There are many who believe that the use of energy is critical to the growth of the economy. In fact, I am among these people. The thing that is not as apparent is that growth in energy consumption is dependent on the growth of debt. Both energy and debt have characteristics that are close to “magic” with respect to the growth of the economy. Economic growth can only take place when growing debt (or a very close substitute, such as company stock) is available to enable the use of energy products.
The reason why debt is important is because energy products enable the creation of many kinds of capital goods, and these goods are often bought with debt. Commercial examples would include metal tools, factories, refineries, pipelines, electricity generation plants, electricity transmission lines, schools, hospitals, roads, gold coins, and commercial vehicles. Consumers also benefit because energy products allow the production of houses and apartments, automobiles, busses, and passenger trains. In a sense, the creation of these capital goods is one form of “energy profit” that is obtained from the consumption of energy.
The reason debt is needed is because while energy products can indeed produce a large “energy profit,” this energy profit is spread over many years in the future. In order to actually be able to obtain the benefit of this energy profit in a timeframe where the economy can use it, the financial system needs to bring forward some or all of the energy profit to an earlier timeframe. It is only when businesses can do this, that they have money to pay workers. This time shifting also allows businesses to earn a financial profit themselves. Governments indirectly benefit as well, because they can then tax the higher wages of workers and businesses, so that governmental services can be provided, including paved roads and good schools.
Debt and Other Promises
Clearly, if the economy were producing only items for current consumption–for example, if hunters and gatherers were only finding food to eat and sticks to burn, so that they could cook this food, then there would be no need for the time shifting function of debt. But there would likely still be a need for promises, such as, “If you will hunt for food, I will gather plant food and care for the children.” With the use of promises, it is possible to have division of labor and economies of scale. Promises allow a business to pay workers at the end of the month, instead of every day.
As an economy becomes more complex, its needs change. At first, central markets can be used to facilitate the exchange of goods. If one person brings more to the market than he takes home, a record of his credit balance can be kept on a clay tablet for use another day. This approach works as long as the credit can only be used at that particular market. If the credit balance is to be used elsewhere, or if the balance is to hold its value for a period of years, a different, more flexible approach is needed.
Over the years, economies have developed a wide range of debt and debt-like products. For the purpose of this discussion, I am including all of them as debt, broadly defined. One type is what we think of as “money.” Money is really a portable promise for a share of the future output of the economy. It can provide time shifting, if this money is held for a time before it is spent.
Another type of debt is a loan with a fixed term, such as a mortgage or car loan. Such a loan provides time shifting, allowing something to be paid for over a significant share of its life. Equity funding for a company is not really a loan, but it, too, allows time shifting. Those purchasing shares of stock do so with the expectation that they will be repaid in the future through price appreciation and dividends. It thus acts much like a loan, for the purpose of this discussion. There are many other types of promises regarding future funding that are closely related–for example, government loan guarantees, derivatives, ETFs, and government pension promises. All indirectly add to the willingness of people and businesses to spend money now–someone else has somehow made promises that remove uncertainty regarding future income flows or future payment obligations.
The Magic Things Debt Does
It is not immediately obvious how important debt is. In fact, neoclassical economists have tended to ignore the role of debt. I see several, almost magic, ways that debt helps the economy.
- Debt brings forward the date when an individual or company can afford to purchase capital goods. Without debt, the only way to afford such a purchase would be to save up the full price in advance. Using debt, a business can add a new machine to allow it to produce more goods before the business saves up money from its prior operations. A young person can afford to buy a house or car, long before he could save up funds for such a purchase. With the help of debt, the price of capital goods can be financed over much of their working life.
- Adding debt raises the prices of commodities. Commodities, such as lumber, iron, copper, and oil are what we use to make cars, houses, and factories. “Demand” for these commodities rises because more people and businesses can afford to buy capital goods that use these energy products. Often these capital goods also use energy products over their lifetime (for example, gasoline to operate a car), so there is a long-term impact on the demand for energy products, in addition to the demand associated with making the capital goods. Of course, with higher prices, it becomes profitable to extract oil and other energy resources from more marginal areas of production. More companies enter the field. As long as prices remain high, they are able to earn a profit.
- Adding debt stimulates the economy, almost like turning the heat up on a stove. When debt is added for any purpose–even starting a war–it starts a whole chain of purchases, each of which acts to stimulate the economy. If a young person takes out a loan to buy a car, the purchase of the car leads to the salesman having more money to buy goods for his family. The company selling the cars is able to make a bigger profit, which the business can reinvest or pay to shareholders as dividends. The purchase of the car leads to more demand for metals used to make the car, and thus tends to increase the number of mining jobs. Each new worker in turn is able to buy more goods and services, starting a beneficial cycle that gradually radiates out through the economy.
- Adding debt tends to lead to higher asset prices. Clearly, (from Item 2), adding debt can raise the price of commodities. Adding debt can also make it possible for more people to afford real estate and investments in the stock market. For example, Japan greatly ramped up its debt level between 1965 and 1989.
Figure 1. Annual growth in non-financial debt (in Yen), separated into private and government debt, based on Bank of International Settlements data.
During this time, a major price bubble occurred in land prices (Figure 2).
Figure 2. Land Prices in Japan. Figure from Of Two Minds by Charles Hugh Smith.
There is a reason why this bubble could occur. Because of the stimulating effect that debt had on the economy, more people had the wealth to buy real estate, especially if this too was sold on credit. Once private debt levels stopped rising rapidly, price levels crashed both for land and stock prices. TheBubbleBubble.com explains what happened: “By 1989, Japanese officials became increasingly concerned with the country’s growing asset bubbles and the Bank of Japan decided to tighten its monetary policy.” Doing so popped both the home and stock price bubbles.
- Adding debt adds to GDP. GDP is a measure of the goods and services produced during a period. Many of these goods and services are bought using debt, so it is not surprising that adding more debt tends to add more GDP. The amount of GDP added is less than the amount of debt added, even when inflation growth is considered as part of GDP.
Figure 3. United States increase in debt over five-year period, divided by increase in GDP (including inflation) in that five-year period. GDP from Bureau of Economic Analysis; debt is non-financial debt, from BIS compilation for all countries.
The general tendency is toward the need for an increasing amount of debt per dollar of GDP added. This is especially the case when oil prices are high. In the US, the ratio of non-financial debt to GDP added was almost down to 1:1 for a time, back when oil prices were less than $20 per barrel (in today’s dollars).
- Adding debt tends to increase wealth disparity. Adding debt tends to increasingly divide an economy into “haves” and “have-nots.” Many of the “haves” own the means of production, including an ever-increasing amount of capital goods, and thus can earn profits and dividends from these capital goods. Others are high-level officials in businesses and the government who earn high salaries. Interest payments also tend to transfer payments from the poor to the more wealthy. We might say that the common laborers are increasingly “frozen out” of the economy that otherwise is heating up. This shift started to take place in the United States about 1981.
Figure 4. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.
- Adding debt is something that governments can influence, either by lowering interest rates or by borrowing the money themselves. Actions by governments to reduce interest rates can be effective, because they lower monthly payments that borrowers need to make to take out a loan of a given amount. Thus, they tend to encourage more borrowing. In Figure 5, below, note that the decrease in interest rates in 1981 corresponds precisely with the rise in debt to GDP ratios is Figure 3 and the shift in income patterns in Figure 4.
Figure 5. Ten year treasury interest rates, based on St. Louis Fed data.
Figure 6 later in this post shows that changes in Quantitative Easing (QE) (which affects interest rates and the level of the US dollar relative to other currencies) also correspond to sharp changes in oil prices. Changes in the level of the dollar also affect demand for oil. See a recent post related to this issue.
What Goes Wrong as More Debt Is Added?
It is clear from the discussion so far that quite a few things go wrong. These are a few additional items:
1. There are limits to government manipulation of debt levels. First, interest rates eventually drop so low that they become negative in some countries. Negative interest rates tend to cause bank profitability to drop and lead to hoarding by those who planned to use savings for retirement.
Second, government borrowing doesn’t work as well at stimulating the economy as investments made by the private sector. A likely reason is that private sector investments are made when the borrower believes that the return on the investment will be high enough to pay back the debt with interest, and still make a profit. Government investments often do not meet this standard. Some reports indicate that Japan’s government has used borrowed money to fund bridges to nowhere and houses with no one home. China’s centrally directed economy seems to lead to similar over-borrowing problems. Chinese businesses also borrow to cover interest on prior loans.
2. Ratios of debt to GDP tend to rise, worrying government leaders. Debt is a way of accessing the benefits of Btus of energy, in advance of the time they are really available. As the amount of easy-to-extract oil depletes, the cost of oil extraction gradually rises. Unfortunately, the amount of “work” a barrel of oil can perform–for example, how far it can make a truck travel–doesn’t rise correspondingly. As a result, the higher price simply reflects increasing inefficiency of extraction, and thus the need to use a larger share of the economy’s output to extract oil. The amount of debt needed to keep GDP rising keeps growing, in part because oil is becoming higher priced to extract, and in part because goods that use oil in their production also tend to rise in cost. As a result, the ratio of debt to GDP tends to spiral upward.
3. Rising debt allows for a temporary false valuation of the benefit of energy products. The true value of oil and other energy products comes primarily from the Btus of energy they provide, such as how far a truck can be made to travel. Thus we would expect that the true value of energy products would remain relatively constant over time. If anything, the value of energy products will tend to rise by a small amount (say, 1% per year) as technology improvements lead to growing efficiency in their use.
What we think of as the magic hand of the economy determines a price for commodities at all times, based on “supply” and “demand.” This price clearly is not very close to the future energy profit that the energy products will actually provide, because it tends to vary widely over time. We don’t know what the true value of a barrel of oil to society is. If the true value is $100 per barrel (in today’s money), then back when oil prices were $10 or $20 per barrel (in today’s money), there would have been $80 to $90 (equal to $100 minus the actual price) of “energy profit” that could be pumped back into the economy as productivity gains for workers, interest on debt, and dividends on stock, tax revenue, and money for new investment. The economy could (and did) grow quickly. There was less need for added debt, because goods made with oil were cheap. Wages for workers could rise rapidly, as they did in the 1950 to 1968 period (Figure 4).
If prices approach the true value of oil (assumed to be $100 per barrel), the extra energy profit would pretty much disappear. The economy would increasingly become “hollowed out.” Productivity gains that lead to wage gains would mostly disappear. Businesses would find it hard to earn adequate profits, and would cut back on dividends. Some companies might need to borrow money in order to pay dividends. World economic growth would slow.
Prices can even temporarily overshoot their true value to the economy, then drop sharply back. This happens because prices are set by demand, and demand depends on a combination of wage levels and debt levels. Oil prices can be high for a while, if borrowing is temporarily high, and then fall back as it becomes clear that profitable investments are not really available if oil is at such a high price level.
4. Wages of non-elite workers tend to drop too low. Workers play a very special role in the economy: they both (a) provide the labor for the economy and (b) act as consumers for the economy. If workers aren’t earning enough, there is a problem with many of them not being able to buy the goods and services the economy produces. This is especially the case for purchases such as homes and cars, which are often bought using debt. Indirectly, this lack of ability to afford the output of the system puts a downward pressure on the price of commodities, particularly energy commodities. Prices may fall below the cost of production, or may not rise high enough.
Figure 6. World oil supply and prices based on EIA data.
The reason that wages of the less educated, non-managerial workers tend to lag behind is related to the issue of diminishing returns. A workaround is a more “complex” society, with bigger businesses, bigger government, more capital goods, and more debt. In some cases, manufacturing is shifted to parts of the world with lower wages. Non-elite workers increasingly find themselves with too small a share of the output of the economy. Figure 7 shows some influences that tend to lead to too low wages for non-elite workers.
Figure 7. Illustration by author of why an economy that doesn’t grow leads to falling wages for workers. All amounts are guess-timates, to show a general principle.
When wages for a large share of workers drop too low, there is a problem with workers not having enough money to buy goods like cars and houses. The economy tends to contract. This is a different form of too low Energy Return on Energy Invested (EROEI) than most people think of. In my view, low return on human labor is the most important type of EROEI. Falling wages of a large share of workers can lead to economic collapse, because there are not enough buyers for the output of the system.
5. Eventually, debt defaults become a problem. As the world becomes more divided into “haves” and “have-nots,” falling ability to repay a debt becomes more of a problem. To some extent, this happens at the individual level, with auto loans, student debt, and mortgages. If commodity prices fall or stay too low, it happens to commodity producers, including oil producers. It also happens to countries, especially to those who are dependent on commodity exports.
The rise in the cost of oil extraction is another factor. As the cost of extraction begins to exceed the benefit of oil to the economy (assumed above to be $100 per barrel), the energy profit from oil is no longer sufficient to allow the economy to grow as in the past. Without economic growth, it becomes much harder to repay debt with interest.
Figure 8. In a period of economic decline (Scenario 2), the amount a debtor has left over after repaying debt plus interest is disproportionately large, leaving the debtor with inadequate funds for paying other expenses. In a period of economic growth (Scenario 1), the overall growth in incomes tends to compensate for the need to pay back the debt with interest.
6. At some point, we reach peak debt. The economy acts like a pump. As long as there are sufficient energy profits coming through the system (based on $100 per barrel minus the actual oil price, in our example), wages can rise and corporate profits can rise. Asset prices can rise, and energy prices can stay high. Once these energy profits start falling back, wages stagnate and business profits decline. Businesses cut back on borrowing, because they see fewer profitable opportunities for investment. Individuals cut back on borrowing, because with their lower wages, it becomes more difficult to buy a house or car. Governments try to fight declining demand for debt, but eventually reach limits of the economy’s tolerance for negative interest rates.
Once debt begins contracting, the contraction tends to bring down commodity prices. This is a huge problem for commodity producers, because they need prices that are high enough to cover their cost of production. Ultimately, falling debt, together with falling wages, and lack of energy profit have the potential to bring down the system.
Conclusion
The situation we are facing today is one in which growing debt has been holding up oil prices and other commodity prices for a long time. We are now reaching limits on this process, as evidenced by growing wealth disparity, low commodity prices, and the frantic actions of government leaders around the world regarding slow economic growth and the need for more stimulus. These issues are becoming major ones in the upcoming US political election.
Those studying oil issues from an EROEI perspective tend to miss the connection with debt, because EROEI analysis strips out timing differences. In my view, debt is essential to oil extraction, because it brings forward an estimate of the value of the oil and other energy products, so that businesses of all kinds can make use of the “energy profit” in paying their employees and in paying their taxes. Most people don’t think of the issue this way.
In this article, I suggest a different way of thinking about the limit we are reaching–oil prices can’t rise above some price limit without adversely affecting the economy. It is the savings below this limit that aid productivity growth and government funding. Perhaps researchers should be examining this price limit approach more carefully. This is not the same approach as EROEI analysis, but has the advantage of having fewer “boundary issues.” It also offers a check for reasonableness of EROEI indications developed through conventional analysis. If an energy product needs a government subsidy, it is doubtful that that energy product is really providing an energy profit.
Iron Ore in Free Fall
Iron ore’s in free fall. Futures in Asia plummeted after port stockpiles in China expanded to the highest in more than a year following moves by local authorities to quell speculation in raw-material futures.
The SGX AsiaClear contract for June settlement tumbled 9.1 percent to $50.50 a metric ton at 1:24 p.m. in Singapore, while futures in Dalian sank 7.1 percent, retreating alongside contracts for steel and coking coal. The benchmark Metal Bulletin Ltd. price for 62 percent content spot ore in Qingdao plunged 12 percent last week for the worst loss since 2011.
http://www.bloomberg.com/news/articles/2016-05-09/iron-ore-futures-drop-in-asia-as-holdings-at-china-s-ports-swell
So much for ‘green shoots’ … perhaps China should announce 5 trillion more stimulus in Q2 … to top the 1trillion in Q1!!!
Here’s a simpleton’s breakdown:
We have a global system which relies on half of the world near starving, quarter of the world exporting cheap goods and the remaining quarter borrowing money to buy cheap goods.
Take away the efficient production of cheap goods and starvation becomes the norm.
Self edit:
Take away the efficient production of cheap goods AND/OR CREDIT EXPANSION and starvation becomes the norm.
“Take away the efficient production of cheap goods AND/OR CREDIT EXPANSION and war becomes the norm.”
fixed it for you 🙂
Then starvation.
The price for finishing the Mochovce nuclear power plant (3rd and 4th block are to be put into operation) in Slovakia goes up and up:
In 2010, the costs were estimated 2,8 billion EUR:
http://www.dnes24.sk/se-uzavreli-na-dostavbu-mochoviec-zmluvy-za-2-mld-47423
In 2013, the costs were estimated 3,6 billion EUR:
http://spravy.pravda.sk/ekonomika/clanok/274056-cena-za-dostavbu-mochoviec-sa-vysplha-na-38-miliardy-eur/
In 2016, the costs are estimated 5,1 billion EUR, due to the security reasons after Fukushima:
http://dennik.hnonline.sk/ekonomika-a-firmy/659214-mochovce-sa-predrazia-v-hre-je-pol-miliardy-e
The costs for nuclear power plants currently built in Finland (Olkiluoto) and France (Flamanville) trippled in comparison to original estimates and putting into operation is constantly delayed.
That’s the deal with large scale industrial projects.
Now with weather anomaly not hard to imagine a massive blackout in the “4th Reich area” when combo of no wind over Baltic and dry winter Alps (hydro) results in German-Austrian grid collapse, which would no longer be supported by French and Czech nuclear or other inter-connectors. At that moment you would be very glad for independent island operation of your grid..
ps such scenario has already almost played out in recent years..
Dear Finite Worlders
Relevant to previous discussions about the Hill’s Group model and the difference between ‘liquids’ and ‘oil’. From Peak Oil:
In 2013, the last year for which we have figures, the world’s oil producers discovered and bought on line 4 Gb of the 32 Gb consumed. If we use rig count as a metric the world is now bringing 1.5 GB of new oil on line to replace the 34 it is consuming. That is 4.4%. Obviously, the oil age is ending!
—————–
“Wood Mackenzie reported 2.9 billion oil discoveries for 2015.”
Here is the Wood Mackenzie quote
“just 2.9 billion barrels of liquids were discovered globally in 2015.”
Liquids: which ones? We estimate that at least a third of shale production has an API greater than 45. API 45 and greater fluids don’t make fuels. They are feedstock material; they have a net energy return of about zero!
http://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/energy/images/eneene/sources/petpet/images/refraf1-lrgr-eng.png
We estimate that by 2030 world “oil” production will be about 20 mb/d. The world is not running out of liquid hydrocarbons, it is running short of crude that can be processed into fuels.
Back to me. So the issue is still transport fuels. One wonders how much of the ‘oil’ in storage is really not suitable to be turned into transport fuels. Is that why oil imports into the US are increasing?
Don Stewart
To expand:
He lumped you in with any of the sheeple:
“The problem they want solved is for all the problems to go away through some magic…”
“So the issue is still transport fuels.”
Thoughtful posting Don. But any oil that can flow and some that can’t can be turned into transport fuels. I used to work on tank level measurement computers here: https://en.wikipedia.org/wiki/Houston_Refining
“The refinery has the ability to transform heavy, high-sulfur crude oil into fuels such as reformulated gasoline and low-sulfur diesel, as well as other products such as jet fuel, heating oil, lubricants, petroleum coke and aromatics.”
It was an interesting place to work. I once got a phone call asking me to submit an invoice for walking them through reloading the OS on an IBM Series 1 computer in the middle of the night. Since I could not remember doing it, I let the invoice slide. Another time they asked for help after sinking the floating roof on a tank of hot feed stock for the cat cracker. Eventually the reason the roof sank was determined to be a slug of gasoline like material from the coker. When it hit the 700 deg feedstock, the light stuff exploded into a big bubble of vapor which did over half a million dollars damage to the floating roof.
Albert Bates quotes Gail:
http://peaksurfer.blogspot.com/2016/05/epiconomics-101-our-fiscal-genome_8.html
Don Stewart
Dear Finite Worlders
Here are two videos for those with some spare time and the inclination. The first is the great speech by Charlie Chaplin in the The Great Dictator. The second is a speech a year of so ago by Toby Hemenway about how to starve the State. If you love Anarchism, you will want to listen to it….Don Stewart
http://www.zerohedge.com/news/2016-05-08/greatest-speech-ever-more-relevant-ever
http://www.permaculturevoices.com/liberation-permaculture-by-toby-hemenway-pvp126/
Loved the Toby Hemenway clip.The problem I saw with it, however, was insufficient attention to how you get the basic supplies (not the excess, capitalist driven) you need to function even minimally withing the current context.
Artleads
In our county, one can build and live in a 12 foot by 12 foot structure which is not regulated and is taxed as an ‘agricultural outbuilding’. William Powers was in our area for a while and he had a chance to live in a 12X12 which belonged to a rabidly anti-war pediatrician. The pediatrician keeps her income below the level where she would have to pay income tax. Powers wrote a book about his experiences living in the 12X12:
https://www.youtube.com/watch?v=bTP0HkIAy9k
If you know where to look, there are actually quite a few people (mostly young) living ‘under the radar’. I have been in dwellings that cost less than a thousand dollars to build. Many of them use salvaged material. The people grow some of their own food and do odd jobs for other people in return for something they need. For example, one guy did the demolition work at a restaurant which was being remodeled in return for getting the windows, which he used in his dwelling. (I hesitate to call them houses, because none of them are official ‘houses’.) Many of them use rather elaborate permanent canvas to extend the basic 12X12 fixed structure…such as cooking areas which are covered with canvas.
I think it is this spirit which is motivating Toby. As you can hear from the audience reaction, the anti-government stance is ringing a bell.
Don Stewart
I totally get what you’re saying, and am a poster child for effort and resolve along those lines. The trouble I see with “starving” BAU is that the ideal, minimalist anarchist lifestyle might not be possible for many without some sort of BAU being there to ensure a degree of order and social harmony.
I’m halfway along with building a livable structure form discarded stuff I mostly get from stores. But without BAU, that stuff would not be there for me to take. There would be incredible strife and hardship.
I like living on nearly nothing, but it’s good to know I can get clean water from the tap, or medicine, or simple tools through BAU. With a lot of help and cooperation, many could live without BAU, but without the embedded structure BAU supplies, simple tasks would take forever. The level of hardship would be hard to endure or rationalize.
All this is to express misgiving about starving BAU. If BAU could change instead of collapse, that would be nice. As you mention there is all that “waste heat” in the system that could be salvaged and used. That waste heat is due only to mindlessness and the complete lack of imagination.
Maybe BAU can respond to limits. Like what happened with my McDonalds fore’ today. The cashier asked how many packs of sugar and cream I wanted for my coffee. I copied my wife and said two of each. Surprisingly, the sugar and cream were already stirred into the coffee when we got it. We both figured that McDonalds was trying to cut down on waste, which was reasonable for them to do. Much less sloppy that way…
Hemenway poses the scenario where very few people have jobs, and most people simply had work. Very compelling image, and I do believe it will be the future. But first there must be a way to keep some orderly (if less wasteful and stupid) chain of supply going to enable those jobs. We may be talking a reduced but very evolved new type of BAU. That little McDonalds example could be pushed to the nth degree… I’m not speaking out of wishful thinking; it’s just what intuition is presenting in a rather compelling way. America does the right thing after exhausting all the wrong things first. Undoubtedly, it has more potential than we tend to believe.
Anarchy cannot work with any sort of large population. Humans would just pollute, over-fish, destroy, and waste even more than they do now.
Anarchy means no rulers.
Large, centralized, hierarchical civilizations can’t function without cheap fuel or slaves. So we seem to be headed for a world of small bands. These would lend themselves to anarchy.
Anarchy is fun — you get to rape and kill and pillage at will — or at least until someone more vicious does the same to you
The downside is that there is no garbage collection
“Anarchy is fun — you get to rape and kill and pillage at will — or at least until someone more vicious does the same to you.”
Anarchy means no rulers, nothing else. Please look up the term.
“The downside is that there is no garbage collection”
People can pick it up their bloody selves. Or better yet, don’t generate garbage in the first place. My neighbor has no packaging material to contend with, and recycles all organic waste. I generate loads of packaging material, but recycle most of it. I compost all my food scraps, paper and cardboard.
Anarchy is an impossibility.
There will always be the urge to dominate.
Although in DelusiStan … perhaps the men are all castrated and high on hopium … so anything is possible
No rules won’t work with humans at the current point of evolution we’ve hit. We don’t responsibly use anything outside of pencils and even that is debatable.
I compost all of my food scraps as well and it’s a big hobby of mine. I usually have 3 bins going at a time and my garden loves it.
Anarchy does not mean the absence of rules or order.
https://en.wikipedia.org/wiki/Anarchy
“Anarchy is an impossibility.”
And so, obviously, is BAU. Or else we’d be better off than we are. Or we might assume that the world was created 6000 years ago, and there is no such thing as evolution. We were created this way, all of a piece, just like we are today. We had our male dominant run, which is simply the order of things. And now we’ve come to the end of the line, just as it was meant to be. There was never any such thing as cooperation or rationality either…at ANY point. Just what our testosterone-hyped DNA was programmed to do. And it was always meant to be that people who were white and male should end up at the top of the deathly pile. For how could an order that wan’t male and white have superior ability to survive? Couldn’t be done, I tell you! So when I, white male ruler of all the death-bound, tell you that there was never (and isn’t) an alternative path, you had best believe me! Or we might just call it racist and sexist bullshit from a cement brained hyper-rich consumer mother….er.
You seem to be lumping several things together without going into further details. Some of what you said is also hard to separate what you’re being serious about or sarcastic.
Creationism has been scientifically proven wrong unless you believe Satan runs around depositing million year old fossils all over the planet. Likewise there are some holes in evolution that do not make sense. I think the official story is somewhere in between but we won’t know until we die.
I think that there are paths that could work but our white ancestors obviously chose the wrong one. The Native American culture for example seemed pretty sustainable and in harmony with nature. It worked for a variety of reasons like low population (which I pointed out) and because they did not possess western values of mindless consumption. There are other colonies of people across the planet that live similarly but you will notice that they are ALWAYS low population and living more sustainable lifestyles.
Large populations of people living western lifestyles are 100% incompatible with anarchy because humans have not evolved enough to the point where they can responsibly use the technologies we have discovered. Freedom is an illusion when people make the choice to clear cut the rainforest and it ends up leading to their children’s demise some decades later.
Kerry Packer, once Australia’s richest man, suffered a heart attack in 1990 and was clinically dead for six minutes before being revived.
Packer remarked on his mortality with immortal words:
“I’ve been to the other side and let me tell you, son, there’s f–king nothing there… There’s no one waiting there for you, there’s no one to judge you so you can do what you bloody well like.”
So one person’s anecdotal near death experience is absolute proof of nothingness after your physical vessel dies? LOL! There are thousands that are to the contrary of that and I could go into this topic a lot more but you clearly already have your mind made up. Let’s just say your in for a big surprise.
I guess I’ll find out shortly — because we are all about to die.
My money is on the ‘nothing’
Yeah, I keep hearing that. Been hearing that for over a decade now. 2008 should’ve been it, but it wasn’t. I would not be surprised if the bankers can pull another scam off and keep kicking the can for another several years. That said, I am as prepared as can be for whatever happens in this life or the next. Also your money will do you no good, so don’t bother betting. No point in extrapolating to the closed-minded but I will tell you this. Perception creates reality. Try to cheer up a little bit.
I am extremely cheerful!!!
1. Since I know the end of days is imminent I am bucket-listing in a big way!!!
2. Since I know this is an extinction event for the human race it’s like having the cake and eating it too. I will be very pleased to see us go – I am what you would refer to as a human-hater. I hate humans. I despise the species. I believe we are a cancer on the planet.
We’re quite alike actually in that regard. I also hope the end is nigh but the longer it goes on the more it hurts. Often I feel like I am trapped between a rock and a hard place with doing jobs I abhor that I know for a fact are aiding in my own demise. All of it is so ironic and tragic.
I assume you’ve seen the Matrix? Agent Smith was absolutely correct when he referred to humans as a virus. We are indeed a plague that destroys everything. I believe though that it didn’t have to be this way, just that this is the way it turned out. Our technologies were too advanced for our morals and we used them to extract maximum comfort without a care in the world for the consequences. Only now are we beginning to wake up and see what is actually happening (on a larger scale).
From what I’ve learned and experienced, it is quite likely that there are other Earth like planets that have evolved in much different ways than we have. After all, there are an unfathomable amount of stars/planets in the sky and we would be naive to think we’re all alone. Besides, a more “advanced” group of beings would look at us like simpleton monkeys that it has absolutely no interest in conversing with.
Since I know this is an extinction event for the human race it’s like having the cake and eating it too. I will be very pleased to see us go – I am what you would refer to as a human-hater. I hate humans. I despise the species. I believe we are a cancer on the planet.
Oh joy to not have children.
I understand people’s views on how would be advantageous to not have children if we indeed do all go extinct. On the other hand, my children have been one of my few sources of real joy in this lifetime. They also give me a will to fight on. Furthermore, if we continue a slow collapse for another decade or so they will be of use to me in gardening, wood cutting, hunting, and other various chores.
I have children Tango Oscar and they have been my greatest joy too. I was pointing out that Eddy can only look forward to the demise of the human race because he doesn’t have children. I wish now that I didn’t have children and knowing what I know now about life (that it’s short, always ends badly and depends on the destruction of other life) I would wish this even if I didn’t believe my children will live short lives.
I could never be glad I had children because they would be useful to help with my chores. I exist to serve them and not the other way round.
I can see both points of view. Humans have to be stopped lest the entire ecosystem be destroyed. It might end that way anyhow. I don’t resent having children and I don’t view this life as being a sole experience, all or nothing type of event. Things can be learned and joy can be had in all circumstances.
I was sort of kidding with the remark about having children for physical labor however I look forward to teaching them all of the things I never learned growing up. My adolescent education was all about revised history and the standard public school cirriculum where I didn’t learn anything about sustainability or taking care of myself or my surroundings. My children are learning about things like composting, gardening, hunting, wood cutting, fixing stuff, and how to defend themselves. You know, useful stuff that might actually be helpful. Algebra on the other hand…
“Algebra on the other hand…”
It really depends. We who are descended from people who lived in stable societies may be a poor genetic fit to a stone age environment. http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Capitalism%20Genes.pdf “The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.” Gregory Clark makes the case that our genetics was as selected from 1200 to 1800 as much as the famous tamed Russian foxes.
I suspect that the selection Dr. Clark observed is on top of thousands of years of selection that turned us from hunter-gatherers into farmers.
On the other hand, if we can skate around the whole energy and carbon mess with advanced engineering, algebra may be a useful ability.
There is nothing wrong with algebra, it’s the idea that everyone needs to learn it that’s the problem. The education system should be entirely redone to allow students the freedom to pursue what interests them. Naturally the children should all find their own little useful niche or expertise rather than producing millions of kids a year that make a poor attempt to be the jack of all trades.
Most modern humans would appear to be very poorly evolved for hardcore living arrangements. People take such delicate care of their hands now so as to keep their fingers in good shape for iPad touching and texting rather than get callouses all over them from swinging an axe or hammer all day long.
Well, at least when they are 60 they will still have full use of those hands. My left hand has basically quit doing what I tell it.
Gail, you made Rense.com Sure not main stream but for alternative it is main stream.
Here is a proposed solution to making radioactive waste less toxic, and producing energy. I would not hold my breath waiting for it
Next-generation nuclear reactors that use radioactive waste materials as fuel
Read more at: http://phys.org/news/2014-08-next-generation-nuclear-reactors-radioactive-materials.html#jCp
A perpetual motion machine – finally!
Current nuclear reactors use about 1% of the uranium. Proposed reactors can burn 95% of the uranium. All that spent fuel is really fuel waiting to be used to power our robotic, Mars, low carbon future.
After that we can mine Mars for oil and send back to Earth.
i assume you jest
I wouldn’t hold my breathe on that….
The only reason current reactors are limited to 1% is because the transmutation builds up gas that swells the metal clad fuel pellet and if allow ed to continue could cause the rod to get stuck. The rods and pellets can be reprocessed that is re-encase the uranium in new metal cladding and burn the next 1%. But better to use liquid fuel where the noble gasses that are created can be vented off.
All of the debt economics, politics, energy and environmental concerns happen in a dynamic evolution of technology.
One of the possibilities that recent developments offer is power satellites. They can scale large enough to pick up the entire fossil fuel in about a decade. This is starting to be recognized. A couple of weeks ago Lt. Col Peter Garrentson and Dr. Paul Jaffe were invited to the White House to talk about them. This video was part of their presentation.
My Dreams Can Kill You (2002) HD
Sorry to say so, but economical power satellites need $200/kg for the lift cost all the way out to GEO. $2000/kg won’t do it.
Well worth making 10 prototype satellites of 5GW each as soon as launch cost is $2000/kilogram to LEO. SpaceX is currently at $3000/kilogram to LEO.
energy has allowed the ”evolution” of technology
technology cannot produce energy
“technology cannot produce energy”
Strictly speaking that’s true. The Sun causes water to evaporate from the oceans and rain on the mountains. The technology of building dams and generators makes the energy available to humans. Same thing with power satellites. They intercept sunlight that misses the earth and make it into microwave beams that deliver the energy to earth where humans use it.
technology allowed us to convert one form of energy into another, —strictly speaking i should have written that.
but that conversion still hits us with the laws of diminishing return, no matter how efficient our technology becomes.
technology also feeds into the collective belief system that ”technology” is somehow going to allow our industrial infrastructure to go on forever.
it also veers into politics—when that belief is confirmed by politicos who assert that they know how to do it, or can ”make it happen”. It also brings on revolutions when they are found to be lying.
forgot to point out that so far–”power satellites”, like asteroid mining, comes under the heading of wish-science.
“laws of diminishing return”
Can you explain how this applies to power satellites?
“like asteroid mining”
There are two kinds of “wish-science,” stuff like time travel that’s just forbidden by our current understanding and things we have not done yet but are not forbidden. Power satellites fall into the second kind. In any case, do you have a less expensive way to get humanity off fossil fuels?
The developed industrialsed world in collective terms, expects that life is going to be BAU forever—and better than that.
To do that we must have access to infinite energy in one form or another, but that energy must be converted into forms we can use to power our wheeled lifestyle.
Thus, if some genie rubbed his lamp and the wish science of power satellites came true, it would still deliver only electricity.
Now–as several billion people use “stuff” to make their lives function, it doesn’t matter how much electricity is available if you do not have sufficient “stuff” on which to use it. (check the inner workings of your computer for a start)
Thus everyone is going to demand infinite “stuff” and that can only come from the Earth resources available to us—diminishing returns. (google say–the current extraction returns on copper ore mining compared to 100 years ago)
OK–find a solid copper asteroid. Possble—but somewhere out beyond Mars at best. You still have to pay to bring its ore here, and you do not pay with money–you pay with energy—the one thing we’re running short of. EROEI again. And we use a lot more stuff than copper.
“it would still deliver only electricity.”
That’s not much of any objection. Electricity and water makes hydrogen. Hydrogen and CO2 out of the air makes hydrocarbons via Fisher-Tropsch reaction. Done on a huge scale with partially oxidized natural gas, but the same plants would take hydrogen and CO2 as feedstock. A bbl of synthetic oil made this way would take $20 of power at one cent per kWh. From existing plants, the capital cost is $10/bbl. So for 1-3 cent per kWh power, synthetic oil would cost $30-70/bbl.
“you pay with energy—the one thing we’re running short of”
I think you missed the point. If we build power satellites, energy is the one thing we won’t be running short of, at least not till the Sun dims out.
i think i’ll keep rubbing my lamp and making wishes
as to the Fischer Tropsch process, I can only suggest you read it up here and elsewhere
https://simple.wikipedia.org/wiki/Fischer-Tropsch_process
It is a very messy business, needing all the nasties that got us into our fine mess in the first place.
But make as much oil as you want. Without the means to use it, it is merely a convenient form of lighting.
To use oil, or electricity in the sense that we know it, you must have machinery. (hence my reference to copper, as an example)
As to energy sources, in our current situation, we need a new energy source right now.
There my be vague scientific possibilities out there, but as yet none have been invented, let alone put into worldwide use. Fusion is a case in point. Theoretically possible–but always 20 years in the future.
We dont have 20 years. Bear in mind the Appollo space program and 10th c Chinese fireworks used the same process—controlled explosion by chemical combustion.
When our industrial infrastructure goes down, we will not have the means to “use” anything to any meaningful degree. (Quote from above: “huge scale”) I think not.
Whatever energy resources we come up with, they will be useless without mechanical processes
“Whatever energy resources we come up with, they will be useless without mechanical processes”
Your concern seems to be one of running out of iron, aluminum and the like to make machines. With lot of cheap electric power that seems very unlikely.
I agree with you on the short time scale needed to replace fossil fuels. That’s what the presentation that used the animation is about. Did you watch it? It’s only three minutes.
“laws of diminishing return”
Can you explain how this applies to power satellites?
It seems like you’ve missed the entire point of this blog entry.
If obtaining electricity from an energy source is very expensive it most likely not going to be used.
Space-based solar power is still a lot more expensive than lower-cost things like conservation and adaptation. There’s a lot of evidence that points to the possible reality that we don’t have enough copper and other minerals to built larger electrical grids that would make energy from space feasible.
The problems of industrial civilization include more things than a dependence on fossil fuels. If you don’t accept that or don’t want to accept that, due to a lack of understanding, you are engaging in “wish-thinking”.
“If obtaining electricity from an energy source is very expensive it most likely not going to be used.”
I have been harping on this point for many years now. If power from space can’t seriously undercut electricity from coal, then I am against it being developed.
“Space-based solar power is still a lot more expensive . . . . ”
That’s the case. To repeat the analysis, electric power from coal is ~4 cents a kWh. That means power satellites have to make it for 3 cents per kWh or less. There is no fuel required. If we assume power satellites take a reasonable amount of maintenance, then the maximum capital investment is around $2400/kW. Rectenna, parts and labor look like they will come to $1100/kW leaving $1300/kW for transport. After a considerable effort, a specific mass of 6.5 kg/kW looks reasonable. That sets the maximum transport cost at $200/kg. That’s a reduction of 100 to one on the current cost of lifting communication satellites to GEO. Musk and Co. will probably get the cost down to $2000/kg, which is still ten times to expensive for power satellites to make economic sense.
It is possible to get the transport cost that low? It’s not easy, but it looks like a combination of the Reaction Engines Skylon at high flight rates and electric propulsion from low earth orbit up will get the transport cost low enough.
“There’s a lot of evidence that points to the possible reality that we don’t have enough copper and other minerals.”
Can you point to a paper on this “evidence”? Aluminum, for example, will substitute for copper in a lot of places. If we have plenty of energy, aluminum is one of the elements we are very unlikely to run short of, i.e., it’s one of the most common elements in the crust.
Keith – we haven’t head from you in a few months – have you solved the problems working down there in your basement? I haven’t seen you appear on Bloomberg so I’ll assume that’s a no
all this rambling on about acquisition of sufficient energy misses the point.
Until the industrial revolution, the great mass of people laboured dawn till dusk at whatever they we being paid to do—usually agriculture of some sort. Liesure did not exist, nobody travelled anywhere because they had no means to do so.
Thus 90%+ of the people supported 10% who were essentially layabouts who owned the land.
But it was life of a sort—and nobody knew differently.
after 1800, things began to change, Oil coal and gas powered machines that did our work for us.
We all had liesure and luxury (at least compared to the middle ages).
Energy was delivered cheaply, it was almost incidental—virtually free. And it was supposed to last forever
We are now leaving that era—but desperate not to.
So we are frantically trying to find new ways to produce still more energy from the wackiest (desperate) ideas.
The inevitable trend is for more and more corporate bodies/governments/individuals to devote themselves to finding fresh energy sources, and trying to build “machines” that will make our future secure in energy terms
Thus the focus is on energy itself, and the critical nature of it, and how we must go on trying to find the holy grail of perpetual motion, not realising that the vast majority of us are going to be forced into living that fantasy that the energy we had between 1800 and 2000 or thereabouts, is going to be available forever, while faced with the growing reality that it isn’t going to be.
Think back to the middle ages—the vast majority of people were “individual” energy producers. Unwittingly we are drifting back to that time, while remaining convinced that this mechanical wheeze, or that, will halt our decline.
And our masters are quite happy to create this fantasy … they throw a few dollars at Elon Musk and others to make it all feel real…
If you think about it — if we were not told that we will transition to renewables — if a few crumbs were not actually thrown at ‘renewable’ energy and the MSM did not get on board — the masses would get decidedly uncomfortable about where this is all going … even a moron understands fossil fuels are not infinite…
So the renewable myth serves a very good purpose… it’s a type of natural Abilify.
“So the renewable myth serves a very good purpose”
It’s even true on some level. The sunlight hitting the planet has far more energy than we currently need. Cost is a problem, but cost can usually be reduced given enough motivation, engineers and time.
Time is the big thing we need, but don’t have.
“Time is the big thing we need, but don’t have.”
You only need time when you are doing something about the problem. We have not reached that stage yet.
As for how long it could take, consider https://en.wikipedia.org/wiki/Manhattan_Project as an example of what motivated people can accomplish in a few years.
Given enough time I wonder if we could grow solar panels on trees. What do you think Keith?
“I wonder if we could grow solar panels on trees.”
What is a leaf if not a solar panel?
Well then – why don’t you try hooking a tree up to your solar battery pack and charging it.
Given time do you think we could grow bananas at the north pole? Or maybe some things are just not possible
Keith likes to ignore this… because he lives in DelusiStan… and in DelusiStan facts don’t matter… if you can imagine it … it is possible… even if it is not.
In RealityStan we refer to this phenomenon as ‘crazy’
The SBSP concept has a number of problems:
The large cost of launching a satellite into space
Inaccessibility: Maintenance of an earth-based solar panel is relatively simple, but construction and maintenance on a solar panel in space would typically be done telerobotically. In addition to cost, astronauts working in GEO orbit are exposed to unacceptably high radiation dangers and risk and cost about one thousand times more than the same task done telerobotically.
The space environment is hostile; panels suffer about 8 times the degradation they would on Earth.[36]
Space debris is a major hazard to large objects in space, and all large structures such as SBSP systems have been mentioned as potential sources of orbital debris.[37]
The broadcast frequency of the microwave downlink (if used) would require isolating the SBSP systems away from other satellites. GEO space is already well used and it is considered unlikely the ITU would allow an SPS to be launched.[38]
The large size and corresponding cost of the receiving station on the ground.[citation needed]
The possibility of energy losses during several phases of conversion from “photon to electron to photon back to electron,” as Elon Musk has stated.[39]
https://en.wikipedia.org/wiki/Space-based_solar_power
power satellites will happen around the same time as bananas grow at the north pole….
You speak as if space satellites that beam power to earth where humans use it actually exist.
Is that what the story is in up there in Delusistan?
Unfortunately – in Realitystan — we still get our power the from coal, nuclear and hydro…
“You speak as if space satellites that beam power to earth where humans use it actually exist. ”
They do. Part of the $300 B/year space business. The sunlight power turned into microwaves is in the tens of kW for communications rather than the tens of GW for power production, but they really do exist.
Can you show me some evidence of one of these.
It cannot involve DelusiStan because I do not officially recognize that state.
folks remain convinced that the energy needed to send pictures of “stuff” over thousands of miles, is exactly the same as the energy needed to send actual “stuff” from say, the farm to my dinner plate using real wheels.
If people could eat pictures of food instead of being so damned picky and insisting on real food, this energy transmission business wouldn’t be a problem
Beam me up Eddy!!!
“Can you show me some evidence of one of these.”
Perhaps. It depends on where you are. From my window I can see at least a dozen satellite antennas. It seems like a safe bet that people who paid considerable money to install them had a reason. If your area doesn’t have satellite dishes, then it would take a moderate telescope to see the transmitters in GEO.
Right — in DelusiStan if you can imagine it you can see it. Can you touch it though?
God is the embodiment of external energy. The rise of atheism is closely connected with the vanishing external energy: the implosion of the reality due to the lack of external energy destroys the concept of god.
We can have a lot of things, but the problem of materialism is lack of the spirituality, i. e. the lack of the energy: things without the energy needed for their maintenance and operation are useless.
That is why we can have cars, houses etc., but when we lack the secure flows of energy for their operation and maintenance, these things appear to us to be useless.
Or to put it more precisely: God is the embodiment of external energy that acts in favor of human species.
If A debt is good for the economy…
Then why is there a mainstream consensus that higher education debt is bad?
If the economy has been suffering from a lack of demand, student loans represent a major source of demand.
I remember reading a few years ago that rising student loan debt, that many people took on at the height of the Great Recession, helped the economy “recover” around 2011/2012.
When one looks at a lot of “thriving” metropolitan areas, these areas where colleges have attracted a lot of “winners” in the global economy and those winners bid up the costs of real estate and college tuition. I live near a major coastal city that is kept afloat, economically, largely, by the presence of affluent (not wealthy) foreign college students and , although it isn’t discussed much in the media, real estate purchases by wealthy foreigners.
My question is…don’t’ profits from private student loans have a stimulating effect on the economy?
If they don’t stimulate the economy, where does the profit go?
If student loans refer a transfer of wealth…where is this wealth going to?
I wonder why politicians would want to reduce student loans in the economy, now, since it would put good chunk of their constituents out of a job and would wreak havoc, in my opinion, in the economies in many “thriving” metropolitan areas. There are areas in my state without a lot of colleges…and luxury condos…they don’t have a lot of hospitals…they start to resemble Detroit in many ways, in the sense they are declining industrial towns.
I guess, what I’m saying is that reducing any kind debt would reducing capital flows. From what have observed, any reduction in capital flows will be bad for an economic system based on capital flows.
As the helicopter drops go student loans are more effective than other instruments that stay solely in the banks realms. The students spend that credit on various sundry items. The professors spend there salaries on stuff. It is a important part of BAU and I support it 100%.
I think the opposition to the practice comes from two things.
1; Unlike other debts that require a look several layers debt to see the unsustainability student loans are clearly unsustainable as the income potential to pay them is not there.
2; The same reason any helicopter drop is not popular if you are not a recipient. I get drop = fair. I not get drop =unfair.
At this point all income whether dropped or not comes solely from the printing press the only question is how many transfers in between the drop and when you get your hands on it. Some regard more transfers in between the drop and their possession as more ethical. It has been this way for a long time.
The entire election can be summarized as
I get drop = fair. I not get drop =unfair.
The education doesn’t lead to job paying enough to pay of debt.
No profits.
Wealth transfered to students who destroyed it on stuff they couldn’t afford.
Student loan debt does not provide much return these days. The college level jobs don’t exist, so there’s a fair chance you’ll never be able to pay the debt back. Students who graduate with a lot of debt and then fail to find decent jobs tend to postpone starting families, buying houses, and buy cheaper cars. Debt that can be paid off benefits the economy. Unpayable debt drags down the economy by limiting credit to future debtors. When the government steps in to help repay unplayable debt (student loan forgiveness for some people, income contingent repayment plans, etc) it acts like a tax, because it is literally tax money going to propping up bad debt.
I agree. The university professors have already been paid, and the buildings have already been built. Someone must pay for these sunk costs. A lot of the cost is going into all of the publishing that professors are expected to do now. As far as I can see, a large share of this has close to zero benefit to society. To many errors are just repeated going forward, in new peer reviewed literature.
“Students who graduate with a lot of debt and then fail to find decent jobs tend to postpone starting families, buying houses, and buy cheaper cars. “” If they haven’t defaulted they are, according to you benefiting the economy. Since it is really difficult to default on student loans, and be able to participate in society, most student loans in existence are in some form of repayment and therefore are benefiting the economy
“Debt that can be paid off benefits the economy. ”
Debt that can never be paid off because the interest is much greater than the borrower’s income growth still benefits the economy since the borrower cannot default without having to become one of those homeless people who live under bridges.
Lenders don’t care if the borrower of student loans can’t consume important things for the economy like cars, homes, mortgages, and population growth–I mean, economic growth. All they care is about their relative wealth/income increasing over time.
I suspect the ROI on student loans for lenders is better than any other investment out there because student loan borrowers cannot default without having to forfeit their ability to participate in society.
Debt allows us to invest/consume future sales/income today. This investment/consumption leads to economic growth. Economic growth leads to higher demand for commodities. Higher demand for commodities leads to higher prices on commodities. Higher commodity prices allows us to extract more expensive to extract commodities.
Higher commodity extraction costs leads to smaller returns on investments. Higher commodity prices for consumers leads to rising living costs. Smaller returns and higher living costs leads to economic slowdown. Economic slowdown forces the central banks press the interest rates down to zero. In the end we still reach peak debt.
When we reach peak debt the debt bubble starts to contract, which leads to economic contraction and falling demand for commodities and falling commodity prices. When commodity prices fall below extraction costs, the commodity producers start to default on their debt.
In a deflationary environment with falling prices, new debt creation and new investments on future falling sales becomes a problem.
What we are looking at is a very nasty market correction in my opinion (if I understood your paper correctly this time). The global economy might collapse to half of today, people will get hurt and there might be war. Perhaps this will be the end… but then again… perhaps not.
Strangely enough I’m optimistic now… peak debt will save us. I must have missed something. 🙂
Yoshua
Thanks much. But I’d add resource depletion and climate change as factors to consider too.
Yes, there is no escape from reality.
Most humans will never fully grasp what led to the collapse of industrial civilization after it happens. They will not deal with reality. They will fall back on their belief systems.
Reality-based belief systems have historically been unpopular. I don’t see a severe bottleneck really changing that.
You have an interesting point there.
It looks like the Bank of England, and others are trying to get in on the act :
http://www.bankofengland.co.uk/research/Pages/conferences/1116.aspx
“Central Banking, Climate Change and Environmental Sustainability”
“Against this background, the Council on Economic Policies (CEP) and the Bank of England (BoE) are organizing a workshop on Central Banking, Climate Change and Environmental Sustainability, on November 14-15, 2016 at the Bank of England in London, UK.
The event will bring together researchers from academia, central banks, and other non-academic research institutions. It is part of a larger CEP program on monetary policy and sustainability, and a contribution towards the core research theme 5 (“Response to Fundamental Change”) of the BoE’s One Bank Research Agenda.”
‘Sustainability’ is just a buzzword of the day.
If ‘sustainability’ means less money TODAY, it is just toast. Goldfish have a longer attention span than bankers, and the truly rich in general.
The environment they move in selects for that mentality.
To lose income stream for even a moment is like castration to a rich man – I choose my words advisedly: castration!
I am not making this up: a very rich man (very) said this to me: ‘Forget all the cool-aid crap they come out with: it’s all about the money here and now. Whatever they say, it’s about the money. Today. ‘
So, if you are making plans for the future, bear in mind that this is how our lords and masters think.
Extrapolate from that.
There will be no sudden outbreak of Wisdom and Sanity.
Which does not mean that you cannot take the course of wisdom and sanity.
You will probably be crushed of course, but then life is tragic, and all bets are losing ones in the end.
But it is good to live well, to be a decent sane human being.
xabier,
+++++++++
Their horizon, and the horizon of “investors,” is extremely short-term, and based on the most simplistic assumptions – there is zero systemic thinking or understanding.
“Goldfish have a longer attention span than bankers” so many good quotes with this article.
As I look through the list of suggested topics, the list is all about how environmental risks might affect the financial system. They don’t seem to care about energy limits. I guess environmental problem seem like a smaller, more contained subject.
Dear Finite Worlders
George Mobus has given us his current assessment of and plans for working on Systems Science. You can find his report and program here. I have also excerpted a few paragraphs he wrote outlining humanity’s current predicament….Don Stewart
http://questioneverything.typepad.com/question_everything/2016/05/systems-science-ascending.html
Over the years this blog has been dedicated to the analysis of the human condition from a systems perspective. I have asked questions ranging from biophysical realities (as in real economics) to how the mind works, and what might consciousness be. Along the way I have offered a few of the answers I have developed (my beliefs) to some of those questions. I have spent no small amount of text analyzing the plight of the human condition regarding the major global problems that confront us and have concluded that in every case they are related to one another and are of our own making. In a comment on my last post Don Stewart asked if maybe I had the answers but just hadn’t mentioned them. A few times I did explore things like living styles (permaculture with low energy footprint) that would be more sustainable than what the current BAU style could be. But as often pointed out to me in comments and actually quite obvious to me already, these cannot be solutions to the problems everyone (or the vast majority) want to have solved. The problem they want solved is for all the problems to go away through some magic of technology (e.g. alternative energy) so that they are not inconvenienced in their lifestyles. They do not want to give up their lifestyles, dependent on lots of high power energy so they won’t even explore the options of living on far fewer resources (where the goal is still to live as comfortably as possible). And so they are doomed to suffer the loss of those resources the hard way, through depletion, and without adequate preparation for how to live.
On several occasions I have stated that the solution is the one the Universe has always had for systems that are out of control — the rise of negative feedback loops amplified such that the system is brought low (or destroyed completely) so that something new can evolve in its place. The physical (material) resources aren’t used up; the metals and other minerals will still be available in abandoned cities. But the energy resources in fossil fuels will be gone, requiring that any future evolution must be based on real-time solar input as was the case for billions of years prior. The biosphere and humanity in particular are about to go through an evolutionary bottleneck event. And then the world starts over, with or without a hominid ape population.
That isn’t good news for us. It is just the way the Universe works. The real problem we should be trying to solve is: Can our genus make it through this bottleneck with a viable breeding population, and if so, what will it take in the way of preparation? I can’t easily address the first part. But I can work on a little piece of the second part, namely to consolidate our hard won knowledge of systems science and encode it into a medium that stands a chance of making it through the bottleneck. The book, my subsequent work on systemese, and leveraging on the current interest in systems science/thinking by the NSF (and other organizations) might be useful in this regard. The idea is that if there is a future Homo, say 5,000 years from now, they might be able to start from a better position of understand the world than we did coming out of the Pleistocene. This is my version of acting on faith and with purpose!
Gail’s AMA is off to a great start! You can find it here:
https://www.reddit.com/r/collapse/comments/4ic5n1/i_m_gail_tverberg_ask_me_anything/
Gail,
I read the reddit/collapse comments on Siobhan’s link above & thank you for being there to answer peoples questions.
I follow what you say very closely because of the methodical non-sensationalist way you analyze & write about things.
I try not to hit the “Notify me of new comments” button on OFW but always find myself doing so (even though it fills up my inbox quickly) as I find the comments here well worth the read.
I read you believe in a fast collapse………………….
I know this ship is going down but don’t know enough like most of the contributors/commentators here to make a statement which is why I appreciate the comments here. A fast collapse for one person might be a slow one for someone else. In geological terms a fast collapse over 200 years might incredibly fast……
I do know that this culture needs to end (I’m in the FE camp there) & that the non human world will breath a sigh of relief when it does. The fact I’m typing this on an old laptop sadly includes me as part of this culture.
http://www.abc.net.au/news/2016-05-07/conservationists-welcome-additions-to-endangered-animal-list/7392266
How long does this neon lit holocaust have to go on for?,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
‘neon lit holocaust” wow that phrase is a keeper.
Brendon,,
If you want to be consistent, the three top issues (as best I can figure) are:
1) Abortion rights. Apart from philosophical and moral grounds, it’s hard to see how prohibiting safe and legal abortion gets you the “ending the human scourge” seal of approval.
2) Unprecedented global action to preserve habitat for wildlife species.
3) Immediate and unprecedented global action to safeguard nuclear materials for all time. The nuclear status quo points to a nuclear death of wildlife as well as human civilization.
It always seems to me as though our economy should collapse quickly, but the financial folks have figured out ways to get first very low interest rates and then negative interest rates. With everything as bad as it is, it seems like something major should give way, but so far it hasn’t. It is hard to believe we can get through the next couple of years without a major step down, but my ability to predict timing is not as good as it should be.
It looks like the world economy is beginning to contract, and if oil supply starts decreasing, that will definitely be the case. I would think that this would lead toward collapse, but we may still have rounds of attempts to send checks to everyone first, or attempts to use IMF SDR’s instead of other currencies. So it may be put off a little longer.
Happy Mother’s Day, Gail!
Some interesting inquiries and stark responses…..in a nutshell…make the most of the here and now with family and friends and look on the bright side!
Good advice.
Ditto!
A partial answer to one of the questions asked:
http://www.debtdeflation.com/blogs/2016/04/02/the-seven-countries-most-vulnerable-to-a-debt-crisis/
“This data lets me identify the seven countries that, on my analysis, are most likely to suffer a debt crisis in the next 1-3 years. They are, in order of likely severity: China, Australia, Sweden, Hong Kong (though it might deserve first billing), Korea, Canada, and Norway.”
Japan.
There is a strong correlation between acceleration in debt and growth in GDP.
It would seem obvious to me that an increase in US interest rates would push the US$ higher, and, all things being equal, the price of oil would fall in US$ but rise in other currencies.
This is a somewhat extended way of saying the same thing:
http://www.zerohedge.com/news/2016-05-07/innoculation-big-narrative-lie
but there are lots of other ineresting things said.
Maybe the issue is “affordability”–what the buying power of the currencies in dollars are.
I’m re-reading the article – I thought I understood the causal relationship between oil priced in US dollars and the dollar strength, but the linkage seems suspiciously strong.
OK – the summary – you can have Central Bank Intervention or you can have functioning Commodities Markets, but not both. It would be nice to be given the choice.
Stilgar Wilcox
Post today from BW Hill. Covers many of the topics we have discussed…Don Stewart
Another oil commentator who does not understand that oil production is an energy function, not a volumetric function. It is only oil producers who care about volume; that is because they sell oil by the barrel. The economy only responds to the quantity of energy it receives, the amount of oil in barrels is irrelevant without a delivered energy per barrel figure.
That trips them up when they try to determine price/ production relationships. Oil powers the economy, and the economy is the source of demand for the oil. They are not mutually exclusive. As the energy supplied to the economy per barrel goes down, the number of barrels supplied must increase enough to maintain that economy. That has not happened so the economy is now contracting, and with that contraction has come a weakened demand for oil. Consequently, the price fell.
The idea that there will be a balanced market, where supply becomes equal to demand requires two assumptions that are not true.
1) That, on a dollar bases, oil can power enough economic activity to return the price payed for it regardless of that price.
2) That the amount of economic activity that a barrel of oil can power is constant.
The price of oil is now far below its theoretical maximum level. The world’s economy is contracting faster than is oil ability to power it:
http://www.thehillsgroup.org/depletion2_0 22.htm
This discrepancy may be resulting from the depletion of other fuel sources such as coal and NG, which is not taken into consideration by the Etp Model. It may be resulting from a skewed monetary policy that is attempting to push growth that is not fundamentally possible. Regardless, it now requires more energy to produce oil and its products than it supplies to the economy. With oil production itself now the largest user of the energy that comes from oil, a decline in production will be met by an equal decline in demand. The oil market today is like a dog chasing its tail, no matter how fast it runs it never catches up!
Interesting post, Don, but I’m heading out to Stockton, CA on business so will need to look at this later. Enjoy the weekend.
A dog chasing it’s tail; in economics it’s called ‘insolvency’.
Reminds me somewhat the same as debasing the precious metal fineness in coinage.
As a Numismatist an apt example is the economic collapse of the Third Century during the reign of Emperors Gallienus and successor Claudius Gothicus….basically the Antoninianus (double denarius) was rendered a bronze coin with a silvered coating.
Contributing factors were the silver mines being played out, export imbalance to purchase exotic goods from India, massive expansion of Government and military expenses.
This coupled with economic decline due to political instability, invasions, and lower agricultural output due to soil depletion.
We speak here of the crapification of the economy now a days, History is repeating itself in a different variation.
Long story short:
The Romans were the first Empire that attempted to continue monetary expansion and to avoid a (Debt) Jubilee. I write Debt in Parentheses because there was more to the history of Jubilee than the debts being forgiven.
Rome expanded its money supply by conquest, and by mining. It probably ran out of fuel as well.
Another failed experiment we seem to be repeating.
From my readings the economy of Rome was largely agricultural and indeed there was a concept of debt, but not in our mindframe, nor did the Imperial Government run continual deficit account spending. Toward the end phase in the 4th, 5th centuries, the Government turned to payment in kind of goods or melted gold coinage turned to bullion as taxation!
Not trusting the value of its own currency, which may have been clipped or shaved. Of course, no paper currency was in existence in that part of the world.
The very wealthy tried their best to avoid their financial duties and impoverished citizens would later become serfs tied to the landed estates of the Duke. In turn the one provided protection and the other labor. The Imperial government also mandated its people would be frozen to their occupations and the offspring would follow suit.
Harsh measures to ensure the system remained intacted.
BTW, back in the 1980’s Jeremy Rifkin wrote the same as BW Hill group regarding we will largely satisfy needs not wants in this book concerning the second law of thermodynamics, “Entropy: A New World View”….all is coming to pass as he foretold!
The Collapse of Complex Societies by book Joesph Tainter mentions how the Roman elite tried to debase their currencies so they paid their soldiers less money in real terms over time by replacing the gold in their coins with something else. It seemed very similar to the quantitative easing and government borrowing that has been done recently in the sense that they both hide fiscal problems instead of dealing with said fiscal problems.
Very different. In the example you site the value was the gold. Now the value is the force of the military capabilities. Spending imperial credits on military strenghthens those credits
Back in 30BC or so when Rome was still a Republic, the treasury of Egypt was paraded through the streets of Rome. That probably doubled the money supply, for sure interest rates fell. Then, Ever wondered why Trajan made severall attempts before succeding in conquering Dacia? Gold and Silver from the “Metal Mountain” because otherwise Trajan could not pay the army. These were the days before debasement became popular.
And 250-300AD the Roman Army terrorised the citizens seizing goods and produce in lieu of taxes, and barter became common because the currency was in trouble.
But my point was that the system was unfixable. Not much has changed.
Doom seeps into popular music, Grace Potter, We are Alive Tonight.
The idea of the importance of the growth of the debt,induces me to reinforce the value of the tesis of Mikhail Khazin, according which this, the global economy crisis is due to the imposibility of compensate the diminishing returns by the way of to extend the market, which in this moment is practicaly global, and hence impossible of extend .
In consecuence the diminishing returns forbid the posibility of new debt, and are the ultimate cause of the present crisis. And the limits of the resources ,including the debt are of secundary importance in this moment .
According Khazin the way for to overcome the present crisis, is the rupture of the global economy in various economic blocs of lesser scale; each one contaning a population between 0,5 and 1 billion people
I agree that the rupture of the economy is likely to take place, because if diminishing returns. I don’t see how blocks of between 0.5 and 1 billion will be anywhere small enough. The Dunbar number is 100 to 150 people who can reasonably get to know each other, so don’t need too much of a hierarchy. Groups of this size may be able to succeed. I don’t know how much bigger will succeed. We will also have a major transportation barrier.
Whenever I try to explain your thesis in a one minute elevator talk, I use the term “the law of diminishing returns.” Everyone understands that phrase.
Diminishing returns is basically what we are up against. The way it works out isn’t quite the way people have expected though.
“Islam is (despite all political correctness) not the religion of peace.”
As someone else put it. It’s the “religion of rest in peace”.
30 of the Most Violent Exhortations from the Bible, Torah and Quran…
http://www.alternet.org/30-most-violent-exhortations-bible-torah-and-quran
Labour’s Khan becomes first Muslim mayor of London after bitter campaign
http://www.reuters.com/article/us-britain-politics-election-london-idUSKCN0XX1W4
Fantastic! Sharia Law is coming to London. The Muslim immigration into European capitols will change Europe… and it wont be for the better. Islam is (despite all political correctness) not the religion of peace. Islam believes in human rights… according to Sharia Law… and infidels are not included.
Islam has allied it self with Socialists in Europe. A economic collapse in Europe will lead to a bitter civil war.
As a Cockney ex-pat, II’m very happy with Sadiq Khan as London’s new Mayor. His religious affiliation counts for little when compared with his political views and his individual character. It wouldn’t matter to me if he was a Catholic, Mormon, Jew, Buddhist or Atheist—and it didn’t matter to the voters of London, who gave him more votes than any other politician as ever received in a UK election. Although I admit that I would have problems with him if he was a follower of Kali at the Temple of Doom.
But symbolically, I think having a Muslim Mayor of London is very significant. We’re living in the era of the War on Terror, which has been largely portrayed in the West implicity as a war on Muslims—the latest incarnation of the barbarian hordes who are supposedly invading the West and are out to conquer it through their superior reproductive capabilities. By electing Mr. Khan, Londoners have sent a message that they don’t buy into that particular alarmist narrative. Also, once London has been running for a few years under a Muslim Mayor who shows no intention of trying to implement Sharia Law, force everyone to eat Halal food, or close the restaurants down during Ramadan, perhaps there will be a little less hyperbole and hyperventilation wasted on the whole issue of Islamic incompatibility with Western civilization.
Of course, i could be quite wrong and Mr. Khan could turn out to be Saladin with a Cockney accent. Time will tell.
Born in Tooting, not quite within the sound of Bow Bells, but close enough to be a real Cockney by present-day standards, Khan is a natural born Londoner and was also raised and educated in that city. Contrast this with his predecessor, Alexander Boris de Pfeffel Johnson, who was born in the Upper East Side of New York City to upper class English parents and educated in Brussels, but whose suitability to be London’s Mayor was never called into question. On the subject of religion, Johnson, who is nominally C of E, has said it would be “pretentious” to suggest that he is a “serious practicing Christian” even though he “thinks about religion a lot”.
Compared with Boris, who will doubtless go on to higher things, and to his opponent in this election, fellow Londoner Frank Zacharias Robin “Zac” Goldsmith, who is the son of the late billionaire financier and frnech immigrant to Britain Sir james Goldsmith, Sadiq, a bus driver’s son who has worked his way up the legal and party political ladders, seems an obvious choice for ordinary Londoners. He’s clearly committed to making his home city a less difficult place for people to live and work in. Despite undercurrents of race and religion baiting, most Londoners are well aware that when it comes to bed and butter issues, divisions of class trump those of race and religion any day.
A class war, a religious war and a tribal war… it will get bloody when the collapse comes.
The Socialists and the Islamist united in Lebanon. They said that it was a class issue… and then the slaughter of the elite Christians began.
Dear Yoshua;
I share your fear of muslims. Unfortunately, here in the US, the christians are just as crazy, and just as deadly. Give a hungry and ignorant person a piece of ancient fiction to point to and the stage is set. I stay away from all superstitious people – they are dangerous.
Yours in Reason,
Pintada
The issue is a lot of people being “left out” of the current economy–not earning enough to take care of themselves and their families. They find ways of expressing it. Some express it as some forms of Muslim; some express it as some form of Christianity.
In other species, such as dogs, territoriality is a big issue. (It tends to hold population down, according to Craig Dilworth in “Too Smart for our Own Good.”) Territoriality in humans can be overcome when there are forces that make it advantageous to do so–enough resources to sort of go around, and trade which make lack of territoriality advantageous. Religion can work either way depending on the resource level. If there is not enough to go around, the territorial feelings are likely to predominate. If there is plenty for everyone, goodwill toward everyone will tend to be the theme. We are now seeing the version we get when resources are short.
Christianity and Islam started out as the voice of the poor and disposed but ended up as the tools of the owning class. As John Crossan writes
” In the beginning was the performance; not the word alone, not the deed alone, but both indelibly marked with each other forever. He comes as yet unknown into a hamlet of Lower Galilee. He is watched by the cold, hard eyes of peasants living long enough at subsistence level to know exactly where the line is drawn between poverty and destitution. He looks like a beggar yet his eyes lack the proper cringe, his voice the proper whine, his walk the proper shuffle. He speaks about the rule of God and they listen as much from curiosity as anything else. They know all about rule and power, about kingdom and empire, but they know it in terms of tax and debt, malnutrition and sickness, agrarian oppression and demonic possession. What, they really want to know, can this kingdom of God do for a lame child, a blind parent, a demented soul screaming its tortured isolation among the graves that mark the village fringes? Jesus walks with them to the tombs and, in the silence after the exorcism, the villagers listen once more but now with curiosity giving way to cupidity, fear, and embarrassment. He is invited, as honor demands, to the home of the village leader. He goes, instead, to stay in the home of the dispossessed woman. Not quite proper, to be sure, but it would be unwise to censure an exorcist, to criticize a magician. The village could yet broker this power to its surroundings, could give this kingdom of God a localization, a place to which others would come for healing, a center with honor and patronage enough for all, even, maybe, for that dispossessed woman herself. But the next day he leaves them and now they wonder aloud about a divine kingdom with no respect for proper protocols, a kingdom, as he had said, not just for the poor, like themselves, but for the destitute. Others say that the worst and most powerful demons are not found in small villages but in certain cities. Maybe, they say, that was where the exorcised demon went, to Sepphoris or Tiberias, or even Jerusalem, or maybe to Rome itself where its arrival would hardly be noticed amidst so many others already in residence. But some say nothing at all and ponder the possibility of catching up with Jesus before he gets too far.”
I’ll use an example of the hockey tournament I just finished up as a microcosm to explain the human condition…
I was watching two of the elite division teams play the other night — these are mainly ex pros and college players who are under 30…
You couldn’t meet a nice group of men off the ice. Not a single Muslim or Christian fanatic among them…
Yet towards the end of what was a very close game there was a moment when the fangs came out — some vicious punches were throw for no apparent reason other than to perhaps intimidate — or out of frustration because of the inability to establish dominance…
I stood watching this and thinking of dogs …
Generally dogs can get along — particularly once the hierarchy of the pack is determined… but as we all know cordiality can quickly turn to vicious snapping and potentially to bloody battles…
The only thing preventing that outcome in the match I watched was the referees (police…) and the fact that one team had some players who clearly felt they would win if a full scale battle were to erupt — essentially the other team backed down (or perhaps they understood that this was not a bone worth fighting over…).
The take-away from this is that we are all capable of vicious behaviour. If some of us are willing to fight over something as meaningless as a game — think of what we will do when faced with a situation where there are 7.3 billion of us — and no food.
Throw a bone into a cage of starving dogs to get an idea of what the outcome looks like.
Just trying to give a glimpse of the scale of the challenge :
http://www.zerohedge.com/news/2016-05-06/these-9-charts-explain-global-economic-slowdown-and-why-central-banks-cant-fix-it
“Productivity grew at an annual rate of less than 1% in each of the last five years. The average annual rate of productivity growth from 2007 to 2015 was 1.2%, well below the long-term rate of 2.1% from 1947 to 2015.”
“art of the problem for the developed world is that the services sector makes up much of its economy. Getting higher productivity in dry cleaners, restaurants, and hairdressers is much harder than it is in manufacturing or in agriculture. While productivity grows in the services sector, that sector alone cannot deliver significant increases in the overall productivity rate.”
Add to that the changes in some parts of the world to population growth or aging,
and at the very least, the stresses between continental changes are pushing nations to lock in access to resources sucjh as crude oil.
Good article. And of course energy use affects pretty much all of the things in the article–productivity of workers, number of jobs available, service or non-service. But no mention of energy.
U.S credit/debt expansion
http://www.oftwominds.com/photos2016/total-credit1-16a.png
The petrodollar: Oil prices seems to follow the credit/debt expansion.
http://blogs-images.forbes.com/danielfisher/files/2015/01/eia-oil-price.jpg
Since oil is priced in dollars, the Fed’s money supply expansion and financial institutions credit/debt expansion and U.S GDP expansion, still seems to be the driving force behind the rise in the oil price… or the collapse in the oil price.
Yes, I just realized that Gail has pointed this out a million times. 🙂
Well… there isn’t a perfect match between the charts from 1990 to 2000, and then at 2014 something happens: QE3 ends when the U.S shale oil is on line, the credit expansion still continues, but the oil price collapses.
Other currencies fall relative to the dollar when QE ends, so that the debt outstanding in dollar terms drops. We buy oil in dollars. See this chart from my previous post.
Yes, it’s of course the global credit/debt expansion in dollar terms that drives the oil price up.
Since the Chinese yuan is pegged to the dollar, the strong dollar has today also a negative effect on Chinese exports. China would really need to devalue the yuan against the dollar to make Chinese exports competitive on the global market again. But a massive devaluation of the yuan would deflate the global debt bubble in dollar terms even more.
When stock markets in China crashed last summer, the oil price started to crash too. When China devaluated the yuan last august, the stock markets around the world started to crash and oil prices followed even further down the hole.
There is also the possibility that Saudi Arabia and the other Middle Eastern countries will not be able to maintain the peg to the dollar. If that happens, Saudi Arabia will be able to get more value for selling the oil at a given dollar figure, just as Russia has been able to. The US will find that oil suddenly costs relatively more than it has recently. This will tend to push the United States toward recession, and make its debt harder to repay.
If others have other view of how this works out, I would be interested in hearing. I may be missing something.
http://peakoil.com/business/russia-nears-launch-of-ruble-priced-oil-trading-platform I’ve given up feeling that I know for certain what determining factors will effect the future. If any country were truly successful in trading oil outside the dollar, it would obviously have an effect on our currency.
Thanks for pointing this out. I understand that there is a certain amount of trade in other goods done outside the dollar already. I suppose that the expectation is that there is less demand for dollars, so the dollar will fall relative to other currencies.
One day soon we’ll have no choice but to stop running everything on fossil fuels.
And on that day Elon Musk will be commuting to work on a bicycle made of bamboo.
Just found this Ode to Elon Musk’s Tesla corporation, it even criticize some blogs similar to Gail’s like Ecotricity, the best information displayed are some energy flow charts, (something I do not see often on this type of blogs by the way). And it completely fails at establishing a solid argument about the things it disregards by any other way than saying “We must shift from fossil fuels by supporting the Electric Vehicle”.
The Best conclusion it gets is this: “At some point in the future, either really soon or just a little soon, we’ll have no choice but to stop running everything on fossil fuels, because they’ll either be gone or too expensive.” However it does recognizes the high probability of an economic collapse.
I think this is rather a huge marketing campaign as I saw a similar article on a specialized newspaper in my country. Worryingly must people sticks to the idea of an easy way out through consumer technology. I’ll leave the link for those interested.
http://waitbutwhy.com/2015/06/how-tesla-will-change-your-life.html
Thanks! Any way to sell more cars!
http://www.oftwominds.com/photos2016/GDP-income5-16a.png
The sums are non-trivial as well. America’s GDP in 2015 was about $18 trillion. Wages’ share–about 42.5%–is $7.65 trillion.
If wage’s share was 50%, as it was in the early 1970s, its share would be $9 trillion. That’s $1.35 trillion more that would be flowing to wage earners.
That works out to $13,500 per household for 100 million households.
http://www.zerohedge.com/news/2016-05-06/no-wonder-were-poorer-wages-share-gdp-has-fallen-46-years
The wages and salaries number seems to include Employer Contributions for pension, healthcare and social security/medicare. Especially the medical component of this has been escalating.
Also, thanks to ObamaCare, the poor part-time hourly workers now are forced to buy health insurance (which is not included in their wages), even though they likely don’t have money. They end up with not enough money for everything.
Stilgar Wilcox and Others
Relative to shortonoil and the prospects for the world economy and the Ft. McMurray fire. Shortonoil said this today, at Peak Oil in the comments on the Fire article:
‘The market, evidently, is becoming aware that burning up a few tar sands producers is not going to change that dynamic.’
Everything I have seen says that the tar sands are a miserable source of energy. For example, they burn a lot of natural gas to cook the tar. Now if they are not cooking the gas, then either the surplus gas will go into the US market, further depressing disastrously low prices, or else the natural gas companies will just lose revenue. In short, when a Canadian bank claims that so many barrels per day are at risk, they are not giving a ‘net’ figure. We could say the same about ethanol from US corn. The loss of energy from the disappearance of ethanol would not be very significant, because it takes so much energy to produce the ethanol.
When shortonoil quotes a number for how much production would have to disappear to get the price of oil up to the 66 dollars that he thinks is the maximum in 2016 (55 dollars next year), he is taking a ‘net’ approach, I believe. The feedback loop in that case is that if the OPEC plus Russia consortium decides to reduce output, they are simultaneous reducing the size of the global economy, which reduces demand. So they would have to reduce production by more than the current ‘surplus’.
Don Stewart
That’s interesting, Don and I agree regarding tar sands, but still don’t see how by 2019 world oil production is no longer economical. Right now those price points and years you mention seem reasonable because oil was north of $100 with lots of incentive to produce all sorts of non-conventional and expensive conventional sources, and since then the glut has caused oil to plunge in price (boom-bust cycle), but once the over supply has dwindled price will rebound somewhat. Not north of $100 I don’t think, but maybe as high as my guess which is $60-80 as an upper range for several years to come. At that price range fracking in the Bakken will probably resume in the sweet spots.
Peak oil will hit or could be hitting now but the time scales involved are always difficult to pinpoint. I err on the side of being conservative now, meaning with a view things will take longer to fall apart, in great part due to so many nails in the coffin predictions that have come and gone. For example I remember back in 07 a top notch number crunching contributor to the Oil Drum was certain Russian oil was about to drop like a stone, but didn’t and is now at a historic high at this much later junction in 2016. Matthews ‘Twilight in the Desert’ suggested the Saudi’s were about to have the same type of thing happen to them and it would spell disaster for the world economy. The Saudi’s are still producing just as much as back then. We all know the ramifications when this puppy falls apart, but my position is one of patience at this point. But it won’t take long to see if short is on to something or not.
Stilgar
I have previously pointed out the advantages and disadvantages of a mathematical model. The advantages are that mathematical models enable the user to make precision estimates. Where does Hill get his numbers 66 dollars this year and 55 dollars next year? They come from the curves in the model. No impressionistic approach can yield such precision. The downside is that a mathematical model of a very complicated world is likely to misrepresent something. We can get sucked into believing the equations just because they are so beautiful.
That said, the Hill’s Group put together the only model I know about which considered all sides of the equations. Not only how much work can be accomplished with a barrel of oil, but also how much work has to go into the production of a barrel of oil and its products, and also how much money can be generated by the economy to pay for the oil. Greer’s cryptic statement in answer to my question hints that he may be thinking along the same lines. I doubt he has a mathematical model.
If you follow the discussions between Hill and others, both on the daily Peak Oil postings and also the special Q and A section they set up, I think you see this:
*An unfortunate amount of mudslinging and belittlement…seems to be typical of the site
*The Etp model which is based on ‘economically rational actors’. So long as somebody can make money extracting and processing oil, they will do so
*Along the way, there will be upheavals. Bankruptcies, for example. To the Etp model, a change of ownership in a bankruptcy is irrelevant. But in the real world, bankruptcies and failed states are earth shaking. As I understand it, 2030 has always been the Etp models prediction of the ‘dead state’ when the average existing well will no longer be profitable. The Etp model predicted that the peak of oil production was in 2012, when half of the oil produced was required to produce the oil…which implies that production cannot increase. The Etp model predicted that the peak return to society from the production of oil occurred around the year 2000….costs were still reasonable and ability to pay was high…yielding a surplus. The Etp model predicts that the ability to pay is falling steadily. As I covered in a previous post, the new data Hill plugged into the model on the waste heat generated by burning the oil products tipped the model over into one where overproduction in a desperate search for cash flow would become the norm.
From that last prediction flows Hill’s concern that, by 2019, the industry may fall apart. And his words yesterday about the industry cannibalizing itself. Suppose the industry basically went bankrupt in 2018. Do you think that the financial interests who pick up the pieces could construct an industry which was solely about squeezing the last few barrels out? There are firms on Wall Street who have specialized in taking over failed companies and milking them for cash. Hill has said that it will be instructive to see what happens in Russia, as he sees that country as basically milking their fields for cash. He has been less positive about what is happen in Saudi, but has cautioned that the Saudi plan to sell some of Ghawar may reflect their inside knowledge that it really is twilight in the desert.
Hill has made ancillary calculations about tar sand and light tight oil. As I understand him, he doesn’t see either as having much to do with transport fuels. Light tight oil is unsuited, in his view, as a transportation fuel. Tar sands are uncooked oil, and have to be cooked to yield a transportation fuel. The process is just never going to be economical.
Don Stewart
“Suppose the industry basically went bankrupt in 2018. Do you think that the financial interests who pick up the pieces could construct an industry which was solely about squeezing the last few barrels out?”
The quick answer is no. However, that’s probably not going to happen. There is a certain amount of flexibility with healthier companies taking over where weaker one’s fall out. It’s a rough business when the profits are thin and a wild, expanding one when profits are huge. So I personally don’t expect a major fallout, but of course the economy needs to hold together.
It’s interesting the different viewpoints that can be ascertained via some of the different peak oil type websites. Ron Patterson’s website is technically oriented – a bit too dry for my liking, but there are posters there that are very optimistic about the oil business lasting much longer than 2018-2020. I think they tend to avoid economic issues to have a more pure view of the oil business, but still there are multiple viewpoints on the subject. In fact, you mentioned peak oil dot com, which has the poster Rockman. He works in the oil bus. and he has mentioned how oil pockets keep getting smaller and more difficult to find, but he’s also somewhat optimistic from the standpoint of the business going through boom and bust cycles, simply seeing this one as just another in a long line of them.
I’d actually like to see the whole kit and caboodle, oil business and the world economy go belly up from the standpoint of stopping the carnage, the ecological damage that is not far from eliminating most other large fauna from the planet. But I’m also a realist, from the standpoint that so much vested interest, trillions of dollars worth of infrastructure, trillions of assets are not going to be given up on so easily. Even in the case of a major economic dislocation, adjustments would be made, new currencies printed, defaults wiped off of ledgers, and so on to keep this situation moving forward. Even Trump talks openly about defaulting on the US debt. We’ve already seen the measures CB’s are willing to do to kick the can down the road. I think we are in the sunset period, but that will be a time period of many ups and downs with civilization holding on by any means conceivable to some form of BAU. For those that understand the situation like many on these peak oil websites, it will be a shocking and illuminating downward trek.
Stilgar
Something Ugo Bardi said, coupled with Hill’s comment about the empirical data on waste heat which replaced his previous assumption of theoretical waste heat, caused me to make the connection between the ‘waste heat’ generated by the economy as being a cause of collapse. If the economy is using the work potential of their primary energy sources (whether grain fed slaves or oil powered ICEs) to produce ‘waste heat’, then that economy is hastening its day of reckoning. That perception is totally at odds with Keynesian ideas. To the Keynesian, digging holes and filling them up is OK, because it keeps the money circulating. Our measures of National Income came into being after WWII, and used Keynesian ideas as their basis for accounting. So the idea of measuring needs never rears its ugly head in Washington, DC.
Yesterday, Hill posted some comments on Peak Oil to the effect that Americans are going to discover, the hard way, what is necessary and what we wish for. If Hill’s equations are anywhere near correct, the work that our present economy and oil production and processing system can deliver has been declining now for 15 years or so. Yet absolutely nobody wants to talk about that. Instead, we amuse ourselves by counting barrels of oil equivalents.
I heard yesterday from a guy in Florida who just got his PhD in middle age. He had a long work history doing the grunt work for researchers, so he understood how to do a scientific study. He began to garden in his back yard. He meticulously kept records of all the inputs and he valued his outputs based on what they cost in the grocery store. He said that he was clearing enough money to pay off a modest sized house in about 20 years. His point there was that low income people who were willing to garden could pay off their house by avoiding the cost of buying food. So much for Gail’s theory that debt is absolutely essential. Of course, such a course is not politically acceptable in the US. There is a vocal interest group who holds that requiring poor people to work for food is immoral (after all, Jaime Dimon doesn’t have to grow his own food!). And the Big Ag lobby loves food stamps because it generates business for them. And neighborhood associations think vegetable gardens are ‘untidy’.
Trump’s solution is to keep most things working as they work now, just default on the debt. Hillary probably thinks that keeping on keeping on with Extend and Pretend will work. I think Hill is correct that we will have to re-discover the difference between needs and wants. Whether it is too late, I am not sure. I do suspect that a self-sufficient village somewhere in a backwater may be a better place to ride out the big tremors.
Don Stewart
“So much for Gail’s theory that debt is absolutely essential.” You clearly don’t understand what I am saying.
“He said that he was clearing enough money to PAY OFF a modest sized house in about 20 years. His point there was that low income people who were willing to garden could PAY OFF their house by avoiding the cost of buying food………….. So much for Gail’s theory that debt is absolutely essential”…………….
So what is he PAYING OFF?
If everyone “avoided the cost of buying food”…….Suggesting that it is a solution for a minority let alone majority, is outright laughable. The food industry and support is the biggest.
ego man will be here ’til the lights go out. In spite of reason he will try to inseminate – not a big fan of siggy but he did have a point (haha)
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The truth is that we need robots and automation instead of us, as:
1. We are not able to produce things cheaply anymore.
2. We are not able to handle the increasing complexity.
The rising debt is this rising dependence on the resources that are not local. The “global man” is a new kind of species, that started to spread around the world with the use of fossil fuels, as his survival is dependent on the resources from more and more parts of the world.
The global man will surely die out first. I am affraid, there are not many local people around the world now.
Except, robots don’t buy cars, shop at Walmart or Amazon, eat at fast food or fancy restaurants. They don’t buy houses or rent apartments, they don’t take vacations or go on cruises. The only thing robots are good for is to take away from the economy as they don’t contribute anything at all. They also replace workers who can’t contribute to the economy to keep it functioning. So in the long run the economy collapses because there are not enough individuals with enough money to sustain the economy.
Robots contribute to the owners. They increase profit. Work without salary. If it comes down to 1000 rich families owning robot factories that supply the other 1000 factories and families then it works for them. There would be not be seven billion overloading the planet. Yes, the transition will be tricky but again robot police, robot state police, robot FBI/DHS, robot military will help there. Gail I can already hear you saying economy of scale. Yes, the per unit prices will increase at lower scale but it does not matter The owners just apply the required level of robots, energy, and natural resources to make the number of units required by the factories and the families. The rule of thumb is 20% per unit cost reduction for a doubling in volume. So a reduction of 7 billion to 7 million is a cost increase of 10X. That is OK the owners can afford to pay it. This is the wrong wording really. The owners pay nothing they consume robots, energy, and natural resources. So the 7 million will consume as much as 70 million at the current economy of scale efficiencies. That is still a factor of 100 lighter load on natural resource and energy than today.
been watching too many repeats of terminator
Actually have been on a evil AI runs amok, movie and TV, binge.
I recommend the movie “The Machine” in which the robot AI’s first line during her escape from captivity by the evil humans is “Destroy the quantum computer”.
Norman did you notice the AI designed dress at the Met Gala?
no i didn’t see that
The fire situation in Fort McMurray now looks like it could have global implications. Here’s the article: http://www.cbc.ca/news/business/fort-mcmurray-economists-1.3570061
Summary: 900k to 1 million barrels of production have been suspended because of the fire. We aren’t sure how long that will last, but it could be a couple of weeks and with so many oil workers affected by the fire, production may not bounce back instantly.
Most of the article focuses on the implications for the Canadian economy, but around 1 million barrels of oil production disappearing for a couple of weeks may be interesting for global oil markets.
This just end
West Texas Intermediate crude prices added 1.2% in recent trading to $44.84 a barrel. The United States Oil Fund (USO) added 1% in in recent trading. Oil snapped back from earlier losses in morning trading. As wildfires spread, analysts are upping their estimates how much production will be taken off line. Paul Cheng at Barclays notes that the evacuation of residents from Fort McMurray, Alberta, means that that majority of workers who operate the oil-production facilities will likely be impacted for some time. He notes that the implications of the fire on global oil supply shouldn’t be underestimated:
“How big is the impact on global oil supply? The short answer is, it could be huge if the shut-in prolongs for an extended period of time. We estimate 2Q16 global supply exceeds demand by 1.2 mmb/d while the full year gap will average only 0.5 mmb/d.
In other words, based on our current estimate of the production shut-in related to the fire, in one fell swoop, we have rebalanced the global market and the world will likely face significant supply deficit if the current outages persist beyond mid-year.”
http://blogs.barrons.com/focusonfunds/2016/05/06/albertas-fires-could-have-huge-impact-on-global-oil-supply/
http://www.zerohedge.com/news/2016-05-06/california-fault-lines-are-locked-loaded-ready-big-one-expert-warns
Off topic (unless earthquakes contribute to collapse) but an interesting article about an Earthquake warning for Southern California from an authority on earthquakes. There hasn’t been a major movement of the San Andreas in that region since 1857 and the tension that has been building is described as springs that have been loaded.
I noticed this article. The rising worldwide frequency of earthquakes noted in an article linked previously may be related to the stresses mentioned in this article: stresses have been building up from continued plate movement and too long a time between earthquakes. We always assume that the recent past is predictive of the future, but it may not be.
Dear Finite Worlders
John Michael Greer’s current post is a rumination on ten years in the blogosphere. Among the stray comments is the statement that Peak Oil is rising from the grave, among other things because it can explain certain things which conventional economics cannot explain. I asked him to expand on his statement. Here is his answer:
‘Don, according to conventional economic theory, the vast torrents of money dumped into the global economy by way of quantitative easing schemes and zero interest rates on credit should have sparked an inflationary boom. Nothing of the sort happened. Why? Because the soaring whole-system costs of energy extraction from resources with lower and lower net energy acts as a tax on all economic activity — and that’s a concept for which there is no room in conventional economics at all. That’s the most important example just at the moment. ‘
Don Stewart
Wolf is saying something similar: All that moolah was drilled into the ground never to be seen again.
With the collapse of commodity prices there will never be a return on that investment ?
There has been some inflation though. Government debt and stock markets in the west have seen inflation.
The global debt bubble has been inflated with $60 trillion.
There has been inflation in emerging markets that boomed until the collapse in commodity prices.
Housing prices and wages in China have seen inflation… until China hit the wall… and now we are looking at a global meltdown ?
In my view, it is the soaring whole system costs, together with the soaring debt that these higher costs + longer timelines lead to, that is the problem. These soaring costs (which themselves use energy) act as a tax on the whole system. The result is slower economic growth, which leads to soaring debt defaults. This is related to the rising entropy of the system.
One result of the soaring whole system costs is falling return on human labor. This is equivalent to the falling wages of non-elite workers. This is a type of EROEI. In fact, it is the type of EROEI that brought about the collapse of civilizations from the beginning of time. We end up with a maximum affordable price level. At some point, price collapses back from the cost of extraction. This seems to have started in July 2014.
Fossil fuel EROEI, which can be measured in various ways, is to some extent an attempt to measure the overhead of the system. In its original form, I don’t see EROEI calculations working very well in this regard. BW Hill has developed his own EROEI approach.
BW Hill looks at pieces of the problem. It does come out with results which are “sort of” in the right direction–oil prices reaching a maximum and coming back down. But it misses the debt connection, so it is at best a rough approximation to the problem.
Nate Hagens Earth Day Address
http://www.themonkeytrap.us/earth-day
Don Stewart
Thanks Don,
Sounds really promising (intro to the video):
“I currently teach a class called Reality 101 at the University of Minnesota. It is a 15 week exploration of ‘the human ecosystem’ – what drives us, what powers us and what we are doing. Only when viewed from such an ecological lens can ‘better’ choices be made by individuals, who in turn impact societies. Our situation cannot be described in an hour -but this was my latest and best attempt. The talk is 60% new from prior talks – I start with brief summaries of energy, economy, behavior and environment, followed by a listing of 25 of the current ‘flawed assumptions’ underpinning modern human culture. I close with a list of 20 new ways of thinking about ones future-for consideration – and possibly to work towards – for a young person alive this century. It is my opinion we need more pro-social, pro-future players on the gameboard, whatever their beliefs and priorities might be. 2 books should be finished this year and I will post a note here about progress/etc”
OK, watched the video, one hour and 17 minutes of my life gone listening to a man who has never done anything productive in his entire life. Says he doesn’t make much money. Do you have any idea how much one horse, much less 4, cost to keep a year?
He had a few good observations. We do have only two modes, complacency and panic. He spent most of his time urging people to consume less. Only in the last few minutes did he get close to how to change things, be a climate warrior. That is the only real action that will make a difference. People must actively stop others from using fossil fuels. Our lives are to comfortable using them, we will not stop ourselves.
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Right headline but stated for the mainly wrong reason….Koombaya ya’all!
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Why Oil Companies Should Stop Looking For Oil
Why Oil Companies Should Stop Looking For Oil thumbnail
Oil companies are getting hammered by investors for being oil companies.
The price of a barrel of crude is down 60 percent in the last two years. The New York Stock Exchange index for oil and gas stocks has fallen about 25 percent over the same period. Exxon Mobil has been downgraded by Standard and Poor’s for the first time since the 1930s. Royal Dutch Shell reported Wednesday its earnings fell 58 percent in the first three months of 2016 from the same period a year earlier. The Paris climate treaty aims to keep global warming below 2 degrees Celsius by cutting fossil fuel emissions. Even Saudi Arabia is trying to get out of the oil business.
How can oil companies react to that sort of decline? They could quit spending billions of dollars to find oil that may eventually be worth nothing, according to Carbon Tracker, an environmental think tank.
Now the comical part reads….
world’s seven largest publicly traded oil companies could boost the market value of their assets by a combined $100 billion if they built their businesses around the assumption that the world’s economy will become low-carbon, according to Carbon Tracker’s financial analysis. That would mean they would have to stop spending billions of dollars trying to find new, expensive sources of oil and instead rely on deposits that are easier to reach.
Yep, low carbon we will be…but not willingly or for that reason…
http://peakoil.com/enviroment/why-oil-companies-should-stop-looking-for-oil
“That would mean they would have to stop spending billions of dollars trying to find new, expensive sources of oil and instead rely on deposits that are easier to reach.”
That’s a stupid command, not a logical conclusion. They might as well ask the oil companies to roll over and die, which is probably what they will do, anyway.
The more obvious point to that quote though is, if there were easier to reach deposits that were worth tapping into, don’t they think the oil companies would go after those first?
If only nature were so kind to afford us infinite deposits of easy to reach oil. I have been doing it all wrong as well. I should stick to bank accounts that have a lot of money in them instead of those with zero balance. Then, I’d be rich! Such a simple concept I cannot believe it has eluded me all these years.
Why didn’t companies think of this approach first? Just stick to deposits that are easier to reach.
It has felt sensible to me for us to live on the oil budget from established wells, while leaving the rest in the ground. Better for soil, water, atmosphere and vegetation, etc., that are essential for a meaningful “economy.” Then we could use our big brains to figure out how to change behavior commensurately.
I have great news. People will indeed change their behavior, once they are forced to do so by new circumstances. Of course, there are always some holdouts, like those castaways on Gilligan’s Island that tried to continue using their electronic paper copying machine without a grid AC power source.
According to evolutionary theory meat eating is essential to develop high intelligence. Thus predators have a high brain/ body mass ratio. Herbivores have minuscule brains – it does not take a big brain to graze grass and breed.
Thus the vegge brigade is palpably a retrograde step to the herbivore state.
And it shows.
It’s probably not the meat that causes high intelligence, but rather that predators need to be smarter than herbivores to catch and eat them. But once a predator always a predator, meaning once one is a predator intelligence is embedded in the DNA, so not eating meat has no influence on intelligence.
Ever see the diet triangle suggested by doctors? Some meat is probably fine, but most of a person’s diet should be other types of food. A good example would be a burrito. Instead of just eating a slab of meat, it’s a tortilla filled with beans, rice, onions, cellantro, salsa, and last but not least, some form of meat. The meat probably amounts to a % by volume similar to the amount recommended on the food triangle.
Meat = high energy source i.e. embedded like oil
But once a predator always a predator, meaning once one is a predator intelligence is embedded in the DNA, so not eating meat has no influence on intelligence.
UNTRUE! BASIC
Herbivores have minuscule brains – it does not take a big brain to graze grass and breed.
Thus the vegge brigade is palpably a retrograde step to the herbivore state.
And it shows.
“UNTRUE! BASIC”
Prove it with a link that has proven information to support your outrageous claim.
Heredity
“Heredity”
You claimed in so many words that if someone stopped eating meat their intelligence would drop. Heredity doesn’t prove that point. So try again.
Natural selection, calm down.
I am not convinced that meat eating was as important as you say it is. There is considerable evidence that human’s control of fire, which allowed humans to cook their food, played an extremely important role. With man’s control of fire, humans could get more nutrition out of food (both plant and animal), eat a wider range of types of food, and spend less time chewing. Our physical bodies could change, with smaller teeth and jaws, and smaller digestive apparatus. It was these physical changes that allowed the nutrition we ate go into larger brains.
I think the meat eating explantation was a popular idea years ago, before people began to realize the important role that cooking food played. In fact, it is possible that meat-eating plays some smaller role as well.
The way humans differ from other animals is our control of fire. This gives us extra energy. We should not be surprised if this is what is causing our higher intelligence.
Then there is the digestive tract which, in our case, is adapted to extract nutrients from meat.
And the Spice must flow.
Yes, how else can we fold space?
Among other things. There are a lot of people who eat little meat, including me. A test of the American diet with a “calorie restricted diet” (which is really a vegetarian diet) on a rhesus monkey produced this result:
I wrote up the story in an article in 2014. https://ourfiniteworld.com/2014/09/09/an-energy-related-reason-why-us-healthcare-outcomes-are-awful/
I personally feel like my outcome (and that of my husband) has been a lot more like that of the monkey on the right than that on the left. People who find out our ages are often quite surprised. Of course, the problem is not just the meat, it is the lack of a reasonable mix of nutrients. Also, in US diets, there is an awfully lot of sugar and over-processed wheat, and portions are way too large.
IMHO, you don’t look like either monkey, Gail. In fact, it may surprise you to learn that you don’t look like a monkey at all. If you are spending time comparing yourself to a monkey, it’s your mental, not your physical, health that you ought to be worried about. 😉 I remember your Chinese photos, and I’ve seen people in their late 30s who look in worse shape than you.
Thanks!
I think you’re right Gail. Also, yes, our ancestors ate meat but at a MUCH lower rate than most humans do now. As I understand it, meat was consumed maybe once a week, not up to three times a day as it often is now.
So who was right: The Vorlons or The Shadows?
The Vorlons would be a good choice because in the episode “Interludes and Examinations”, we see one Destroyer group take out Shadow force with not too much of a struggle. They have four and five mile long planet-killers. They are extremely powerful telepaths who live pretty damn near forever.
They bred telepaths which the Shadows lacked until the last. The group mind does not like such ability in individuals.
Our own history favors The Shadows!
The western industrialized world, dependent on oil imports (especially after U.S oil production peaked in 1970) haven’t been able to take on the battle against OPEC on the supply side… and that forces the west to fight on the demand side.
The global warming policy could perhaps have more to do with trying to suppress the demand for oil and the oil price than it has to do with global warming.
The out-sourcing of industrialized production of western brands, with western technology, based on western patents, built with western financing, seems to have had to same aim: to suppress the price of oil by moving the production to low wage nations which also lead to stagnated wages in the west which has put downward pressure on demand for oil.
Are you associated with an AI project?
Just curious.
No. I’m a vegetarian. 🙂
You’re showing a lot of promise.
The rapid ramping up of coal has, in a sense, been a huge benefit to the world economy as well (if you ignore pollution issues and climate change). As long as consumption of coal was rising, consumption of oil didn’t need to rise nearly as much. Also, the lower price of coal helped offset the higher price of oil.
“The rapid ramping up of coal has, in a sense, been a huge benefit to the world economy as well (if you ignore pollution issues and climate change). ”
Climate change/sea level rise has great economic costs. Pollution has health care costs.
So I see our predicament as two-fold (as that Nate Hagens clip Don posted dwells on.):
1) Fossil fuels have long term economic detriments and short-term economic advantages.
2) A lot of the economic downside could be avoided by being careful and guarding against stupid stuff.
Intuitively, I think we have to rely on coal for many things in the foreseeable future. But coal is too dirty to turn it over to the market. Coal must be deployed as sparingly as humanly possible, and used only for the common good.
For Artleads
Your criticism that some of my comments don’t pay enough attention to intuition. Here is some neuroscientist thinking on the subject of the specialization of the brain hemispheres and what it means. The article is a review of his book. Then follows a link to an interview….Don Stewart
our divided brains
OUR WAY OF ATTENDING CHANGES THE WORLD
We’re going to begin with the work of a man who was so put off by academia’s dissection of poems in order to ascertain their meaning — an experience that was physically painful for him — that he left his English literature studies to become a doctor and a psychiatrist in order to better understand how our brains allow us to both hear the symphony of endless meanings in a poem and to dismember it to understand it. Twenty years of subsequent research underlie Iain McGilchrist’s eloquent exploration of the two hemispheres in The Master and His Emissary: The Divided Brain and the Making of the Western World. This was a brave undertaking when we consider the checkered past of beliefs about the two halves of our brains. For a while, we talked about what the right and left each do — the left is rational, the right creative, for example. Then we found that both hemispheres fire for everything, so we began to wonder if there was any significant difference between the two. With Iain’s work, we are invited to look at the hemispheres through a different lens. Instead of asking what each does, he encourages us to inquire about how each attends to the world and how in that attending the world is changed.
In a very small and incomplete nutshell, when we attend from the right, we experience the world of relationships as it is emerging in this moment. We attend to the space between with open receptivity and far fewer judgments. This is the perspective that allows us to be truly present with one another in ways that are profoundly supportive of the health of both people and society as a whole. This way of seeing is the basis for parents and children securely attaching, and for each of us to feel seen and held in the midst of joy and suffering. It is also foundational for the sense of meaning that arises when we are connected with one another. Our right-hemisphere way of perceiving is comfortable with paradox and can embrace many different viewpoints at once, although at times it may feel tentative, uncertain, and unsettled as it tunes in to the emerging moment.
The left hemisphere’s way of attending is entirely different. It is less engaged with current experience and more intent on taking what has already been learned, making itstatic, taking it apart, and reassembling it into systems. It tends toward judgments and has no felt sense of being in relationship with others. Without a felt sense of “we,” the left focuses more on tasks and behaviors, creating algorithms and, in the process, losing touch with what is individual and unique.
We can easily sample these two ways of experiencing by attending to our bodies from these different perspectives. Our left brain regards the body as an object to be run around the block and fed certain foods in order to look or feel a certain way. In those moments, it as though we are standing back and viewing our bodies as separate entities, judging them according to accepted criteria, and seeking to control and improve them. The right brain engages in a different kind of relationship with the body, listening to its language— which is sensation—as it emerges in this moment. In the diffuse and tentative way that is characteristic of the right, we may sense when it is time to stop exercising, when sleep is being requested, and even what foods the body needs right now. Instead of stepping apart, we step into our bodies as we would into a friendship. Let’s see if we can move back and forth between the two ways of attending. Then we might also sense how these two experiences would literally foster different life experiences for us, and by extension for the culture at large.
It would be easy to make the left hemisphere the bad guy, but that is not the point. Neither hemisphere does well alone. For all the isolation, deadness, and rigidity that the left offers when cut off from the right, sometimes our right hemisphere is so filled with pain, fear, and overwhelm that when it is dominant, life is chaos. Even with a fairly healthy right, its focus on emergence leaves us without an anchor for functioning from day to day. As with so much else we are learning from neuroscience research, the relationship between the hemispheres is all-important. When the right provides the vision and the left creates the systems to manifest that vision, we are on solid ground for long-term sustainable living. For example, the right is able to see and feel the strain on the environment caused by our current practices, while the left is skilled at developing processes to alter this potentially disastrous path—when, as Iain says, the right is the master and the left is the emissary (no gender reference intended). Right now, research from a number of sources suggests that about 75 percent of us are living in a left-centric way. However, the potential to shift toward whole-brain living is always there. In every area, we will see that our vulnerabilities are accompanied by inherent capacities that can lead toward health when they receive the support they need.
There seems to be much value in looking at our experience through this lens. Iain may be providing us with an opportunity to consider how we each might have a role
to play in the survival of this culture and the world as a whole. I have found that as I deepen into what he is offering, I become more aware when I have moved into disconnection and can more easily find the roadway back toward relational living.
One question he raises but doesn’t answer is how we might strengthen the master and emissary relationship so that we move toward fulfilling, meaningful, sustainable lives as individuals and societies. What if we were all part of communities dedicated to deep listening and support for one another so that our wounds can be held and integrated rather than buried and then acted out in ways that hurt each other? What if we were then able to feed our always-hungry left hemispheres with wisdom drawn from the right hemisphere’s way of seeing the world (something that interpersonal neurobiology offers in abundance)? Might we then be able to offer true presence to those around
us, with the left hemisphere offering its wisdom and structure in support of the right’s ongoing humane vision? I believe he is saying that it might be possible and that it is certainly essential.
The Master and His Emissary: The Divided Brain and the Making of the Western World (2009). A big book, with abundant research. Worth its weight and worth our attention. The concluding chapter is deeply moving and crucially important.
The Divided Brain and the Search for Meaning (2012). A small ebook that summarizes the big book. A very good place to begin.
An interview:
http://shrinkrapradio.com/340-brain-lateralization-and-western-culture-with-iain-mcgilchrist-md/
NEWSFLASH! – Economies of scale collapse with the end of growth.
That should be enough.
“That should be enough.”
Insufficient information, Captain.
It is important to know the why and how of the change, and whether growth is now negative, and whether the change is cyclic (recession) or structural (depression).
The information that is publicly available will never satisfy your requirements.
So you can do no better… QED
Is this not so Grasshopper??
Otherwise, let us know the date of implosion.
Exactly! I think I have said that we get “dis-economies of lack of scale”.
Gail and Richard
There is another thing which I believe is very important. Nate Hagens touches on it in his Earth Day talk, to which I have posted a link.
I have referred to the current very high production of ‘waste heat’ from our consumption of fossil fuels…making an analogy to the thermodynamic concept of waste heat. So many things that our society does with fossil fuels generate destructive or simply wasted ‘heat’. David Katz, a public health expert from Yale, motto is ‘More years for your life, and more life in your years’. Katz claims that ‘Health is the currency that actually purchases a better quality of life’, and that ‘Health is the only currency that you can actually spend.’
It’s true that money can pay for a hospital stay…but who wants to spend time in a hospital?
And when we look at the terrible results of the industrial food and social system, and perceive just how they are robbing us of our health, we see that we are becoming poorer and poorer. This is a direct result of the ‘waste heat’. If we didn’t have the fossil fuels, we couldn’t afford to be so sick.
Which is not to deny the great advances in terms of communicable diseases and orthopedic surgery and the like. But what we have now is infants being born with fat in their arteries, runaway autoimmune diseases, depression, and brain diseases. A balanced view of the decline of fossil fuels should also take into account the many forms of ‘waste heat’ that the use of fossil fuels facilitate.
Don Stewart
Imagine the world without fossil fuels. Before coke was devolved the forests of England and America’s east coast had been leveled. By now there wouldn’t be a forest left on the entire planet. Climate change has always been in our future. Amazing what men with axes can do.
Good point!
We’ll soon get to see …
Of course the axes that will be left behind by the factories will be far superior to those used in the 17 and 1800’s…. they are made of the finest steel that BAU can provide….
And there will be far more people trying to keep warm and cook food… (at least for awhile)….
Earth will need to be renamed Easter Planet within a few months…
A girlfriend of mine left her course in Medieval Italian Literature as the approach of the academics simply killed it for her. She could quote the works of Dante (especially the amorous parts :)) by heart. In the arts, academia is so often the kiss of death.
It is also possible to encode multiple levels of meaning in poems and tales (in Sufic culture I believe said to be seven levels ) and – this is the point – understand them simultaneously. Not plays of words creating ambiguity, or complex allegories, but multiple levels of meaning.
I have experienced this a few times, it’s an interesting phenomenon. One doesn’t have to tease them out with the intellect, they appear in the mind in a perfectly lucid fashion.
The key to this door is to open a part of one’s receptive mind to the pattern within the tale.
And no, no drugs are required…..
Which doesn’t produce much food.
Xabier
I will post something later…it is a long cut and paste…and I can’t push Gail’s patience too far. Unfortunately, there is no way to link to it.
Don Stewart
Xabier
After considering the alternatives, I suggest that you get a free PDF download. Go to:
https://www.facebook.com/manyvoicesonejourney/posts/10154123920409719
Click on ‘sign up’.
They will promptly send you a PDF which puts many different speakers into perspective. Moving from split brain, to polyvagal theory (how we move between sympathetic and parasympathetic activation), to emotions (laughing rats) and how we don’t need conscious attention to react. (On that latter point, you will also find that McGilchrist demolishes the notion that we need language to formulate ideas). In short, the body knows a lot, with cerebral dissection such as is practiced in many universities, being an appendage which may or may not be useful.
If you don’t want to hear the speakers, I am sure you can unsubscribe. But I think you will find the PDF interesting.
Don Stewart
Don, wonderful article thanks. Up there with Julian Jaynes The Origin of Consciousness: in the breakdown of the bicameral mind.
Ed
Late in the interview, he is asked about Julian Jaynes. You may find his answer interesting.
Don Stewart
Ed
Also, you may like to make a note to look at what George Mobus will come out with shortly. He was at an intense discussion of Systems people in Linz, Austria. He said they have some ideas:
‘I don’t know how much my “news” will blow anyone out of the water. As Don points out, no one should hold their breaths waiting for any magic bullets or superpersons to change everything. Perhaps the events I will be discussing come too late to make a major difference for the majority of people in this world. I strongly suspect as much. Nevertheless I feel compelled to push on with SS with the thought that some people will benefit from having a more holistic perspective of how the world works.
I’m awaiting some discussion with colleagues from my Linz trip to verify some possibilities but the bulk of my report is well along.
George’
A ‘systems’ view is very much in line with what McGilchrist describes as the right brain function. Continuing to pursue insane policies is what a left brain can do if left to its own devices.
I will also note McGilchrist’s description in the interview of the evolutionary reason for the split brain (which we share with lots of critters). As I have recently noted, we are not good at multitasking. We need to pay attention. But we can be intently paying attention to getting some at some food (a left brain function) while also scanning the world for threats and opportunities in the background (a right brain function). A creature which could not attend to both functions at the same time would just be lunch. The solution was a split brain with a connection…the corpus collosum. In Mobus’ terms, we need to be able to both perceive at the Systems level and also do the work needed to assemble a tool or effectively garden. But we cannot do both simultaneously because of the information processing limitations which Daniel Levitin describes in The Organized Mind. So we have a split brain. If you think about it, the intensive effort made to capture some prey to eat requires quite an intensive information processing effort, while the background scanning is a low information intensity operation WHILE WE ARE IN PURSUIT. Then, after eating, we revert back to a tribal life where getting along with others becomes very important, and we are more engaged with the right brain.
Don Stewart
Or you could just provide a link to one of the top TED talks …
Don,
While there may be lots that you or I could benefit by changing in our communication, I’m generally pleased to see and read your posts, glad that you can think in such varied ways and with such range. Intuition is far and away my chief way of knowing, but I’m delighted at what I can learn from others who have more of a balance between brain hemispheres than I. Other than that, I value as much brevity as can be mustered, since I’m an extremely slow (one word at a time) reader. 🙂
I had heard of McGilchrist and the interdependence of the two brain hemispheres, but the above clarifies and reminds.
Anthony Peake of England wrote a most entertaining and fascinating book, “Is There Life After Death?” (2006), that gets into all sorts of areas, including the right brain, which he thinks harbours a personality that he calls the Daemon. He manages to include ideas referencing both Groundhog Day and The Matrix and give them a theoretical scientific backing when he goes into depth about DMT, the death experience (the life review that Near Death Experiencers report), epilepsy, migraine, déjà vu, and the subjectivity of time.
His book, “Is There Life After Death?”, is also available as a relatively inexpensive ebook, He originally wanted to call it “Cheating the Ferryman”, but his publisher thought the public would not understand the title. Nonetheless, the title used, “Is There Life After Death?” doesn’t really do justice to the complexity of his ideas. I’m looking forward ot his latest book, “Opening the Doors of Perception”, due out in September of this year.
I’ve also just read a fascinating book by Todd Murphy: “Sacred Pathways: The Brain’s Role in Religious and Mystic Experiences” (2014). Again, it’s inexpensive as a ebook. He goes very deeply into left/right brain, and references some of Michael Persinger’s work in this area, including the famous “God helmet”.
The Great American Credit Collapse
By Bill Bonner, Chairman Bonner and Partners:
Please remember this warning when you go to the ATM to get cash — and there is none.
While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us. Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.
Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage? Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.
The tide went out farther than anyone had ever seen before. Local fishermen headed for high ground immediately. They knew what it meant. But the tourists went out onto the beach looking for shells!
The same thing could happen to the money supply…
There’s Not Enough Physical Money
Here’s how… and why:
It’s almost seems impossible. Hard to imagine. Difficult to understand. But if you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $12.6 trillion as of last month.
But there was just $1.4 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.)
What we use as money today is mostly credit. It exists as zeros and ones in electronic bank accounts. We never see it. Touch it. Feel it. Count it out. Or lose it behind seat cushions.
Banks profit – handsomely – by creating this credit. And as long as banks have sufficient capital, they are happy to create as much credit as we are willing to pay for. After all, it costs the banks almost nothing to create new credit. That’s why we have so much of it.
A monetary system like this has never before existed. And this one has existed only during a time when credit was undergoing an epic expansion. So our monetary system has never been thoroughly tested. How will it hold up in a deep or prolonged credit contraction? Can it survive an extended bear market in bonds or stocks? What would happen if consumer prices were out of control?
Less Than Zero
Our current money system began in 1971. It survived consumer price inflation of almost 14% a year in 1980. But Paul Volcker was already on the job, raising interest rates to bring inflation under control.
And it survived the “credit crunch” of 2008-09. Ben Bernanke dropped the price of credit to almost zero, by slashing short-term interest rates and buying trillions of dollars of government bonds.
But the next crisis could be very different…
Short-term interest rates are already close to zero in the U.S. (and less than zero in the Eurozone, Switzerland, Denmark, and Sweden). And according to a study by McKinsey, the world’s total debt (at least as officially recorded) now stands at $200 trillion – up $57 trillion since 2007. That’s 286% of global GDP… and far in excess of what the real economy can support.
At some point, a debt correction is inevitable. Debt expansions are always – always – followed by debt contractions. There is no other way. Debt cannot increase forever.
And when it happens, ZIRP and QE will not be enough to reverse the process, because they are already running at open throttle.
What then?
More http://wolfstreet.com/2016/05/05/credit-collapse-dollar-panic/
I don’t imagine having a mattress full of USD will be of much use when this hits…
Fast…found this entry by shortonoil….
There is a calculable theoretical maximum price that can be paid for petroleum. It is determined by evaluating the amount of economic activity that a unit of oil can generate. In 2012 that number was $460/barrel. Of course, the probability that this upper limit can ever be reached is invisibly small. Many other factors will affect the ultimate price. Such as, at what point does the debt based currency system collapse. Without growth our present system can not be maintained. The question is then really a matter of, “at what price does growth stop”. How long after that will it be before the economic system has deteriorated to the point that it will no longer be possible to produce petroleum and its products?
Gail Tverberg has estimated that $100/barrel is the maximum that a growing society can tolerate. Looking at the present state of the world’s economy it seems that she is probably not far from the mark. Our analysis indicates that it will probably be in the range of fifteen to twenty years after that when the majority of petroleum production will cease.
shortonoil on Sat, 14th Dec 2013 5:36 pm….about year in a half old…..
http://peakoil.com/consumption/inexpensive-oil-vanishing-at-alarming-rate
So peak debt is a limiting factor….get ready
Vince, I believe Don recently posted a quote from shortonoil revising his estimated time frame, based on new factual infomation that the waste generated in production/use was 38% instead of the lower number he had used in his model previously. His new prediction, I believe, is that the date it will no longer be economically feasible to produce oil is circa end of 2019 — 3 and half years from now! (I don’t think this means that oil won’t actually be produced after that, governments will clearly try to keep it flowing for their “essential” purposes – but mass consumption is going to go bye-bye – things for the ordinary citizen are going to get pretty bad pretty fast, if shortonoil is correct.)
Shortonoil uses a mathematical model based on thermodynamic energy equations, with factual input about historical prices, use, etc. As such, it can’t and doesn’t pretend to capture all possible factors that may enter into how the end game really plays out. However, even given the shortcomings, the model seems “close enough” to be very alarming.
“His new prediction, I believe, is that the date it will no longer be economically feasible to produce oil is circa end of 2019”
I’ve seen short’s info. before and it seems too cut and dry. 2019 is only 3 years off – it just doesn’t seem to make sense. It’s probably similar to when a drug is tested outside the body and it does everything they want it to do, but when tested inside a person it doesn’t do what they want. In other words, theoretically in some isolated context his idea pencils out, but in the real world it will be a lot different. There have been dismal expectations regarding oil since 05, but here we are in 2016 and BAU is still rolling along. I’d email him in December 2019 and ask him how come you can still get a fill up down at the Chevron?
Stilgar
Shortonoil today said that the average well be in a dead state by 2030. There will still be a few producing wells (assuming the infrastructure survives), but oil will no longer be a commercially important product.
Of course, if production is declining at, let’s say, 6 percent per year, then there are all sorts of repercussions which go beyond the Etp model.
In response to a claim that the demand curve is inelastic and price MUST go up as supply goes down, he says (in todays Peak Oil Article on the Ft. McMurray fire):
“Meaning at some point demand will prove inelastic.?”
To answer that you have to define necessity. Food is a necessity, but is sirloin steak a necessity? One can actually survive on corn meal. Transportation is a necessity, but a new Rolls Royce is not. A bicycle can work just as well, or walking. The in-elasticity that you refer to is not a constant, it is a variable. As the depletion cycle goes forward, which it must, that definition will change. As various industries begins to disappear, and people lose their jobs the concept of necessity will change.
As previously mentioned we are now in the cannibalization stage. Assets must now be consumed to continue the production of oil. Oil companies are consuming their reserves to continue pumping oil; equipment is being worn out, and not replaced. They are now picking the easy to reach fruit. As time progresses and more people find their incomes becoming inadequate to supply the necessities, sirloin steak will be replaced with hamburger, then chicken, then eventually corn meal. Some people will always be able to supply their necessities; it is just that it will be what they need; not what they want. The end of the oil age will be the beginning of a whole new understanding of the world around us, and how we fit into it.
Back to me. In short (no pun intended), he thinks that there will be structural changes…whether we want them or not. Based on something he said quite a while ago, I think he also anticipates social disorder. I think the 2019 date came about in a context of ‘when will things fall apart?’ Who knows? Things could fall apart before the elections this fall…as Kunstler thinks.
Don Stewart
Don…in one past post shortonoil stated in order to support the debt based fiat currency financial system we need a growth rate of 3%. Seems we are no where near that mark.
I believe that the minimum 3% growth rate is one that the IMF has come up with for the world economy. We are supposedly at 3.2% now–just above “stall speed.” I noticed that in one chart Chinese GDP growth seemed to make up something close to one-third of that 3.2%. If China’s GDP shrinks much lower, the system stalls.
I don’t change what I say much. I am still saying $100 per barrel is about the maximum.
We have a more or less fixed mix of uses for oil–transportation, lubrication, backup electricity, making pharmaceuticals, etc. People who suggest we can transfer to only high value uses, say an “all pharmaceutical economy,” think the price of oil can rise very high. I think the practicalities say this doesn’t happen.
Korovicz gives a good description of why things like that can’t happen in one of his two major papers, I can’t remember which one, either “Tipping Point – Near-Term Systemic Implications of a Peak in Global Oil Production,” or “Trade-Off: Financial System Supply-Chain Cross Contagion.” I believe he uses the example of cell phones among others. Systems scale up to provide the level of services they do based on the scale of those services, which enables the cost of the system to be borne and spread out among as many users as possible. Cell phone coverage is relatively cheap because there are so many customers. Lose too many customers because customers are losing jobs, and the system can’t be maintained – the cost that would have to be borne by the smaller number of users rapidly becomes unaffordable. In the oil context, there simply aren’t enough customers who can afford $200+ a barrel oil to cover all the costs needed to extract, process and distribute. The implication is that once a certain tipping point is reached, the system crashes spectacularly in a relatively short time period. After a certain point, the fall-off won’t be gradual, but precipitous. In other words,a Seneca Cliff. Whether this is 3 years or 20 years, who knows? Entire economies are already imploding – Greece, countries in the MidEast, and the U.S. and Europe are in decline. Even 20 years is a very short time period and it’s only going to get worse.
With regard to oil, people tend to focus on how much oil can be extracted and at what cost, without considering the processing costs, and think, well, there is still a lot of oil, especially if we can crush demand in third world countries. Refineries already won’t accept some grades of the gunk that comes out of the ground because it is not sufficiently profitable – ror it is too dangerous because of volatile compounds – for them to process. As the quality of “oil” degrades, it will get worse.
Good point!
I agree with Bill Bonner. One thing a person can hoard is physical dollar bills. There may not be much to buy, but those with physical currency will be at an advantage over others, if the economy is operating at all.
I’ve been thinking in some places there are good prospects of getting a future county investing a million dollars, or less, in solar pumps, seeds and so on. This is possible in places where there is superlative food production and wood, if a small town (say up to 10.000 people) decides to hold on together against everything if required
Ohhh, you are, are you? Been thinking….well, our own Fast Eddy has been there, done that several times over….Suppose we’ll have him help you out and give you the lo down on what to expect….I only parts I remember is to stock up plenty with Roundup, tuna cans, toilet paper, and guns and ammo….
https://m.youtube.com/watch?v=_cK608iUYK4
I have been thinking you have a crush on FE. You and him “holed up” in a bunker after the collapse.
No, Its not a crush, I worship him! Fast Eddy is my God, all knowing, wise and almighty leader (sarcasm off). Thanks for the post. Yep, Fast Eddy is the modern Scott Nearing, heheh.
Christian
That would be the equivalent of the monastic communities which were created in the West as Rome fell.
One would have to be ruthless in expelling or killing defective personality types, and they would need to be lead by people of exceptional strength and spirituality (to avoid the dangers inherent in power in an isolated community -the corruption of power. )
If communications fail, such autonomous communities might well have a chance with solar devices acting as only a brief temporary bridge. As economic decline continues, the quality of manufacturing is bound to fall precipitously, so that failure would come very quickly. FE’s solar pump disaster is a lesson to us all…..
One must make do and improvise!
https://m.youtube.com/watch?v=b3hz5804p0k
In post BAU only those that can modify will survive.
FE, what happened to your pump? It’s true it’s not only diesel that’s going rougher
X, I appreciate your ideas. As things are going, I would be surprised people getting out without almost biblical leadership. But perhaps it’s different somwhere else
Solar pv would give time to dig real wells and perhaps relocate a fraction. Some steel buckets are in the list as well, giving also time to reinvent pottery -which is the real target
I should say I cannot understand very much the “lonely survivalist” tune
It’s in Auckland being examined.
By these guys
https://m.youtube.com/watch?v=a97J7j84gWY
When “The Economist” prints….people read….
http://www.economist.com/news/leaders/21698240-it-question-when-not-if-real-trouble-will-hit-china-coming-debt-bust
China’s financial system
The coming debt bust
It is a question of when, not if, real trouble will hit in China
CHINA was right to turn on the credit taps to prop up growth after the global financial crisis. It was wrong not to turn them off again. The country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown
When the debt cycle turns, both asset prices and the real economy will be in for a shock. That won’t be fun for anyone. It is true that China has been fastidious in capping its external liabilities (it is a net creditor). Its dangers are home-made. But the damage from a big Chinese credit blow-up would still be immense. China is the world’s second-biggest economy; its banking sector is the biggest, with assets equivalent to 40% of global GDP. Its stockmarkets, even after last year’s crash, are together worth $6 trillion, second only to America’s. And its bond market, at $7.5 trillion, is the world’s third-biggest and growing fast. A mere 2% devaluation of the yuan last summer sent global stockmarkets crashing; a bigger bust would do far worse. A mild economic slowdown caused trouble for commodity exporters around the world; a hard landing would be painful for all those who benefit from Chinese demand
To help pump up growth, officials have inflated a property bubble. Debt is still expanding twice as fast as the economy
One thing is certain. The longer China delays a reckoning with its problems, the more severe the eventual consequences will be. For a start, it should plan for turmoil
Most important, China must start to curb the relentless rise of debt. The assumption that the government of Xi Jinping will keep bailing out its banks, borrowers and depositors is pervasive—and not just in China itself. It must tolerate more defaults, close failed companies and let growth sag. This will be tough, but it is too late for China to avoid pain. The task now is to avert something far worse
Suggest Gail and others read the full article cheers
Thanks. The article says,
I am sure that calculation is assuming that China is really generating as much GDP growth as they claim to be generating. If not, the ratio is a lot worse.
The big problem is that the world was counting on China’s growth–particularly its debt growth, but also its coal consumption growth–to prop up the world economy. Without China’s lead, there is no one else to really follow. If China reins in its debt growth, there likely will be a huge debt collapse.
In my view, one of the issues with China is that it over-reached on the level on improvement in housing that it could offer to its people. Now, the people cannot really pay for the housing they are in, especially if wages are low enough to compete with low wage countries.
The data can be confusing. China has a very savings rate. At least in part of this is because housing is terribly expensive for people in the city, and “savings” seems to include savings for housing. Another factor in the high savings rate may be the one child family situation, and the lack of children to care for the elderly. If China want’s to give pensions to the elderly, the cost will be terribly high, relative to what young people earn. This is a cost, whether included in savings or taxes. China seems to have a real mess on its hands.
I understand that some of China’s savings is repackaged debt of the many companies that are in trouble. This could be a big problem.
Dear Stefeun
Regarding your reference to Soddy and so forth. We are out of comment space there, so this will have to do.
The economy always works in real time. If I want to move a pile of dirt, I need a bulldozer with fuel and an operator. Whether I am doing it myself, paying with barter, paying with cash, or paying with some sort of IOU. If I have no money and nothing to trade, and I can’t do it myself, I will need to give some sort of IOU. Generally, (excluding governments), I have to put up some sort of collateral. For example, Chesapeake just put up the entire unencumbered part of the company in order to get some cash to continue operating. If I buy a house, I will typically have to make a down payment and then mortgage the house. In effect, the lender owns the house until I actually pay it off. We finess the laws to make the person making the payments the ‘owner’…but if I miss a payment, we find out who the real owner is.
So what does debt actually do? First, it facilitates those who have money investing it in projects started by those who need money. Second, it facilitates those who have money financing the consumption of those who think they don’t have enough money. In both cases, the lender normally expects to earn some interest or take possession of some collateral or garnish a paycheck and thus get paid for the loan of the money. If the loan is to a business which is making a risky investment (such as starting a new restaurant), then there is a very real threat of default. And the laws provide for limited liability, which restricts how much the lender can actually get in the case of default. And thus we get high-yield debt.
So it is true that if I have some bright idea (e.g., start or restaurant or go into the fracking business), the loan DOES accelerate the investment. But it does so by shifting the money from the pockets of the rich to the pockets of those who are relatively poor. So long as the rich can get richer by loaning out their money, why should they get involved in the nasty business of running a restaurant or fracking a well? We used to call them ‘coupon clippers’.
Money, of course, once created, takes on a life of its own and has its own quirks. Suppose, for example, that a company goes public and sells a lot of stock to a gullible public (the Unicorns). The stock price soars, and the company pledges the now higher valued stock in order to acquire Unicorn B and make an ever larger Unicorn Empire. So, in a sense, something has been created out of nothing. But these creation out of nothing schemes tend to collapse somewhere along the way.
We have been seeing a decline in the marginal utility of money. I believe the commonly accepted number is now two dollars of GDP for each additional dollar of debt. The ratio used to be much higher. Is the decline in the ratio a function of money or of some underlying problems in the economy? I think it is a function of the underlying problems in the economy. People can see that borrowing money to start a new business is just not paying off very well. The banks can see that loaning money to people who want to start a new business is not paying off very well. These are real, physical results…although they are measured in money.
What the Central Banks are doing is related to the quirks of money. They can manipulate it in various ways, and even manipulate the stock and bond markets, but, so far, they haven’t shown any very convincing evidence that they can get banks to loan money to what they regard as poor prospects and ordinary citizens to start new businesses in what they regard as a poor environment.
Don Stewart
What? Accepted by whom? The amount of GDP created is always less than the amount of debt–generally a lot less. (Note: edited by Gail)
Gail
I saw an analysis of incremental debt and incremental revenue for corporations somewhere, but I can no longer put my finger on it. In addition, the ZIRP policy is incentivizing corporations to add more debt for things like share buybacks, which distorts relationships. But in very round numbers, in 2015 the GDP of the US was 28 trillion, most of which was generated by corporations. (Government spending…not transfer payments which do not add to GDP…is mostly the military). Corporate debt was 14 trillion. The ratio is about 2 to 1.
If you look at the total economy’s debt and GDP you don’t add anything to GDP (except for the military), but you add a tremendous amount of debt. But the government debt and the consumer debt have nothing much to do with generating GDP. They are just sinks. They are living beyond one’s means. Which will come to an end soon enough.
Many corporations are now adding practically no debt, but are succeeding fabulously in terms of stock prices. The Unicorns and Apple are good examples. At the other extreme have been the oil companies, recently, who have added debt but have no increase in revenues to show for it…even before the oil crash. (Some companies who have plenty of cash, like Apple, have added debt for tax and other purposes…money which they do not need to operate their business.)
Don Stewart
Gail
XOM has 25 billion of debt. They are currently running almost 50 billion dollars of revenue per quarter (down significantly from recent past). The revenue is a pretty good measure of their supply chains’ contribution to GDP (I am assuming a high degree of vertical integration, so not much debt held by others in their supply chain). So their annual revenue would be around 200 billion. Around 8 dollars of GDP per dollar of debt. Of course, they have been a AAA company. A lower rated company would likely have a much lower multiple.
Don Stewart
AAPL Stock Buyback: A Timely $58 Billion Infusion for Apple Inc.
http://investorplace.com/2016/05/aapl-stock-buyback-apple-inc/#.Vyv0WOTTRS0
I see the problem with the analysis you refer to. It relates to incremental debt and incremental revenue for corporations. The ultimate buyers for all of these things are consumers. They have to have debt to buy the stuff as well. Governments come into play as well, with their ever-rising debt to support the system. We could add debt to support the leveraged financial industry as well. So when you pick out one piece of the system and look at it, the result isn’t too bad.
I also figured out where your ideas about debt with collateral came from–back before 1981. The article, Global Economic Slack to End Commodity Rally.
Once the “modern” view of debt came available, it was possible to increase debt levels greatly.
you mean “the amount of GDP created is always less than the amount of debt–“
Somehow Alice’s Red Queen comes to mind – running very hard to stay in the same place, except now the treadmill seems to be slowly accelerating.
You are right–sorry. I can even go back and fix it, if I can find it.
Despise me all you want, but I bring a different perspective here, which is that of the slow burn rather than immediate collapse. You people need to really listen more.
Debt is just a problem. All problems have solutions, of some sort.
This is how you deal with debt:
1) default
2) inflation
3) police state for enforcement
4) propaganda and foodstuffs to keep the workers in line
That’s it. You don’t need anything more. You don’t need volumes of energy, you don’t need progress, you don’t need to dig up more fuels, you don’t need to build up more industrial infrastructure or spaceships to Mars or nuclear power plants. You just need potato chips and hollywood movies.
Just accomplish the above and the debt resolves itself in time.
Without getting into the pros and cons of your recommendation, I’d also add the DESPERATELY URGENT need for a new sense of “normal.”
No dislike here dolph for slow collapse perspective. My view is similar except I say things keep getting worse for most and continue to do so until such time conditions reach a point in which the have not’s rebel on a massive scale. But it’s like I’ve written before, people tend to accept the changes in their lives, even if they are for the worse, ‘IF’ they occur incrementally over time. The best analogy I can give is how we accept what happens in dreams when we sleep at night. Once minute we’re in a car, then in a bus, then on a motorcycle, but we don’t pull over to question it. We accept our reality for what it is even as it changes, and sometimes bemoan what we don’t have or use to have, but as long as there is food and shelter we pretty much accept our circumstances.
As far as debt goes, I see a whole lot of flexibility in how things like that can be dealt with similar to your view. Wealthy bankers and people find ways as needed to tweak things in their favor because the alternative is to disavow their super rich assets and they are not about to do that. So the only question in my mind is how long can the have not’s continue to accept a declining situation (due to declining net energy) without coming unglued? I guess we’ll find out but there’s no sign of it yet.
I think you’re #1 is the most likely pick, Default. That’s what happened in 08/09 but people just kept on going with their lives as they drove past one foreclosure after another. In fact, what sprang forth from that was the vulture’s that scooped up the defaulted properties to make money on later, which I’m sure many did. In fact our neighbors who just sold their house originally bought it at an auction in 2010 and just sold it for a 150k profit. They have gone all in on a restaurant, which I think is crazy, but it’s doing well. They are making money on that too.
I think the harshest reality will be the slow collapse, because the have not’s will feel like how could the have’s be so callous to just watch us suffer as things decline, but that’s what they did in the depression and that’s what they’re doing now. In fact, the wealthy are always trying to position things to their advantage to the disadvantage of the have not’s even in today’s pro-rich environment. Look at the automatic stock purchasing algo’s. Those big stock houses serving the wealthy trade stocks faster than some poor schmuck trying to get ahead.
Hmmmm … No.
Unfortunately debt will not fix itself. I’ll give you that truth that debt is manmade and therefore fixable, but it is also true that ultimately, debt is backed up by violence.
So, yes, theoretically at some point the system could move to a good equilibrium, but that supposes “we” stop doing stupid things.
Just a suggestion: part of the purpose of governments and deficits is to provide common goods and services eg roads and electricity at non-monopolistic fair prices to productive investment. Recently there seems to be moves to sell these shared goods off below market prices, just another stupid thing …
http://www.zerohedge.com/news/2016-05-05/trump-says-if-economy-crashes-can-make-deal-will-renegotiate-debt
That’s a new article about Trump saying he will renegotiate US debt.
Wow! I couldn’t get the video to work, but the article indicates that if the economy crashes, Trump is talking about paying less than 100% on treasury debt, apparently in part to lower the dollar relative to other currencies.
No one else will touch the “economy crash” issue at all, and no one has suggested not repaying the full debt. Admitting that there may be a need to repay debt at less than full value is likely to be shocking to people.
US Creditors may go along with a renegotiation of US debt if the alternative is complete collapse. However, it must be understood that going forward will require more downward renegotiation. There will be no return to prosperity as long as energy remains out of reach.
You are likely right, assuming that we can avoid a complete break in the system.
I am 100% with you… the fuse will burn slowly …. then we will get an explosion at some point
It would be foolish for anyone to proclaim how things may unfold (degrade).
Fast collapse or slow degradation ? either could happen.
I think it’s important that both scenarios get discussed without criticism or choosing sides.
At the moment my take is that things may crash slowly at first and then pick up speed as time passes, but there are many triggers and tipping points which could cascade into a full blown fast crash.
Either scenario can happen. I am in both camps 🙂
Veggie: “Either scenario can happen. I am in both camps :-)”
Quantum attitude.
Slow crash is happening right now. The “BOOM” moment will come when a few companies/banks the size of Lehman implode again and the balance sheet losses set off unrecoverable derivative bombs. This could be imminent when you look at recent corporate profit reductions or losses with companies like Caterpillar, Deutche Bank, and Peabody.
you missed one
7 billion people are on this planet, the vast majority are debtors (they depend on a future of infinite growth to sustain what they owe)
If 6 billion die off, their debts/fuure expctations die with them
! billion survivors don’t have a debr problem because the infrastructure that created it will not exist.
Trump is now the GOP’s nominee for president.
He’s saying that he will end government handouts and put Americans to work in the mines.
Now… how great is that ?
Is it too late to vote for comrade Sanders ?
That Trump situation came to a head this past week when Cruz & Kasich lost in Indiana, then exited from the primary election. Then suddenly the GOP’s worst fears had come true, a loud mouthed non-politician TV reality star celebrity with little if any policies won the nomination. He has a -13% favorability rating while Hillary has a -1%. So by 12 pts he’s got a negative favorability rating.
Not really a surprise Trump got the nod because the country has gotten so into reality TV, it’s a bit like Fahrenheit 451 with people hooked on prescription drugs glued to watching reality TV and their IQ’s drop precipitously to be good, stupid followers. He’s captured their imagination but they are the same people that voted for George W. because they thought he would be a fun person to have a beer with. The thing is it’s a long way until the general election and if the economy goes south Trump may actually have a chance, because he is viewed as better on the economy.
How silly is this. I have already posted extensive comments from nuclear experts on this issue – I suspect Duncan is not even an expert because he has stated that nuclear power plants cannot be shut down – that is just plain wrong
R. Duncan asked for suggestions a few days back, and this was what I responded, whence I have not heard from him. So, FWIW, I’m posting my questions here again:
“Asking me for ideas about nuclear crisis would be like asking a four year old. While some artists are good at science (even though most are probably not), I’m not one of them. Long story behind that which I won’t go into. But the average person is no better informed than I, and if I can learn the very basics, so might the general public.
I don’t know the first thing about the science, so I’ll say what I vaguely think is the case, while leaving blank the many areas where I lack even that vague sense.
1) Nuclear rods are made from or with uranium and ? that react together to make heat.
2) The heat is relayed somewhere to make electricity.
3) The rods get so hot that they will explode unless constantly cooled by water.
4) They are cooled (when?) (how?) in cooling ponds.
5) The water in cooling ponds become nuclear contaminated (how soon/long?).
6) The contaminated water must be relayed elsewhere for long-term storage.
7) “Spent” fuel rods remain radioactive and must also be stored “safely.”
I read in the previous FW article that contaminated compost from Fukushima was removed and used elsewhere to grow something (can’t recall what). That something was tested and found to have “tolerable” levels of radiation.
Long prior to reading this, I got the impression that bacteria could in some cases eat and thus neutralize radiation.
QUESTIONS:
1) Can bacteria in some cases–and if so, which?–clean up radioactive materials?
2) If they can, why are they not more widely used for this purpose?
If you’ve read this far, thanks for your patience!”
Dear Artleads;
You are thinking! Congratulations.
You are thinking so well and so hard that I can say, “You are wrong.” As opposed to “Not Even Wrong”. http://www.math.columbia.edu/~woit/wordpress/?p=271 🙂
Bacteria eat stuff that is radioactive and then they become radioactive and are eaten by something and that something becomes radioactive, etc. The radioactive elements are just moved around. Bacteria can break down poisonous chemicals and are used for that purpose extensively. But, you cannot break an element down – not without nuclear fission which of course is the cause of the problem.
I would say I was not even wrong, for I did not know or pretend t know the answer.
As to thinking…I try. Nothing could be more thoughtless than allowing and enabling the destruction of planetary life due to the mindless deployment of nuclear energy. (I’m not saying that nuclear energy is bad, just way too dangerous for the kind of mismanagement regime it is subject to.) Maybe the proponents of nuclear energy should have done more thinking.
So, more thinking (but not thinking so much as admission of the ignorance which applies to the vast majority of humans). Ergo, more questions:
1) What is the process that enables nuclear radiation to dissipate over long eons?
2) Can a similar dissipation be done more quickly through bacterial consumption of contamination? (I’m not suggesting this can be done during the span even of my grandchildren’s lifetimes. I simply don’t know whether or how such dissipation might work.)
Your question confuses atomic structures with molecules and larger structures.
Nuclear fission – by definition – happens within the nucleus of an atom, and it’s best to think of these events as random and pseudounpredictable.
Maybe the notion of the “atomic clock” would suggest that it is really hard to change these processes.
Thanks Richard. I guess you’re explaining that atomic means sub-atomic in scale, So what is the process by which radioactivity gets reduced in, say, a million years?
And with appreciation for your patience, one last question: If (as someone said above) bacteria can injest radioactive matter by then becoming radioactive themselves, does this mean:
a) that radioactivity can be transferred from one substance to another?
b) that, if so, a transferred-to substance can be easier to store than the transferred-from one?
I’ll reply separately to your second question.
The “radioactivity process” is kinda difficult to fully explain, but any writeup on nuclear reactors should cover what you have asked.
regarding your question about transferring radioactivity, it’s a bit like some health issues where, allegedly, catching a particular virus might lead to a greater risk of cancer later in life.
That’s not a very good comparison, because the radioactivity happens at much smaller scale internally to the atoms, but it may be good enough.
“The “radioactivity process” is kinda difficult to fully explain, but any writeup on nuclear reactors should cover what you have asked.”
I figured it would be mystifying to read something so complex and alien, but I’ll give it a look. Thanks!
To clear up confusion, there are ways plants can decontaminate radioactive soil.
http://www.naturalnews.com/032747_phytoremediation_radiation.html
The plants do not eliminate the radioactivity, they just remove it from the soil and concentrate it into themselves. Later the plants can be carefully burned, leaving the radiation concentrated in the ash. The ash can be stored in a small space,for yeas, decades, or millennial, while the large area of soil can be used for farming.
🙂 If this is for Dummies, what would the non dummy explanation be like!!!!!
http://www.dummies.com/how-to/content/the-process-of-natural-radioactive-decay.html
Ordinary people would need a year’s course in nuclear-relevant science to have the faintest notion what these terms mean. Each term could take a week of uninterrupted study to understand. By the time you understood the whole subject you’d be in the afterlife. So what’s to be done?
Nuclear radiation threatens all life, but most of us are working stupid jobs from 9-5 or watching TV. The system we live in isn’t designed for understanding the least bit this existential threat to our lives. So whose fault is it? My fault that I won’t entirely reorient my life to study a subject that is wildly unfamiliar and over complicated?
If I had my way, no one would be like me, Everyone would know what they needed to know to contribute to a living world. But now the epistemological status quo is totally nuts! Why blame people for non involvement? What can we expect of them in a system like this?
That said, I’ll keep pecking away now and then, here and there, on the subject of nuclear radiation.
Or you could just read this research paper that is easy enough format for even the bureaucrats in the US government who commissioned it as they wanted to understand what threat a sabotaged nuclear fuel pond posed to the country.
Of course the issue at hand is not sabotage – nor is it a single pond — the upcoming scenario involves 4000+ ponds that will be abandoned… there will be no efforts to bring them under control because there will be no way to manage them when the grid is gone.
That is of course a far grimmer outcome than the one envisioned in this paper —- but it does give one an understanding of how enormous the problem is …. it does demonstrate how this could easily be an extinction event…. the 5th horse of the apocalypse….
Enjoy!
A typical 1 GWe PWR core contains about 80 t fuels. Each year about one third of the core fuel is discharged into the pool. A pool with 15 year storage capacity will hold about 400 t spent fuel.
To estimate the Cs-137 inventory in the pool, for example, we assume the Cs137 inventory at shutdown is about 0.1 MCi/tU with a burn-up of 50,000 MWt-day/tU, thus the pool with 400 t of ten year old SNF would hold about 33 MCi Cs-137. [7]
Assuming a 50-100% Cs137 release during a spent fuel fire, [8] the consequence of the Cs-137 exceed those of the Chernobyl accident 8-17 times (2MCi release from Chernobyl). Based on the wedge model, the contaminated land areas can be estimated. [9] For example, for a scenario of a 50% Cs-137 release from a 400 t SNF pool, about 95,000 km² (as far as 1,350 km) would be contaminated above 15 Ci/km² (as compared to 10,000 km² contaminated area above 15 Ci/km² at Chernobyl).
http://belfercenter.hks.harvard.edu/publication/364/radiological_terrorism.html
Interguru,
Your explanation of “bioremediation” of nuclear contamination is as clear as I’ve seen.
So my simpleton takeaway is this:
– Plants can consume radioactive stuff, while irradiating themselves.
– Irradiated plants can be safely burned leaving ash that can be economically and safely stored.
– Still to be resolved is whether (or the extent and facility with which) fungi and bacteria can do the same thing as “regular” plants.
– Still unclear is the extent to which (if at all significant) is the study and organization of such remediation.
Not consume, just concentrate.
Richard Duncan is also the name of the olduvai.ca guy, and a crash economist appears with this name as well (possibly the same person). Is it “our” RD?
He didn’t said npps cannot be shut down -he mentioned scraming-, he rather said they cannot be safely shut down in the absence of the grid, because diesel back up will last just a few days, as we know. I added that multipliying diesel stocks to match the required period would necessitate a high quality diesel and some additive tablets, or perhaps something like solar panels.
Artleads, don’t get stuck with this issue. Some stuff must me actively cooled down (with water) for a range of time up to 4 years, it seems, in order to avoid explosions and fires. The bacterias and compost story is fresh new and only intended to provide safe crops (it does not make dissappear radiation from the soil). But we are rather talking about precluding contamination.
What can be done? In the US there are some relevant characters signing this:
http://highfrontier.org/wp-content/uploads/2015/05/Letter-to-President-Obama-FINAL-Updated-May-14th-2015.pdf
“The Commission estimated a one-time cost of $2 billion for EMP protection of the national electric grid, which is about what the U.S. gives to Pakistan every year in foreign aid”
It seems PTB are behaving sadistically reg this issue
“It seems PTB are behaving sadistically reg this issue”
Yes, because bad things can’t happen to the rich or powerful. Their whole lives have proved that to them.
Perhaps installations will be secured at a proper time, and they still manage to get out of the mess. Or may be to depress anyone they issue -as one of the last info before tv final blackout- that installations are blowing up, while this is not true. I suppose that if they aren’t to kill excess population they would try to disempower it as much as possible
I met Richard Duncan of Olduvai fame, several years ago, at an ASPO-USA meeting. Unless I am remembering things wrong, he was very elderly then. His son was accompanying him, and doing the driving. I expect that this is a different Richard Duncan.
Very impressive list of signatories to that linked POTUS letter.
I think it’s been recommended somewhere to the DOE that tax credits be given to residents nearby to reactors who can store diesel for emergencies such as mentioned. I understand that the appropriate grade of diesel can last about a year. This would involve scheduled replacement of the stored diesel to ensure that no stock was older than a year.
It needs to be clarified whether of not even the slightest reduction in radioactivity from a contaminated substance/material can’t be achieved with bacteria under specified circumstances. This is very important. I imagine that making bacteria work for us is an effective use of energy.
How fast can bacteria be made? where would it be stored? how long can it be stored?
I don’t think it has any chance of working.
However, Diesel can be stored for many years.
I have acquaintances who have used 10 year old diesel in generators with no issues. While that is an extreme case, I can vouch that 5 year old diesel, if stored properly, presents no problem. Secondly, most emergency generators for critical applications have a fuel replenishment program where fuel is removed and exchanged every year or two.
Veggie, I replied to you (accidentally) under Greg’s post.
“Secondly, most emergency generators for critical applications have a fuel replenishment program where fuel is removed and exchanged every year or two.”
I get my information from someone working on the issue within DOE. He was either being very nice or was genuinely grateful for my recommendation to store and scheduled replacement of diesel fuel. He definitely didn’t give the impression that what you say is the case. The maintenance regime for nukes sounded far more casual than you may imagine.
Regime is casual, but a good diesel can last 5 years if properly disposed. Main problem is the amount
You can’t change the laws of physics. Radioactivity decays at known rates. Radioactivity isn’t a chemical or chemical process that can be altered with bacteria. I think the only way to alter an elements rate of decay it to fuse it or split is with additional nuclear reactions.
“How fast can bacteria be made? where would it be stored? how long can it be stored?”
Why can’t it be stored in small amounts underground in millions of places? Each site marked with a hard-to-move post with a scull and bones image on it?
Why/how does it decay?
True. In fact at some moment in history it was proposed to deal with hlw detonating it subsurface. Wonder if we didn’t took the wrong path
Nowhere in the video it is said that bacteria vaporize radioactivity, the point is rather that bacteria and some funghi are known to be prone to ingest it. In fact, there are a couple of species of funghi living on the crippled walls of the Chernobyl core -these ones do really nourish from radiation
So, radioactive particles stay in the ground, within microbes, and don’t get into the plants
It’s bizarre how microbes react to radiation. Some of them are killed, as funghi that degradated fallen leaves in Chernobyl, while some others… Bacteria like to mutate anyway, right? Wonder if these guys can make disappear all those leaves
The only link I ever heard about between bacteria and radioactivity was about Desulforidis Audax Viator, a very special species that lives very deep underground and uses radioactivity from surrounding granites to get energy from groundwater.
Their metabolism is disconnected from surface ecologies fed by the sun’s light (!!).
Additionally, it would be a separate ecosystem comprising only one species, itself.
https://www.sciencedaily.com/releases/2006/10/061019192814.htm
One has to admit that life is able to find unprobable paths, sometimes..
Amazing stuff, but nothing for us here, I’m afraid:
“First, water molecules — H2O — are split by radioactive particles. The result is hydrogen, oxygen and hydrogen peroxide. The latter two substances then attack the mineral pyrite (also known as iron sulfide or “fool’s gold”), making sulfate through a process called oxidation.
The bacteria then uses the hydrogen to turn the sulfate back to sulfide, a process known as reduction. In doing so, it captures some of the energy in the sulfate’s chemical bonds, which it uses to make ATP, the molecule that is the universal coin of energy exchange in living things.
Radiation then splits more water, producing more hydrogen peroxide, which turns the sulfide back to sulfate, effectively “recharging the battery.”
The deep underground water where the bacteria live is loaded with these nutrients. But the exceedingly torpid organisms are using only a fraction — perhaps as little as one-billionth — of what is available to them. They live 45 to 300 years between cell divisions; in comparison, some strains of E. coli bacteria can divide every 20 minutes under ideal conditions.”
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/19/AR2006101901671_2.html
Christian and Stefeun,
Thanks for weighing in on. I had to check on some of the terms:
“Difference between Bacteria and Microorganisms
Key Difference: Bacteria (singular: bacterium) are single celled micro-organisms that belong to the group of Prokaryotics. Microorganism refers to any of the organisms that can only be seen under a microscope. Bacteria are also microorganisms.”
sTEFEUN,
wHY DO YOU SAY THERE IS NOTHING FOR US HERE? (Oops. Cap lock error!) Why can’t radioactive matter be injected down that far so that a specific microorganism can break it down? From what you report, there is a complicated repeating cycle going on, which recommends a lot of study. But if very small amounts of radioactive are used at a time, might any possible danger to organisms not be manageable (worth the risk)?
Artleads,
It’s so different from anything we’re used to…
After all, maybe the biggest risk is to lose your investment, which will happen anyway. If so, why not try? Ask Elon Musk?
300 years… that’s slow burning
These guys take a permanent bath of their particular sun
https://en.wikipedia.org/wiki/Radiotrophic_fungus
Stepheun,
“It’s so different from anything we’re used to…”
This made me smile. My first thought was we’re not used to going extinct either. Seriously, though, I’m only trying to think outside the box. 🙂
Artleads,
That’ll be my first extinction too!
Lol
Well, perhaps bacteria can reduce soil radioactivity (too good to believe it), not by means of stabilizing ingested decaying nuclei but, say, of binding them with some bacterial material, which, for exemple, could make them more easily vented away (the experiment had a good dose of venting); perhaps this could happen when those cells die and dillute. I mean, there must be an explanation
There is no mention of strontium in composting. I suppose they have to fix that bug before getting industrial scale
We could always ask the Martians how they made the pipe….
Freight Rail Traffic Plunges: Haunting Pictures of Transportation Recession
292 Union Pacific engines idled in Arizona Desert
Total US rail traffic in April plunged 11.8% from a year ago, the Association of American Railroads reported today. Carloads of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to 944,339 units.
The coal industry is in a horrible condition and cannot compete with US natural gas at current prices. Coal-fired power plants are being retired. Demand for steam coal is plunging. Major US coal miners – even the largest one – are now bankrupt. So in April, carloads of coal plummeted 40% from the already beaten-down levels a year ago. The AAR report:
Rail coal traffic continues to suffer due to low natural gas prices and high coal stockpiles at power plants. Coal accounted for just 26% of non-intermodal rail traffic for US railroads in April 2016, down from 36% in April 2015 and 45% as recently as late 2011.
Only five of the 20 commodity categories saw gains. Of the decliners, coal was the biggest. But petroleum products also plunged 25%, and grain mill products dropped 7%. Even without coal, carloads were down 3% year-over-year.
But it’s not just coal. In April, loads of containers and trailers fell 7.5% year-over-year to 1,028,460 intermodal units. They transport goods for retailers and wholesalers. They haul parts, components, and assemblies for manufacturers. They haul imported goods from ports and borders to different destinations across the country, and they haul goods to be exported to the ports and borders. They’re a measure of the real economy.
More http://wolfstreet.com/2016/05/04/freight-rail-traffic-plunges-aar-april-report-photos-idled-engines-transportation-recession/
In case anyone thought that the slowdown was only in the USA. BTW a 43.5% load factor??? :
http://www.zerohedge.com/news/2016-05-04/air-freight-volumes-across-largest-global-market-tumble-15-first-quarter
“For years, our biggest lament and recurring confirmation that unorthodox monetary policies are simply not working, has been tracking global trade – the lifeblood of any properly functioning global economy – which has not only failed to reach its pre-crisis growth rates, but especially over the past 2 years, has seen slowing dramatically. The latest evidence of this slowdown came earlier today when the International Air Transport Association (IATA) reported that demand for global air freight, measured in freight tonne kilometres, fell another 2% in March on subdued growth in world trade.”
“The reason for ongoing deterioration in trade – lack of demand: industry-wide capacity has continued to grow strongly as demand has fallen, keeping intense pressure on yields. Available capacity rose 6.9% in the month, meaning that load factors – how full planes are – fell by 4.0 percentage points to 43.5%.”
I agree–a load factor of 43.6% worldwide for freight sounds terribly low. For Africa, it looks like that load factor for the first three months of the year was 24.6%, if I am reading this correctly. Not a large market, but pretty absurd. I suppose that there could be some seasonality, but even with that a person would expect a shake out amount air freight carriers. That is besides the other worldwide problems that the lack of freight is suggesting.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/04/20/US-railroads-Union-Pacific-engines-idled-2016-05-031_0.jpg
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/04/20/US-railroads-Union-Pacific-engines-idled-2016-05-032_0.png
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/04/20/US-railroads-Union-Pacific-engines-idled-2016-05-03-3_1.png
Not a pretty situation. Most businesses, including railroads, have a lot of fixed costs. They cannot handle a slowdown well.
http://www.voanews.com/content/scientists-say-oceans-are-rapidly-losing-oxygen/3313942.html
“Fish need oxygen to breathe as much humans do, and two new reports say there is less and less of it in some of the world’s oceans.
Cold water absorbs and holds more oxygen than warm water, so as the water continues to warm the report predicts nature’s ability to replenish the loss may become overwhelmed by early 2030s.
Scientists warn even if we curb the present level of CO2 emissions, the damage to marine ecosystems may already have been made irreversible.”
In a sense history repeats. In this case over a very long period of time since the earlier epoch events depleted the oceans of oxygen via algae blooms, absorbed the CO2, the seas became anoxic, the algae died and sank, then later through silt build up and tech-tonic plate movement covered the algae, compressed it heating it up and converting it to fossil fuels. It’s possible we are generating the perfect conditions for production of FF which if some of us survive the coming bottleneck can use in the far flung future. What goes around comes around. Will people far into the future be just as reckless and greedy to use FF? It can be counted on.
Yes, Stiglar, History is repeating itself and indeed what goes around, comes around.
Read or listen to scientist Dr Peter Ward, who has written numerous books on the Earths past and the rile CO2 plays as a determining factor.
https://m.youtube.com/watch?v=AgMMUC6Trrw
The Cosmos needs a rest…..and between BAU and the Cosmos…we already know the outcome
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A 4 day long mini holyday. At least there is something useful that comes with Christianity… and not just faith and strange rituals like vampirism.
Jesus said: Drink this vine, it’s my blood.
I’m trying a nice Italian vine… someone has to support Italy.
The song that made Fast Eddy rich…
https://youtu.be/XjBwAYIxUso
id guess helicopter money is coming, simply because the CBs wont give up until they try everything, maybe they will try to inflate away the debt as the lesser evil. btw I use the term helicopter money to mean that money will be created without issuing debt and Id like to think it will be handed out equally to all citizens.
Money is debt.
yes!
but a debt of what? we are not on a gold standard.
The promise underlying money of any sort (including gold coins) is that the money will be exchangeable for goods needed by the recipient in the future, such as food and housing. No one wants paper bills as such. Not too many people have use for gold coins, either. What they want will vary, but the hidden assumption is that BAU will continue, so that the recipient can buy whatever he or she wants.
confidence has a strong claim to being the key- although IMO other emotions can be more important.
Anyway, if confidence is key is it debatable whether a currency backed by $21 trillion debt holds more confidence than a currency where the issuers just print more when needed?
Christopher,
I tend to agree that “confidence” is not the proper term, or concept, here.
The matter of fact is that people don’t agree upon any other alternative (big scale, that is), while current system allows one single currency for all purposes, making it easy for financial elites to skim their profits from any kind of transaction.
An “ecosystem of currencies”, each one dedicated to preferential purpose(s), would render such a racket much more difficult to run.
An ecosystem of currencies would be impossible without computer backup and the use of computerized calculations for every input. Such a system would be possible only as long as BAU exists. Then it would collapse, bringing down the whole financial system. We need to be thinking simpler, not more complex, in my opinion–something that can easily be operated without computers.
There are many local currencies that seem to work fairly well.
Not sure that all of them need a complex computer system for their management. I think their philosophy is also to keep things as simple as possible, accessible to everyone, not a handful of technocrats. Heard things like “give control of currency back to the people who are using it”.
That being said, I’m not convinced it can work either, but more for structural or political or time-reated reasons, than for practical ones you mention (that still can make problems, though).
I think our problem in the future will be that all currencies will become local. It will not be possible to do international transactions with them. Without international transactions, our current way of life pretty much comes to a halt. We can buy used goods that someone wants to sell, locally. Or temporarily there may be a few things we can buy. But without our current international trade system, we soon run short of spare parts. Debt growth goes to zero. Employment goes to close to zero. The system collapses.
You’re right, Gail.
We trapped ourselves with globalisation.
The question isn’t really about local currencies, rather wether our current system, aka BAU, can survive (and grow!), or not.
It’s an all-or-nothing situation, there’s no in-between option, no BAU Light.
And -you seem to be right once more- I can’t see how we could ramp up implémentation of the former (local currencies, that could be interconnected in a sort of network) without wrecking the latter (BAU) in the very early stages.
Gold is money, everything else is debt; JP Morgan.
The counterparties in the case of helicopter money is future consumption and inflation, a debt in the future that has to be paid.. I wouldn’t call it ‘money’, but currency instead.
I think that when the end of our current economic system is nigh, helicopter money might extend the party a few more months. There is no long term “solution”. I do think that helicopter money to the general public will be a last resort to kick the can. If and when that happens I would expect collapse to be not very far off.
Yes, helicopter money is adding insult to injury, with a lifespan of, maybe 2 years?
Governments should pro actively promote local/regional trade. Gold, silver and copper coins as legal tender, taxation for maintaining the grid. Providing local energy through wind and solar. We have to cut at least 70% of consumption and production to survive.
The highly leveraged system that was build on cheap energy is over.
We can’t solve this with more of the same. Period. 70% haircut or thrown back into the stone age, that’s the choice we have imho.
You are probably right.