The Economy Is Like a Circus

The economy is like a circus. It comes to town, and eventually it leaves town. We get paid in tickets to this circus. As long as the circus stays in town, we can use our tickets. Once the circus leaves town, we are pretty much out of luck.1

The reason the circus stays in town is because the economy stays in sufficient balance that the economy can go on. This is much like the way many other self-organized systems function. For example, our bodies continue to function as long as there are suitable balances in many different areas (oxygen, food, water, air pressure). Ecosystems continue to function as long as there is sufficient rain, adequate temperatures, and enough sunlight.

There are many different views as to what limits we reach in a finite world. Some people think we will “run out” of oil, or of energy products. Some think that the energy return will fall too low, as measured in some manner. I see the adequacy of the energy return as being very much tied to the financial system. Thus, the forecast by US Atlanta Fed GDPNow indicating that first quarter 2017 US GDP growth will only be 0.5% is likely to be a problem, assuming it is correct.

Our economy operates on economies of scale. Once we get too close to shrinking, or actually start shrinking, we reach a point where the economic circus starts to leave town. At some point, we will discover the circus is gone. The economy we thought we had, will have left us. If some people are survivors, they will need to pick up the pieces and start over with an entirely new system.

What the Economy Needs to Do to Keep Functioning

For our economy to continue functioning, a number of variables are important:

  • Prices of commodities – Prices cannot be too high for the consumer to afford goods made with them. They also cannot be too low for producers. If prices of oil and other commodities are too low for producers (as they are now), producers need to keep raising debt levels to stay in business. There is a risk that production will stop from lack of adequate new investment, or from the bankruptcy of producers.
  • Wages of non-elite workers – These wages need to be high enough so that workers can afford goods made with commodities, such as cars, homes and computers. These big purchases tend to use commodities even after they are made, adding to “demand” for commodities. If commodity prices such as oil are too low (as they are now), it is likely related to the inadequate wages of non-elite workers.
  • Mandatory payments required of non-elite workers, such as taxes, health care, and education – It is not just wages of non-elite workers that are important. So are required payments, such as payments for taxes, healthcare and education. Clearly, the lower these payments are for non-elite workers, the better the economy functions.
  • Interest rates – Low interest rates are helpful for some parts of the economy, while high interest rates are good for other parts. Low interest rates help create affordable monthly payments for goods such as homes and cars. If interest rates decline, the market prices of assets such as real estate, shares of stock, and bonds tend to rise. These rising values are of great benefit to owners of these assets, since they can sell these assets and use the proceeds to add to current consumption. Conversely, high interest rates are important to pension plans and to others depending on investment income. Banks have a problem if there is not a big enough “spread” between short and long interest rates.
  • Increase in debt – An increase in debt indirectly makes the economy “look” much better. Increasing debt acts to raise wages, since some of this growing debt adds to funds available for wages. The higher wages tend to increase demand for goods, and thus indirectly raise commodity prices. A virtuous circle starts, pushing up economic growth, provided an adequate quantity of very cheap energy products is available (under $20 barrel oil, for example) that can be used to make goods and services. Increased debt works less and less well, as the price of energy products increases.
  • Inflation rates – The higher the inflation rate, the easier it is to repay debt with interest, since most debt is not adjusted for inflation. Also, high inflation rates help keep prices of homes and other buildings from falling as they age, making the use of mortgages more feasible. If the price of a commodity, such as oil or coal, is high and then falls, debt based on the prior high value of the commodity is likely to become a problem.
  • Quantity of energy products affordable by economy – It takes energy products to produce goods and services. If the price of commodities is low, it is possible for buyers to purchase a large quantity of these products, even on a low budget. Current relatively low prices tend to help the economy, even if producers cannot afford to make adequate investment in new production with such low prices. Thus, today’s low energy prices make the economy look good for at a short time. Afterwards, the outlook is less rosy.

Ultimately, the issue at hand in determining whether the “circus will leave town” is whether non-elite workers are able to adequately make a living. We know from biology that the return on the labor of animals must be adequate (animals must be able to get enough food by walking, swimming, or flying) or their populations will collapse. The same thing is true for humans. We also know that prior civilizations that collapsed often had wage disparity problems. When this happened, non-elite workers were no longer able to pay adequate taxes. Their nutrition became poorer. They tended to become more susceptible to epidemics. These were things that pushed the economy toward collapse.

The goods and services that non-elite workers can buy with their wages represent the benefits of our fossil fuel powered energy system, as distributed to the most vulnerable workers in the system. Once these benefits start falling too low, the system can no longer function.

There are some indications that benefits are already too low for the economy to keep functioning in a “normal” manner. A major such indication is the fact that energy prices have remained far too low since mid-2014. It is becoming increasingly clear that there really is no oil price which is both high enough for producers and low enough for consumers. We may be living on “borrowed time,” using an increasing amount of debt to support energy producers.

Thus, world economic growth rates may already be too low to keep the world economy operating. Regulators who consider only the US do not seem to understand the world situation. Because of this, they can easily make moves that make the situation worse, rather than better. For example, they have already started raising interest rates and are planning to sell securities currently held by the Federal Reserve.

A Few Graphs Giving Hints of Our Problem

Economists have not understood what our problems really are, so they have tended to omit some important issues from their analyses. I put together a few graphs that might give a little insight as to what is happening.

Interest Paid by Households 

Interest paid by households is important because this money is transferred to banks, insurance companies, and pension plans. It leaves the households who paid this interest poorer. Buying goods using debt is convenient, but it has a cost involved.

BEA Table 7.11 shows a category called, “Interest Paid by Households.” If we compare this to BEA “Wages and Salaries,” we find the relationship shown in Figure 1. Admittedly this is not an exact comparison; there are some people who are not wage earners who are making interest payments, for example. I have not tried to offset “interest paid by households” against “interest received by households,” because the households benefiting from interest payments are likely very different households from those making interest payments. They are likely richer, and at a later stage in their lives.

Figure 1. US Household Interest Paid (from BEA Table 7.11 Interest Paid and Received by Sector and Legal Form of Organization) divided by Wages and Salaries from BEA Table 2.11, “Personal Income and its Disposition.”

The pattern might be described as follows:

  • A rapid run-up in interest payments that took place until about 1986
  • A general flattening, with new peak in 2007
  • A rapid fall starting in 2008

It seems to me that the pattern up to 1986 reflects the general run-up in consumer debt levels during this period. The amount of interest paid is also affected by interest rates, such as ten-year treasury rates.

Figure 2. US Federal Bonds 10 year interest rates. Graph produced by FRED (Federal Reserve Economic Data).

Interest rates started falling in 1981. These higher rates only gradually worked their way into the system because many people had bought houses earlier and were able to keep their existing mortgages at low interest rates. The amount of debt outstanding continued to rise, allowing the total amount of interest paid to continue to rise until 1986.

After 1986, rising debt amounts and falling interest rates came closer to offsetting each other (Figure 1). By 2008, the economy was in a severe recession. In order to help get out of the recession, interest rates were lowered through Quantitative Easing. These lower interest rates, besides helping the economy in general, helped oil prices gradually increase back to the $100+ per barrel price level that they needed to be profitable. Oil prices had temporarily dropped below $40 per barrel in December 2008.

Figure 1 shows that interest payments for several years amounted to about 12% of wages for households. Interest payments are now down to 8% of wages. Even at this level they are significant. They are likely higher than this for those with low wages and high debt. If interest rates rise significantly, the most vulnerable are likely to find their discretionary income reduced.

Rising Healthcare Costs 

Figure 3 shows a comparison of US healthcare costs to GDP and to wages. A huge increase in costs is evident in the 2001-2005 periods, and also in the 2008-2010 period, especially compared to wages.

Figure 3. US Healthcare costs as a percentage of GDP and as a percentage of wages. Healthcare costs from cms.gov. Wages and salaries and GDP from BEA.

The increase in healthcare costs since 2008 is one of the costs putting pressure on the economy, and leading to a need for lower interest rates.

The Affordable Care Act should be affecting amounts for the latest years, since the ACA started increasing the number of people with insurance starting about 2014.

Figure 4. Kaiser Family Foundation chart of percentages of non-elderly people without healthcare insurance, from this Source.

A person might wonder why 2014 and 2015 costs didn’t rise more, with so many more people added to the system. Perhaps care that was being given “free” by hospitals is now being charged back to patients. Or perhaps many of the people choosing to purchase coverage through the program were already insured elsewhere in the system, so were not really added to the healthcare system through the Affordable Care Act.

One very recent US healthcare change is the addition of an automatic penalty for not having healthcare insurance. This penalty began for tax year 2016, filed in the beginning of 2017. This provision particularly hurts young people, because rates are structured in such a way that the rates for young people subsidize the rates for older people. Thus, young people often find that buying health insurance is far more expensive than their out of pocket costs for health care would have been, without insurance.

Young people who are affected by this new requirement will find that they need to cut back on other expenditures (such as restaurant visits), if they are meet the requirements of the law–either buy healthcare insurance or pay the mandated penalty. This change will begin to adversely affect the economy in 2016. Bigger impacts are likely in early 2017, when taxes are filed.

Falling Wages Relative to GDP, and Rising Wage Disparity

The path to lower wages as a percentage of GDP has been a bumpy one. The general pattern is that when the economy is booming, wages tend to grow as a percentage of GDP. Recession tends to send wages down as a percentage of GDP. US wages seem to have increased somewhat since 2013, perhaps because the price of oil is down, and the US dollar has risen to a relatively high level. This is part of what allows some people to talk about the “tightening labor market,” and gives them confidence in the economy.

Figure 5. US wages and salaries divided by US GDP, based on BEA data.

There has been significant growth in wage disparity since about 1980, both in the US and in many other developed countries. Figure 6 shows some data for the US.

Figure 6. United States Income Distribution_1947-2007 in 2007$. The data source is “Table F-1. Income Limits for Each Fifth and Top 5 Percent of Families (All Races): 1947 to 2007”, U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements. Graph is from Wikimedia Commons http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg

As the economy becomes more “complex,” in other words, “specialized,” wage disparity tends to be more of a problem. Work that could previously be done by manual laborers is done by machinery, or is transferred to low wage countries. Many people lose their jobs, and have difficulty finding good-paying replacement jobs. All of this contributes to inadequate wages for non-elite workers.

Role of Inflation and Rising Commodity Prices in the Economy

We rarely stop to think how important inflation is to the economy. For example, if inflation is sufficiently high, it will slightly offset normal depreciation in values of homes and business properties. Thus, home and business property values will tend to slightly rise over time. If banks can count on values of structures rising, rather than falling, over time, lenders can assume that mortgage loans are fairly risk-free, because the lender can count on getting its money back through the sale of the property, if the mortgage-holder defaults.

This same principle holds when energy properties, such as coal mines and oil fields, are financed. As long as energy prices keep rising, there is a good chance loans can be repaid. Once energy prices fall, debt defaults become a problem. Oil exporting countries also find that the taxes they can collect fall significantly. As a result, energy-exporting countries are in a far worse economic position once energy prices fall. Exporters of other commodities, such as metals, have a similar problem if prices fall.

In the last two paragraphs, I mentioned the impact on lenders and governments of rising or falling prices. Owners of properties are also affected by rising or falling prices. If prices rise, these owners can sell their assets, and make a profit. In fact, these owners have often purchased their properties with debt. If the price of the property rises, but the amount of debt is unaffected by inflation, the owner of the property can often get a disproportionate benefit of the price rise. Of course, if the value of a property falls, the property-owner is disproportionately affected by the fall of the price.

We are so used to a rising-price scenario that we have little understanding of how a flat or falling price scenario might work.

To get a little idea of how much inflation has in the past been working through to asset prices in the United States, I looked at some information provided by the US Bureau of Economic Analysis. I compared these amounts to GDP, rather than asset prices, to get an idea of how much impact they have, relative to each current year’s activities (Figure 7). There is about $3 of assets of the types BEA analyzes for every dollar of GDP, so the impact, relative to GDP, is about three times as high it would be, relative to the asset prices themselves.

If this same relationship holds elsewhere, a person can see why a commodity-producing country might have a big problem, if the price of that commodity suddenly falls. There is huge “balance sheet” impact that doesn’t directly affect current GDP as reported (since GDP has to do with current goods and services produced). But it can have a major impact on the country, as it goes forward, because affected loans are much less likely to be repaid. Countries often try to be lenient with lenders, hoping that commodity prices will rise again. But if the drop in prices is permanent, countries must use more and more extreme measures to hide the problem of loans that have a low probability of repayment in a low-priced commodity environment. Eventually, these loans seem likely to default, if prices do not rise sufficiently. China and many commodity-exporting countries seem to be affected by this problem.

 

Figure 7. Changes to US Fixed Assets, based on BEA Table 5.10, Changes in Net Stocks of Produced Assets.

BEA shows three amounts of interest with respect to US assets (Figure 7):

  1. Inflation – Changes in asset values based on changes in the general price level
  2. Re-evaluation total – Changes to asset prices in particular; includes changes because assets are taken out of service because of disaster or because a business is no longer profitable. Note the spikes related to the housing bubble of the 2003-2006 period and the corresponding dip during the Great Recession of 2007-2009.
  3. Depreciation – Expected amount of new investment needed to offset “consumption of fixed capital.” This rate is quite high, (about 15.7% of GDP recently) because the asset base includes fairly rapidly depreciating assets, such as cars and computers, besides buildings of all types, and intellectual property such as computer programs.

The last year shown is 2015. Inflation (relative to GDP) was only 1.2%, and the re-evaluation total was only 0.3% of GDP. (Calculated as percentages of the assets involved, these inflation rates would be only a third of these amounts.) These low inflation rates make it very difficult to operate a debt-based economy. A shift from inflation to deflation would be a major problem. Unfortunately, it is very difficult to get much inflation, if the wages of non-elite workers remain very low.

Conclusion

We have kept our economy expanding through growing debt use and growing energy use. I described this process in my post, What has gone wrong with oil prices, debt, and GDP growth?

Now we seem to be reaching the end of the line. The economy is getting very close to shrinking. When this happens, we are getting close to economic collapse–the economic circus is starting to “leave town.”

People who think our only problem is “running out” and “high oil prices” don’t see the problems the economy is developing right now. These problems are much more subtle, but they can have a devastating effect. The Federal Reserve talks about inflation rates above 2% being too high, but inflation rates below 2% are at least equally problematic. Somehow, the debt system needs to keep operating for the whole system to work.

We are now at the point where the economy is decidedly unstable. Little things can affect it, like the Affordable Care Act requirement that uninsured people buy healthcare insurance, or pay a penalty. Low commodity prices make debt repayment more difficult in countries producing those commodities.

We should not be too surprised if the economic circus starts to leave town. There are simply too many pieces that are now unstable. The US Government is facing a shutdown in the near future, unless its debt ceiling can be raised and funding can be enacted. The world is depending on China for economic growth, but China’s debt is becoming unmanageably high. Japan’s debt is also unreasonably high. Oil exporters are becoming increasingly unstable, with continued low prices. We can find problems in almost every country of the world. It looks like it is only a matter of time, until one of these problems starts a downward spiral.

 

Note:

[1] Thanks to commenter “Lastcall” for this analogy.

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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1,952 Responses to The Economy Is Like a Circus

  1. Fast Eddy says:

    Oil has been overproduced since late in 2013. That glut decimated oil prices in 2014, finally bottoming at a low price below $30 and now recovered towards $50, but still well below a price that enables anyone to make a decent profit except for the conventional Middle East producers – and even THEY need a far better margin to support their national budgets.

    But how have oil companies reacted? Did they stop drilling oil at a loss? No, not really – instead they cut their budgets for investments in new projects, trimmed costs to the bone and called on technology to make getting a barrel of oil out of the ground as cheap as possible.

    http://wolfstreet.com/2017/05/06/self-sabotage-what-are-us-oil-producers-thinking/

    What are they thinking? It sounds as if they are not thinking … rather they are acting on a directive to slash costs and keep the oil flowing as we approach collapse.

    What is happening is completely rationale.

    Surely it should be obvious to the author that this is what peak oil looks like … clearly he does not understand this

    • Fast Eddy says:

      R Davis
      May 6, 2017 at 1:10 am
      “selling ever increasing amounts of oil on the market at a loss”

      Is it possible that the customers cannot afford to by / cannot afford to pay market prices ?
      What happens to you, when your customers can only afford to stand outside the window of your store, gazing at your products with desire & empty pockets.
      What do you do ?
      Pull down the blinds to minimize your pain & anguish.
      Oil keeps .. right
      It does not have a used by date .. right
      Phew !
      In the meantime the consumer will have to go without .. causing discontent, panic, civil unrest bla, bla, bla.

    • 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.
      Gail Tverberg says:

      It is sort of hard for elite to be saved, without continued access to food, water, electricity, and oil to operate vehicles. In a nuclear war, all of these would be at risk. The government would somehow need to keep the entire supply chain of all of these alive. I don’t think it would happen.

  2. Cliffhanger says:

    So, you would surmise from reading the papers (or their web editions) that the health care problem was simply a matter of apportioning insurance coverage. That is what the stage magicians call misdirection. Any way you cut the dynamics of health insurance, as practiced in the USA these days, it is nothing but racketeering, literally a conspiracy between informed players to swindle uninformed “patients.” The debate in congress (and the news media) is just about who gets to be swindled.

    -jhk

    • 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.
      Gail Tverberg says:

      I haven’t read the whole James Howard Kunstler article, but I expect that my take on the situation is not too different from his.

      We have put together a healthcare system in the US that is horribly expensive and doesn’t work very well. It is based on providers making money, not on curing patients. Doctors have a range of “medical treatments.” These often do not include any knowledge of what has happened in the last 10 years in terms of research on what the underlying cause is of the condition–what deficiency in food or exercise might be changed to correct the condition, for example. Instead, they have pills and surgery to hand out to fix any condition imaginable. The system is set up so that those over 65 can cure their loneliness by going to visit doctor after doctor, in the quest for more tests, pills, and surgeries that will somehow make them feel better. People who seem to be near death are kept alive as long as possible, often in intensive care, even when it is clear there is no hope of recovery. Surgery is done on very elderly patients, if they or a spouse asks for it. I know my father in law had brain surgery when he was 90, because my mother in law wanted it. The assisted living facility where they lived would call us and demand that we get treatment for them of some rash or other minor problem.

      My father was a medical doctor, first a general practitioner (delivered babies, did surgery, counseled patients, etc.) and then became a psychiatrist, after he developed a latex allergy. The government facilitated the transition with funding for living expenses and schooling starting about 1965. Pills for curing/mitigating psychiatric diseases had come out, and the government wanted to empty out the many large facilities warehousing patients. Unfortunately, this did not really work as planned. Quite a few of the people who had been in mental facilities ended up as homeless, because the drugs did not work as well as planned, and because people did not take them consistently.

      As a general practitioner, my father spent every spare minute reading medical journals. (He did this, even after he retired.) He would complain that the other doctors never looked at a medical journal. Their primary concern seemed to be earning money.

      Anyhow, the whole system needs to be changed to greatly reduce its cost. I think healthcare needs to be a government sponsored program, available to all, but covering a relatively limited number of conditions. It needs to be based primarily on what patients can do to keep themselves well, rather than “cures” for everything imaginable. Health care providers cannot be terribly high paid. The whole “specialty” situation has become hugely overdone.

  3. JT Roberts says:

    This system resembles Mr. Todd’s Wild Ride. It starts off in a library. This is fitting because information is the foundation of the universe. Then it passes through Todd hall into a barn yard. The biological endowment here on earth. After going down the One Way Street which is the point of no return. It then witnesses the order and disorder of human civilization. Starting with a judge ending with a shoot out. The final scenes are running on a railroad track and being hit by and oncoming train which is the thermodynamic collapse of the system. Ending in a Hell scene representing death. Just a ride like the Carousel of Progress.

  4. Duncan Idaho says:

    The World Is Buying American Diesel as Fast as Refiners Can Make It

    https://www.bloomberg.com/news/articles/2017-05-04/world-buying-american-diesel-as-fast-as-refiners-can-make-it

    (The diesel engine is the most important thing keeping BAU together)

  5. Duncan Idaho says:

    Canada Housing Bubble Pops and Looks Similar to US Housing Bubble: Canada’s Largest Alternative Mortgage Lender Crashes in Dramatic Fashion.

    http://www.mybudget360.com/canada-housing-bubble-home-capital-group-canada-real-estate-bubble/

  6. xabier says:

    So, on a more cheerful note: what are everyone’s vacation plans this summer? 🙂

    • DJ says:

      Hyperloop to of Saturns moons, have not yet decided which.

    • Fast Eddy says:

      Paris – Malta – Hong Kong … end of June…. provided I have not starved to death by then

      • Eddy you are a one man global warming machine

        • ITEOTWAWKI says:

          FE is putting his money where his mouth is….doing his part to keep BAU chugging along as long as possible 🙂

          • xabier says:

            I’m spending as much as I dare in support of BAU, not by travel but in local shops, staffed by nice people who are pleasant to talk to – few such still exist, and they make my urban experience bearable. And, guess what? These places give helpful discounts to regulars (as I do to my regulars).

            No chains. No one in a chain shop ever really makes personal contact, it’s depressing.

            I’ve just discovered a little cafe in a side street where the owner is clearly on his own and so pleasant and human it’s goodbye to all the rest: pleasant view of a 800 year-old church from one’s seat as well. I hope he survives, he deserves to.

        • Fast Eddy says:

          I think I might come back to Bali again in August… someone needs to counter these fools who are buying and flying less in the false belief that they are doing the world a favour…

          I do appreciate the compliment but Leo Dicaprio and Elon Musk are far more deserving… one really needs a private jet to make a significant difference….

          • ITEOTWAWKI says:

            Leo Dicaprio, enjoy his movies, but his environmentalist gig hahahahaha, what a joke…classic case of “Do as I say, not as I do”…Dude enjoy your jet-setting lifestyle by all means, but then don’t come preaching to the rest of us how we have to save the planet…another clueless human being who does not understand that BAU is keeping him and the rest of us alive…

    • Yorchichan says:

      Ibiza. Been already at Easter. Thank demand destruction and budget airlines for the £27 return air fare from Manchester. 🙂

      • ITEOTWAWKI says:

        Nice! World’s headquarters of Electronic Music, a nice gift (IMHO) of our Industrial Civilization 🙂

      • xabier says:

        Generations of Northerners would have killed to have such a cheap escape route to sunnier climes (distant ancestors from Bolton, by the way)!

        Such are the miracles of the end days of industrial consumerism.

        When this all ends, if we are still about at all, the old saying will apply:

        ‘They say a starvin’ dog’ll eat a bit o’ dirty puddin”……….

    • Kurt says:

      Road trip in a tesla. Maybe put some solar panels on the house. Also looking to pick up my very own storage container – cheap of course.

      • Fast Eddy says:

        Solar panels are good — the manufacture of them involves the burning of tremendous amounts of lignite coal — every little bit counts!

    • grayfox says:

      I have no summer travel plans but plan to spend time gardening, hiking, bird-watching and visiting a local cafe. Also, I’ll be training for a couple of local mile footraces.

      • DJ says:

        Competing over only a mile? If you are an adult that is impressive.

        • grayfox says:

          I typically do the mile, 5k, 10k, 8 Mile, and 10 mile races each year. The mile is very tough race. I’m not an “elite status” runner, by any stretch of the imagination, but I like a challenge.

          • DJ says:

            Yes, middle distance is serious running.

            But doesn’t impress much on the sheeple who disregards speed.

            Like: a mile in 6:00 would impress no one even though being equal to about 90 min half marathon. But a 2:27 half marathon is kind of impressive on those folks …

    • merrifield says:

      San Francisco (wedding), Seattle (food) and watching the solar eclipse in Oregon in August.

      • Duncan Idaho says:

        Just moved from Mexico (San Pancho) to Bend OR.
        The eclipse is going to bring the hoards, as being on the Eastern side of the Cascades, good viewing is almost assured.

        I’m done with Asia, and not going back.

        • jarvis9077
          Jarvis says:

          Off to the doomstead in the electric car. It’s on a beautiful lake and there’s no better way to start the day than a long swim and coffee on the dock. We spend the day cycling around to the 10 wineries that are located close by and always a couple of hours in the garden. In other words one foot in the doomsday world and one in delusistan! Does wonders for your sanity.

        • merrifield says:

          I live in Eugene, which won’t quite have a totality, so will drive up to Salem unless it’s supposed to be cloudy. If so, will join you in Bend!

    • Karl says:

      Well, we got back from Belize about 6 weeks ago. It was a nice trip sans children. Lots of jet fuel consumption. August is going to be a driving trip with kids to one of the East coast beaches. Not nearly as much FF consumption 🙁 . I am planning on adding a whole house generator with propane tank this summer though, that should help the cause some……

      • Fast Eddy says:

        ‘Lots of jet fuel consumption’

        ++++++++++++++++++++++++++++++++++

        • 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.
          Gail Tverberg says:

          I am headed on a trip to Japan on Monday for two weeks, on a commercial tour. Don’t want to announce this too widely, though. Will try to keep commenting, assuming I have internet access. Will also keep the use of jet fuel up.

          • Fast Eddy says:

            Excellent! Long haul flights are where it is at. I’ve got a 5 hour flight next Sunday then a 12 hour one on Monday topped with a 1.5 hour flight from Auckland to Nelson.

            Then …. I have two 12 hour flights to Europe in late June — and two more on the way back + 4 more short flights involved…

            I gave so many flights just the thought of all this jet fuel involved makes me giddy

  7. Fast Eddy says:

    Consumption in the rich OECD bloc fell by 0.4pc in February from a year earlier, and it has been lacklustre in emerging markets. “Oil demand growth is very poor,” said Dan Smith from Oxford Economics.

    The picture of soggy demand is even clearer for industrial metals. Iron ore has crashed by over 30pc as stockpiles reach record levels in Chinese ports and steel mills suspend production. China accounts for half the world demand for iron ore, copper, and zinc, among other metals.

    http://www.telegraph.co.uk/business/2017/05/04/commodities-slump-china-tremors-opec-failure/

  8. A stray thought, I raised this earlier but only got a sensible response from doomphd.

    Given that breakdown in effective cooling in fuel rod ponds in a SHTF scenario appears to be regarded as an extinction level event.

    They use water at the moment as its cheap, there is an existing low cost transport network, it serves to block/absorb the radiation and the fuel assemblies can easily be fished out of it when required. Only significant issues appear to be that you need to minimise the corrosive effect of water on the fuel assemblies and you need an active system to compensate for evaporation and keep the ponds topped up. Taking a feed off a river or rain gathering might serve to deal with the latter issue as long as precipitation and weather patterns remain consistent but if the fuel assemblies corrode you are likely to have a problem.

    If you aren’t expecting to be reprocessing the rods then replacing the water with anything that might bind the stuff up in a solid matrix and reduce likelyhood of it dispersing/reacting would be beneficial. Real issue is identifying suitable materials.

    If we are concerned with mitigating an extinction level event then ensuring that there sufficient supplies of sand, clay, lead, sodium borate, whatever located near to each fuel pond so that in the event of a collapse, the last action is to dump the stuff in the pond and leave.

    Even if you eventual end up with a puddle of lava the radioactive crap is likely to be a lot more bound up and contained than just leaving the fuel assemblies in a pond of water waiting for the active cooling/replenishment system to run out of fuel.

    • Fast Eddy says:

      How about we line up thousands of people and they just squat and take dumps onto the fuel rods…

      If you are going to suggest solutions — it would be useful if you might provide some references that indicate that the solutions are feasible… maybe a scientific study that demonstrates that ponds can be contained without water… (and btw – diverting a river into a pond will not work — if you took a few minutes to understand how a pond works you would quickly understand that these are high tech computer controlled facilities that require a very specific and constant water temperature)

      Otherwise stop wasting my time with this nonsense

      • They use water to cool very hot (radioactive decay wise) fuel rod assemblies. I thought we were concerned with a scenario when the cooling stops, thus resulting in the water evaporating, the fuel assemblies breaking down/melting/burning and dispersing their contents as vapourised/particulate smoke which would be very unpleasant to breathe in.

        Anything that could stop the above would be beneficial, I raised it on the off chance someone here might have sufficient expertise to actually respond constructively!

  9. Cliffhanger says:

    This is how you become after discovering OFW!
    http://imgur.com/TwmhP0i

  10. Cliffhanger says:

    1. Society is very reliant on cheap oil.

    2. There is projected to be a shortage of cheap oil between 2020-2022

    3. Shale and tar sand oil are very expensive and can never fill the gap left by cheap oil.

    4. Imports are going to be very expensive. Most people will lose their jobs. most people

    will not be able to pay their debt.

    5. Because most dept cannot be paid, money becomes worth very little.
    Very little of society can operate on expensive oil. For the last one hundred years, we

    have created a civilization incredibly reliant on cheap oil.

    6. It is reasonable to expect anarchy when there is no more cheap oil

    • merrifield says:

      Temps in the Arctic were close to 50 degrees F above normal this week. Unbelievable that some people think climate change is fake or will be beneficial to the world.

      • Fast Eddy says:

        The climate has always been changing … so what?

        And even if this is caused by man – so what. What do you suggest we do to stop it?

        Nothing can be done. So please f789 off with this climate change bullshit. You are wasting my time.

        http://earthguide.ucsd.edu/virtualmuseum/images/raw/IA_Fig7_0_2.jpg

        • Yorchichan says:

          “Nothing can be done. So please f789 off with this climate change bullshit. You are wasting my time.”

          A little harsh. After all, there is not a lot can be done about the impending financial collapse due to lack of cheap energy and diminishing returns, but we still talk about it. The only argument for not talking about climate change (and it’s a good one), is that Gail prefers this site to be about the economy. If climate change is beginning to impact the economy in a big way, then it becomes fair game to talk about it.

          • Fast Eddy says:

            This site is about energy – and the collapse of BAU.

            Climate change discussions are not relevant — but that is not my beef — my beef is that people moan about climate change implying that if only we stopped burning fossil fuels we could change things.

            We need to burn MORE fossil fuels. Because that is what keeps BAU going.

            Therefore unless AGW is discussed in that context – it should not be discussed at all.

            Burn More Coal Now.

        • Rendar says:

          What’s missing from the mainstream global warming narrative is the earth’s relationship with the sun.

          See here:

          https://www.youtube.com/watch?v=5MvAnECkaME

          “Sunspots going down, solar irradiance going down, flaring going down… the polar magnetic fields of the sun are weakening as well. This is partially what’s leading to that speculation that we could be coming upon another grand solar minimum.”

          The video references an article published by The Irish Times, July 12, 2013, titled “Sun’s bizarre activity may trigger another ice age”:

          http://www.irishtimes.com/news/science/sun-s-bizarre-activity-may-trigger-another-ice-age-1.1460937

          “It all points to perhaps another little ice age. It seems likely we are going to enter a period of very low solar activity and could mean we are in for very cold winters.”
          – Ian Elliot formerly of the Dublin Institute for Advanced Studies

          As much as we humans would like to consider ourselves all-powerful and central to the universe there are far greater forces at play.

          Here’s a novel idea though: forget the mainstream global warming narrative, which would have you living your daily life in fear and feeling guilty about how fuel efficient your car is, how much plastic you use, how often you recycle, etc. That’s the point of it: to keep you frightened and overwhelmed by a manufactured global problem that is so massive you can hardly wrap your head around it, much less do anything to solve it. Instead, how about focusing on reducing pollution and waste for the sake of maintaining a safer, healthier and more enjoyable ecosystem? “I’m a human being on this planet and I don’t want to live in a poisoned ecosystem.” Simple. No need for the end-of-the-world, doom-and-gloom, David vs. Goliath, man vs. nature mainstream global warming narrative whatsoever.

          • Fast Eddy says:

            In that case we must – with a sense of great urgency – burn more fossil fuels to offset this horrific outcome.

          • Slow Paul says:

            This was my thinking for a long time as well, climate issues got much more attention than it deserved compared to enviromental issues, which I felt was more acute. The former might have been easier to sell from a business (as usual) perspective. Save the planet, buy this EV and that solar panel.
            The latter is a tougher sell. Save the enviroment, have less babies, use less water, eat less meat… not so much money to be made.

            But the climate data for the last couple of years points us toward runaway climate change. So now my thinking is: since these changes happens so fast compared to earlier abrupt climate change (extinction events) there is a VERY good chance that humans are one of the main causes. To dismiss this entirely is just absurd.

            The problem with AGW is that there are no solutions. But in politics you can’t talk about a problem without suggesting solutions. So then you get all this “green” industries making “solutions”. And then you get a lot of people dismissing AGW because they see that these solutions are BS therefore AGW must be BS.

            If AGW had a simple solution, nobody would question the science. Everybody would believe in it and fix it. But we can’t fix it, so we do this silly dishonest dance instead.

      • aubreyenoch says:

        So true FE. Spoken like a loyal Venusian.

        • Yorchichan says:

          With his dislike of climate change discussion, sometimes I think Eddy is one of the aliens from The Arrival. It could explain why he likes to post pictures of Charlie Sheen also.

          Other times I think he is Gail’s evil alter ego. He’s admitted before saying the things Gail would like to say but can’t.

  11. Fast Eddy says:

    White South Africans Are Preparing For “Removal of All Whites Within Five Years”

    http://www.zerohedge.com/news/2017-05-04/white-south-africans-are-preparing-slaughter-and-removal-all-whites-within-five-year

    Hate to be a doomsday prepper in South Africa….

  12. Cliffhanger says:

    When there are no viable solutions, politicians are reduced to feeding shrooms bullshit. It has become a matter of who gets pushed out the back of the bus first, without getting blamed for doing the pushing….Republicans are especially vulnerable since a big chunk their base is largely made up of folks who will be most vulnerable to cuts but haven’t figured that out yet. They can only blame the ‘liberals’ for so long now that they have both Houses and the White House. It’s going to be funny watching both silly parties try to placate their constituencies as limits to growth reveals their impotence.

    • Duncan Idaho says:

      Repugs are notorious for voting against their own interest.
      The neo liberal elite has key words that have been seared into their sheep’s neural pathways that they can control them with ease.

      • +10 post DI. The R’s lead them around like oxen with rings in their noses.

        Did you see the Sat. Nite live bit they did with Trump meeting with his followers. Several things that will hurt the people are brought and he says, “But you’re still with me, right?!” And they chorus in with clapping and yes’. Most of the stuff will be going but then they mention lead in the water, and he says, “That’s staying, but your still with me right.” “Oh, yes you’re our president!”

        • xabier says:

          In stressful times, intellectual capacity declines severely, and modern education does not encourage critical thinking in a society saturated by propaganda of all kinds: moreover, people need to believe that someone supposedly powerful is looking out for their interests. Such people have existed historically, but very rarely. To face the reality of being on your own at the bottom, in a declining, system is too cruel for many, too bleak.

        • 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.
          Gail Tverberg says:

          I suppose it might even work this way.

  13. Fast Eddy says:

    The price of oil plunged nearly 5% today. West Texas intermediate is now at $45.41, down $2.41 per barrel. It has been a wild ride since April 12, when it still traded at $53 and the industry was talking about $60. Over the past three weeks, it has plunged 15%. It is now at the lowest level since November 30, when OPEC agreed to cut production.

    This chart shows the plunge over the past three weeks in five-hour increments:

    http://wolfstreet.com/2017/05/04/heres-what-oil-did-today-and-over-the-past-three-weeks/

  14. Cliffhanger says:

    I imagine the economic collapse will look much like this.What do you folks think?

  15. Van Kent says:

    https://robertscribbler.com/

    Just making a mental note to self; “the new normal is abnormal cold/ heat waves of +/- 30 C a melting Greenland ice, and raging wildfires in Siberia and droughts in India” Check.

    Now, what exactly grows in +/- 30 C abnormal weather swings.. hmm.. hmm.. not much I guess

    • xabier says:

      What grows?

      Delusion, madness.

      And Elon Musk will wake up in the morning and feel sad: so we have to build him that Mars mothership.

  16. ITEOTWAWKI says:

    Pension plans were always going to be unsustainable no matter how you approach it:

    http://thecanadianpress-a.akamaihd.net/graphics/2017/static/cp-census-children-vs-seniors.png

  17. https://www.bloomberg.com/energy

    Brent & WTI down 1.73 today. Wha happa?

  18. Cliffhanger says:

    Just because there’s barrels by the billions locked in shale and oil sands around the world, it’s gonna take trillions in new investments to extract. Under $60 oil that ain’t happening. While some shale operators might claim they break-even @$40 investors can’t be fooled forever. Next year the world will burn, Heaven Help Us 98 million barrels per day. Refute that, https://www.eia.gov/outlooks/steo/report/global_oil.cfm

    • Van Kent says:

      Been looking at some production stats of oil, and it looks like Norms 2025 is waaay too far. Shale plugged the gap for 2014 – 2016, but even 2017 and 2018 looks a bit shaky for shale to plug. Going beyond 2020 with lowered conventional oil production and shale having so rapid a pace in well depletion, looks to me nearly impossible. Like driving a truck through a brick wall. There are some physical realities that make it a bit hard.

      But currently we still do have tankers filled with oil in harbours. Storages filled to the brim with the stuff. My bet of 2019 everything starts to brake apart, and early 2020 everything grinds to a halt, still stands

  19. 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.
    Gail Tverberg says:

    There seems to be a new article out supporting the belief that if radioactive particles get inside a person, as they did after the Chernobyl disaster, the outcome tends to be very bad. http://live.iop-pp01.agh.sleek.net/physicsworld/reader/#!edition/editions_Nuclear_2017/article/page-19330

    Chernobyl’s hidden legacy

    Historian Kate Brown argues that scientists should re-examine Soviet-era evidence of health effects from low doses of radiation

    • Harry Gibbs says:

      Can anyone here speak knowledgeably about ways to mitigate radiation poisoning or at least alleviate the suffering from it? As far as I can ascertain, 500mg Prussian Blue tablets marketed as ‘Radiogardase’ would be helpful, as would Potassium Iodide. Taking these would hardly be a panacea, I’m aware, but better than nothing. Pot to offset the nausea and booze to flush the system out would also seem to be good ideas.

    • PBS Nova aired an episode recently on the 2nd sarcophagus to go over the first at Chernobyl, because the old one is falling apart. This was done by a French team. Huge undertaking and definitely worth watching if you get a chance. They built it a safe distance away then on tracks moved it remote controlled into place, then sealed the gaps. From inside they will take apart the reactor with cranes similarly remote controlled, which will take several decades and the debris needs to be moved to another very expensive site for long term storage. That stuff will remain very hot for another 100,000 years! Oh what a wicked web we weave… Any kind of war between countries with reactors could be disastrous.

      • Fast Eddy says:

        Reactors are not a bid deal…. they contain small amounts of fuel ….

        it is the spent fuel ponds that are the problem…

        Just watch what happens when the electricity goes down and the ponds’ water boils off…

        If you are still alive post BAU…. there will be no CNN coverage of what is happening with the ponds…

        But when these symptoms being to appear…. you will know why…

        Nausea and vomiting. …
        Spontaneous bleeding. …
        Bloody diarrhea. …
        Sloughing of skin. …
        Hair loss. …
        Severe fatigue. …
        Mouth ulcers.

        Radiation sickness: 8 terrifying symptoms – Photo 1 http://www.cbsnews.com/pictures/radiation-sickness-8-terrifying-symptoms/

    • Greg Machala says:

      Or read about the Fallujah babies. Depleted uranium contamination resulted in massive and widespread birth defects. Radiation is particularly bad for the unborn. http://www.independent.co.uk/voices/commentators/fisk/robert-fisk-the-children-of-fallujah-the-hospital-of-horrors-7679168.html

  20. 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.
    Gail Tverberg says:

    I see that the Wall Street Journal is reporting “Chinese Metal Prices Tumble on Worries of Shrinking Demand for Infrastructure Projects: Rout in iron-ore market spills over to other commodities”

    https://www.wsj.com/articles/chinese-metal-prices-tumble-on-worries-of-shrinking-demand-for-infrastructure-projects-1493892753

    The closely watched price of iron ore traded on the Dalian Commodity Exchange closed down 8%, the daily trading limit, at 485 yuan (US$70.33) a ton, extending losses after a four-day rally was reversed on Wednesday.

    In Shanghai trading hours, hot-rolled coil futures also dropped by the daily maximum of 7%, while steel-rebar futures plunged 6.2% to 2,931 yuan a ton, wiping out last week’s gains.

    I see that WTI is now trading at $46.45, too.

    • Harry Gibbs says:

      Wow – WTI really tanking; down to $45.75 now. Renewed production in Libya and the growing glut in the US apparently triggering this.

      • Greg Machala says:

        I just read that Russia’s uncertainty about continuing production cuts is what caused prices to drop. I think it is likely a combination of factors. The big picture is that the global economy is contracting (since 2014) applying a downward pressure on oil prices. The attempt to put a floor under the oil price by limiting production is just delaying the inevitable.

    • Fast Eddy says:

      More Ghost Towns NOW.

  21. ITEOTWAWKI says:

    Degrowthers…fail to understand that the system we have setup for ourselves needs growth…the beast (financial system) needs to be fed growth or it dies…and takes us with it…

    http://www.alternet.org/economy/life-degrowth-economy

    • 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.
      Gail Tverberg says:

      Some people do not understand diminishing returns, and how the system works. I know that at one point, Samuel Alexander read at least some of my posts, because he has referenced some of them in his work. But he clearly does not understand the full picture.

    • xabier says:

      I have been puzzled by this, but I suspect that their view of the possibility of benign ‘de-growth’ is distorted by moral considerations and romanticism , ie imagining a world of no greed, simple pleasures, nice conversations with trees, sheep and all the other little animals, etc.

      They fail to see that they are standing as stokers in front of a huge furnace in vast ocean liner: they must feed it with rest, or engines stop and the ship drifts and eventually sinks in mid-ocean. Sailing or rowing is not an option anymore.

      The other factor is that it is a very bleak vision, which of course they shy away from.

    • Slow Paul says:

      Even if degrowth was possible, why would TPTB let it happen? Can you imagine Trump at the press conference “We are going to use less… so that Africa can use more!”

      It’s like that commenter “Hestal” last week who said everything will be OK if we delete people’s debt and just hand out cash to everyone! Some people have really dug themselves so deep into the “fix it” hole, that they lose sight of the real world and how things would turn out in practice.

    • Slow Paul says:

      People are not able to / do not want to acknowledge that the world is what it is, it turns how it turns. I guess they are in the “bargaining” phase…

    • 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.
      Gail Tverberg says:

      The Retreat of Western Liberalism seems to come to the same conclusion that I have reached, “Unless the West can rekindle an economy that produces gains for the majority of its people, its political liberties may be doomed.” Actually, my conclusion is worse than “its political liberties may be doomed.”

    • Lastcall says:

      I have on a few occasions mentioned that fossil fuels equals freedom….but it flies out the door and I am forced to discontinue as blank looks indicate incomprehension…’a rather dismal view’ was the last comment I received. This was in the context of me saying voting is a complete waste of time…big ooops there!

      When fossil fuels do finally go, bend over and kiss all your freedoms / democracy goodbye.

      Its amusing/sad to listen to the intensity of debates about public transport, saving the dolphins, the imminent arrival of google cars, LGBT..? issues etc etc on public radio. All the while standing on the sad ship ‘Titanic Debtberg’.

      • Fast Eddy says:

        I have never been very interested – nor particularly comfortable – with dinner party conversations…

        I am even less so now….

        It’s like sitting in a house that is on fire — and someone asking what I think about the pro-democracy movement in Hong Kong….

        I am sure my disinterested garbled response must leave them feeling as if they are in the presence of Chauncey the Gardiner….

  22. CTG says:

    It looks like many here have the idea of JIT systems financial systems are critical to the continuation of our modern civilization. These are the two factors that just dispels the myth that our society can have a step down collapse. It is either you have money or you don’t. It is either you have food or don’t. You cannot be a little pregnant. There is no way ever in this planet that one can eat a little food and share it with the others. So, when the food is gone, how?

    Knowledge – to me, what we have gained in our knowledge about the atoms, universe, technology etc cannot offset the loss of knowledge that no one is talking – nature, medicinal plants, smithy, animal husbandry, truly sustainable agricultural, etc. What can a nuclear scientist do when he is given a plot of farm? He can only survive in BAU. Does anyone know that the probably the fastest growing vegetable takes a few weeks to grow? Does anyone realize that while waiting for the vegetable to grow, one still needs to eat?

    Attitude – all of us are not ready to face what we are about to face. As I have mentioned many times here, life is like a itsy-bitsy paper on the bathtub. Some will feel the movement of the paper even though it is on the other end of the bathtub when the plug is pulled. More people will feel as it draws nearer to the drainage hole. Faster and faster until suddenly, plop it goes. All goes dark……

    I have mentioned it before but so true it is, no newspaper or any MSM or anyone is talking about renewables anymore. No incentives, no subsidies, no big news from any country.

    Enjoy your day. Have a good weekend. Play with your kids, Don’t put off drinking that bottle of whiskey that you have saved for a special moment.

    Autos, retail, healthcare, Puerto Rico, Alitalia, China, Japan, North Korea, Syria, Iran, debts, etc… these are symptoms of collapse. Not much differences from all other past civilization if you can look beyond the trees for the forest in which 99.9999% of the population cannot.

    Do I sound like broken record? Yes, definately. (Kurt – I know you are going to say : “We know”… move on”) We have nothing much to talk because we are of the same wavelength. We don’t need others to convince us. Those who cannot take it will leave. It is by virtue or destiny that those who have taken the red pill will be here on this website and these are the people who will stay on. These are the people who are the outcast of society. Just look at it positively, it is a gift for us to enjoy the present. When this thing happen, you will say to yourself that at least for the last xxx months/years, you have lead a very fulfilling life. I will not be like my friend who works so hard (and neglected his family) so that he can get his retirement fund full for his retirement in 20 years’ time.

    p.s. I have no timeframe as to when it will happen but it will happen at any instant (can be any trigger) and we probably have less than 3-4 days to say goodbye here.

    • psile
      psile says:

      Couldn’t agree more. When the time comes to get out of Dodge, take it. The signs will be unmistakeable, just like back when the GFC struck. Drop whatever you’re doing, go hire a 4WD, fill it with supplies from the nearest local big box retailer, grab the fam and head out. It’s not like anyone’s ever going to come looking for it, or you, when the end comes. 4 or 5 days to get out, maybe less, and I wouldn’t dawdle.

    • Yorchichan says:

      Your hardworking friend sounds a lot like me, except I know what’s coming.

      “Working hard for a future one knows does not exist”.

      Is that a definition of insanity to rival Einsteins?

    • 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.
      Gail Tverberg says:

      I think that there is a difference by part of the world on search terms, and in what gets talked about in the press. When I looked up on Google Trends a few search terms, I saw a slight downward trend for some the things you mentioned, but not a huge downward trend.

  23. DJ says:

    Statoil seems to do ok, don’t know if it is old fashioned profits or Twitter profits.

    https://www.statoil.com/en/news/q1-2017-results.html

    • Slow Paul says:

      For one oil prices have almost doubled quarter-on-quarter so results look relatively good? Second, lots of legacy oil and gas fields in the Norwegian part of North Sea which are freewheeling on old investments. Maintenance has been put off a lot since 2014/2015, only the most critical equipment gets any priority now.

    • 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.
      Gail Tverberg says:

      There seems to be a lot of quarter to quarter variability. Statoil seems to have taken a lot of write offs in the 4th quarter. I am sure the devil is in the details.

  24. Lastcall says:

    Elon Musk is doing good work; he is keeping the Millennials etc etc from opening their eyes. Just promise a glittering future thats just soooo close! Its kind of like the Rapture for Technophiles. Merely have to ‘fund a little harder’ huh?

    Just like the Pope telling everyone we just need to pray a little harder…oh and put a little something in that tray as it goes past!

    Not good to be around such passionate believers for too long, or else it will be noticed you aren’t singing from the same song sheet and then the opprobrium won’t be far behind!

    • 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.
      Gail Tverberg says:

      Right! And tax revenues relating to oil and gas extraction are too low, around the world. This affects a large number of governments of oil exporters. Many other commodity prices are low as well, also affecting commodity exporters.

      The world economy needs inflation, not deflation. Low prices lead to deflation in the cost of goods and wages, and an inability to repay debt with interest.

  25. Cliffhanger says:

    What do you folks think will happen once the oil shortages hit the world? who will get oil and who won’t? Will the whole world be furious with the United States for hogging so much of the supply? I am sure the Politicians will say “Nobody saw this coming”?But what I curious about is what will they say after that to calm everyone? Will global capitalism collapse due to these shortages? Such as the German Army leaked peak oil study concluded? Is it technically even possible to grow the world economy without more oil? Will the stock market go insane?
    http://www.nasdaq.com/article/iea-forecasts-oil-shortages-and-sharp-price-rise-by-2020-cm757712

    • CTG says:

      My personal opinion. The collapse of financial system will kill all of us way way way before any shortages or oil. Over leverage systems will fail “bigly”and fail it will. It is just a matter of time.

      • Cliffhanger says:

        You don’t think it will make it for another two years? Jesus I hope you are wrong. Why do you think that?

      • ITEOTWAWKI says:

        Exactly CTG…we will disappear way before we empty out the world’s resources…we will be long gone and all the remaining resources will stay in the groung FOREVER!!! Without the software (Financial System) to run the show, I don’t care how much resources are left they will stay in the ground, never to be touched again, even if some make it through the giant bottleneck…

        • Cliffhanger says:

          Nobody is claiming the world is running out. they are just claiming we are running short. You dont think BAU can truck along for another two years?

          • ITEOTWAWKI says:

            Nobody can say for sure how long…but the way the financial system is stretched..the fact that there is no more price equilibrium between the consumer and producer of oil (the demand and supply curve do not cross at ANY price) is a situation that is unsustainable..so we don’t have a long time left..now whether it’s 1 month, 1 year or 5 years nobody can say for sure…but it’s not 10 years and certainly NOT decades….we have been on life support for 8 years now courtesy of CBs and the plug is about to be pulled…Carpe Diem I say!!! That has been my motto for quite a while now…

            • Cliffhanger says:

              no more price equilibrium between the consumer and producer of oil (the demand and supply curve do not cross at ANY price) is a situation that is unsustainable.

              Can you explain that to me? I don’t understand?

            • 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.
              Gail Tverberg says:

              This is why I keep saying we are headed for a financial crash. We are sitting in the middle of an unsustainable situation. Sort of like Wile E. Coyote.

              http://www.nicolaginzler.com/wp-content/uploads/2013/07/wile-e-coyote2.jpg

            • xabier says:

              A renewed wave of consumer defaults, even at such low interest rates and such easy credit, is clearly gathering momentum; this must feed eventually into widespread corporate difficulties which will be difficult to paper over, and hence into greatly increased real unemployment taking us another stage down.

              This will hit severely -so much that it cannot be ignored or buried under fake news about growth – in a couple of years or so; companies will automate even more rapidly to cut workforce costs, reduce the quality of goods even further, screw their suppliers down, and…… well, then we shall see whether it can all implode overnight, or new patch-ups can be devised to keep things more or less functioning.

              What mangy old rabbit can the CB’s pull out of their hats then ? It is hard to see: the most important need is to restore purchasing power to the ordinary consumer, and nothing, but nothing, can do that.

              The materials I buy in for my little business can last 40 years or more without deterioration, and without any special storage conditions -much longer than I can possibly live – and I get substantial discounts for bulk buying, but I am certainly now, observing this clear trend, ceasing to stock with the long-term in mind, just keeping things ticking over, and assuming that business could freeze and go away, for ever, at any time.

            • ITEOTWAWKI says:

              Basically Cliffhanger, it’s an unnerving situation where the price the producer needs to produce the oil at, the consumer cannot afford…and the price the consumer can afford to pay, the producer cannot produce (without losing money, which has been covered by increasing debt courtesy of the banks…a situation that cannot go on forever…)

              Steve from Virginia (which I highly recommend reading his blog, Economic Undertow) has aptly called it The Triangle of Doom…

            • Fast Eddy says:

              Executive summary of the situation:

              HIGH PRICED OIL DESTROYS GROWTH
              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

              OIL PRODUCERS NEED $100+ OIL
              Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

            • ITEOTWAWKI says:

              At the end of the day Xabier the CBs cannot replenish the convential oil wells of the oil we have burned in increasing amounts to grow our beautiful world economy from the end of WW2 until 2005…now that would be the ULTIMATE pulling of the rabbit from the hat…but unfortunately we don’t live in a virtual world where you can program some code and replenish the oil wells…we live in the physical world…

            • solejam
              Puppet Master says:

              — Things that can’t go on forever eventually stop —

              Two lemmas (courtesy of commenter ‘Interguru’)
              1) They go on a lot longer than you think they can.
              2) They stop suddenly without warning. Even those who see it coming have no idea when.

          • 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.
            Gail Tverberg says:

            Prices have been two low for producers since at least 2014, more likely 2013. How long do you think that this can go on?

        • Fast Eddy says:

          Auto decline – retail decline….these are both canaries… symptoms… if no cure is found fairly soon… they will turn into full blown AIDS…. and they will take down the financial system…. and we won’t have to worry about an impending gasoline shortage… because we will be dead.

          https://i.ytimg.com/vi/EYUXys87wVY/maxresdefault.jpg

          • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
            doomphd says:

            He’s not dead, that’s just a grocery store tic list that his wife tied on him whilst he was sleeping.

            Cue Monty Python “Dead Parrot” exchange…

            • xabier says:

              Maybe he tied on that label on himself so that someone would come along and write on it who he really is – life is so confusing these days, we all need a hint……

          • 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.
            Gail Tverberg says:

            I wonder how Janet Yellen and her buddies can ignore the problems so completely.

            • Fast Eddy says:

              It certainly feels as if we are teetering on the cliff edge….

              Recalling Korowicz…. and the key pillars… the auto industry must be considered a key pillar… if that crashes … then we are likely done for.

              I am not sure how the CBs can reverse the current course with autos — even those with a faint pulse have already gone heavily into debt to buy new vehicles…. they are tapped out…. where does the growth in sales come from now?

              Throw in the fact that this is happening even with substantial discounts…

              And it would appear to be a pushing on a string moment…

          • jeremy890
            jeremy890 says:

            Fast Eddy, may I suggest a group for you to join?; right up your alley… Pun intended

            The Dead Runners Society is a discussion group for people

            who like to talk about running. The group is informal
            and social and we all try to encourage each other in
            our running programs. We talk about everything

            https://m.youtube.com/watch?v=uqTslcT-C3I

            This lad is one of the FEW living members
            New members added daily
            A Fleet Feet running coach has died after suffering a “serious medical emergency” during the Seneca7 relay race on Sunday, according to the organizer’s Facebook page.

            Seasoned runner, 37, dies after suffering a massive heart attack during a race up a 1,100ft Lake District fell

            The cause was an apparent heart attack, according to Montclair Kimberley Academy (MKA) in Montclair, New Jersey, where Fleming taught fourth grade and coached track. He died as he was coaching the middle school track team in a meet in neighboring Verona

            The hand of Mister D is always close by, Eddy…don’t be afraid

            Another RARE member of the Society that LIVES
            being in a coma for 40 days, a Central Texas teenager has survived a case of the flu which almost turned deadly.
            Elizabeth Schiller, 15, of College Station is attributing her survival to healthy living, her competitive spirit, and the staff at McLane Children’s Hospital in Temple.
            Schiller runs track and cross country for A&M Consolidated High School, and says being fit and eating healthy helped her beat the virus which nearly killed her.
            “If I was a couch potato, I probably wouldn’t be where I’m at now,” she said

            Yes the web has many more accounts to ease your mind!

          • jeremy890
            jeremy890 says:

            And MORE importantly, you will doing something you LOVE to do!
            Listen, everybody has a bullet with their name on it…even the whole of humanity as a species. So, are we going to lament and cry about it all the time?
            Man, I was overwhelmed by all kinds, ages, male or female that bite the dust daring the fates…Now, that’s the way to go

            KATHMANDU, Nepal — Ueli Steck, a renowned mountain climber nicknamed “the Swiss Machine” for his rapid ascents of some of the world’s most imposing peaks, died in an accident on Sunday at a camp near Mount Everest, Nepali officials said.

            At the time of his death, Mr. Steck, 40, was trying to climb the 25,791-foot Himalayan peak of Nuptse in preparation for an ambitious ascent of Everest, said Dinesh Bhattarai, the director general of the Nepal Department of Tourism.

            https://m.youtube.com/watch?v=q00aM_K6jkQ

    • ”hogging the supply” is a misguided concept

      if you literally own all the oil coal and gas there is, it is of no use whatsoever until you burn it.

      this is the fundamental error that polticians and economists make, there is a certainty that the possession of an energy resource of itself, constitutes wealth with no further input being necessary—that somehow the oil-holders will live in a bubble of prosperity, while the rest sink into medieval poverty (as saudi right now)

      the world is an interlocked commercial system, each part burning fuel as fast as possible to hold their particular part together with all the others..
      when parts begin to fail, we think it irrelevant, but in fact it is a sign that the whole is failing—just one part at a time.

      • xabier says:

        How true: the desert Arabs were sitting on top of all that oil for millennia, eating camel-hair and blood cakes and more or less stark naked, despised by every civilised race, until they got to be plugged into a global network which rendered that stuff into wealth for them.

        Possession is nothing compared to use.

        • xabier says:

          People seem to think of reserves of resources as though they were a lot of frozen seal-meat stuck under a pile of stones: ‘I’m alright, Jack!’ says the Inuit.

          But then, he has the teeth to process his store when he fishes it out.

      • 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.
        Gail Tverberg says:

        Good point!

    • Greg Machala says:

      There could easily be shortages if Colonial Pipeline has another pipeline fire/failure. Or, a big storm takes out refineries. However, I think the financial system and energy are so closely tied together that they will fail together. I think it is more likely for there to be a financial “shortage” before an energy shortage.

    • 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.
      Gail Tverberg says:

      We are already at energy shortages. Energy shortages look like increased wage disparity, and fewer people who can buy goods and services of all kinds. Commodity prices drop. They become too low for producers.

      Do not waste too much time reading what the IEA says. What we are facing is gluts, not shortages, for the most part. There may be shortages in a few parts of the world, for example, when their currency drops relative to the dollar. But these will be related to lack of affordability.

      • Cliffhanger says:

        Saudi Aramco Chief also claimed it as well. As well did HSBC and UBS banks recently.

        • 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.
          Gail Tverberg says:

          All of these people follow the same set of reasoning. They haven’t figured out that the problem we are facing is low prices and “collapse,” rather than high prices associated with shortages and “running out.” There is a very widespread wrong idea, followed by almost everyone. They do not understand how a networked system works.

    • greg machala says:

      Venezuela’s collapse will be far worse than the collapse of the Soviet Union. They have no economic energy resources left. The USSR had lots of conventional crude left so had something to fall back on and recover to some degree.

      • edwinlloyd
        edwinlloyd says:

        What will emerge from that vacuum? Does anyone commenting have a knowledge of what centers of economic and political/military exist there that will dive into the collapse and try to gain control?

      • 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.
        Gail Tverberg says:

        Russia’s oil production was not able to increase until prices rose sufficiently to justify production at the higher prices. Prices are again too low for Russia.

        The former Soviet Union was able to sort of continue, because the individual member states could sort of stand on their own. Ukraine did about the worst–they were dependent on Russia’s exports, and Russia couldn’t afford to export at the low prices. So its businesses collapsed.

        I don’t know enough about Venezuela to say what the situation will be. If the central government collapses, are there local governments that can continue? Extraction of Venezuela’s heavy oil will take a much higher price than we have today, I expect. Venezuela used to produce (some?) food for its own people, but like many places, it has come to depend more on imports.

        Venezuela has been living beyond its income for a long time. It needs a high price per barrel to expo

  26. jerry says:

    Apple has MORE cash than the UK and Canada combined: Firm set to reveal its quarterly financial results and reveal reserves of more than a quarter of a trillion dollars

    Read more: http://www.dailymail.co.uk/sciencetech/article-4463472/Apple-money-UK-Canada-combined.html#ixzz4g3vrmf29
    Follow us: @MailOnline on Twitter | DailyMail on Facebook

    • dolph says:

      Interesting but make sure not to confuse categories.
      National governments cannot run out of currency, because they can either print it directly, or borrow it from the banks (the central banks can print it directly).

      Thus, Canada has infinite Canadian dollars. UK has infinite pounds. United States has infinite dollars, etc.

      Corporations are not far behind, though. If they can get a direct line to the banks, they have pretty much unlimited borrowing capacity.

      • bandits101
        bandits101 says:

        Why do the refer to 20T The USA owes as debt then.
        Infinite money………there is absolutely no chance of a Stockmarket crash when governments can buy all the stock, if it does go into dive.

        • 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.
          Gail Tverberg says:

          There is more than stock that is a problem. There are home prices and businesses prices that fall. Did governments bail them out, the last time that these fell?

          There are used car prices that are already falling, putting at risk the loans in the used car markets, and making it hard for those with used cars to buy new cars. Have you heard any rumors about governments rushing to prop up used car prices? I haven’t, and I don’t think any of us will in the future.

          There is also a whole lot more debt outstanding, than shares of stock. Puerto Rico is unable to pay its debts. Did the US government run to its aid? No! I would not expect help for the many other debtors, either.

          The problem becomes that the financial system crashes, and that pensions become unplayable. It becomes impossible to balance the budget.

          • Kurt says:

            Like I have said, the stock market will be reaching new highs when the collapse occurs.

          • i1 says:

            Yeah, as far as pension bailouts, even US postal employees are neck deep in equity indexed 401k plans. How would that bailout work?

            • 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.
              Gail Tverberg says:

              A pension bailout likely isn’t really feasible. We can’t print resources. Citizens would be up in arms if the US government increased the debt load to fund all of the pensions that are failing. The government also needs to fund growing obligations from Social Security and Medicare. Young people cannot support themselves today. Adding to their tax load to fix the problems of seniors is not going to work.

          • Fast Eddy says:

            The stock market could be driven to record highs – on the back of low interest cash used for buybacks…

            But let’s say auto sales tumble from 17M to 12M…. would the record stock market matter?

            Of course not — auto makers carry debt — that can only be serviced if sales are growing… a massive crash in sales would wipe out the auto industry and result in a financial crisis with all financial institutions facing insolvency.

            Throw in massive layoffs (laid off people do not pay back loans) and you have a perfect storm

            And the stock market could – in theory — continue to hit new record highs.

  27. Kurt says:

    He’s a visionary. I just don’t get why people don’t understand the synergies involved in reaching forward to new horizons.

    http://www.zerohedge.com/news/2017-05-03/tesla-burns-through-620-million-loses-13000-car-made-ahead-model-3-launch

    • jarvis9077
      Jarvis says:

      Just read an interesting article in the business section about Tesla’s exact opposite, that is a company that makes tons of money. Apple reportedly has $250 billion so obviously this company is run by the smartest of the smart but just guess what they are considering buying with all that money ? TESLA! Are we missing something? or are the execs at Apple just as stupid as Elon & Co.

    • xabier says:

      As the other Visionary with the little moustaches and tendency to shout once said;

      ‘If we fail to conquer, it is because the people were not worthy of me and their historical task!’

  28. https://www.bloomberg.com/news/articles/2017-05-03/fed-refrains-from-rate-hike-while-maintaining-sunny-outlook

    FED does NOT raise interest rates yet has a sunny outlook. Ok, I guess that makes sense in Bizarro World, but in any case this illustrates what I was beating the drums about in January of this year (that the FED were liers), when they claimed they would raise rates 4-5 times this year in 1/4% increments because the economy was so heated up. Well, we’ve had ONE hike so far and that’s 4 months under our belts for 2017. Many posters were presuming the truth of what the FED claimed they were planning to do back in Jan. figuring the economy would falter big time, but they do this all the time and have been for years now. The reason why is because it’s good propaganda. It says, yes folks the economy is going great and now is a good time to invest in a new business, or buy a new house. But it’s all just a come on from 7th avenue (if you know what I mean). It means nothing until they actually raise rates, which is very rare lately. What, 2 times since 2008? I think that’s it. My suggestion is from now on when they claim a plan to raise rates, just laugh it off.

  29. you know today politicians all over the world remind of that they make promise working for 99 percent people but they do the work for 1 percent

  30. JT Roberts says:

    Henry Kissinger once said:

    “As a historian one has to be conscious of the fact that every civilization has alternately collapsed One has to live with the sense of inevitability of tragedy. As a statesman one has to act as though problems must be solved. ”

    So the fact remains no politicians ever get elected telling people the truth rather they get elected telling people what they want to hear as is true of the current administration.

    The irony is that everyone is guilty of their own willful ignorance. By voting in a liar people are only lying to themselves. In the end no one can innocently say “I never knew”

    • edwinlloyd
      edwinlloyd says:

      The more our ‘leaders’ listen to the pollsters, the more fickle they appear to us. They are only a mirror we are looking at while we accuse them of flipflopping.

    • jerry says:

      thank you JT Roberts for this. the quote by Kissinger of all people is one I’ve noted and will remember. You may also be very interested in a fascinating essay which I have starred as extremely important, indeed, one in which I will never forget and often return to:

      “Doug: Well, a rational man, which is to say, an ethical man, would almost certainly not vote in this election, or in any other – at least above a local level, where you personally know most of both your neighbors and the candidates.

      L: Why? Might not an ethical person want to vote the bums out?

      Doug: He might feel that way, but he’d better get his emotions under control. I’ve thought about this. So let me give you at least five reasons why no one should vote.

      The first reason is that voting is an unethical act, in and of itself. That’s because the state is pure, institutionalized coercion. If you believe that coercion is an improper way for people to relate to one another, then you shouldn’t engage in a process that formalizes and guarantees the use of coercion.”

      the whole piece can be found here and I recommend it highly:

      https://www.caseyresearch.com/articles/weekend-edition-doug-caseys-top-five-reasons-not-to-vote
      Next to this is another fascinating piece by this same Doug Casey:

      “Louis James: The idea of political representation is a myth, and a logical absurdity. One person can only represent his own opinions – if he’s even thought them out. If someone dedicated his life to studying another person, he might be able to represent that individual reasonably accurately. But given that no two people are completely – or even mostly – alike, it’s completely impossible to represent the interests of any group of people.

      Doug: The whole constellation of concepts is ridiculous. This leads us to the subject of democracy. People say that if you live in a democracy, you should vote. But that begs the question of whether democracy itself is any good. And I would say that, no, it’s not. Especially a democracy unconstrained by a constitution. That, sadly, is the case in the U.S., where the Constitution is 100% a dead letter. Democracy is nothing more than mob rule dressed up in a suit and tie. It’s no way for a civilized society to be run. At this point, it’s a democracy consisting of two wolves and a sheep voting about what to eat for dinner.

      L: Okay, but in our firmly United State of America today, we don’t live in your ideal society. It is what it is, and if you don’t vote the bums out, they remain in office. What do you say to the people who say that if you don’t vote, if you don’t raise a hand, then you have no right to complain about the results of the political process?

      Doug: But I do raise a hand, constantly. I try to change things by influencing the way people think. I’d just rather not waste my time or degrade myself on unethical and futile efforts like voting. Anyway, that argument is more than fallacious, it’s ridiculous and spurious. Actually, only the non-voter does have a right to complain – it’s the opposite of what they say. Voters are assenting to whatever the government does; a nonvoter can best be compared to someone who refuses to join a mob. Only he really has the right to complain about what they do.”
      http://www.caseyresearch.com/articles/weekend-edition-doug-casey-explains-why-democracy-is-uncivilized

  31. Fast Eddy says:

    Despite record incentives, sales decline speeds up, inventory bloat spreads to zombie malls.

    http://wolfstreet.com/2017/05/02/carmageddon-not-yet-but-hot-air-hisses-out-of-auto-bubble/

    Restaurants… autos…. retail….. danger.

    • 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.
      Gail Tverberg says:

      I see that GM is planning plant closures in the second half of the year to cut inventories.

      http://www.detroitnews.com/story/business/autos/general-motors/2017/04/12/gm-trim-inventory-weeks-combined-downtime/100378036/

    • Greg Machala says:

      Time for another round of Cash-For-Clunkers!

      • jerry says:

        Hey Greg lol I own a 1996 clunker with almost 600,000 kilometres on the speedo and it just keeps on going and going like the energizer bunny. When asked if i will ever upgrade I tell them why don’t you know that we live in a finite world and soon there will be no oil or gas. Everythings peaking but awe shucks the rebate for the electric is looking more and more the ideal?
        What really gets my goad going though is the Voilkswagen dealer keeps putting a sign on the road 3000.00 push, pull or drag it in.

    • Greg Machala says:

      This:
      “The #carrmageddon point to watch: despite the 13.4% year-over-year surge in incentive spending to nearly $5 billion, total vehicle sales fell 4.7%! When these massive incentives fail to even slow the sales decline, serious problems lurk beneath the surface.”

      • edwinlloyd
        edwinlloyd says:

        Incentives and debt are both being used to fuel overshoot, not necessary growth. So, instead of increase and decrease we get overshoot and collapse. The same happens with residential housing also. If we all had to save for houses and cars, yes we would have more apartments and public transport (needed things in many ways) and slum lords, but we would have a lot less throw away houses and cars and a lot fewer bloated bankers.

      • Volvo740...
        Volvo740 says:

        If you assume gasoline would be phased out over a 20 year period ~ 0 sales in 2037, then we could probably be ok making 0 new cars starting today since the existing fleet will probably last that long and match the declining fuel availability about right.

        • 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.
          Gail Tverberg says:

          James Kunstler made precisely that point in “The Long Emergency.” Why keep building more, if we already have enough?

  32. Kanghi says:

    THis explains everything!!! FE enjoy!
    http://theoatmeal.com/comics/believe

    • 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.
      Gail Tverberg says:

      This is great! Thanks!

      The one point I would make is that our “house” of beliefs is also strongly influenced by what schools are teaching, and what politicians are telling us. It is also influenced by the stories in newspaper and elsewhere. It is easy to blame problems on old religious beliefs and tradition, but I think now the problem is just as much the pervasive religion of “technology will save us.”

    • Greg Machala says:

      Challenging another’s core belief can indeed incite physical violence. Religion and political views seem to be near the top of a persons core beliefs. Challenging those can be deadly. Technology is like a religion as well so best to tread lightly there.

      • merrifield says:

        Yes, and it’s impossible to “argue” with people who don’t base their beliefs on reality or evidence.

        • edwinlloyd
          edwinlloyd says:

          That’s the problem with technology- it IS based on evidence and success in very tangible ways.. The weakness is the expectation that success will continue indefinitely into the future. The ‘faith’ issue is more about a blindness to the limits of this earth. Dimitry Orlov points out technology’s blind spot well in his book ‘the Technosphere’. Like so many of the dinosaurs it cannot exist without huge consumption of resources. Technology itself is not able to see that flaw.

  33. MG says:

    The humans become enslaved by the devices: first roads and wheeled carts, now pipes and wireless networks.

    We serve these devices that secure our survival. And less and less remains for our freedom of choice, as these devices support our living environment.

    We have created extensive networks for energy extraction and transfer that require huge amounts of energy.

    We become more and more marginal, as these devices and networks gain increasing priority over our species.

    • grayfox says:

      You have a choice in the matter. Just say no. Repeat after me: I don’t need, don’t want, and will not use such devices. You can do this.

      • worldofhanumanotg
        worldofhanumanotg says:

        Grayfox, not sure you what you mean by it?

        Because MG’s well pointed argument has a much broader validity.
        For example, we are slaves to the legacy and (future) infrastructure, incl. roads, grids, factories, JITs, hospitals, pensions, .. , etc. You have to tend your car, bicycle, jet, water pipes, .. , ALL OF IT, regularly or the longevity is hugely impacted.

        This however applies to less complex societies as well, even wooden wheel and cart, everything subject to entropy, it’s the very same problem just lower intensity.

        So, if you meant in fact people should calmly return to the bush, “naked” even without stone tools, be my guest.

        The answer, in my book is rather seeking to strike somewhat of a balance to the environmental impact, but that likely never comes in current setting, or as only low prob scenario after several waves of further complexity crashes on the down stair sloping ladder.

        • grayfox says:

          You do not have to embrace “all of it”. You can choose what level of tech you wish to use to some extent. Do I really need a wireless network, for example? Maybe not. The broader argument is valid of course – we benefit from the “legacy and infrastructure”. Still, if feel that you do not have to do a swan dive into the heart of modern industrial civilization and technology.

    • edwinlloyd
      edwinlloyd says:

      MG
      You have pounced upon the irony of technology. The more we create and use it the more we become servants to it. It’s like we all were dasabled and rely on electric wheelchairs (or pacemakers) to stay alive. The things we use for day to day survival are also our masters. If those pieces of technology are controlled by each of us ibdividually, like fire or even a book (which doesn’t change once you have it) then individual autonomy is preserved. However, if your welfare is dependent on electricity and digitally controlled information your autonomy is minimized while you depend on these things to live.
      That is why there will be so much pain when the energy grids start to fail.

      • Greg Machala says:

        That is why there will be so many deaths when the energy grids start to fail.

      • 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.
        Gail Tverberg says:

        We don’t have any workarounds for when electricity fail. Oops!

      • xabier says:

        The Ladder of Civilisation: no rungs, except the one you are standing on.

        • 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.
          Gail Tverberg says:

          Right!

          • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
            doomphd says:

            it’s a rather Richard Duncanest conclusion about the lights going out.

        • xabier says:

          Actually, I’ll modify my own statement.

          Previous civilisations -Rome, China, etc, – could fall back in their periodic (China, Greece, Persia) or final (Western Rome) collapses onto the lower rungs of the ladder, consisting of the economy of farmers, hunters, fishermen, when the complex superstructure failed.

          Most people lived there anyway, and knew what to do when the cities and international trade and centralised structures vanished: carry on, and avoid the war bands….

          Our highly urbanised civilisation, however, is the first – and no doubt the last! – that cannot do so , because it has hollowed out those lower structures – ‘kicked the rungs away.’

          I recall the young Greek whom I met exploring the countryside (‘Dionysius! Like the god!’) who said: ‘ Our grandparents knew how to live, but we’ve only known city life, and nearly all of us live in Athens. We’re lost! We only know service industries.’

          • ITEOTWAWKI says:

            Exactly Xabier…like CTG had said before, everybody is connected to the Matrix..we are no longer in pre-WW2 times where a major earthquake in California destroying most of the state would not affect the farmer in France (as a quick example)…now whether you live in the countryside or in a big city, you only know how to function within the Global BAU system…there is no going back to lower rungs…

          • Fast Eddy says:

            I am in Bali for 12 days and was on my bike doing a long ride this morning… seems to be more traffic than ever and it’s just a year since I was last here…

            Anyway… I was noticing the rice fields and the farmers going about their daily routines and thinking that this appeared to be a sustainable way of living…

            But even these farmers are plugged directly into BAU — they farm using petro chemical pesticides and fertilizers…

            And they too have kicked the rungs off the ladder…

            I had to hire an NGO to train our workers to farm organically when I lived in Bali — these are rice farmers who did not have a clue! Rungs kicked off the ladder….

            The NGO manager told me that when oil prices spiked in 2007 the fertilizers and pesticides spiked in price as well – and many farmers were distraught turning to them for help.

            He said there was very little they could do for these industrial farmers — because you cannot just stop chemically farming and switch to organic. It is not possible because it takes years to repair the damaged soil.

            So what they were trying to do was have farmers gradually revert — they would take perhaps 10% of their land and stop applying chemicals — and instead using intensive organic inputs over long periods…

            Again – more rungs kicked off the ladder

            This was one of the main reasons we left Bali — we had thought that this was one place where at least people would be able to feed themselves post BAU….

            Not a great idea to be a white man in a village of hungry Indonesians… with pots… when the world collapses.

            • xabier says:

              Yes, agriculture producing the grains, the bulk nutrition, we all need, now floats on a sea of chemicals: when it recedes, agriculture nearly everywhere will be stranded and die.

              I sometimes think that only those who can manage a small-scale primitive agriculture and mostly live off a symbiotic relationship with animals they herd might possibly survive: the horse, for instance, that supplies mobility, milk, yoghurt, leather, tendons, and meat to its riders. Central Asia? The Welsh mountains? A vital substance for making shelter in harsher climates is goat or sheep felt: both are very destructive grazers in large numbers…..

              Changing weather patterns destroying grazing, water sources and favouring new diseases could knock that on the head, of course.

              I see things are getting hot in every sense in Kenya with the drought affecting the tribal herders.

    • xabier says:

      MG

      One of the best and most succinct statements of our situation as advanced humans.

    • 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.
      Gail Tverberg says:

      Very good points!

      • MG says:

        The only way for Stalin to restart collapsing Russia was to use millions of the people as slaves to access the hard to get resources. These hard to get resources were also the reason why the Soviet bloc collapsed.

        Keeping the infrastructure for hard to get resources consumes a lot more energy than simple devices for easy oil, water, electricity etc.

  34. Duncan Idaho says:

    Priebus: Trump Considering Amending or Abolishing 1st Amendment

    (whats left of it)

    http://talkingpointsmemo.com/edblog/priebus-trump-considering-amending-or-abolishing-1st-amendment

    • Cliffhanger says:

      Pandora doesn’t go back in the box, it only comes out..

      • 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.
        Gail Tverberg says:

        Perhaps part of the reason depression is so common among young people.

        • houtskool says:

          Perhaps part of the reason is prosperity is so common among old people.

          • 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.
            Gail Tverberg says:

            Those of us in the boomer generation came out well, when it came to job opportunities and pay–also pensions.

          • Joel says:

            Things have been heading down hill for 50 years or more. Being born pre-peak was a big advantage economically for the broader population. Will be 60 this year, have wished that I was born a decade or 2 earlier. Glad to not have come into this world in the 21st century.

    • It is all very well picking up on some strand of thought as “right on”, but be careful about that, it would be like run for hills and wisely so.

      Any “civilization” that takes Sid and Johnny as gurus is likely headed for the trash can of history. Think hard about that, it is not a joke.

      (I will almost certainly regret this post in the morning, I always do. The world is too inelegant for me.)

      https://www.youtube.com/watch?v=cBojbjoMttI

    • kimberlaina
      Sceadu says:

      I mentioned in one of my earlier posts that I work with teenagers. The “future” for young people is often couched in terms of consumerism — what will you be able to own one day? Frankly, many of the teens I work with already own a lot of the requisite trappings of modern American life, like fancy video game systems and phones. There is no real reason for them to exit adolescence; adulthood is just the same stuff with more responsibility. One thing that has fascinated me as of late is men who just decide not to adult. I’m talking about guys whose entire existence revolves around frozen food, a video game console, and internet searches for tattoo designs, and no real sense of obligation or responsibility. I feel like this is increasingly common. Adulthood is losing its appeal.

      “Peak stuff” cannot replace having a purpose in life, having a sense of civic duty and belonging, participating in a community, or making a difference — all things that our society has increasingly de-emphasized. I think young people are hungry for this, but they don’t know what it is to even begin looking for it. Everywhere they turn they hear that physical belongings are the answer to our problems.

      • xabier says:

        Yes, I’ve seen that.

        In Europe, this sense of participation can come from political activism, mostly on the Left; but mouthing slogans and posturing – which is all it is – is certainly not the same thing as being part of an functioning organic community in the real world.

        This activism is mostly ciber-activity anyway, more screen-staring and tapping away.Twitter rows, and the odd group protest and march.

        My little sister is a Youtube radical feminist vegan: they actually believe they are doing something! She -like her friends and fellow radicals – has never yet soiled her hands with work, even the office variety.

        And they do have all the toys from infancy: there is nothing for them to wish for, except more money, which they call, of course, ‘fairness’!

        This perpetual adolescence is rather disturbing.

        • kimberlaina
          Sceadu says:

          In the defense of young people, I think the picture of adulthood presented to them is rather bleak. It lacks self-determination, and instead offers the chance to follow someone else’s rules for a questionable reward. Perpetual adolescence is not the only alternative, but finding a way of life that is empowering AND includes adult responsibility does take some effort and creativity.

          I suspect that decades ago, people were more likely to feel like adulthood included an empowering sense of self-determination, the ability to carve one’s own destiny. In an era of globalization and huge corporations, it is harder and harder to eke out a living by one’s own standards, or even the standards of a small community. Competition is global and therefore one’s work must have global appeal.

          I am reminded of William Catton’s second book, where he talks about how people develop new anxieties without the context of a community to live in. If I recall correctly, he said that in the 1700s, most people interacted with the same 150 or so people for most of their lives. People in those times must have had a sense that their actions were predictable based on a familiar context. They also had defined, secure roles in their communities.

      • 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.
        Gail Tverberg says:

        Not marrying fits into this new pattern as well. A person can remain a child forever, if they don’t take on the responsibilities of a family.

  35. Duncan Idaho says:

    NSA collected Americans’ phone records despite law change: report

    Very interesting math.
    But as the NSA says, “what are you going to do about it?”

    “It found that the NSA collected the 151 million records even though it had warrants from the secret Foreign Intelligence Surveillance court to spy on only 42 terrorism suspects in 2016, in addition to a handful identified the previous year. “

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