Oops! The economy is like a self-driving car

Back in 1776, Adam Smith talked about the “invisible hand” of the economy. Investopedia explains how the invisible hand works as, “In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.”

We talk and act today as if governments and economic policy are what make the economy behave as it does. Unfortunately, Adam Smith was right; there is an invisible hand guiding the economy. Today we know that there is a physics reason for why the economy acts as it does: the economy is a dissipative structure–something we will talk more about later.  First, let’s talk about how the economy really operates.

Our Economy Is Like a Self-Driving Car: Wages of Non-Elite Workers Are the Engine

Workers make goods and provide services. Non-elite workers–that is, workers without advanced education or supervisory responsibilities–play a special role, because there are so many of them. The economy can grow (just like a self-driving car can move forward) (1) if workers can make an increasing quantity of goods and services each year, and (2) if non-elite workers can afford to buy the goods that are being produced. If these workers find fewer jobs available, or if they don’t pay sufficiently well, it is as if the engine of the self-driving car is no longer working. The car could just as well fall apart into 1,000 pieces in the driveway.

If the wages of non-elite workers are too low, they cannot afford to pay very much in taxes, so governments are adversely affected. They also cannot afford to buy capital goods such as vehicles and homes. Thus, depressed wages of non-elite workers adversely affect both businesses and governments. If these non-elite workers are getting paid well, the “make/buy loop” is closed: the people whose labor creates fairly ordinary goods and services can also afford to buy those goods and services.

Recurring Needs of Car/Economy

The economy, like a car, has recurring needs, analogous to monthly lease payments, insurance payments, and maintenance costs. These would include payments for a variety of support services, including the following:

  • Government programs, including payments to the elderly and unemployed
  • Higher education programs
  • Healthcare

Needless to say, the above services tend to keep rising in cost, whether or not the wages of non-elite workers keep rising to keep up with these costs.

The economy also needs to purchase a portfolio of goods on a very regular basis (weekly or monthly), or it cannot operate. These include:

  • Fresh water
  • Food of many different types, including vegetables, fruits, and grains
  • Energy products of many types, such as oil, coal, natural gas, and uranium. These needs include many subtypes suited to particular refineries or electric power plants.
  • Minerals of many types, including copper, iron, lithium, and many others

Some of these goods are needed directly by the workers in the economy. Other goods are needed to make and operate the “tools” used by the workers. It is the growing use of tools that allows workers to keep becoming more productive–produce the rising quantity of goods and services that is needed to keep the economy growing. These tools are only possible through the use of energy products and other minerals of many kinds.

I have likened the necessary portfolio of goods the economy needs to ingredients in a recipe, or to chemicals needed for a particular experiment. If one of the “ingredients” is not available–probably because of prices that are too high for consumers or too low for producers–the economy needs to “make a smaller batch.” We saw this happen in the Great Recession of 2007 to 2009. Figure 1 shows that the use of several types of energy products, plus raw steel, shrank back at exactly the same time. In fact, the recent trend in coal and raw steel suggests another contraction may be ahead.

Figure 1. World Product Consumption, indexed to the year 2000, for selected products. Raw Steel based on World USGS data; other amounts based of BP Statistical Review of World Energy 2016 data.

Figure 1. World Product Consumption, indexed to the year 2000, for selected products. Raw Steel based on World USGS data; other amounts based of BP Statistical Review of World Energy 2016 data.

The Economy Re-Optimizes When Things Go Wrong 

If you have a Global Positioning System (GPS) in your car to give you driving directions, you know that whenever you make a wrong turn, it recalculates and gives you new directions to get you back on course. The economy works in much the same way. Let’s look at an example: 

Back in early 2014, I showed this graph from a presentation given by Steve Kopits. It shows that the cost of oil and gas extraction suddenly started on an upward trend, about the year 1999. Instead of costs rising at 0.9% per year, costs suddenly started to rise by an average of 10.9% per year.

Figure 1. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is "Compound Annual Growth Rate."

Figure 2. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is “Compound Annual Growth Rate.”

When costs were rising by only 0.9% per year, it was relatively easy for oil producers to offset the cost increases by efficiency gains. Once costs started rising much more quickly, it was a sign that we had in some sense “run out” of new fields of easy-to-extract oil and gas. Instead, oil companies were forced to start accessing fields with much more expensive-to-produce oil and gas, if they wanted to replace depleting fields with new fields. There would soon be a mismatch between wages (which generally don’t rise very much) and the cost of goods made with oil, such as food grown using oil products.

Did the invisible hand sit idly by and let business as usual continue, despite this big rise in the cost of extraction of oil from new fields? I would argue that it did not. It was clear to business people around the world that there was a large amount of coal in China and India that had been bypassed because these countries had not yet become industrialized. This coal would provide a much cheaper source of energy than the oil, especially if the cost of oil appeared likely to rise. Furthermore, wages in these countries were lower as well.

The economy took the opportunity to re-optimize. Part of this re-optimization can be seen in Figure 1, shown earlier in this post. It shows that world coal supply has grown rapidly since 2000, while oil supply has grown quite slowly.

Figure 3, below, shows a different kind of shift: a shift in the way oil supplies were distributed, after 2000. We see that China, Saudi Arabia, and India are all examples of countries with big increases in oil consumption. At the same time, many of the developed countries found their oil consumption shrinking, rather than growing.

Figure 2. Figure showing oil consumption growth since 2000 for selected countries, based on data from BP Statistical Review of World Energy 2016.

Figure 3. Figure showing oil consumption growth since 2000 for selected countries, based on data from BP Statistical Review of World Energy 2016.

A person might wonder why Saudi Arabia’s use of oil would grow rapidly after the year 2000. The answer is simple: Saudi Arabia’s oil costs are its costs as a producer. Saudi Arabia has a lot of very old wells from which oil extraction is inexpensive–perhaps $15 per barrel. When oil prices are high and the cost of production is low, the government of an  oil-exporting nation collects a huge amount of taxes. Saudi Arabia was in such a situation. As a result, it could afford to use oil for many purposes, including electricity production and increased building of highways. It was not an oil importer, so the high world oil prices did not affect the country negatively.

China’s rapid rise in oil production could take place because, even with added oil consumption, its overall cost of producing goods would remain low because of the large share of coal in its energy mix and its low wages. The huge share of coal in China’s energy mix can be seen in Figure 4, below. Figure 4 also shows the extremely rapid growth in China’s energy consumption that took place once China joined the World Trade Organization in late 2001.

Figure 3. China energy consumption by fuel, based on BP 2016 SRWE.

Figure 4. China energy consumption by fuel based on BP 2016 Statistical Review of World Energy.

India was in a similar situation to China, because it could also build its economy on cheap coal and cheap labor.

When the economy re-optimizes itself, job patterns are affected as well.  Figure 5 shows the trend in labor force participation rate in the US:

Figure 4. US Civilian labor force participation rate, based on US Bureau of Labor Statistics data, as graphed by fred.stlouisfed.org.

Figure 5. US Civilian labor force participation rate, based on US Bureau of Labor Statistics data, as graphed by fred.stlouisfed.org.

Was it simply a coincidence that the US labor force participation rate started falling about the year 2000? I don’t think so. The shift in energy consumption to countries such as China and India, as oil costs rose, could be expected to reduce job availability in the US. I know several people who were laid off from the company I worked for, as their jobs (in computer technical support) were shifted overseas. These folks were not alone in seeing their jobs shipped overseas.

The World Economy Is Like a Car that Cannot Make Sharp Turns 

The world economy cannot make very sharp turns, because there is a very long lead-time in making any change. New factories need to be built. For these factories to be used sufficiently to make economic sense, they need to be used over a long period.

At the same time, the products we desire to make more energy efficient, for example, automobiles, homes, and electricity generating plants, aren’t replaced very often. Because of the short life-time of incandescent light bulbs, it is possible to force a fairly rapid shift to more efficient types. But it is much more difficult to encourage a rapid change in high-cost items, which are typically used for many years. If a car owner has a big loan outstanding, the owner doesn’t want to hear that his car no longer has any value. How could he afford a new car, or pay back his loan?

A major limit on making any change is the amount of resources of a given type, available in a given year. These amounts tend to change relatively slowly, from year to year. (See Figure 1.) If more lithium, copper, oil, or any other type of resource is needed, new mines are needed. There needs to be an indication to producers that the price of these commodities will stay high enough, for a long enough period, to make this investment worthwhile. Low prices are a problem for many commodities today. In fact, production of many commodities may very well fall in the near future, because of continued low prices. This would collapse the economy.

The World Economy Can’t Go Very Far Backward, Without Collapsing

The 2007-2009 recession is an example of an attempt of the economy to shrink backward. (See Figure 1.) It didn’t go very far backward, and even the small amount of shrinkage that did occur was a huge problem. Many people lost their jobs, or were forced to take pay cuts. One of the big problems in going backward is the large amount of debt outstanding. This debt becomes impossible to repay, when the economy tries to shrink. Asset prices tend to fall as well.

Furthermore, while previous approaches, such as using horses instead of cars, may be appealing, they are extremely difficult to implement in practice. There are far fewer horses now, and there would not be places to “park” the horses in cities. Cleaning up after horses would be a problem, without businesses specializing in handling this problem.

What World Leaders Can Do to (Sort of) Fix the Economy

There are basically two things that governments can do, to try to make the economy (or car) go faster:

  1. They can encourage more debt. This is done in many ways, including lowering interest rates, reducing bank regulation, encouraging lower underwriting standards or longer term loans, taking out greater debt themselves, guaranteeing debt of non-creditworthy entities, and finding new markets for “recycled debt.”
  2. They can increase complexity levels. This means increasing output of goods and services through the use of more and better machines and through more training and specialization of workers. More complex businesses are likely to lead to more international businesses and longer supply chains.

Both of these actions work like turbocharging a car. They have the possibility of making the economy run faster, but they have the downside of extra cost. In the case of debt, the cost is the interest that needs to be paid; also the risk of “blow-up” if the economy slows. There is a limit on how low interest rates can go, as well. Ultimately, part of the output of the economy must go to debt holders, leaving less for workers.

In the case of complexity, the problem is that there gets to be increasing wage disparity, when some employees have wages based on special training, while others do not. Also, with capital goods, some individuals are owners of capital goods, while others are not. The arrangement creates wealth disparity, besides wage disparity.

In theory, both debt and increased complexity can help the economy grow faster. However, as I noted at the beginning, it is the wages of the non-elite workers that are especially important in allowing the economy to continue to move forward. The greater the proportion of the revenue that goes to high paid employees and to bond holders, the less that is available to non-elite workers. Also, there are diminishing returns to adding debt and complexity. At some point, the cost of each of these types of turbo-charging exceeds the benefit of the process.

Why the Economy Works Like a Self-Driving Car

The reason why the economy acts like a self-driving car is because the economy is, in physics terms, a dissipative structure. It grows and changes “on its own,” using energy sources available to it. The result is exactly the same effect that Adam Smith was observing. What makes the economy behave in this way is the fact that flows of energy are available to the economy. This happens because an economy is an open system, meaning its borders are permeable to energy flows.

When there is an abundance of energy available for use (from the sun, or from burning fossil fuels, or even from food), a variety of dissipative structures self-organize. One example is hurricanes, which self-organize over warm oceans. Another example is plants and animals, which self-organize and grow from small beginnings, if they have adequate food energy, plus other necessities of life. Another example is ecosystems, consisting of a number of different kinds of plants and animals, which interact together for the common good. Even stars, including our sun, are dissipative structures.

The economy is yet another type of a dissipative structure. This is why Adam Smith noticed the effect of the invisible hand of the economy. The energy that sustains the economy comes from a variety of sources. Humans have been able to obtain energy by burning biomass for over one million years. Other long-term energy sources include solar energy that provides heat and light for gardens, and wind energy that powers sail boats. More recently, other types of energy have been added, including fossil fuels energy.

When energy supplies are very cheap and easy to obtain, it is easy to ramp up their use. With growing supplies of energy, it is possible to keep adding more and better tools for people to work with. I use the term “tools” broadly. Besides machines to enable greater production, I include things like roads and advanced education, which also are helpful in making workers more effective. The use of growing energy supplies allows growing use of tools, and this growing use of tools increasingly leverages human labor. This is why we see growing productivity; we can expect to see falling human productivity if energy supplies should start to decline. Falling productivity will tend to push the economy toward collapse.

One problem for economies is diminishing returns of resource extraction. Diminishing returns cause the economy to become less and less efficient. Once energy extraction starts to have a significant problem with diminishing returns (such as in Figure 2), it is like losing energy resources into a sinkhole. More work is necessary, without greater output in terms of goods and services. Indirectly, economic growth must suffer. This seems to be the problem that the economy has been encountering in recent years. From the invisible hand’s point of view, $100 per barrel oil is very different from $20 per barrel oil.

One characteristic of dissipative structures is that they keep re-optimizing for the overall benefit of the dissipative structure. We saw in Figures 3 and 4 how fuel use and jobs rebalance around the world. Another example of rebalancing is the way the economy uses every part of a barrel of oil. If, for example, our only goal were to maximize the number of miles driven for automobiles, it would make sense to operate cars using diesel fuel, rather than gasoline. In fact, the energy mix available to the economy includes quite a bit of gasoline and natural gas liquids. If we need to use what is available, it makes sense to use gasoline in private passenger cars, and save diesel for commercial use.

Another characteristic of dissipative structures is that they are not permanent. They grow for a while, and then collapse. Later, new similar dissipative structures may develop and indirectly replace the ones that have collapsed. In this way, the overall system is able to evolve in a way that adapts to changing conditions.

What Are the Likely Events that Would Cause the Economy to Collapse?

I modeled the system as being like a self-driving car. The thing that keeps the system operating is the continued growth of inflation-adjusted wages of non-elite workers. This analogy was chosen because in ecosystems in general, the energy return on the labor of an animal is very important. The collapse of a population of fish, or of some other animal, tends to happen when the return on the labor of that animal falls too low.

In the case of the fish, the return on the labor of the fish falls too low when nearby supplies of food disappear, and the fish must swim too far to obtain new supplies of food. The return on human labor would seem to be the inflation-adjusted wages of non-elite workers. We know that wages for many workers have been falling in recent years, because of competition from globalization, and because of replacement of human labor by advanced machines, such as computers and robots.

Figure 6. Bottom 50% income share, from recent Piketty analysis.

Figure 6. Bottom 50% income share, from recent Piketty analysis.

Besides the problem of falling wages of non-elite workers, earlier in this post I mentioned a number of other issues that make the wages of these workers go less far. These include growing government spending, and the growing costs of education and healthcare. I also mentioned the problem of rising debt, and the increased concentration of wealth, as we try to add complexity to solve problems. All of these issues make it hard for “demand”–which might also be called “affordability”–to be sufficiently great to allow commodity prices to rise to the level producers need for profitability.

Prices Play a Very Important Role in the Economy

The pricing system is the communication system of the economy, as a dissipative structure. One use of energy is to create “information.” Prices are a high level form of information.

One big area where prices come up is with respect to the whole portfolio of products needed on a regular basis, which I mentioned earlier (water, food, energy products, and mineral products). In order for the system to continue working, the prices need to be both:

  • Affordable by consumers
  • High enough for producers to cover their costs, including a margin for taxes and reinvestment

Now, in 2017, prices are “sort of” affordable for consumers, but they are not high enough for producersOil companies will go out of business if these low prices persist.

Back in 2007 and 2008, we had the reverse problem. Prices were high enough for producers, but too high for consumers (especially non-elite workers). This is a big part of what pushed the economy into recession.

We noticed back in Figure 1 that quantities of energy products/goods tend to move up and down together. A similar phenomenon holds true for prices: commodity prices tend to rise and fall together (Figure 7).  The reason this happens is because when the world economy is moving swiftly forward (higher wages, more building activity, more debt), demand tends to be high for many different types of materials at the same time. When the economy slows, prices of all of these commodities tend to fall at the same time. Inflation tends to fall as well.

Figure 6. Prices of oil, call and natural gas tend to rise and fall together. Prices based on 2016 Statistical Review of World Energy data.

Figure 7. Prices of oil, coal and natural gas tend to rise and fall together. Prices based on 2016 Statistical Review of World Energy data.

If prices cannot rise high enough for producers, it is likely a sign that wages of non-elite workers are already too low. The affordability loop mentioned earlier is not being closed, so prices cannot stay up at a high enough level to maintain production.

Most Modelers Overlook the Fact that the Economy Is an Open System

Most energy models are based on one of two views of the world: (1) fossil fuel energy supply will eventually run short, so we must use it as sparingly as possible; or (2) we want to reduce the use of fossil fuels as quickly as possible, because of climate change. Because of these issues, we want to leverage the fossil fuel energy we have, to as great an extent as possible, with energy that we can somehow capture from renewable sources, such as the solar energy or wind. With this view of the situation, our major objective is to create “renewables” that use fossil fuel energy as efficiently as possible. The hope is that these renewables, together with the actions of governments, will allow the economy to gradually shrink back to a level that is somehow more sustainable.

Implicit is this model is the view that the economy, and the world in general, is a closed system. Our current government and business leaders are in charge; they can make the changes they would prefer, without the invisible hand causing an unforeseen problem. Very few have realized that the economy cannot really shrink back very much; past history, as well as the nature of dissipative structures, shows that economies tend to collapse. The only economies that have at least temporarily avoided that fate have shifted toward less complexity–for example, eliminating huge government programs, such as armies–rather than yielding to the temptation to add ever more complexity, such as wind turbines and solar panels.

The real situation is that we have a here-and-now problem of too low wages for non-elite workers. Commodity prices are also too low. Intermittent renewables such as wind and solar are thought to be solutions, but it is well-known that intermittent renewables cause too-low prices for other types of electricity generation, when added to the electric grid. Thus, they are likely part of the low-price problem, not part of the solution. Temporary solutions, if there are any, are likely in the direction of cutting back on government expenditures and reducing regulation of banks. In fact, with the election of Trump and the passage of Brexit, the economy seems to again be re-optimizing.

We also know that dissipative structures do not shrink back well, at all. They tend to collapse, instead. For example, you, as a human being, are a dissipative structure. If your food intake were cut back to, say, 500 calories per day, how well would you do? If you could not get along on a very low calorie diet, how would you expect the economy to shrink back to a renewables-only level? Renewables that can be used in a shrunken economy are scarce; we don’t have a huge number of trees to cut down. We cannot maintain the electric grid without fossil fuels.

The assumption that the economy is a closed system is pretty much standard when modeling our current energy situation. This occurs because, until recently, we did not understand that the self-organizing properties of inanimate systems were as important as they are. Also, modeling of the economy as a closed system, rather than an open system, makes modeling much easier. The problem is that closed system modeling doesn’t really tell the right story. For a discussion of some of the issues associated with this mis-modeling, see the recent academic paper, Is the increased use of biofuels the road to sustainability? Consequences of the methodological approach.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,573 Responses to Oops! The economy is like a self-driving car

  1. Tim Groves says:

    Famine is on the brink of reaching greater than biblical proportions in Yemen, South Sudan, Nigeria and Somalia, where the combination of war, draught, poverty and more and more babies is proving too much for the aid agencies even at a period of record high global grain production.

    http://af.reuters.com/article/topNews/idAFKBN16B087?sp=true

    The number of people facing severe hunger worldwide has surpassed 100 million and will grow if humanitarian aid is not paired with more support for farmers, a senior United Nations official said.

    Dominique Burgeon, director of the emergency division at the U.N. Food and Agriculture Organization (FAO) said latest studies showed 102 million people faced acute malnutrition – meaning they were on the brink of starvation – in 2016, up almost 30 percent from 80 million in 2015.

    The hike was mainly driven by deepening crises in Yemen, South Sudan, Nigeria and Somalia, where conflict and drought have crippled food production, he said.

    “Humanitarian assistance has kept many people alive so far but their food security situation has continued to deteriorate,” Burgeon told the Thomson Reuters Foundation in an interview.

    More investment is needed to help people feed themselves by farming crops and livestock, he added.

    “We come with airplanes, we provide food assistance and we manage to keep them alive but we do not invest enough in the livelihood of these people,” he said.

    “We avoid them falling into famine but we are not good at taking them off the cliff, away from food insecurity.”

    The U.N. World Food Programme said last month more than 20 million people – greater than the population of Romania or Florida – risk dying from starvation within six months in four separate famines.

    Wars in Yemen, northeastern Nigeria and South Sudan have devastated households and driven up prices, while a drought in east Africa has ruined the agricultural economy.

    • Ed says:

      The truth is nobody cares. Yes, yes, millions without food. Wake me when it is hundreds of millions.

    • Ed says:

      Let’s consider mercy killing the starving. Fast painless nerve gas for Yemen?

      • Ed says:

        The primitive dictators of KSA want to kill all Yemeni, the US federal government wants to kill all Yemeni, and the suffering Yemeni will be put out of their misery. It is a win/win/win. Maybe even some oil fields for the Israelis to pick up?

        • Fast Eddy says:

          My experience of Yemen was that the entire population is so stoned on khat from morning to night…. they wouldn’t care if they starved to death — just keep supplying the khat

          As for oil fields — Yemen has pretty much run out of oil — and water:

          http://www.al-monitor.com/pulse/business/2012/02/the-economic-horrors-of-yemen-oi.html

          • Ed says:

            Thanks FE, ground truth is gold.

          • Joel says:

            So your saying the movie Salmon Fishing in the Yemem, isn’t depicting current facts on the ground. The British at least found a market for cluster bombs sales, did notice that. They are just in the wrong place for someone’s plan.

          • yorin says:

            Have you chewed the stuff? Whats it like? Did you mix it with your ABILIFY?

            • Fast Eddy says:

              When in Yemen….

              Of course I tried it — bought a sack for 5 bucks in the market — felt like what drinking 4 red bulls and 6 cups of coffee must feel like… I would not call it a ‘good buzz’…. but then when people drink coffee for the first time they don’t feel well…. I suppose you get used to it …

              I gave the rest of the bag to the organizer.

            • yorin says:

              Thanks for the honest reply! I was wondering… The media made it out to be the crank of the alooooo ukbars. Reefer madness yah know. Khat would seem to be a mere red bull like imitator for captagon the real aluuu ukbir amphetamine psychosis.

            • Fast Eddy says:

              My take on it was that it created walking zombies….

              I’ve also chewed betel in Burma — similar effect but khat would be more powerful….

              Neither made me want to find an AK and open fire…

            • Fast Eddy says:

              Happiness is:

        • psile says:

          The Roman name for Yemen was Arabia Felix, or “happy Arabia”. Alas, it is anything but, because of war and lack of oil.

    • DJ says:

      “The soaring cost of seeds, fertilisers and tractor fuel was pushing many farmers to leave,”

      There goes any illusion of a skinny cow, wooden plow and a farmer farming owned/borrowed land.

    • Greg Machala says:

      ” latest studies showed 102 million people faced acute malnutrition – meaning they were on the brink of starvation – in 2016, up almost 30 percent from 80 million in 2015.” – And there folks is how we get billions to die very quickly. 30% in one year is crazy exponential growth. All we have to do is continue on course and by the year 2026 3 billion people will starve to death. Without food and water we die quickly.

      • Joel says:

        10 years of inverse growth, can’t be done, no way.

        • Joebanana says:

          • Joel says:

            Get your point on my pic being a poor choice, now to your pic.

            Sadly, that is the case, now that we are sort of post industrial though things have cleaned up. Down south in Ohio, the river caught on fire, back in 1969 pre-conventional-peak-oil period. Good old days…

      • it is true that Africa as a whole is headed for basket case status as a complete continent.
        thats 1.25 Bn people give or take.

        It would seem an obvious to cut world pop by just emptying out Africa—but then what?
        Turn it into a game reserve?
        the means by which africa dies will not stay within africa.

        • Greg Machala says:

          I don’t know how it plays out. But the numbers are all there indicating that a massive storm is on the horizon that will test human survival at levels we haven’t seen in thousands of years, if ever.

          • a big part of the problem is of course that many African rulers regard their country as personal property, and so run kleptocracies—not exclusive to Africa of course, but seemingly worse there than elsewhere in general

        • Tim Groves says:

          It would seem an obvious to cut world pop by just emptying out Africa—but then what?
          Turn it into a game reserve?

          Norman, I gather this has been Prince Philip’s idea for some decades now.

  2. Fast Eddy says:

    Jacob Zuma calls for confiscation of white land without compensation

    http://www.telegraph.co.uk/news/2017/03/03/jacob-zuma-calls-confiscation-white-land-without-compensation/

    What the South African anti-foreign riots say about the country’s economy

    Growth is anaemic and per capita income is 3.8% lower than in 2009 – a recession year, writes Julians Amboko

    http://blogs.lse.ac.uk/businessreview/2017/03/02/what-the-south-african-anti-foreign-riots-say-about-the-countrys-economy/

    Anti-White Riots – video https://www.nytimes.com/2017/02/24/world/africa/immigrant-protests-south-africa.html

    • Fast Eddy says:

      No place on earth will be a good place to be when BAU goes…. however Whitey would be better off on the moon than in any country where Whitey is not the majority …. in any country where Whitey has a history of oppressing the locals….

      One reason I left Indonesia is because Whitey treated them Indonesians very badly for 300+ years… and they remember … and when Whitey loses his power — there will be people who recall grandpa telling about how Whitey spit on him ….

      And they will be wanting revenge on Whitey…. they will be doing very bad things when they catch Whitey…

      South Africa….whooaa….. very bad place to be when the SHTF… very bad indeed…

      Whitey is going into the cooking pot … as we can see Jacob is putting more wood on the fire….

      • Ed says:

        FE, this is a real issue. Unfortunately the US is not a safe place for this reason. New Zealand sounds pretty good. I can not think of any other safe place for whites.

        “What we must fight for is to safeguard the existence and reproduction of our race and our people, the sustenance of our children and the purity of our blood, the freedom and independence” of our land.

        • Fast Eddy says:

          Non-Hispanic whites make up 63 percent of the U.S.; Hispanics, 17 percent; blacks, 12.3 percent; Asians, 5 percent; and multiracial Americans, 2.4 percent.

          But let’s not kid ourselves… white will be at the throat of white as well…. over a can of beans

        • Joel says:

          Whitey has had a good run overall, I don’t think it’s all that bad yet. Everyone can’t go to NZ…

          Hard times ahead for the majority though. I think a good test would be a 30 day shut down on the EBT cards, sort of a stress test. Get a feel if any problems area’s or stability issues with the system. Down in Venezuela they’re currently testing…

        • DJ says:

          Why should non-white revenge on european countries with no real colonial history? Like Finland?

          • Fast Eddy says:

            Oh I dunno … if I was from Libya … and I had been bombed back to the stone age by NATO…. and I noticed that Whitey was in chaos …. I might slit a few random throats …. as payback…

            Eye eye tooth tooth and all that

        • doomphd says:

          Last I heard NZ has a fairly large native Maori polynesian culture, and I’m sure they remember “whitey” tried to exterminate them about 200 odd years ago. They practiced canibalism, also.

      • zuma is already making promises to take the land from white farmers and return it to black africans

        so he is planning to do another zimbabwe—that’s going to be interesting

        • Artleads says:

          It’s counter intuitive, and some will say it’s fanciful, but I propose that whites’ best interests are served by at least trying to see that a minimum standard of governance is provided for non whites. It can often be done for a pittance. Non white people (broadly defined) don’t basically want to live like whites, and instead only want things a little better, or just want to be left alone. Leaving stable communities alone would be the cheapest way to go. But if you want to disturb those stable communities to sell them things they don’t need, to take their “untapped” resources, then their violence against you (for want of more of what you convince them is indispensable, but also due the hellish disorder from destabilization) goes with the territory.

      • i1 says:

        Yeah, they should write a song-“fracking on the moon with solar panels beaming energy back to earth as they build asteroid mining stations”.

    • How ~30yrs span could make such a difference, at that time they had the technology base to research and build ICBMs (with Israel and Pakistan as junior buddies in the project), now they are further dropping into some primal state of affairs of much lower complexities.

      • ICBM stuff is built on a surplus of cheap energy, not technology.
        This simple rule applies all over the world. The notion that space technology creates wealth is the ultimate fallacy

        when you have cheap surplus energy, then lots of taxes are collected–these fund vanity projects–moonlandings– and essential projects–hospitals schools etc.

        when energy becomes expensive, less ”surplus” is available in the tax take—so space programs are cut back.

        if there was anything commercially useful on the moon/asteroids, you can be sure private venture capital would have put colonies there decades ago.

        • Greg Machala says:

          Indeed. People in general assume that it is technology that powers our world. What the people miss is that energy makes the technology and thus energy powers the world. I think this obfuscation is done on purpose to keep the people from questioning too much.

        • ? I was simply referring to the rapid complexity fall of all things considered South Africa since the late 1980s/very early 1990s. Most of the commonwealth talent escaped.
          I just illustrated this on the their nuclear program, which came to fruition only in other countries (former partners) as the people and info moved out of South Africa.

        • Artleads says:

          I wonder if the Middle Ages have any lessons for us here? Isn’t it that, with civilization out of gas (somewhat like now but much much less so then?), monasteries sequestered as much knowledge of technology as they could? Civilization lived to fight another day (although our prospects are different now) using that stored knowledge?.

          • the last 200 years (since the industrial revolution) have been an anomaly—something never experienced before in the history of humankind, and something that can never be experienced again.

            Our current danger lies in the insistence that our mode of existence has shifted permanently—-ie–our lifestyle will always be as it is now–heat light transport permanent employment/liesure available on demand.
            We believe the politicians who promise this.

            Whereas our reality/normality is what existed before 1700/1800, the autocratic rule of combined church and state, where only aristocracy had access to surplus energy resources, and the energy providers (we serfs) had to labour to provide it.
            For 200 years fossil fuels spread the wealth and democracy, when we’ve burned it all, we will revert to the fascism that was our normality.

            How? Because as society breaks down, dictators will seize control and rule as petty fiefdoms–which is how rule was enforced in the middle ages and way back before that.

            Civilisations “lived to fight another day” Agreed, but only using the weapons they had. Which is why little progress was ever made as one civilization replaced another.

            The industrial revolution provided new weapons to expand territories and kill off native peoples. The first people to get hold of iron ships and cannon proceeded to conquer much of the world, (we Brits).
            Unfortunately everybody else learned the same techniques and that created 2 world wars.

            Now there are no new territories to take, and no new resources to absorb and thrive on–again this is why I chose the title that I did for my book ‘The End of more”

            —in an attempt to wake people up to the fact that there just isn’t any more to be had. Though the majority of people remain convinced that “they” will “come up with something”.—It ain’t going to happen. Denial of reality is critical, because people are going to get very annoyed when the truth dawns.

            I can read a book on how an internal combustion engine works (stored knowledge) but without oil and steel production facilities, that knowledge is useless.—Same with a lightbulb, refrigerator, tractor, aircraft. Read about how they work but without a cheap power source, that knowledge is also useless. Medieval society functioned on muscle power alone.

            As to monasteries, they were a store of literacy and numeracy, but little more than that. They colluded with the state to maintain the status quo, where even printing the bible in English carried the death penalty. Right now, the evangelical godbotherers are in a state of denial about science, global warming, age of the earth and so on. Given the opportunity, they would enforce these beliefs. (Check out Inhofe and Carson et al)

            I can forecast now, that when society collapses, there will be a suppression of scientific knowledge, through the doctrines of extremist ideology of one sort or another. Then we will revert to the era of pre-enlightenment, with the disadvantage that there will be no means to extract ourselves from it by “technological progress” because we will not have the surplus fuel to do it.

            • Artleads says:

              “How? Because as society breaks down, dictators will seize control and rule as petty fiefdoms–which is how rule was enforced in the middle ages and way back before that.”

              But still the monasteries managed, against all this inevitable terror, to sequester knowledge. We live in a very different time, and if we can’t keep BAU going, or enough of what feels like it, there is no telling what will happen. But I’m only talking about trying to stash away information, if only aliens in a million years ever get to examine it.

            • the monasteries managed to hold onto literacy and numeracy in a reasonably safe environment because there was a universal belief in and fear of a real god. But that was all

              hence kings left monasteries untouched, until Henry 8th in UK disbanded them, and sold off thier lands. Until then the ownership of land was split between king and church.

              Getting rid of church rule led to the enlightenment in the uk, because the church stopped restricting access to knowledge (as opposed to Galileo in Italy for instance, where the church imprisoned him for stating that the earth went round the sun)

              I pointed out in a post elsewhere, that the longest lasting practical information we have is stuff written on vellum 500 years ago. Most of what’s before that is stone tablets or cave paintings.

              Nothing of it could be done without motive power—again i make the point that our civilised existence is entirely dependent on converting explosive force into rotary motion. It does not depend on information

            • Glenn Stehle says:

              Norman Pagett says:

              hence kings left monasteries untouched, until Henry 8th in UK disbanded them, and sold off thier lands….

              Getting rid of church rule led to the enlightenment in the uk, because the church stopped restricting access to knowledge (as opposed to Galileo in Italy for instance, where the church imprisoned him for stating that the earth went round the sun)

              So the church was all obscurantism and darkness, and the new secular ideoloogy all light and reason and tolerance?

              What an unbelievablly Manichean, and false, construct. Have you ever heard of the Holocaust?

              It was developed by German physicians and scientists in the late 19th century and is rooted in the period’s Social Darwinism….

              Although notions of race have a long history, it was ironically the Scientific Revolution followed by the Enlightenment and then the Age of Reason, emphasizing science and rationality, that were the wellsprings for biologically based racism. The earlier division of humans into races had produced opposing views that were hotly debated….

              [The] concept of intrinsic value or defect (popularized in the 1860s as Social Darwinism) was clearly articulated by Sir Francis Galton (1822–1911) in “The science which deals with all influences that improve the inborn qualities of a race.” He coined the word “eugenic” (relating to or producing improved offspring) and proposed that “races” were in a struggle for survival of the fittest. German Darwinists argued that innate racial inequalities gave each individual life a different value, and extermination of “inferior” races was not only appropriate but unavoidable.

              — FRANCOIS HAAS, German science and black racism—roots of the Nazi Holocaust

              And your doomerism seems to belie just how enlightening you believe the enlightenment was. In the end, you flame out in a bout of cognitive dissonance.

              And Henry 8th’s “disbanding the monasteries” and “Getting rid of church rule led to the enlightenment in the uk, because the church stopped restricting access to knowledge?”

              Good grief, man, have you ever picked up a history book in your life?

              Henry’s commitment to Catholicism deepened. Lord Chancellor More, with royal encouragement, imprisoned the Christian Brothers and other heretics. And the Tynsdale affair, which appalled English intellectuals, seemed to align him with the most reactionary heresimachs.

              William Tynsdale had conceived his translation while reading ancient languages at Oxford and Cambridge….

              It was actually dangerous; the Chruch didn’t want — didn’t permit — wide readership of the New Testament. Studying it was a privilege they had reserved for the hierarchy, which could then interpret passages to support the sophistry, and often secular politics, of the Holy See….

              At Henry’s insistence Tynsdale was imprisonedfor sixteen months in the castle of Vilvorde, near Brussels, tried for heresy, and, after his conviction, publicly garrotted. His corpose was burned at the stake, an admonition for any who might have been tempted by his folly.

              The royal warning was unheeded. You can’t kill a good book, including the Good Book, and Tynsdale’s translation was excellent; later it became the basis for the King James version.

              — WILLIAMM MANCHESTER, A World Lit Only By Fire

            • last sunday, i sent my stunt double to confession.

              on my behalf he confessed to masochistic urges in some of my replies on OFW on this particulr thread.

              The priest ordered that this must cease, as I was enjoying it too much, therefore i feel bound, under threat of eternal damnation, to resist responding to this latest diatribe.

              I would also counsel other OFW doomsters to desist from such self pleasuring, under threat to their eternal souls, from taking equal pleasure in such matters.

              Thy sins shall find thee out!!

            • Fast Eddy says:

              I didn’t read your latest drivel because it would put me over my drivel limit…

              But I did notice reference to a Mr Mani ….

              I read a book about Mr Mani some years ago —- http://www.publishersweekly.com/978-1-56656-247-8 and interesting you use the term Manichean …

              My recollection of the book was that Mani had attempted to bridge the major religions (primarily Islam and Christianity) — that he was quite successful — so he was captured tortured and murdered https://en.wikipedia.org/wiki/Manichaeism#Life_of_Mani

              That’s sums up organized religion for you 🙂

              FYI

            • Artleads says:

              “Nothing of it could be done without motive power—again i make the point that our civilised existence is entirely dependent on converting explosive force into rotary motion. It does not depend on information”

              But without having access to this sentence, any future humans would be bereft of possibly useful information, whatever they were able to make of it. It’s been said that knowledge is power.

            • i take your point

              but—project 10000 years hence—the same length of time that our civilised living might be said to have existed.
              If we “go down” in the coming century….you can be certain that we will spend the following century denying it, and killing each other to prove it.
              That might kill off (5 Bn people) maybe more–if it does, there will not be a big enough body of people to reconstruct anything, even if the means was available.

              Those left will be too busy staying alive to worry about scientific advancement with no immediate benefit.

              Currently we use coal oil and gas for motive power—there may be other “energy systems” out there that we know not of, and all kinds of projects are under way to find them.
              But for the moment The laws of physics govern us in 3 applicable ways:

              1 we need hardware/metals to build anything substantial

              2 we cannot create stuff without heat.

              3 everything we use to function needs wheels

              If we’ve burned everything thats burnable, I fail to see how any future civilisation if there is to be one, will have access to anything useful in practical terms.

              10 k years from now, there will be no hydrocarbon fuels available, and no “factory system” to provide development of new power systems.
              We run on wheels—so any alternative would seem to require something different—what exactly?

              Yes the knowledge of the wheel will exist, but the means to make it rotate will not, other than muscle power

            • louploup2 says:

              “there will be no hydrocarbon fuels available”

              Wood is a hydrocarbon, and it does not take high tech to produce liquid fuel from it. Not a lot maybe, but if populations are low, plenty enough per capita to “turn some wheels.”

            • Fast Eddy says:

              Europeans had lived in the midst of vast forests throughout the earlier medieval centuries. After 1250 they became so skilled at deforestation that by 1500 they were running short of wood for heating and cooking. They were faced with a nutritional decline because of the elimination of the generous supply of wild game that had inhabited the now-disappearing forests, which throughout medieval times had provided the staple of their carnivorous high-protein diet. By 1500 Europe was on the edge of a fuel and nutritional disaster [from] which it was saved in the sixteenth century only by the burning of soft coal.

              More https://en.wikipedia.org/wiki/Deforestation#Pre-industrial_history

              7.5 billion people will do quite a number on forests that remain….

            • during WW2, quite a number of cars used wood as a fuel system
              http://www.lowtechmagazine.com/2010/01/wood-gas-cars.html

              Problem with this is:

              1……trees don’t grow fast enough to supply the need for fuel, in addition to all the other requirements, long term. Trees will be cut down for short term use, just as oil has been used for short term use.

              2 …..If you have a low population, there will not be enough people to sustain the necessary industrial infrastructure to produce wheeled vehicles other than carts. Motor vehicles are complex systems.

              3…. Journeys require purpose. In a crashed economic situation, there will be little need to go anywhere at all. Travelling from A to B does not produce prosperity, the journey consumes fuel, which is a finite resource. There will be no “nature of work” in the sense we know it as the point of commuting to work.

              4…..converting plant material into liquid fuel is pointless now (EROEI is too low)—it will be even more so in the future

            • Joebanana says:

              There will be plenty of trees In the future. There will be virtually no one to cut them down or have the means to move them to where they are needed. Forests are going to get a break.

            • Fast Eddy says:

              I am sure there will be plenty of trees — they will just be too far away from where anyone lives to bother cutting and dragging them back…. (note: I am pretending people will survive the spent fuel ponds)

              As has been posted previously — it all comes down to nett energy — if it takes more energy to cut and drag a tree from a distance – than the energy you get from the tree — you do not bother

              Likewise — hunting animals — what happens is the nearby animals get hunted out — and as any hunter knows — when animals know it is open season all the time — they avoid humans — they go further into the bush…

              There won’t be any ATVs to haul meat out of the bush — and if you have to walk 10 or 20km to try to find something to shoot – then haul it out on your back — you get into the nett energy issue again….

      • Fast Eddy says:

        ‘primal state of affairs’

        sustainable state of affairs? nice try but unfortunately too late for that… no going back

  3. Fast Eddy says:

    Mexico — applies for Too Big Too Fail status:

    The most ominous sign yet came last week when Bloomberg reported sources saying that the Bank of Mexico (or Banxico, as it is referred to) had sought a swap line from the Federal Reserve in case of “liquidity problems,” which immediately triggered furious denials from Banxico.

    http://wolfstreet.com/2017/03/05/mexico-debt-liquidity-problems-swap-line-fed/

    • Fast Eddy says:

      Foreign currency borrowing caused the Asian Financial Crisis in 1997…. it’s all good until your currency devalues — and you have to pay USD debt with local currency revenues.

      The Fed will need to add Mexico to the list of entities that suck the teat to get infinite low interest USD…..

      • edwinlloyd says:

        I heard a prediction that we can expect rolling derivative collapse based regional bank failures this year. These, like past failures, will be contained in an effort to save the system. Since this will be an international issue I’m sure all central banks will collaborate. 2017 shouldbe interesting if this turns out to be accurate.

        • China announced few days ago (ZH article) at their congress that they are not going print anymore, as the post 2008 and especially the period after 2013 reflation was pumped mostly by them at least on the traceable front as per that recently “famoused” UBB paper. They said such printing could be utilized again in times of reacting to crisis only.

          So, this is either just another lie or as perhaps more probable they are trying to force showdown on FED, since the Euros and Japanese (or yet smaller ones like BoE/SNB) can’t obviously return to printing in that top league alone in any quasi credible fashion.

    • Kurt says:

      Here we go. Sooner than I thought. Those dominos just keep falling.

    • Glenn Stehle says:

      Well something is certainly going on, because the Mexican Peso has recovered substantially since the middle of January. So maybe Mexico asked for and received a swap line from the Fed. This is what happened back during the Great Financial Crisis.

      There are, however, other reasons why the Peso might be recovering, as are listed here:

      ¿Por qué se ha recuperado el peso frente al dólar?
      http://laorquesta.mx/entrevista-se-ha-recuperado-peso-frente-al-dolar/

      Also the Chinese ambassador from China to Mexico announced a while back that if Trump gets too tough on Mexico, China is waiting with baited breath to enter Mexico and develop its vast oil and natural gas shale reserves.

      Maybe this had something to do with Trump’s 180º reversal on his immigration policy last week, which is a very big issue with the Mexican people and its criminal state.

      Suddenly, Trump says he is open to path to legal status
      https://www.bostonglobe.com/news/politics/2017/02/28/suddenly-trump-says-open-path-legal-status/J83vCfNg8jQYEgwbmrb4cJ/story.html

      Only in the week prior to this, Trump had taken an extremely hard line towards Mexico, saying he was not only going to deport Mexican citizens back to Mexico, but non-Mexicans as well. This caused a huge outcry in Mexico.

      Mexico rejects ‘unilateral’ US migration moves
      https://www.pri.org/stories/2017-02-23/mexico-rejects-unilateral-us-migration-moves

      Maybe someone like Rex Tillerson or Boone Pickens got to Trump, because they certainly do not want to be disinvited to the huge oil and natural gas party that Mexico is on the cusp of having, after Hillary Clinton was so successful in laying the groundwork.

      Maybe Rex Tillerson and Boone Pickens, and the US’s future energy security, won out over the racists and anti-immigration hardliners under Trump’s tent. And by saying this I am in no way implying that all anti-immigration hardliners are racists. Many, or maybe even most, of the anti-immigration hardliners are motivated by economic self-interest and concerns over security. So their anti-immigration stance is not motivated by irrational prejudice, but by very pragmatic concerns.

      • Duncan Idaho says:

        I’m in Mexico right now.
        They knew something several months ago, as i was limited to $300 in exchange.

        • Joel says:

          Since you are there, has the pipeline theft issue improved? Remembered a story a few months back.

          Mexican Drug Cartels Looting State-Owned Gas Pipelines http://www.zerohedge.com/news/2017-01-12/mexican-drug-cartels-looting-state-owned-gas-pipelines-black-market-sales
          Amid the chaos, the country’s powerful Jalisco New Generation cartel threatened to to burn down gas stations as retribution for taking advantage of “the majority of the people who don’t make even a minimum wage.”

        • That chart is sort of humorous.

          • Greg Machala says:

            That chart is pure propaganda.

          • Glenn Stehle says:

            Nevertheless, the revenues Mexico receives from the export of petroleum plunged drastically beginning in 2012, due to both declining production and lower prices, leaving a huge hole in the Federal budget.

            • Duncan Idaho says:

              Mexico’s top auditor, the Federal Audit Office (ASF), just came out with a bombshell report showing that a staggering 72.9% of the new debt Mexico’s government issues today is used to repay the principal on its maturing old debt while 13.9% goes toward servicing the interest payments. That leaves just 13.2% for investment projects or productive activities, part of which is no doubt skimmed off by corrupt officials and businessmen.

              The debt continues to grow at a much faster rate than Mexico’s economy, whose growth is forecast to slow this year to 1.5%, compared to last year’s 2.4%. To make matters worse, much of Mexico’s new debt is in foreign-denominated currencies. Between 2015 and 2016 alone, the total amount of euro and dollar-denominated debt it issued rose by 46.2%.

              Mexico’s oil revenue is crashing.
              It was 1/3 of National Income.

            • Fast Eddy says:

              I don’t understand why shale is not happening in Mexico — don’t they understand that they can be Saudi Mexico … I don’t buy this ‘gangs’ excuse —- are the gangs shutting down Pemex?

              Come on Mexico – join the 50 Buck Club. Avoid collapse. And enjoy decades of prosperity based on cheap shale oil

            • Duncan Idaho says:

              Come now FE, you just need to ignore profitability and depletion.
              Living n Mexico, I can say from primary experience red is a popular color.

            • DJ says:

              Euan Mearns says Donald saved us
              “10 years ago on The Oil Drum many were forecasting the imminent terminal decline of global oil production. And it never happened. For years now folks have been forecasting the imminent collapse of the US shale industry and US oil production. And it never happened. “

            • Glenn Stehle says:

              Well actually there’s some real factual information out there on Mexico’s vast shale oil and natural gas potential, so one doesn’t have to trade in the distortions, half-truths and outright lies that Fast Eddy does.

              And yes, Mexico does have the potential to put it in the same league with Saudi Arabia, reserves wise, even though the extraction costs for shale will be much higher than what the extraction costs in Saudi Arabia’s conventional oil fields have been.

              The vastness of Mexico’s shale fields is difficult to comprehend: 1000 km long by 50 to 200 km wide, with more than 200 m of gross shale thickness, double the typical Eagle Ford thickness in South Texas.

              Instead of wallering in a world of defactualized distortions, half-truths and outright lies the way Fast Eddy does, one might actualy try doing some investigations based on empirical facts, as this article in the Oil and Gas Journal does:

              New bid round accelerates Mexico’s shale potential
              http://www.ogj.com/articles/print/volume-114/issue-6/exploration-and-development/new-bid-round-accelerates-mexico-s-shale-potential.html

              Mexico’s shale industry may find traction in 2016. Well-prepared early movers will bid on the choicest geologic areas in one of the most anticipated shale offerings of recent years.t hasn’t occurred as quickly as expected.

              Not only were early Petroleos Mexicanos (Pemex) shale wells meager producers, they also were expensive to drill and frac. Despite the disappointing start, Mexico’s geologic and commercial qualities could thrust the country to the front of the emerging global shale market.

              Low oil prices delayed the country’s first shale auction, originally scheduled for last year and designed to attract needed foreign investment and technology. But it could take place later this year or in 2017.

              Recognizing its vast shale resources, Mexico’s government is opening the country’s most prospective acreage, formerly the exclusive domain of Pemex, to foreign capital and expertise. The opening of Mexico’s onshore and offshore basins to foreign investment for the first time in 75 years is a key part of the country’s ongoing reforms.

              Mexican regulator National Hydrocarbons Commission (CNH) has not yet announced a revised schedule for Round 1 of its unconventional shale lease. Industry interest has been growing steadily despite the delay, along with an appreciation of Mexico’s shale geology.

              The macro outlook for shale is also improving, with more than $10 billion invested in pipeline construction and a burgeoning cross-border trade in oil and gas, as US and Mexico move to integrate their refining and marketing systems. Secretaria de Energia de Mexico (Sener) announced 11 pipeline projects totaling 2,300 km and costing $5.2 billion to be built 2014-15 (OGJ Online, May 29, 2014).

              Stratigraphy will be familiar to North American geologists, particularly those working the Gulf Coast, because the two principal shale targets in Mexico are stratigraphic equivalents of major source rocks and productive shales in the US.

              Regional geologic mapping reveals the Pimienta trend stretching 1,000 km across northeast Mexico (Fig. 1)….. Shale thickness, depth, and thermal maturity are prospective within a belt 50-200 km wide…

              High-graded Pimienta shale areas, for example, may have more than 200 m of gross shale thickness, double the typical Eagle Ford thickness in South Texas.

              The regional structure is simple throughout much of this trend, with few faults and mostly gentle dip angles (Fig. 2).2 Shale thickness, depth, and thermal maturity are prospective within a belt 50-200 km wide and spanning 27,000 sq miles (17 million acres), covering just the Pimienta shale’s two key basins: Burgos and Tampico-Misantla…..

              Advanced Resource International Inc.’s (ARI) 2013 assessment for the US Energy Information Agency (EIA), which included areas not assessed by Pemex, found 104 billion boe of risked, technically recoverable resources, comprising 13.1 billion bbl of oil and 545 tcf of natural gas.5

              Our current analysis, based on a larger public data set that we assembled for our multiclient study, indicates the oil potential could be greater. Shale areas in the Burgos and Tampico-Misantla basins are structurally simple with few faults. Owing to gentle or flat structural dips, the liquids-rich windows often are wider than in the Texas Eagle Ford. Overpressuring occurs locally in these prolific and still actively generating source-rock shales.

              Potential complications, however, remain a part of the nascent Mexican shale industry. One of the largest is the local security situation. Both the Burgos and Tampico-Misantla basins are plagued by organized criminal gang activity. Shale development involving thousands of widely spaced wells and surface infrastructure presents daunting security issues. The government will need to focus law enforcement and security resources in these areas to enable large-scale shale development. Other countries (e.g., Colombia) have successfully grappled with similar concerns, but the security situation remains an active risk in Mexico.

            • Fast Eddy says:

              And there is a pool of oil beneath the surface of the moon 10x the volume of the Pacific Ocean — but the cost to deliver it to earth is $100+ per barrel….

              Will this oil every make it to earth?

              According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

            • Glenn Stehle says:

              This map shows the areal extent of Mexico’s shale basis.

              The areas are so vast in comparison to the size of US shale basisns that it boggles the mind.

            • Fast Eddy says:

              We’ve got plenty of oil that in the ground that is not feasible to recover because it would result in a sea of red ink — so what is so special about this?

            • Ghost0 says:

              I understand that those areas are deeply infested with the cartels and the population suffers tremendously. Its time humanitarian responsibilities of USA illicit drug use are addressed, those shale/cartel zones need to be liberated!

            • Fast Eddy says:

              Interesting that Pemex up until the price of oil plunged …. was able to operate without being shut down by the ‘bad guys’ — how the revenues from Pemex made up to one third of all govt income — how it fueled corruption to many officials ….

              Yet apparently shale oil — which could replace Pemex as the cash cow — is not allowed to happen because the ‘bad guys’ are so powerful that they are stopping it.

              You’d think the Mexican military would step in — heck – considering the fate of the planet is at stake you’d think the US military would walk across the border and within 15 minutes put an end to the ‘bad guys’

              They must be really F98877ing bad guys…. everyone is afraid of the bad guys …. let’s take a look at one of the bad guys

              Ya – I am sure the Mexican and US military machines are scared… gotta be that

  4. jerry says:

    Got to check out this essay found here:
    http://www.lemetropolecafe.com/Pfv1.cfm?pfvID=2612&SearchParam=Shamrock
    concerning the manipulation of the gold and oil markets leading up the collapse of the USSR. http://www.lemetropolecafe.com/Authorlinkdocs/1672.htm
    Very interesting stuff and the many links provides a wealth of info. This one paragraph though speaks volumes:
    “What we are looking at are “the powers that be” backed by British and American (and Israeli) military might, pushing for control of the world’s oil supply to the detriment of the people who already have legal title to it. It is raw, naked power…ruthlessly projected. The United Nations Security Council has just approved the plan, which means that this whole farce is now turning out to be little more than ‘legalized’ stealing. Public opinion be damned.”

    This piece to from 2001 on Saddam Hussien and his manipulation of the oil market is frightening to say the least. He had balls to go up against the States but paid for it terribly so.

    mahttp://www.gold-eagle.com/article/saddam-ized-iraqi-crude-oil

    Gold and Oil and all the political blackmail going on reminds me so very well the words from James 4
    What causes fights and quarrels among you? Don’t they come from your desires that battle within you? You desire but do not have, so you kill. You covet but you cannot get what you want, so you quarrel and fight. You do not have because you do not ask God. When you ask, you do not receive, because you ask with wrong motives, that you may spend what you get on your pleasures.
    You adulterous people, don’t you know that friendship with the world means enmity against God?

    • adonis says:

      thanks Jerry very interesting read there is proof of elders working in collusion to bring about a hidden agenda this may involve precious metals maybe a return to the gold standard that might be the real reason that canada has lost all its gold

      • jerry says:

        strange goings on but for me all of this lends considerable weight to the bible and its teachings/warnings that the city of Babylon in Rev. 18 is none other than New York/Washington. Given the reference to 7 hills and one would think its Rome but don’t you know Washington herself sits on 7 hills. Rev. 18
        Strange goings on and one should visit vigilent citizen to learn and ask why the interest and building of Pyramids and other symbols from long cursed and forgotten empires. https://vigilantcitizen.com/category/sinistersites/
        There you will find the truth that America is not a Christian nation but an idolatrous one! and Christianity has sadly been usurped by diabolical people working to destroy it from within. It is why we read in 2 Peter 2:2-4
        Many will follow their depraved conduct and will bring the way of truth into disrepute.
        and why St. Paul cried terribly for he foresaw what was coming
        I know that after my departure savage wolves will come in among you without mercy for the flock. Yes, and even among you men will arise speaking perversions of the truth, trying to draw away the disciples and make them followers of themselves. This is why I tell you to keep on the alert, remembering that for three years I never failed night and day to warn every one of you, even with tears in my eyes.

  5. jerry says:

    Got to watch this!!!

    • Bergen Johnson says:

      Maybe he could explain carbon emissions to people using gumballs.

      • jeremy890 says:

        The people would just eat them and want more gumballs.

        • Bergen Johnson says:

          “The people would just eat them and want more gumballs.”

          In the movie Key Largo a character in a wheelchair asks this Cuban Mafioso character how much is enough? What is it you really want? And he thinks about it for a moment, then says, “I want more. Sure, that’s what I want.” And I guess that defines people too, always wanting more. Voracious appetites until something stops them.

          • Glenn Stehle says:

            The idea that men would not come in conflict with one another, if the opportunities were wide enough, was partly based upon the assumptions that all human desires are determinate and all human ambitions ordinate. This assumption was shared by our Jeffersonians with the French Enlightenment.

            “Every man,” declared Tom Paine, “wishes to pursue his occupation and enjoy the fruits of his labors and the produce ofhis property in peace and safety and with the least possible expense. When these things are accomplished all objects for which governments ought to be established are accomplished.”

            The same idea underlies the Marxist conception of the difference between an “economy of scarcity” and an “economy of abundance.” In an economy of abundance there is presumably no cause for rivalry. Neither Jeffersonians nor Marxists had any understanding for the perrennial conflicts of power and pride which may arise on every level of “abundance” since human desires grow with the means of their gratification….

            The false abstraction of “economic man” remains a permanent defect in all our bourgeois-liberal ideology. It seems to know nothing of what Thomas Hobbes termed “the continual competition for honor and dignity” in human affairs. it understands neither the traditional cultural ethnic and cultural loyalties which qualify a consistent economic rationalism; nor the deep and ccomplex motives in the human psyche which express themeselves in the desire for “power and glory.”

            All the conflicts in human society involving passions and ambitions, hatreds and loves, envies and ideals not recorded in the market place, are beyond the comprehension of the typical bourgeois ethos.

            — REINHOLD NIEBUHR, The Irony of American History

            It may sound like a fantastic creed that the quasi-divine powers of the market are a rational will and that the social world is governed by an “invisible hand” that almost miraculously produces a rational distribution of goods and services.

            And so it is. What is more fantastic is that it is still widely believed.

            The market fundamentalists, even as we speak, are diligently at work propagandizing their fantastic creed:

            The Trump Presidency: An Embarrassment for Those Who Believe in the Market
            http://evonomics.com/donald-trumps-economic-policies-market-zingales/

            After two months, it is clear that the Trump industrial policy will be pro-business, not pro-market.

            It may seem to be a nuance, but there is a fundamental difference. A pro-business policy favors existing companies at the expense of future generations. A pro-market policy favors conditions that allow all businesses to thrive without any favoritism. A pro-business policy defends domestic enterprises with favorable rates and treatment. A pro-market policy opens the domestic market to international competition because doing so would not only benefit consumers, but would also benefit the companies themselves in the long term, which will have to learn to be competitive on the market, rather than prosper thanks to protection and state aid. A pro-business policy turns a blind eye (often two) when companies pollute, evade, and defraud consumers. A pro-market policy seeks to reduce the tax and regulatory burden, but ensures that laws are applied equally to all.

      • Duncan Idaho says:

  6. Joel says:

    What does it all mean…

    It seems like a lot of testing has been hitting the news lately. Poor Iran has been threatened so many times over the years. Had a friend who had to train these guys to maintain F14 avionics back when the Shah still had his job there. He said they tough to work with, didn’t like being blamed for mistakes, maybe the Navy should just leave them alone.
    The new young Kim is having fun, love the photo ops/clips when a successful launch takes place.

    “One day after North Korea launched 4 ballistic missiles, 3 of which fell into the East Sea inside Japan’s economic exclusion zone, and which have painted a spotlight on how Trump will react to this latest provocation, Fox reports that Iran also test-fired a pair of ballistic missiles this weekend into the Gulf of Oman, with one missile destroying a floating barge approximately 155 miles away.”
    http://www.zerohedge.com/news/2017-03-06/iran-test-fired-2-ballistic-missiles-iranian-vessels-came-within-600-yards-us-navy-s

    Hope things don’t get out of hand

    • Bergen Johnson says:

      Most likely not accidental timing both NK & Iran fired missiles the same day, as they have exchanged missile and nuclear bomb information in the past. What I love about it is it was a double whammy on Trump, the provocator. Let’s see what the narcissistic raging lier does in response. Probably just more venting and fuming. Come on Trump, put your rage into action. Do something about these missile launches instead of spouting vacuous threats.

    • Just some thoughts says:

      That cat seems to want nothing more than to pass out in a comfy place.

      One eye says “just ignore this tiresome pr/ck.” The other says “just be glad that you are the one who brings me the food bowl and not a mouse.”

  7. Fast Eddy says:

    Real earnings are up 2.5% off the 2009 lows, The Dow is up 210%

    http://www.zerohedge.com/news/2017-03-06/snap-crackle-drop-hottest-ipo-crashes-bull-market-celebrates-8th-birthday

    Do not … fight… the Fed

    • i1 says:

      It’s really just a breathtakingly huge circle jerk between institutional investors and the FRBNY. That’s it. Everything else they spew out is utter nonsense.

  8. Fast Eddy says:

    Can we put the world out of its misery …. please….

    • Kurt says:

      The market can remain irrational longer than you can remain solvent. It’s just an easily manipulated number. I fully expect the dow to be reaching new highs just before everything collapses.

      • Duncan Idaho says:

        Wage slavery is categorically different in that its prevalence correlates with non animate sources of energy. Wage slaves have served as overseers of the energy slave economy according to the instructions of the bosses. Sadly, what this implies is that as fossil energy production declines, the demand for wage slaves also declines. We are observing it happening. The stagnation of wage earnings began at the time US oil production peaked. The currently observable rapid decline in demand for wage slaves just happens to coincide with global peak energy.

        The actual rate of energy decline is accelerated by the associated trend of impoverishment of wage slaves and the growing pool of would-be wage slaves. And thus we will get to see the effect of Ugo Bardi’s Seneca Cliff. Named for 1st century Roman citizen Lucius Annaeus Seneca and based on this quotation:

        “It would be some consolation for the feebleness of our selves and our works if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.”
        – Lucius Anneaus Seneca, Letters to Lucilius, n. 91

        Demand for energy is falling faster than production, causing even the mightiest producers to teeter on the edge of insolvency. The prediction a few years ago by petroleum geologist Jean Laherrere that the Bakken fields would be played out around 2020 appears to be on target.

        The great NY Yankees catcher Yogi Berra is said to have quipped that “predictions are hard, especially about the future.” I agree, but sometimes you just have to throw caution to the wind.

        Ugo Bardi, an estimable professor, and a whole pack of fellow academics joined by the usual crowd of entrepreneurial hustlers are pushing a pipe filled to the brim with Hopium that ruination can be avoided or mitigated by works worthy of a sorcerers apprentice.

        We just have to assemble a vast armada of solar panels and wind turbines, plus a few billion tons of rechargeable batteries and turn every suitable topographic feature of the landscape into pumped storage, et voila!, energy slaves forever.

        An admirable dream, but I’m gonna let that bandwagon go on down the street without me. I share the opinion that boat sailed for NeverneverLand quite a long time ago. What already exists and whatever still gets built will keep some lights on for awhile, but preservation of industrial civilization seems to me unattainable.

        • Fast Eddy says:

          For me optimism is ordering 100 more capsules for the despised Nespresso machine….

          • Duncan Idaho says:

            “we must live the dark ages with the human species we have, not the one we might wish we had. “

    • Duncan Idaho says:

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