Why We Should Be Concerned About Low Oil Prices

Most people assume that oil prices, and for that matter other energy prices, will rise as we reach limits. This isn’t really the way the system works; oil prices can be expected to fall too low, as we reach limits. Thus, we should not be surprised if the OPEC/Russia agreement to limit oil extraction falls apart, and oil prices fall further. This is the way the “end” is reached, not through high prices.

I recently tried to explain how the energy-economy system works, including the strange way prices fall, rather than rise, as we reach limits, at a recent workshop in Brussels called “New Narratives of Energy and Sustainability.” The talk was part of an “Inspirational Workshop Series” sponsored by the Joint Research Centre of the European Commission.

Figure 1. Empty Schuman room of the Berlaymont European Commission building, shortly after we arrived. Photo shows Mario Giampietro and Vaclav Smil, who were the other speakers at the Inspirational Workshop. Attendees started arriving a few minutes later.

My talk was titled, “Elephants in the Room Regarding Energy and the Economy.” (PDF) In this post, I show my slides and give a bit of commentary.

Slide 2

The question, of course, is how this growth comes to an end.

Slide 3

I have been aided in my approach by the internet and by the insights of many commenters to my blog posts.

Slide 4

We all recognize that our way of visualizing distances must change, when we are dealing with a finite world.

Slide 5

I should note that not all economists have missed the fact that the pricing situation changes, as limits are reached. Aude Illig and Ian Schindler have recently published a paper that concludes, “We find that price feedback cycles which lead to increased production during the growth phase of oil extraction go into reverse in the contraction phase of oil extraction, speeding decline.”

Slide 6

The comments shown in red on Slide 6 reflect a variety of discussions over the last several years. Oil prices in the $50 per barrel range are way too low for producers. They may be high enough to get “oil out of the ground,” but they are not high enough to encourage necessary reinvestment, and they are not high enough to provide the tax revenue that oil exporters depend on.

Slide 7

Most people don’t stop to think about the symmetric nature of the problem. They also don’t realize that the adverse impacts of low oil prices don’t necessarily appear immediately. They can temporarily be hidden by more debt.

Slide 8

There would be no problem if wages were to rise as oil prices rise. Or if there were an easily substitutable source of cheap energy. The problem becomes an affordability problem.

Slide 9

The economists’ choice of the word “demand” is confusing. A person cannot simply demand to buy a car, or demand to go on a vacation trip. The person needs some way to pay for these things.

Slide 10

If researchers don’t examine the situation closely, they miss the nuances.

Slide 11

 

Slide 12

Many people think that the increasing use of tools can save us, because of the possibility of increased productivity.

Slide 13

Using more tools leads to the need for an increasing amount of debt.

Slide 14

Read this chart from left to right. If we combine increasing quantities of resources, workers, and tools, the output is a growing quantity of goods and services.

Slide 15

Read this chart from right to left. How do we divide up the goods and services produced, among those who produced the products? If we can only use previously produced goods to pay workers and other contributors to the system, we will never have enough. But with the benefit of debt, we can promise some participants “future goods and services,” and thus have enough goods and services to pay everyone.

Slide 16

If we decrease the amount of debt, we have a big problem. Instead of the debt adding to the amount of goods and services produced, the shrinkage acts to decrease the amount of goods and services available for distribution as pay. This is why moving from deficit spending to a balanced budget, or a budget that reduces debt, is so painful.

Slide 17

When I say (resources/population), I mean resources per capita. Falling resources per capita makes it harder to earn an adequate living. Think of farmers trying to subsist on ever-smaller farms. It would become increasingly difficult for them to earn a living, unless there were to be a big improvement in technology.

Or think of a miner who is extracting ore that is gradually dropping from 5% metal, to 2% metal, to 1% metal content, and so on, because the best quality ore is extracted first. The miner needs to work an increasing number of hours to produce the ore needed for 100 kilograms of the metal. The economy is becoming in some sense “worse off,” because the worker is becoming “inefficient” through no fault of his own. The resources needed to provide benefits simply are less available, due to diminishing returns. This problem is sometimes reported as “falling productivity per worker.”

Falling productivity per worker tends to lower wages. And lower wages put downward pressure on commodity prices, because of affordability problems.

Slide 18

The problems that prior civilizations reached before collapse sound in many ways like the problems we are seeing today. We are seeing increased specialization, and falling relative wages of non-elite workers.

Slide 19

We seem to have already gone through a long period of stagflation since the 1970s. The symptoms we are seeing today look as if we are approaching a steep downslope. If we are approaching a crisis stage, it may be much shorter than the 20 to 50 years observed historically. Earlier civilizations (from which these timeframes were observed), did not have electricity or the extensive international trade system we have today.

Slide 20

The period since 1998 seems especially flat for wages for US wage earners, in inflation-adjusted terms. This is the period since energy prices started rising, and since globalization started playing a greater role.

Slide 21

This is a list I made, showing that what looks to be beneficial–adding tools and technology–eventually leads to our downfall. The big problem that occurs is that non-elite workers become too poor to afford the output of the economy. Adding robots to replace workers looks efficient, but leaves many unemployed. Unemployment is even worse than low pay.

Slide 22

We can think of the economy as being a self-organized network of businesses, consumers, and governments. New products are gradually added, and ones that are no longer needed are eliminated. Government regulations change in response to changing business conditions. Debt is especially important for economic growth, because it makes goods affordable for customers, and it enables the use of “tools.” Prices are created almost magically by this networked system, through the interaction between supply and demand (reflecting affordability, among other things).

Slide 23

It is only in recent years that physicists have become increasingly aware of the fact that many types of structures form in the presence of flows of energy. We have known for a long time that plants and animals can grow when conditions are right. The networked economy illustrated on Slide 22 is one of the types of things that can grow and flourish in the presence of energy flows.

Slide 24

This is my view of how an economy, as a dissipative structure, works. “Tools and technology” are at the center. If a person doesn’t think too much about the issues involved, it is easy to assume that tools and technology will allow the economy to grow forever.

There is a potential for problems, both with respect to inputs and waste outputs. Early modelers missed many of these “issues.” M. King Hubbert created a model in which the quantity of energy supply and technology are the only issues of importance. He thus missed the impact of the Waste Output problems at the right. The Waste Outputs lead to falling prices as limited supply nears, and thus lead to a much steeper drop in production than Hubbert’s symmetric model would suggest.

Slide 25

Peak oilers recognized one important point: our use of oil products would at some point have to come to an end. But they did not understand how complex the situation is. Low prices, rather than high, would be the problem. We would see gluts rather than shortages, as we approach limits. Much of the oil that seems to be technologically extractable will really be left in the ground, because of low prices and other problems.

Slide 26

Here, I am getting back to the topic I was originally asked to talk about. What else, besides low energy prices and too much debt, are likely to be problems as we reach limits?

Slide 27

The easy way of modeling the use of wind turbines and solar turbines is to assume that the electricity produced by these devices is equivalent to electricity produced by fossil fuels, or by hydroelectric. Unfortunately, this is not the case.

Slide 28

Trying to integrate solar panels into an electric grid adds a whole new level of complexity to the electrical system. I have only illustrated some of the issues that arise in Slide 28.

The fact that the price system doesn’t work for any fuel is a major impediment to adding more than a very small percentage of intermittent renewables to the electric grid. Intermittent renewables can only be used on the electric grid if they have a 24/7/365 backup supply that can be ramped up and down as needed. Unfortunately, the pricing system does not provide nearly high enough rates for this service. We are now seeing how this works out in practice. South Australia lost its last two coal-fired electricity power plants due to inadequate wholesale electricity prices when it added wind and solar. Now it is experiencing problems with both high electricity prices and too-frequent outages.

Another problem is that new [long distance] transmission makes buying from neighbors optimal, over at the left of Slide 28. This is a new version of the tragedy of the commons. Once long distance lines are available, and a neighbor has a fairly inexpensive supply of electricity, the temptation is to simply buy the neighbor’s electricity, rather than build local electricity generating capacity. The greater demand, without additional supply, then raises electricity prices for all, including the neighbor who originally had the less expensive electricity generation.

Slide 29

It is easy to assume that EROEI (Energy Returned on Energy Invested) or some other popular metric tells us something useful about the cost of integrating intermittent renewables into the electric grid, but this really isn’t the case.

Slide 30

We are now beginning to see what happens in “real life,” as intermittent renewables are added. For example, we can now see the problems South Australia is having with high electricity prices and too many outages as well as the high electricity prices in Germany and Denmark (Slide 29).

Slide 31

Wind and solar are not very helpful as stand-alone devices. Yet this is the way they are modeled. Some researchers have included installation costs, but this still misses the many problems that these devices cause for the electrical system, especially as the share of electricity production by these devices rises.

Slide 33

A networked system works differently than a system that is “user controlled.” It builds itself, and it can collapse, if conditions aren’t right. I have shown the economy as hollow, because there is no way of going backward.

Slide 34

Many people miss the point that the economy must keep growing. In fact, I pointed this out in Slide 2 and gave an additional reason why it must keep growing on Slide 16. As the economy grows, we tend to need more energy. Growing efficiency can only slightly offset this. Thus, as a practical matter, energy per capita needs to stay at least level for an economy to grow.

Slide 35

If energy prices rise, this will tend to squeeze out discretionary spending on other goods and services. If we cannot obtain energy products sufficiently cheaply, the system of economic growth will stop.

Slide 36

The fact that energy prices can, and do, fall below the cost of production is something that has been missed by many modelers. Prices can go down, even when the cost of production plus taxes needed by governments rises!

Slide 37

Wind and solar are part of the category at the top called “renewables.” This category also includes energy from wood and from geothermal. Many people do not realize how small this category is. Hydroelectric is also considered a renewable, but it is not growing in supply in the United States or Europe.

Slide 38

It takes energy to have an intergovernmental organization, such as the European Union. In fact, it takes energy to operate any kind of government. When there is not enough surplus energy to go around, citizens decide that the benefits of belonging to such organizations are less than the costs involved. That is the reason for the Brexit vote, and the reason the question is coming up elsewhere.

Slide 39

The amount of taxes oil-producing countries can collect depends on how high the price of oil is. If the price isn’t high enough, oil-exporting countries generally have to cut back their budgets. Even Saudi Arabia is having difficulty with low oil prices. It has needed to borrow in order to maintain its programs.

Slide 40

Oil prices have been too low for producers since at least mid-2014. It is possible to hide a problem with low prices with increasing debt for a few years, but not indefinitely. The longer the low-price scenario continues, the more likely a collapse in production is. Also, the tendency of international organizations of government to collapse (Slide 38) takes a few years to manifest itself, as does the tendency for civil unrest within oil exporters (Slide 39).

Slide 41

Slide 42

It is easy to miss the point that modeling a piece of the system doesn’t necessarily tell a person very much about the system as a whole.

Slide 43

Once an incorrect understanding of our energy problem becomes firmly entrenched, it becomes very difficult for leaders to understand the real problem.

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 inadequate supply.
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2,716 Responses to Why We Should Be Concerned About Low Oil Prices

  1. Duncan Idaho says:

    Bad day at the Dog Track today, if you were long.
    I wonder how long it will keep together?

  2. Duncan Idaho says:

    If we step back and take an unsentimental, warts-and-all look at ourselves, we realize that Trump is not only worthy of being president, he seems the obvious choice for it.

    Consider: The U.S. is, first and foremost, a nation of consumers. Manufacturers know it, advertisers know it, the Ukrainians know it, and Trump knows it. Indeed, there’s nothing we Americans won’t buy if it’s properly advertised and promoted. And say what you will about Trump, but the man is, first and foremost, a fanatical salesman and promoter.

    Consider: We Americans are practical people, which is why we don’t form queues at poetry readings. There’s no shame in that. We simply aren’t a nation of poetry lovers. But we do form queues (often unbelievably long, serpentine queues), beginning at midnight, waiting for the store to open so we can purchase the newest technology. That’s because we’re a nation addicted to buying stuff. And Trump knows how to sell stuff.

    Consider: We gush over rich people. We idolize them. But because that realization seems vaguely “un-Christian,” we pretend we don’t. We tell our children that “money isn’t everything,” but we don’t even believe that ourselves. We are in awe of Wall Street because Wall Street is Taj Mahal rich. And Trump is rich.

    Consider: We love celebrities, and Trump was a TV celebrity. We love glamour, and the Trumps are glamorous. Wife Melania and daughter Ivanka are exotic creatures. Granted, that is more a testament to cosmetic surgery than the generosity of Mother Nature, but exotic creatures nonetheless. And as much as we pretend to respect “authenticity,” we don’t. Plastic is good.

    Consider: Unlike much of the world, we Americans have always despised intellectuals. We pretend we don’t, but we do. We resent cultural snobs, know-it-alls, smarty-pants media types, and “deep thinkers,” and we admire salt-of-the-earth businessmen, self-made moguls, and (counter-intuitively) military officers.

    That’s partly because of our native egalitarianism, and partly because we don’t wish to be reminded of our ignorance. We prefer brevity and plain talk to complexity. We embrace slogans (“Make America Great Again”), and avoid nuance, ambiguity, and self-doubt. Arguably, if we don’t count Ronald Reagan, Trump is the most anti-intellectual president since Andrew Jackson.

    Consider: We admire conspicuous muscle and power. Accordingly, as long as the combat doesn’t occur on our own soil, we prefer war to peace. We pretend we don’t, but we do. If that weren’t the case, our defense budget wouldn’t be so absurdly bloated, and we wouldn’t have been engaged in all the military adventurism that has defined us since the end of World War II.

    Consider: We Americans are a narcissistic people. We pretend we aren’t, but we are. We don’t have to be tied down and water-boarded to confess that we think we’re the greatest country in the world. Not only the greatest country in the world, but very likely the greatest country in the history of the world. If that ain’t narcissism, what is it?

    And yet, for all this, we still pretend we don’t deserve Trump? We still pretend to be surprised that we elected a shallow, dishonest, narcissistic bully as our president? As Kurt Vonnegut wrote in Mother Night, “We are what we pretend to be. So we must be very careful about what we pretend.”

    • Fast Eddy says:

      As an outsider looking in at America and Americans… I have wondered why someone like Trump had not made an appearance sooner….

      He represents what the vast majority of Americans want to be — right up there with Kim and Paris

      He is a braggart — a loud mouth — hey look at me – aren’t I great — aren’t I better than you — well that’s your fault you are who you are —- someday you might be like me — until then live vicariously through me…. don’t like it — I will smash you in the mouth.

      America has gotten what it wants — what it deserves — what it needs it seems….

      Reap. Sow.

      • bandits101 says:

        Yeah but I think he has ruined the chances of another despot getting elected in the foreseeable future. His inept, amateur legacy will have long lasting consequences for prospective inexperienced independents.

        The only way for a jackass like him to gain the presidency now, is if he/she gets there by force.

      • Froggman says:

        He is perfect, isn’t he? I’m an American and even I have to admit that. If you consolidated all of our defining features into one composite figure, you’d get the rough equivalent of the Donald. An arrogant, greedy, ignorant reality show clown.

        And don’t get me wrong: I’m no better, just because I read this blog. It’s not like the “good Americans” like me deserve something better than the “bad Americans”. I deserve Donald too. We all do.

        The people get the government they deserve.

        • Fast Eddy says:

          We all deserve him….

          He is the perfect front man to represent what we are — and to chaperone this shit parade as it circles down the toilet and into the sewer.

        • Everybody wants Trump gone

          How many ask about his replacement? Or consider what it will mean–you still have a lunatic in charge

          Trump is not the danger, the danger lies in who comes after him. Pence is a worse bigot, but less upfront about it, (but you can check his record) and when he takes over the White House, he will have the certainty that is is gods will that he is president, therefore everything he does as president will also be god’s will and intention.
          Think what that means!!

          Think what will happen come SHTF time if Pence is president. You will have civil disorder and martial law with a godfreak president.
          He assumes control, and in no time at all you have theocracy. (gods will you see)

          exactly what Ive been banging on about for years.
          There can be no other way of running the US nation–until total collapse hits.

          The US government is full of self righteous idiots, convinced that the earth is 10k years old,and that humankind is not subject to any laws of physics, only to laws of their god.

          consider what that means:
          No controls on population, climate change or energy depletion. Prayer solves everything.

          They will still face us when Trump has departed. we should consider that

          It is expanded here…for what it’s worth
          https://medium.com/…/presidential-predictions-5fc0532c085a

          • Fast Eddy says:

            Venezuela needs a miracle worker more urgently that the US…. maybe Pence could cut his teeth down there…

            His first task would be to make Venezuelan oil profitable at $50 — how hard can that be given the costs to extract shale have miraculously ‘halved’

            If Bloomberg says they have halved then it must be so. The MSM is all Pence would need to walk on water.

          • Jesse James says:

            Wrong Norman, everybody doesn’t want Trump gone. Since when are you the self righteous repeater of main stream fake news?

            • Fast Eddy says:

              I don’t want Trump gone.

              I want him to continue to entertain me.

            • bankrupt 4 times
              paid out $25m to cover claims for fraud
              Blatant liar, proven with his own words,
              Misogynist by his own words
              Narcissistic by his own words
              racist by his own words
              Tweets childish comments at 3am
              Already under investigation for dubious dealings
              issues executive orders that are immediately knocked down by the courts
              wants the media to be restricted on what they can report.

              I could go on. You still think there’s nothing wrong with him? (I mean in a clinical sense)

              All this is fake news? Everything above is on record. No need to fake anything.

              All politicians by their very nature are suspect beings, but this one is in a class of his own—and you still think he’s fit to run the most powerful nation on earth?
              Normally the doings of the POTUS wouldn’t concern me, but he does affect the lives of everyone.
              Maybe there are people who still want him to remain in office, I can’t think why.

              But I would be happy to know the reasons why he should remain. I am genuinely interested.

            • Fast Eddy says:

              The only thing he’s not done – as far as we know — is murder a whistleblower

              http://www.zerohedge.com/news/2017-05-19/russian-embassy-implicates-hillary-tweet-asking-who-killed-seth-rich

            • Harry Gibbs says:

              “From the standpoint of creating economic uncertainty, the election of Donald Trump has been more tumultuous than the 1987 stock market crash and the 2008 financial crisis.”

              http://www.cnbc.com/2017/05/18/economic-uncertainty-index-surpasses-08-financial-crisis-levels.html

            • ok ok ok

              nits duly presented for picking

              not everyone wants him gone—
              Ivanka doesn’t. that would be bad for her business interests
              Jared doesn’t…he’s got an eye for the future there–though what would happen if WW3 was declared on a friday i can’t imagine.
              Melania does—with body language like his, she wants out. She wants him gone gone. Anybody that self obsessed is useless in certain marriage departments. And El Supremo would be too busy tweeting to spare time for anything else.
              I daresay she likes making tea for her security guards.

              am struggling to think of anybody else—Sessions of course. he has an interesting past history—fill the jails etc. So he’s a plus.

              Anybody else? Collectively I’d say anybody able to think for themselves wants him gone

              The deluded want him to stay and tell them his ponzi scheme will pay out forever

            • Fast Eddy says:

              And if Trump is gone … they’ll soon want what comes next gone too… because nothing will change…

            • Buzz Lightyear says:

              I suspect Norman is a Guardian reader. Am I right?

              You could accuse most presidents and CEOs of the things you listed.

              But none have been as savagely attacked as Mr Trump from all sides.

              I suspect there is more to this than meets the eye.

              Possibly the fall guy for the collapse of western industrial civilisation.

              And because it’s obviously the Russian’s fault we’ll witness the rise of Putin as leader of the New World Order.

            • not an habitual guardian reader—but i glean information from wherever i find it, then i check it. If I cant verify it i tend to leave it out.

              Agreed leaders always have the some of the problems that trump shows, but rarely all at the same time and revealed so quickly—tho maybe not so quickly because pre election he told us what he was like. The only one that comes to mind is A. Hit-ler. And I’m not the only one to have noticed that.

              Most leaders keep their secrets secret–but his are all on public record even while he is in denial of them

              I said a while back that he could be the sideswipe nobody expected—maybe not in himself personally, but in the political waves he’s made. I forecast that it might not be trump, but the one who comes after him—as i said that might well be Pence.—by its very nature the future is unpredictable,

              If he takes over you might well be wishing Trump was back

            • Buzz Lightyear says:

              Knowing everything about Trump – from the horses mouth – up front just makes the guy a more honest option than all the previous puppets

              and if there’s one thing the establishment hates it’s a prideful blabbermouth that won’t toe the line and stick to the script

              so unlike the screaming sjws that piss in their pants at the mere mention of el Trumpo I am enjoying the theatrics while they last

              if anything Turkey’s Erdogan is shaping up to be the new bad guy on the block that will have to be neutered at some point

    • dave warren says:

      brilliant analysis!!

      • Jesse James says:

        I did not state Trump has many redeeming qualities. He has lots of shortcomings. So have most presidents in recent memory. I cannot find any redeeming qualities in Bush, or his father Bush senior. Can’t really find many in Clinton. I find absolutely none in Obama.

        I did not say Trump is the greatest person ever…but simply that you repeated a lie. That “Everybody wants Trump gone.” This is a fake meme being propagated by the fake news and the corrupt group in the city state called Washington D.C. to disrupt Trump, to create ungovernable chaos in his administration.
        The fact is, despite his shortcomings, I’ll maintain most want Trump there….that is how and why he got ELECTED. Your personal disgust with him has nothing to do with all those other peoples wants and desires.

        As far as business, we have a word called bankruptcy for a reason, because it happens and is a normal outcome in the business world. I would submit that because of his experience in this area, perhaps Trump is more qualified to be president. At least he knows how hard earning a dollar is. None of the other presidents mentioned knew how to.

        He is a liar? LOL Name a recent politician who isn’t!

        Issues executive orders….seems to me that is what presidents do these days. That is their JOB. The fact that we have politicized courts now that run roughshod over anything they do not like by trumpeting (pardon the pun) “unconstitutionality” is meaningless in judging Trump. I would suggest you judge our politicized courts.

        I see a nation in decline, a city state called Washington DC that is corrupted to the core by money, greed and power. And you repeat the fake meme that everybody wants Trump gone.

        BS

        • Buzz Lightyear says:

          I agree.

          Sick to the teeth with all the left right paradigm crap.

          We have rulers.

          They provide the serfs with the illusion of choice in all things. Keeps them occupied and busy argueing over details while they are robbed blind.

          • bandits101 says:

            The ONLY people that defend Trump are those that voted for him (for obvious reasons) and of course they reside in the country that elected him. Canadians, Mexicans, Chinese, Europeans I’m sure, in the vast majority see Trump as untruthful, naive, ignorant, narcissistic, incompetent and completely unworthy to be a leader of any description, let alone the free world. How he got elected will only ever be guessed at.

            Those that defend him, always, always make the point that other presidents had the same traits……they think that is a defence!

            • Buzz Lightyear says:

              I didn’t vote for Trump

              I never vote

              People like you always repeat the MSM waffle

              As Norman says… you will be clamouring for Trump to return at some point after you see what comes next

            • bandits101 says:

              “I didn’t vote for Trump”. Guess I’ll take your word for that. But you are a conspiracy nutter and very likely a global warming denier, so you fit the bill of a Republican.

            • Fast Eddy says:

              This is … as good as it gets….

            • Fast Eddy says:

              I can understand why he got elected…

              Americans have been told for years that there there has been a recovery — that there is full employment…..

              Now Americans might be considered – in general – to be pretty stupid….

              But when you have no job — or if you do you can barely make ends meet….

              You quickly figure out that you are being duped…

              And when a stupid person is duped… they get angry…

              Trump is their way of lashing out at those who duped them

              Can you blame them for voting for Trump?

            • Buzz Lightyear says:

              Bandit

              You are a caricature of everything that’s wrong with this world

              You would be a passable source of entertainment if you weren’t so pitiful

              Make all the assumptions you want about people you’ve never met but I suggest you change your strategy lest you look like a fool

              I am a proud Galician and spanish national. Why on earth would I vote for Trump or identify as a republican?

              I have Viking and Roman and Moorish and Basque blood. I know who I am.

              I am about as far removed from mainstream thought and action as you can get.

              I question everything.

              I have researched occult knowledge for the past ten years and its influence on our technosphere. It’s fascinating stuff. If that qualifies me as a conspiracy nutter then so be it. I wear the title with pride. It served me well at times in various consultancy gigs.

              It doesn’t hurt to know more. You should try it some time.

        • Fast Eddy says:

          I suspect if another election were held now — Trump would win again

          The continuing attacks on him from the MSM would make generate more support for him than even

        • Siobhan says:

          “I’ll maintain most want Trump there….that is how and why he got ELECTED. ”
          BS
          He lost the popular vote .˙. “Most” want him gone.

          #TraitorTrump. Is. Done. #RussianSpy

          @Norman
          Orrin Hatch is fourth in line.
          President Hatch?
          Doesn’t change your argument. Only the name changes.

          • Siobhan says:

            oops, broken link, try this one:

            President Hatch?

          • Jesse James says:

            Trump won the electoral college. We have the electoral college for a reason….to prevent mob rule. Let’s just suppose that one state, one very big state wanted to “cook” an election. Let’s say they registered millions of illegal voters, dead voter, fake voters…whatever. Then in a popular vote, they could “win”an election by fraud. The electoral college prevents this from happening. No one would ever do such a thing, I am sure. But the electoral college keeps this large diverse country from mob rule by a few states. It prevents that kind of fraud. Without it, this nation probably would not exist at this point.

            • Buzz Lightyear says:

              Thanks for saying this. It appears that some have no grasp of the reality that they live in. Either that… or they are simply dishonest.

    • Exotics lolz? For some reason Donald prefers Slavic spouses, both of them are culturally formed in former Austrian Empire regions, Slovenia and Czech. Does it have bearing on the politics, plus part of his own Scottish heritage, not sure, but US politics has been dominated by precisely anything NOT like this for ages, although obviously those are undercurrent traits.. but I’d say they show up eventually.

    • xabier says:

      Trump, or Hillary Clinton, were both very appropriate presidential candidates for the last days of Imperial America, in just the same way that the last Romans themselves got the sort of emperors suited to the times.

      In the same way, Britain got Tony Blair whose phoney act embodied the national spirit to a remarkable degree.

      • xabier says:

        The Romans had a more picturesque foundation myth than Americans, being descended, they thought, from a mother who was tending the ashes of her homestead fire one morning when a supernatural – divine they believed – penis thrust up from the heaped ashes, impregnated her and so produced Romulus and Remus, who were brought up by a wolf.

        What a shock for a girl in the morning! 🙂

        Same thing in effect, though: Manifest Destiny.

        The English by the time they became a nation and powerful knew they were merely descended from a bunch of hairy Gemanic mercenaries who made their way over the Channel in leaky boats,and from Vikings who were much cleaner taller, and built better boats.

        So in the 16th century they invented the myth of being the noble warriors of the Protestant God; all nonsense, as they knew that it was the chink of gold coins that had motivated them all along.

        All rather rational compared to the Sumerians and their Talking Fish gods, who are meant to have taught them the arts. Now, that’s a Myth!

      • Fast Eddy says:

        • doomphd says:

          has anyone found a clinical analysis of that seizure? Hillary laughs it off, but those paying attention to her are dismayed and one asks “are you OK?” A few more votes in the right places and she would be running the country now, with occasional seizures to laugh about, until they become more serious.

    • Buzz Lightyear says:

      Great post!

    • Buzz Lightyear says:

      One step closer to this…

      if we’re not there already.

      • i1 says:

        First haircut yesterday, many more to come.

      • Slow Paul says:

        We’re heading there for sure. The POTUS is one thing but think of all those people with their minds rotting away on “social” media and watching reality TV… I’m pretty sure we are past peak intelligence.

    • Snorp says:

      You sound just like Morris Berman (that’s a complement)

    • Bergen Johnson says:

      Excellent post, DI. That’s some straight talk that is very accurate and unfortunately continuing to move further in those directions. Trump is a reflection of what America has become.

  3. Fast Eddy says:

    Watch this….

    Baum thought the above was likely to collapse the global economy … it didn’t … because of extreme CB responses….

    Then consider…. the current situation is infinitely more dangerous….

    • ITEOTWAWKI says:

      Exactly FE, that’s why I don’t get the slow collapsers, decades out collapse, commenters on this blog…we came soooo close to losing JIT in 2008, with ships all over the world not moving from their ports because they were afraid that the notes of credits at the destination port would not be honoured, and so many other examples related to credit, which is the lifeblood of the world economy, freezing up…through the Herculean efforts of CBs we were “artificially saved”….however next time around we will not print ourselves out of this…at the end of the day there are not enough resources left to grow the world economy, and the global financial system NEEDS growth or it collapses….and again, we lose the financial system, I don’t care how many resources are left, they will be left in the ground…take away the lubricants from your car engine and see how long it runs before it buckles…there is no possiblity of slow collapse, degrowth…this is NOT Rome…we are all inter-connected…Gail’s Leonardo sticks…pull one stick the whole thing comes down..Carpe Diem!!

      • Slow Paul says:

        You are too married to classical economic thinking. The rules of the financial game has changed. We are approaching limits everywhere and things do not play out as expected. Just because we no longer will have real growth in the classical sense doesn’t mean we couldn’t have negative growth. We will have whatever we get. We can’t use old maps because this is uncharted territory.

        You have read this blog since 2011? Theoretically, how many more years of reading OFW would it take for you to consider a slow collapse outcome?

        • ITEOTWAWKI says:

          We have never been where we are!!! 7.5B people adding 80M net humans a year with conventional oil having peaked in 2005…have you seen the debt levels since 2008 go exponential?? You can hide what is going on for a while with paper shuffling and undertaking all kinds of uneconomical projects (see China and how many empty cities they built in the last few years) pulling the world economy forward, but that cannot go on forever..we live in a physical world not a virtual one…so yes collapse has not happened yes but that’s because of the efforts of CBs…without them we would not be debating here right now…

        • Fast Eddy says:

          Contraction looks like this

  4. jerry says:

    Here is what you need to know about James Comey. Everything he said or did related to Hillary Clinton or President Trump is unimportant. The fact that James Comey did and said nothing about $6. 5 trillion missing from your government in fiscal 2015 tells you all you need to know about James Comey.

    WHERE IS THE MONEY?

    James Comey paid $3 million for his Connecticut mansion. The US Congress can not pass health care legislation because there is no money to pay for it and sorely needs a political distraction. Let me suggest now is a good time to connect the dots between Mr. Comey’s personal wealth and the debasement of the United States and your finances.

    https://solari.com/blog/all-you-need-to-know-about-james-comey/

    • xabier says:

      Let’s wait for Mr Comey’s speaking tours…..

      • xabier says:

        The way politicians are filling their pockets in the US – blatantly and without shame or attempt at concealment – is comparable only to Spain and Italy.

        Now, in Spain and Italy it is tolerated, because of the client network – eventually, you get your little piece as a party faithful or family member.

        In Italy, above all, people tend to think: ‘If only I had that chance, smart guys!’

        • xabier says:

          This is why there are so many governments in Italy: it’s about sharing the pie with a regular change-over.

          Moreover, every time you are a minister, you get an extra pension.

          Oh, and then there’s the publicly subsidised housing which you can buy cheap and sell on to other politicos….

          They aren’t badly organised and chaotic: they are the best-organised crooks in the world, and all legal.

  5. adonis says:

    This will be my last post on OFW as my views on collapse do not seem to be listened to i can understand why many of the popular commenters here all agree with each other that their view of collapse is correct and that any other views of collapse are bogus.I will continue to read OFW as I truly enjoy and love this site but I will state that I have come to the final conclusion that their are others out there i call them the ‘elites’ and they are aware of our predicament and have prepared accordingly the direction of any actions they can take to manage ‘collapse’. I have deciphered some of the hidden messages they have left for those that have the stamina to investigate and I will tell you the date of the collapse of our current “financial system’ . The date is the 1st of June 2018 .

    • Fast Eddy says:

      It is very difficult to win an argument with gods…. that’s why we are gods…

      Well.. at least you can tell your friends that you spent some time with gods… very few people can actually say that.

      • xabier says:

        Ah, but where is that vital organ placed? 🙂

      • Buzz Lightyear says:

        As I lie here prostrate, face in the dirt, I feel truly humbled to have bathed in the glory of your resplendent presence.

        May rocks fall and block the entrance to the cave where mere mortals will tremble in fear of the wrath that you shall bring upon us when the day of reckoning comes.

        Please spare us for we knew not that we were dealing with TRUE gods – olympians no less – and not other deluded apes that could type.

        Still I wonder why you chose to share your knowledge of the future gained through sight beyond sight since it would have been far more considerate not to have done so. Many a psyche would’ve been spared the pain of imminent DOOM always lurking around the next corner.

        I know my lord I have crossed the line that you so graciously have drawn before us. I will retreat to my cave immediately and perform the cleansing rituals until my conscience is cleaner than a hungry dogs food bowl.

        • Fast Eddy says:

          Now you are getting it!

          As for sharing the future with the DelusiSTANIS…. it’s like giving medicine to dead people…. it makes no difference.

    • Econimica graphs show there are some two potential knees of disruption ahead of us ~2019 and prior ~2025, so your estimation for Q2/2018 might be in very good company.

    • xabier says:

      Try not to get fixed on particular dates, just concentrate on being as happy as possible. Good luck.

    • lol

      your ears will fall off before anybody listens to you

      that’s just life—don’t let it get you down

  6. dolph says:

    I would say Americans are in a position to take everything to its farthest possible point, without anyone else being able to stop them.

    Look at how the Soviets crumbled. Look at how the Islamic terrorists are powerless against both America and their own governments. Look at how Europe bows down to its American master. Look at how China just makes more and more stuff to feed the bottomless American appetite.

    See, that’s what you people don’t understand. This system will take everything to its final endpoint, there is no turning back anymore. The system is like a 65 year old person. They aren’t going to die right away. But neither are they capable of change. They will just grow older and older and one day they will be 95 in a nursing home.

    • Fast Eddy says:

      There are 65 year olds that look like this:

      And then there is America:

      • jeremy890 says:

        Maybe so, FE..but you forgot to insert one thing….under that wheelchair is a arsenal of nukes that can destroy EVERTHING! Mark my word, before petrodollar is replaced, a MAJOR military engagement will ensue. Saddam Hussein was one that challenged it and he met the hangman’s noose. No Sir, GW the Elder wasn’t kidding when he asserted that the American way of Life was not negotiable.
        That’s why I’m staying put….no where to run and hide.
        We ALL Go Down

        • Fast Eddy says:

          I could see that happening.

          • jeremy890 says:

            The most dangerous predator is not the youngest, strongest….but one that is the one in decline, used to be Top Dog, and grasping to remain alive. When its back is against the wall, watch out….whatever it takes …..that is what we are witnessing today.
            When the United States can not longer deploy it’s military machine overseas and closes overseas military bases and in retreat. Worry…

      • Greg Machala says:

        OMG

      • Jesse James says:

        Thanks FE, I needed the laugh!
        It will be a difficult thing when all the helpless and hopeless in America suffer like what is happening in Ukraine and Venezuela. It will be grim.

        • jeremy890 says:

          The Big Old Bear reacts…sign of the end times

          Can’t say we weren’t warned!

    • xabier says:

      Well, dolph. The US is undoubtedly the most powerful military force in the world, as far as offensive capacity is concerned.

      Russia’s strength is only defensive and nuclear, it can’t project an army on any part of the globe like the US: he US can drop an army anywhere at the drop of a hat: of course, it loses all the wars it fights in the strict sense, but it can sure screw up a whole region if it wants to – witness the last two decades.

      It also has immense financial tools, and most importantly, through global spying, has all the best blackmail material on everyone of any significance throughout the world.

      However, as physical reality overtakes the world system, all this will be as nothing. It is impossible to time this process, but it will happen.

      • Buzz Lightyear says:

        Here we go again.

        If it’s impossible to time this process

        then it’s impossible to say what will happen

        collapse in ten years, fifty years or one hundred years changes the rationale behind making such a prediction

        What happens here and many other places too is that predictions are always placed in the buffer zone of one to three years away so that you can always say something WILL happen in the next few years

        The thing is people (soothsayers) have been making precisely these kinds of predictions for milenia and they’re still at it!

        For example the roman empire didn’t collapse – it tranformed and is very much a part of life today. Take a look at the Capitol (temple to jupiter) in Washington DC right next to the Pentagon (roman military headquarters in honour of Venus the only planet that draws a perfect pentagram in the night sky) Virginia and Maryland should tell you something too.

        It’s my belief that Rome is playing east against west in a final game of problem reaction solution – a final synthesis of global rule under a reformed united nations where the power of veto will be removed.

        Beyond that anything could happen. Radical transformation could take place under the guise of a benevolent world government – a global governance willingly elected to ensure that terrible things never happen again i.e. the conflict that may be about to ensue.

        That’s the plan according to my knowledge. Does it mean that it WILL happen or that it even CAN happen. I have no idea.

        But I’ve heard rumblings that the Trump gov is about to unleash all manner of black project tech and knowledge and that’s why the “establishment” is intent on stopping him at all costs.

        Whenever that “solution” is offered up here the response is that we would rapidly inflate in all areas – population, materials, land use, and side effects – and therefore we would get our DOOM somehow only a bit later than predicted.

        Of course, that is the most ludicrous reasoning possible and exists only to fit the result to the prevailing prediction model which is inherently flawed.

        There are about four microchip manufacturers in the world
        Now map out the supply chain for those factories
        Draw up a plan to ensure the management and rapid closure of the spent fuel ponds
        Free up all tech and patents that have military value
        Apply agressive population control measures
        Focus on human machine hybrid organism survival – everything else is expendable

        As Gail says we form part of a self organising system. The self organising system doesn’t give two hoots about this species or that species including ours but there does appear to be some kind of impulse to survive rather than not. I’m suggesting that something may survive. It just won’t be humans in their current form.

        • Timing does seem to be very tricky. I think the situation is quite different now from when prior transformations took place, however. It is hard to see how we can even half-way land on our feet again. We don’t have parallel civilizations that can absorb us. Regeneration of soil and forest doesn’t really fix our problems with “running out” of cheap to extract fossil fuels.

          • Buzz Lightyear says:

            It’s different this time but it appears the system is more resilient than many imagined. At least for now.

            Because nobody can know the day or the hour, not even the angels in heaven, not even FE, there exists the possibility for salvation.

            At every stage in our history when the high priests thought that all was lost they would proclaim that it was very hard to see a way out.

            They were wrong in every single case.

            7.5 billion human souls currently experience the sun on their face in defiance of those hand wringing high priests.

            Since I have nothing to lose I may as well place a bet on salvation – at least for some aspect of human activity

            • Fast Eddy says:

              ‘salvation’ – what do you reckon that looks like?

            • Buzz Lightyear says:

              Not knowing everything in precise detail is the fun part.

              Oh radiant one, surprise me.

              But please if there’s ouchy involved then make it quick.

        • xabier says:

          Hmm. Rome did collapse you know, the Western part, it’s a classic case study for that very reason.

          But yes, transformations and transitions are always worth thinking about.

          • Buzz Lightyear says:

            Yep. I should have worded it differently but my point stands – basically that throughout all the ups and downs, swings and roundabouts and changing of the guard ancient Roman and Greek and Turkish and Babylonian and Chinese and Indian systems and values have persisted and very much shape the world we live in today.

            Supposedly the difference now is that we live in an interconnected global system. Personally, I don’t think this matters as much as people are making out. As long as failures in the system are not catastrophic and patches can be applied then the system continues and transforms.

            Oh and ask yourself the question – who owns the BIS?

            http://www.zerohedge.com/news/2015-04-11/meet-secretive-group-runs-world

            • xabier says:

              True, and we have been watching the fevered application of the patches: so far, so……still falling to pieces, but also still quite nice on the surface in places.

              Those earlier civilisations were much less developed than ours, non-industrial, and only able to cause very local and contained devastation (those Mesopotamian mounds surrounded by poor pasture where once cities stood among woods and fertile fields).

              They could always fall back on the farmer or nomad – who, and this is the important point, – had never stopped being that, as the higher levels grew and collapsed.

              The only possible hope, if one must grasp at straws, is that our Earth system is so complex that there might be some sightly pleasant surprises and reprieves along with the all-too obvious looming ecological catastrophe.

            • Buzz Lightyear says:

              Xabier

              I try to think of the whole planet as a single organism so parts may slough off even die regenerate evolve etc while the core principles of life soldier on somehow

              because we tend to favor some form of life existing rather than none at all – especially human life – we also tend to romanticise our existence and long for a fantastical state of being in perpetuity

              some people believe the earth is a paradise created for them and that the apparent anomalies are tests from god

              I try to see things from an abstracted point of view where humans are not neccesarily the most important cogs in the machine just current branch of potential paths opening up along evolution’s journey so far

              i believe the system as a whole is not far from undergoing rapid mutation resulting in a breakaway system

              I can’t help viewing the current global activity as some kind of final feast before a period of rapid transformation

              if it’s possible for something to emerge from the breakdown and reorganisation of cells then I suspect it would be fairly unrecognisable even if some humans formed part of the new structure

              picture a timelapse of some region of earth where the climate has varied drastically. Flora and fauna can adapt, move on or die. And then humans come along and build a shopping mall, parking lots, roads and skyscapers

              then the landscape changes again

              elsewhere… an enormous server farm is constructed at the bottom of the ocean (better for cooling) digital inhabitants live there for ten thousand years until something else comes along

              https://www.engadget.com/2016/02/01/project-natick-underwater-datacenter/

        • Van Kent says:

          The normalcy bias in human brains is astounding. Just because our neighbours and our family is fine, no matter what happens at the valley next door, surely nothing bad can happen to us..

          http://content.time.com/time/specials/packages/completelist/0,29569,2040762,00.html
          http://bigthink.com/dr-kakus-universe/what-is-really-causing-the-spate-of-sudden-animal-deaths
          https://watchers.news/category/mass_death/
          http://www.infiniteunknown.net/2017/02/05/mass-animal-deaths-for-january-2017-mass-animal-death-lists-2011-2016/

          It seems its one mass death incident for every day of the year, several years in a row.. It seems two thirds of wildlife will be gone within just a few years.. now its those populations.. and then it will be our turn.. and then we take the rest of the wildlife with us.. bye bye everything bigger than a mouse

          Sure there are cave systems in Turkey. Sure the great rivers running through Siberian plains is a vast territory. Sure we even have people on Antarctica, Greenland, NZ, Easter Island and Denver Airport. Sure Hawai, Patagonia Tierra del Fuego, Swiss alps or the Himalays could support ar least a few people.. right?

          But somehow the St. Matthew Island reindeers comment; “only a few females survived and one dysfunctional male” that comment keeps haunting me.

          The few females that find themselves yet alive in those remote places after a decade or so, after all the malnutrition and diseases.. may find all males left to be somewhat.. dysfunctional..

          • Buzz Lightyear says:

            I was going to offer my services as the “one dysfunctional male”…

            And then I read the next paragraph!

          • xabier says:

            Van Kent

            I have an uneasy feeling that most people would, if they stepped out of the house and saw no birds or insects, and all the trees covered were with strange blotches, neither notice nor care if it were pointed out to them.

            Proof? it’s happening now.

            I was in the local bookshop the other day and an old gamekeeper with a profound knowledge of the local wildlife and plants walked in, and among other things said suddenly in the conversation: ‘You know what I think? It’s all dying.’

            Unanswerable.

            • Joebanana says:

              xabier-
              That is so awful. I never thought I would see the day I would avoid killing an insect but I’m their. They fill me with appreciation now along with all living things.

            • bandits101 says:

              You don’t know what you’ve got til its gone……..

            • xabier says:

              Joebanana

              I may be going mad, (going?) but one of my pleasures these days is – when the light is right – watching all the tiny insects in the garden, golden as they catch the sun.

              It’s a visible demonstration of the web of life we have despised and ignored, acting as if we were separate from it.

            • Harry Gibbs says:

              Xabier, one consolation of living in the Hebrides is that I don’t have to witness the trees dying, as there are none in my locale. They were looking awful when we left SE England – so much leaf-burn, discolouration and opportunistic infections like tar spot run rampant.

            • Fast Eddy says:

              Looks cool! Like Easter Island only better:

            • one of the most beautiful places on earth

              till the midges start eating you (they prefer tourists to locals for some reason)

            • Fast Eddy says:

            • Harry Gibbs says:

              It can look rather austere in winter but when spring comes and the sun is out and we don’t have lots of rain washing peat into the sea and turning it brown, it can be quite stunning. The beaches are vast and usually deserted.

            • Harry Gibbs says:

            • Harry Gibbs says:

              Norman, the little swine have clearly sussed my interloper status – I get eaten alive! They’re not out in full force yet, thank goodness.

            • lol

              i know the area well

              i remember the romance of the little ferries that made sure you lingered while waiting for each one.
              nobody seemed to mind very much.–though that was in the 50s and 60s

              then Elian Donan, or Elgol on Skye where words fail to describe it.

              but the bloody midges have you running for cover–though I still envy you living there.

            • Joebanana says:

              Xabier-
              That light you speak of is one of my favourite things as well. I put my first real day of gardening of the year in yesterday. We have just come through one of the coolest and wettest springs in some time. We rarely have a nice spring but it is still my favourite time of year.

              The only trees with leaves out yet are the poplar’s but everything is coming on fast now. I’ve been reading about the deteriorating health of trees around the world for some time now. There is defiantly some stress here but not nearly as bad as other areas. Apparently low level ozone and NOX do a real number on trees. With all the rain we’ve had they at least they won’t be stressed for water any time soon.

            • Buzz Lightyear says:

              Still buzzing with birds, bees, butterflies, bats, foxes where I am even today

              Fruit trees budding, loaded up and ready for another mega harvest this year just like last year – four months of sweet fresh orange juice from your own garden is unbeatable

              this year threw some seeds on a twenty five meter patch of grass and they’re all growing and flourishing – i just trim the grass around the plants

              the surrounding countryside is healthy and running amock – really you should it – it’s breathtaking

              we sometimes comment on the amount of edible plants all around us and don’t bother to use – should get a little book on the topic

            • Buzz Lightyear says:

              My neck of the woods…

            • Buzz Lightyear says:

              You can’t see for green…

    • Buzz Lightyear says:

      The sytem will have children and grandchildren.

      Only this time they won’t look anything like their grandparents.

      They will not need food nor waste the energy they harvest
      They will not suffer illness or waste resources on “healthcare”
      They will not fight amongst themsleves
      They will have a common goal and sense of purpose
      They will multiply and colonise new environments only when it is wise to do so
      Balance and a higher level of existence will always be pursued
      Human ancestors will be put out to pasture and at some point forgotten

      Either that or mutant squirrels will rush to fill the void post human extinction

      Other top candidates – geckos

      My reasoning: dolphins and crows are smart but they don’t have hands

      If we have to start with bacteria all over again then holy cow that’s going to be a while…

      • Aubrey Enoch says:

        Don’t count your bacteria before they hatch. The Venusian avitars are trying to get the Earth up to 600degrees so their mother can move in. No water no Earthlings.

        • Buzz Lightyear says:

          Ahh… I see it now.. duh

          you have no idea what a weight off my mind that is

  7. Bergen Johnson says:

    http://www.reuters.com/article/us-usa-trump-russia-contacts-idUSKCN18E106?il=0

    ‘Exclusive: Trump campaign had at least 18 undisclosed contacts with Russians – sources’

    “In addition to the six phone calls involving Kislyak, the communications described to Reuters involved another 12 calls, emails or text messages between Russian officials or people considered to be close to Putin and Trump campaign advisers.”

    Did you read that? EMAILS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  8. Harry Gibbs says:

    “The spread of the global financial crisis (GFC) from one country to another over days, weeks and months can now unfold before your eyes thanks to a ground-breaking network model.

    “The model, which tracks how the financial crisis moved and proliferated like a virus through the governments and banks of 18 countries between 2006 and 2015, has been developed by a research team at the University of Melbourne’s Faculty of Business and Economics…”

    https://pursuit.unimelb.edu.au/articles/picturing-the-credit-crunch

  9. psile says:

    The end of the Aussie Dream run (26 years without recession, 18 years of housing bubble) draws ever nearer…with many completely crazy-eyed desperate to climb aboard the Ponzi any way they can…

    Genworth Mortgage Insurance Warns Of Risky Home Loan Deposits (behind a paywall)

    The nation’s largest mortgage insurer has warned that borrowers are scraping together deposits with credit card debt, parental loans and other forms of risky “unsecured debt” as tougher regulations force lenders to require larger deposits.

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