Falling interest rates have huge power. My background is as an actuary, so I am very much aware of the great power of interest rates. But a lot of people are not aware of this power, including, I suspect, some of the people making today’s decisions to raise interest rates. Similar people want to sell securities now being held by the Federal Reserve and by other central banks. This would further ramp up interest rates. With high interest rates, practically nothing that is bought using credit is affordable. This is frightening.
Another group of people who don’t understand the power of interest rates is the group of people who put together the Peak Oil story. In my opinion, the story of finite resources, including oil, is true. But the way the problem manifests itself is quite different from what Peak Oilers have imagined because the economy is far more complex than the Hubbert Model assumes. One big piece that has been left out of the Hubbert Model is the impact of changing interest rates. When interest rates fall, this tends to allow oil prices to rise, and thus allows increased production. This postpones the Peak Oil crisis, but makes the ultimate crisis worse.
The new crisis can be expected to be “Peak Economy” instead of Peak Oil. Peak Economy is likely to have a far different shape than Peak Oil–a much sharper downturn. It is likely to affect many aspects of the economy at once. The financial system will be especially affected. We will have gluts of all energy products, because no energy product will be affordable to consumers at a price that is profitable to producers. Grid electricity is likely to fail at essentially the same time as other parts of the system.
Interest rates are very important in determining when we hit “Peak Economy.” As I will explain in this article, falling interest rates between 1981 and 2014 are one of the things that allowed Peak Oil to be postponed for many years.
Figure 1. 10-year Treasury Interest Rates. Chart prepared by St. Louis Fed.
These falling interest rates allowed oil prices to be much higher than they otherwise would have been, and thus allowed far more oil to be extracted than would otherwise have been the case.
Since mid 2014, the big change that has taken place was the elimination of Quantitative Easing (QE) by the US. This change had the effect of disrupting the “carry trade” in US dollars (borrowing in US dollars and purchasing investments, often debt with a slightly higher yield, in another currency).
Figure 2. At this point, oil prices are both too high for many would-be consumers and too low for producers.
As a result, the US dollar rose, relative to other currencies. This tended to send oil prices to a level that is too low for oil producers to make an adequate profit (Figure 2). In addition, governments of oil exporting countries (such as Venezuela, Nigeria, and Saudi Arabia) cannot collect adequate taxes. This kind of problem does not lead to immediate collapse. Instead, it “sets the wheels in motion,” leading to collapse. This is a major reason why “Peak Economy” seems to be ahead, even if no one attempts to raise interest rates.
The problem is not yet very visible, because oil prices that are too low for producers are favorable for importers of oil, such as the US and Europe. Our economy actually functions better with these low oil prices. Unfortunately, this situation is not sustainable. In fact, rising interest rates are likely to make the situation much worse, quickly.
In this post, I will explain more details relating to these problems.
Low interest rates are extremely beneficial to the economy; high interest rates are a huge problem.
Low interest rates allow consumers to purchase high-priced goods with affordable monthly payments. With low interest rates, consumers can afford to buy more consumer goods (such as homes and cars) than they could otherwise. Thus, low interest rates tend to lead to high demand for commodities of all kinds, thus raising the price of commodities, such as oil.
Low interest rates are also good for businesses and governments. Their borrowing costs are favorable. Because consumers are doing well, business revenues and tax revenues tend to grow at a brisk pace. It becomes easier to afford new factories, roads, and schools.
While low interest rates are good, a reduction in interest rates is even better.
A reduction in interest rates tends to make asset prices rise. The reason this happens is because if someone already owns an asset (examples: a home, factory, a business, shares of stock) and interest rates fall, that asset suddenly becomes more affordable to other people, so the price of that asset rises because of increased demand. For example, if the monthly mortgage payment for a house suddenly drops from $600 per month to $500 per month because of a reduction in interest rates, many more potential homeowners can afford to buy the house. The price of the house may be bid up to a new higher level–perhaps to a price level where the monthly payment is $550 per month–higher than previously, but still below the old payment amount.
Furthermore, if interest rates fall, owners of homes that have risen in value can refinance their mortgages and obtain the new lower interest rate. Often, they can withdraw the “excess equity” and spend it on something else, such as a new car or home improvements. This extra spending tends to stimulate the economy, and thus tends to raise commodity prices. Suddenly, investments in oil fields that previously looked too expensive to extract, and mines with ores of very low grade, start looking profitable. Businesses hire workers to staff the investments that are now profitable, stimulating the economy.
Businesses receive other benefits, as well, when interest rates fall. Their borrowing cost on new loans falls, making new investment more affordable. Demand for their products tends to rise. The additional demand that results from lower interest rates allows economies of scale to work their magic, and thus allows profits to rise.
Companies that have large portfolios of investments, such as insurance companies and pension funds, find that the values of their assets (stocks, bonds, and other investments) rise when interest rates fall. Thus, their balance sheets look better. (Of course, the low interest payments when interest rates are low provide a different problem for these companies. Here, we are talking about the impact of falling interest rates.)
Of course, the reverse of all of these things is also true. It is truly bad news when interest rates rise!
Wages Depend on Interest Rates and Debt Growth
When interest rates fall, debt levels tend to rise. This happens because expensive goods such as homes, cars, and factories become more affordable, so customers can buy more of them. Thus, falling interest rates are very closely associated with rising debt levels.
We find that when we look at debt levels, rising debt levels seem to be highly correlated with rising US per capita wages, (especially up until China joined the World Trade Organization in 2001, and globalization took off). “Per capita wages” are calculated by dividing total wages and salaries by total population. Per capita wages thus reflect the impact of both (a) changes in the wages of individual workers and (b) changes in workforce participation. Using this measure “makes sense,” if we think of the total population as being supported by the wages of the working population, either directly or indirectly (such as through taxes).
Figure 3. Growth in US Wages vs. Growth in Non-Financial Debt. Wages from US Bureau of Economics “Wages and Salaries.” Non-Financial Debt is discontinued series from St. Louis Federal Reserve. (Note chart does not show a value for 2016.) Both sets of numbers have been adjusted for growth in US population and for growth in CPI Urban.
What does oil price depend upon?
Oil price depends upon the amount customers can afford to pay for oil and the finished products it produces. The amount customers can afford, in turn, depends very much on interest rates, since these influence both wages and monthly payments on loans. If the price that a significant share of consumers can afford is below the selling price of oil, we get an oil glut, as we have today.
It is important to note that oil and other energy products are important in determining the cost of finished products, such as cars, homes, and factories. Thus, high prices on energy products tend to ripple through the economy in many different ways. Many people consider only the change in the cost of filling a car’s gasoline tank; this approach gives a misleading impression of the impact of oil prices.
Affordability is also affected by growing wage disparity. Growing wage disparity tends to occur because of growing complexity and specialization. Globalization also contributes to wage disparity. These are other problems we encounter as we approach energy limits. Demand for commodities is to a significant extent determined by the wages of non-elite workers because there are so many of them. High wage workers tend to influence commodity prices less because their purchases are skewed toward a greater share of services, and toward the purchase of financial assets.
Because interest rates, debt, wages, and oil prices (and, in fact, commodity prices of all kinds) are linked, the system is much more complex than what most early modelers assumed was the case.
Hubbert’s Theory Underlies Many Mainstream Energy Beliefs
Today’s mainstream beliefs about our energy problems seem to be strongly influenced by Peak Oil theory. Peak Oil theory, in turn, is based on an analysis by geophysicist M. King Hubbert. This view does not consider interest rates, debt, or prices.
Figure 4. M. King Hubbert’s symmetric curve explaining the way he saw resources depleting from Nuclear Energy and the Fossil Fuels, published in 1956.
In this view, the amount of any exhaustible resource that we can extract depends on the resources in the ground, plus the technology we have to extract these resources. In general, Hubbert expected an approximately symmetric curve of extraction, as illustrated in Figure 4. The peak is expected when about 50% of the resource is extracted. Hubbert believed that improved technology might allow more exhaustible resources to be extracted after peak, making the actual extraction pattern somewhat asymmetric, with a larger share of a resource, such as oil, being extracted after peak.
With this theory, we can expect to extract a considerable amount of resources in the future, even if the energy supply of a particular type starts to fall, because it is “past peak.” With the relatively slow decline rate shown in Figure 4, it should be possible to “stretch” supplies for some years, especially if technology continues to improve.
At some point, the standard view is that we will “run out” of energy supplies if we don’t make substitutions or conserve the use of these nonrenewable resources. Thus, an increase in efficiency is viewed as one part of the solution. Another part of the solution is viewed as substitution, such as with wind and solar energy.
In the mainstream view, the major influence on commodity prices is scarcity, not affordability. The expectation is that scarcity will cause oil prices will rise; as a result, expensive substitutes will become cost competitive. The higher prices will also encourage more conservation and more high-cost technologies. In theory, these can keep the economy operating for a very long time. The very inadequate models that economists have developed have encouraged these views.
The Usual Energy Model Is Overly Simple
Hubbert assumed that the amount of oil extracted would depend only upon the amount of resources available and available technologies. In fact, the amount of oil extracted depends on price, in part because price determines which technologies can be used. It also governs whether oil can be extracted in areas that are inherently expensive–for example, deep under the sea, or heavily polluted with some other material that must be removed at significant cost. Because of this, if oil prices are high, new technologies can be brought into play, and resources that are expensive to reach can be pursued.
If oil prices are lower than really needed, for example in the $40 to $80 per barrel range, the situation is more complex. The problem is that taxes on oil are important, especially for oil exporters. In this range, many producers can continue to produce, but their governments collect inadequate taxes. Their governments find it necessary to borrow money to maintain programs upon which the populations of the countries depend. Governments with inadequate tax revenue tend to get into more conflicts with other countries, such as is happening today with other Middle Eastern countries fighting with Qatar.
The situation of inadequate tax revenue is inherently unstable. It can eventually be expected to lead to the collapse of oil exporting countries.
Factors Underlying the Rise and Fall of Historical Oil Prices
The fundamental problem regarding the cost of resource extraction is that we tend to extract the cheapest-to-extract resources first. Thus, the cost of extracting many types of resources, including oil, tends to rise over time. Wages grow much more slowly.
Figure 5. Average per capita wages computed by dividing total “Wages and Salaries” as reported by US BEA by total US population, and adjusting to 2016 price level using CPI-Urban. Average inflation adjusted oil price is based primarily on Brent oil historical oil price as reported by BP, also adjusted by CPI-urban to 2016 price level.
This mismatch between wages and oil price tends to cause increasing affordability problems over time, even as we switch to cheaper fuels and increased efficiency. Part of the reason why affordability problems get worse has to do with our inability to keep reducing interest rates; at some point, they reach an irreducible minimum. Also, as I mentioned previously, there is a growing wage disparity problem caused by growing complexity and globalization. Those with low wages find themselves increasingly unable to afford goods such as homes and cars that require oil products in their construction and use.
Looking at Figure 5, we see two major price “humps.” The first of these is in the 1970-1998 period, and the second is in the 1999 to present period. In the first of these two periods, we often hear that the run up in oil prices was the result of an oil supply problem. This occurred because the US oil supply peaked in 1970, and the Arabs made the situation worse with an oil embargo.
In fact, I think that at least half of the problem in the 1970-1981 period may have been that wages were growing rapidly during this period. The rapid run up in wages allowed oil prices to increase in response to a fairly small oil shortage. Thus, the run up in prices was caused to a significant extent by greater demand, made possible by greater affordability. Note that timing of wage increases is slightly ahead of the timing of increases in CPI Urban. This suggests that wage growth tends to cause price inflation. It seems likely that globalization reduces the influence of US wages on oil prices, and thus on price inflation, in recent years.
Figure 6. Growth in US wages versus increase in CPI Urban. Wages are total “Wages and Salaries” from US Bureau of Economic Analysis. CPI-Urban is from US Bureau of Labor Statistics.
The large increases in wage payments shown in Figure 6 were made possible by growing total population, by rapidly growing productivity, and by an increasing share of women being added to the workforce. Figure 6 shows that the big increases in wages stopped after interest rates were raised to a very high level in 1981.
Economists hope that rising oil prices will bring about new supply, substitution, and greater efficiency. In the 1970s and 1980s, oil prices did seem to come back down for precisely these reasons. I explain the situation in more detail in the Appendix. Rising inflation rates and interest rates were a problem during this period for insurance companies. One insurance company I worked for went bankrupt; another almost did.
We have not been able to achieve the same new supply–substitution–efficiency result in the 1999 to 2016 period, partly because whatever easy efficiency and substitution changes could inexpensively be made were made earlier, and partly because we are reaching diminishing returns with respect to extracting energy products, especially oil. Also, the wage disparity of workers is growing. Growing wage disparity makes debt growth increasingly ineffective in raising wages. Instead of debt growth funding more wages and more affordable goods for the working poor, the additional debt seems to go to the already rich.
The decreases in interest rates since 1981 have given the economy an almost continuous upward lift. This long-term decrease tends to get overlooked because it has gone on for such a long time. The major exception to the long-term decrease in interest rates since 1981 was the big increase by the Federal Reserve in target interest rates in the 2004-2006 period (shown indirectly in Figure 7).
Figure 7. Three-month treasury rates. Graph prepared by the St. Louis Fed.
The problem started when Alan Greenspan dropped target interest rates very low in the 2001-2004 period to stimulate the economy, and then raised them in the 2004-2006 period to cut back growth (Figure 7). This seems to have been one of the major causes of the Great Recession. The other major cause of the Great Recession was fact that oil prices rose far more rapidly than wages during the 2003-2008 period. More information is provided in the Appendix.
Where We Are Now
We have many leaders who do not seem to understand what our real problems are, and how successful programs have been to date in keeping the system from crashing. Way too much of their understanding has come from traditional models regarding “land, labor and capital,” “supply and demand,” and “higher prices bring substitution.” These models are not suitable for understanding how the economy, as a self-organized networked system, really works.
These leaders seem to believe that QE worldwide is no longer working well enough, so it should be removed. In addition, securities currently held by central banks should be sold. Also, the growth in debt should be slowed, because it is getting too high. Whether or not debt is too high, this strategy will lead to “Peak Economy.” As I explained in an earlier post, debt is what pulls an economy forward. It is the promise (which may or may not actually be kept) of future goods and services. These goods will be made with energy resources and other resources that we may or may not actually have in the future. Once we pare back our expectations, the system is likely to spiral downward.
It is not entirely clear the extent to which interest rates have already started to influence the economy. Long term interest rates, such as 10 year Treasuries, have not yet changed in yield (Exhibit 1). But short-term interest rates clearly have increased (Figure 7). An increase from 0% to 1% is a huge increase, if someone is using very short-term interest rates to fund highly levered investments.
Worldwide, the International Institute of Finance reported an increase in debt of $70 trillion, to $215 trillion between 2006 and 2016. This sounds like a huge increase, but it only amounts to a 4.0% increase per year during that period. It is doubtful this is enough to support the GDP growth the world needs, plus the increase in commodity prices demanded by diminishing returns.
There is evidence the economy is already headed downward. A recent report indicates that in the US, the smallest increase in consumer credit in 6 years took place in April 2017.
Another worrying area is auto loans. This is an area where interest rates have already begun to increase a bit, making monthly payments on cars higher.
Figure 8. Finance rate on 48-month new car loans through February 2017. Chart by St. Louis Fed.
The average finance rate in February 2017 was 4.52%, compared to an average finance rate of 4.00% in November 2015 (the low point). We don’t yet have information on what the increase would be to May 2017. A person would expect that if finance rates are following the interest rates on short to medium term US government securities, the finance rate would continue to rise. This interest rate rise would be one of the things that discounts provided by auto dealers would act to offset.
Because of the higher cost to the buyer of rising auto financing rates, a person would expect such a rise to adversely affect new auto sales. Higher interest rates would also affect lease prices and auto resale prices. We don’t yet know the extent to which higher interest rates are currently affecting auto sales, but the kinds of changes we are seeing are precisely the kinds of changes we would expect to see from higher interest rates. We have had a long history of falling interest rates (plus longer maturities) helping to prop up auto sales. Simply getting to the end of this cycle could be part of the problem.
Peak Economy is likely not very far away. We do not need to encourage it, by raising interest rates and selling securities held by the Federal Reserve. We badly need more people to understand the connection between interest rates and oil prices, and how important it is that interest rates not rise–in fact, more QE would be better.
Appendix – More Detail on Changes Affecting Oil Prices
(a) Between 1973 and 1981. Our oil problems started when US oil production began to decline in 1970, and Arab countries took advantage of our problems with an oil embargo. We immediately started work on extracting oil from other locations that we knew had oil available (Alaska, North Sea, and Mexico). Also, Japan was already making smaller cars. We started building smaller, more fuel-efficient cars in the US, too. We also began to substitute other fuels for oil in home heating and in the making of electricity.
(b) Between 1981 and 1998. In 1981, Paul Volker decided to force oil prices down by raising target interest rates to a very high level. He knew that such a high interest rate would lead to recession, which would reduce demand and thus prices. Also, earlier efforts at new oil supply and demand reduction approaches began to be effective. The new oil supply was somewhat higher priced than the pre-1970 oil. Falling interest rates made it possible for consumers to tolerate the somewhat higher oil prices required by the new higher priced oil.
(c) Between 1999 and 2008. Oil prices rose rapidly during this period, in large part because of rising demand. Globalization added huge demand for oil. Also, Alan Greenspan reduced target interest rates at about the time of the 2001 recession. (Target interest rates affect 3-month interest rates, shown in Figure 7.) At the same time, banks were encouraged to be more lenient in lending standards, and to offer loans based on the very favorable short-term interest rates available at that time. This combination of factors led to rapidly rising housing debt and much refinancing activity. All of this activity also added to oil demand.
Fortunately, these demand increases coincided with an increase in the cost of oil extraction. The world’s supply of “conventional oil” was becoming limited in supply, and began to decline in 2005. The higher demand raised prices, thus encouraging producers to pursue more expensive unconventional oil production.
(d) The 2008 Crash occurred after the Federal Reserve raised target interest rates in the 2004-2006 period, in an attempt to damp down rising food and energy prices. This interest rate rise made home buying more expensive. Oil prices were also increasing in the 2002-2008 period. The combination of rising interest rates and rising oil prices reduced demand for new homes and cars. Home prices fell, debt levels fell, and oil prices fell. Many people blamed the problems on loose mortgage underwriting standards, but the basic issue was falling affordability of oil, as oil prices rose and as higher interest rates took away the huge boost the economy previously had received. See my article, Oil Supply Limits and the Continuing Financial Crisis.
(e) 2009-2011 ramp up in prices was enabled by QE. This QE brought a broad range of interest rates to very low levels.
(f) 2011-2014. Oil prices gradually slid downward, because there was no longer enough upward “push” created by QE, since interest rates were no longer falling very much.
(g) Mid to late 2014 to Present. The US removed its QE, leading to a sharp reduction in carry trade in US dollars. Many currencies fell relative to the US dollar, making oil products less affordable in these currencies. As a result, oil prices fell to a level far below that needed by oil producers, especially oil exporters.
$100 oil is a ‘pipe dream’, says Wells Fargo
http://www.marketwatch.com/story/100-oil-is-a-pipe-dream-says-wells-fargo-2017-06-16
And like the article states; if the price rises above $60 a barrel the temptation to over produce will drive the price back down.
The $31 Billion Hole in GE’s Balance Sheet That Keeps Growing
“At $31 billion, GE’s pension shortfall is the biggest among S&P 500 companies and 50 percent greater than any other corporation in the U.S. It’s a deficit that has swelled in recent years as Immelt spent more than $45 billion on share buybacks to win over Wall Street and pacify activists like Nelson Peltz.”
https://www.bloomberg.com/news/articles/2017-06-16/ge-s-31-billion-hangover-immelt-leaves-behind-big-unfunded-tab
Trump’s no-experience, fake-degree wedding planner will be in charge of billions in NYC housing spending
https://boingboing.net/2017/06/16/jd-na-jk.html
And who said late stage capitalism would not be fun?
https://foreignpolicymag.files.wordpress.com/2017/06/gettyimages-488226322.jpg
Donald Trump’s Ancestral Brothel gets a New Lease on Life
“Everybody’s gotta start somewhere,” says Donna Laperle, a tourist from California. The Tlingit had little use for gold—it’s too malleable to make tools—but the metal promised money for one German man with drive.
Friedrich Trump, Donald’s great-grandfather, joined the bandwagon—with no wagon, but rather hired Indigenous locals to carry much of his load—and established the Arctic Restaurant and Hotel, which also served as a brothel
http://www.msn.com/en-ca/news/canada/donald-trump%E2%80%99s-ancestral-brothel-gets-a-new-lease-on-life/ar-BBCJR1i
From pimp to President in a few generations – truly, a golden Land of Opportunity. 🙂
Haha for a few yes…but for most, even in the good times, the American Dream was just that….a dream…
Tip of the hat to the great George Carlin:
Scarcity – Humanity’s Final Chapter
Christopher O. Clugston has posts here in the oil drum archives. Found a video of him from 2012,
300 views in the last 5 years, and probably one of the most important videos on the web……….
https://www.youtube.com/watch?v=-mwTtTAxoZk
(thanks for your comments a few pages ago)
Mars terraforming will save us!
No we will be mining asteroids and comets soon!
. At 38% of total world economic activity, the end of the petroleum industry will certainly bring about the end of the modern economy. Once this situation becomes full appreciated the geopolitical impact will most likely be devastating!
If you scan the headlines and news from the alternative media, it certain looks like the what happened to the civilizations of olden days just before it collapse. Read the history books and observe the parallels on the power struggle, rich-poor gap, etc. I think we certainly at at the very edge.
For those who are at the other side of the world (not Asia), even Singapore has its own leadership issue…
https://www.google.com/search?hl=en&gl=us&tbm=nws&authuser=0&q=lee+hsien+loong&oq=lee+hsien&gs_l=news-cc.3.1.43j0l7j43i53.1650.4944.0.6271.11.8.1.2.2.0.275.1018.2j5j1.8.0…0.0…1ac.1.pCowLT5BPvs
Yes, CTG, one can work through the Tainter thesis of the collapse of complex civilisations, and tick off the boxes from the news – even from the MSM. The truth comes out, always, even by omission
I wonder, if the mass of people were informed of this substantiated model, which can explain what they are experiencing, and had the intellect to grasp it – which in most cases must be doubted – how would they behave?
It is interesting to observe the irrationality and violence which has resulted from the terrible fire in the tower block in London: people are not making rational observations about the causes and are reacting very primitively, looking for scapegoats ,etc, when the case is very clear-cut and is simply a failure of building regulations.
But they want their scapegoats……. That’s what we will be facing: Unreason, looking for victims.
Yeah, it happens when people all around you get burned alive…
Not really: I’d be in shock I suspect if I had lost someone.
They are being worked on by agitators of all kinds, if you take time to watch the videos -always interesting to study crowd behaviour.
If I am a revenge seeker …. I am looking at that London fire….
http://memeshappen.com/media/created/Hmmmmm–meme-29495.jpg
https://image.freepik.com/free-vector/hand-drawn-idea-concept_23-2147532419.jpg
I’ve been reading the articles about the fire with interest as well. The truth is that any of us could, at any moment, become a victim of corporate cost-cutting measures. Decisions are made all around us about how much to spend ensuring our safety, and other people frequently do not make the decisions we would make for ourselves. I am solidly middle class and rented for many years before I bought property, and renters of any kind have little leverage over the decisions of their landlords, especially when the property is in demand. This is not necessarily linked to the income of the renter, though it can be.
I often wonder where the anger would be directed post BAU. I feel like there will be a narrative about who is at fault. This narrative will probably not be the truth as we know it here at OFW. We often assume that people will go searching for food, but they may also choose to go looking for scapegoats, choosing to single out a particular corporation or government agency they feel is responsible for their plight.
Looking for a scapegoat is the default of the average human: one can’t vent anger against a systemic situation, one can’t hang physical laws from lamp posts…..
The London tower tragedy is fascinating. As a tenant one is indeed completely powerless: there is much irony in the fact that this tower was recently refurbished at a cost of some £10 millions, (so this was not a neglected slum) a refurbishment which clad it in highly combustible (though quite legal) materials, and closed off pre-existing fire exits. This left the building a death-trap, but bright and shiny on the outside.
Sensible observations from experienced fire fighters that new plastic-packed cladding materials looked dangerous to them, and that sprinkler systems are essential to avoiding multiple fatalities in such blocks, were more or less ignored, and so on.
One could almost call this tower disaster a parable of our age:
A complexity ‘machine for living in’, a product of the fossil-fuel age and mega-cities made possible by such fuels, literally covered in plastic, in which these people were imprisoned waiting -as told to by the authorities -for someone to rescue them, and with exits cut off by the very changes which were meant to improve their situation, make th building look more attractive, and improve energy efficiency through insulation. ‘Green’ cladding, among other things, did them in!
As for them, so for all of us.
Ask not for whom the bell tolls, it tolls for thee……
Them there El.ders are …. sure rich…. and to think… they just keep pushing a few keys on a computer… and they can add trillions to their massive portfolio….
https://srsroccoreport.com/wp-content/uploads/2017/05/Central-Bank-Asset-Purchases-YTD-768×428.png
https://srsroccoreport.com/massive-central-bank-asset-purchases-last-ditch-effort-to-save-economy-cap-gold-price/
Bill Gate Net Worth 89.1 billion USD
Putting this in perspective…one trillion is one thousand billion ….
The Elders sing a long…nice to be a member!
https://m.youtube.com/watch?v=w5Fgp-KihIA
It remains interesting that the Corporate MSM media keeps thumping the Russia drums. Considering the latest sanctions from congress there is little question who they’re beholding to. But this is a very old story.
The western banking systems have had their eye on Russia all the way back to the Bolshevik revolution.
https://www.voltairenet.org/IMG/pdf/Sutton_Wall_Street_and_the_bolshevik_revolution-5.pdf
The American industrialist recognized that their prosperity was a product of wrestling the control of capital from the rent seekers to the manufacturing segment of the economy. To do this you had to eliminate hereditary possession.
So the revolution in Russia was precisely what was needed to allow unfettered investment in Russian resources.
However things didn’t work out as planned. The Revolution didn’t open the doors. The ideology of communism was a greater threat to the industrialists wealth than the Tsar.
Having let the genie out of the bottle what could the do?
A great lesson had been learned in WW1 war was profitable. Hundreds if not thousands of US industrialists had become millionaires.
So to stop the communist ideology they supported a nationalist ideology named Nazi. To bolster it they exported the eugenic philosophy that was popular in the US at that time.
https://www.voltairenet.org/IMG/pdf/Sutton_Wall_Street_and_Hitler.pdf
If you don’t think WW2 was a war staged for profit and to crush competitive economic systems think again. The Willow Run B24 production plant went into production in July 1941. Only thing missing was a war to go to oops 12/7/41. Pearl Harbor false flag. Looks like my 3.5 million sqft plant is gonna make some money now.
Wall Street was determined to profit from the vast resources of the Russian landscape. The hope was the Soviet system would collapse. However in an incredible twist Stalin was able to move his industrial capacity out of Hitler’s reach.
This was a major monkey wrench. The industrialists we’re thinking the Germans would have defeated Russia so when they moved on Germany they would have the whole pie.
Fast forward to today the Capital markets require growth and who’s held them at bay? Russia.
Besides being a good boogie man to drive the Military Industrial Complex. They still have stuff to exploit.
Wall Street once again wants war.
++++++
Very true. The British and the French (and Dutch, Portuguese, Spanish) just wanted to hold on to their old empires in the 1930’s – 40’s.
The Italians and Germans sought to expand, but lacked the resources -territory and manpower – to do so successfully.
The US industrialists, however, sought endless expansion and global domination – hence US treachery towards the British and French post WW2, which was dressed up as ‘Republican’ Anti-Imperialism but was really about taking the whole pie.
The drive to destroy the Russian Federation will not be readily abandoned, it is essential from their perspective.
Why Some Hedge Funds Believe The Shale Boom Is Coming To An End (Again)
http://www.zerohedge.com/news/2017-06-16/shale-boom-coming-end-again
They’re suckering gullible investors with promises that new and innovative technology will turn the shale patch profitable, truly laughable at this point . Either Fed asset purchases decline and they die or they cannabilize themselves by spending the majority of their cash flow servicing debt and paying shareholders, take your pick.
“To constitute an effective Great Filter, we hypothesize a terminal global cataclysm: an existential catastrophe.. (Bostrom 2008)
http://imgur.com/z282Dfe
Sometimes I have thought to myself what would have needed to happen, to avoid this predicament?
It seems so logical, all intelligent life forms go through this development phase. Finding the holy grail of cheap abundant energy, and then killing themselves with it.
Freedom, democracy and free markets are all a big no-no. They all are symptoms of cheap abundant energy, and they all result in wild exponential growth. So, maybe what we would have needed was some global feudal dictatorship with medieval torture, slavery, disease and misery? A really tyrannical upper lip moustache guy, who would have purged millions if not billions. Wonder how this predicament of ours would have developed then?
Could it have been different? Perhaps it could.
Our global mess is a consequence of social, legal and scientific developments which occurred in Europe alone during the late Middle Ages and Renaissance, and above all In Britain and the Netherlands, culminating in the massive release of fossil fuel energy in the Industrial Revolution,and the subsequent spread of that model throughout the planet.
They achieved putting an end of sacred kingship and priestly rule; established security of life and property, developed advanced accounting methods, and devoted themselves to ever-accelerating tool-making, etc. They had no rival in this -in co-ordinating all this – in any other civilisation. It is an anomaly in human development.
Consider: in the Dark Ages, the Arabs and Persians (not forgetting China)had made considerable scientific and technological advances and were able to sustain large and sophisticated cities with advanced agriculture and technology. Smart people.
Doomed to eventual failure of course, as the cities of Ancient Mesopotamia foreshadowed – now just mounds, surrounded by desert inhabited by cretins and goats. But still, well advanced, although this never sat well with their primitive Faith which looked suspiciously on reason and the sciences.
Fierce European resistance to the imposition of Islam in the Dark Ages, and in fact through to the 17th century when the power of the Ottomans was finally broken, enabled some Europeans to develop in a space free from this distinctly anti-rational and totalitarian religion, which destroyed scientific thought in all areas under its dominion – by the 14th century the magnificent culture of Andalusia had been destroyed by religious purists who hated the sciences and anything except the recital of the Koran – as an Arab historian of the day Ibn Khaldun observed in his ‘World History’.
If Islam had swept over Europe totally when the Europeans were barbarians, then science would have been aborted there too, there can be no doubt. (As it died in Spain, which was dominated completely by the Catholic Church, another enemy of human reason – people more or less just went to university to learn classical languages, medicine, law and theology).
Moreover, Islam never developed security of person and property under law, which are essential to the industrialised capitalist system: the Caliph, Sultan or regional governor could seize any wealth or land, whenever they pleased – to get rich was very dangerous indeed, and the only secure place for wealth was the creation of a mosque/hospital foundation which could never, in theory, be seized by the ruler being sacred.
The British, in 1688, ended that kind of system of absolutist rule for ever. The gains of invention could be kept, and industrialised capitalism had the right environment in which to flourish.
British travellers in the early 19th century were well aware of the distinct features and advantages of their system compared to those prevalent in China, India, the Ottoman Empire, the Papal States, etc.
The conclusion is that if Europeans had not resisted and expelled Islam, they, and mankind in general, would never have escaped for a century or two – the old regional civilisational loop of growth, stagnation and death through exhaustion of non-fossil natural resources.
Nor have wreaked such global destruction on the environment, precluding future civilisation.
It is worth observing that modern commerce, science and technology were born in those regions which were most distant from the old theocratic empires – China, Islam, India, and the Catholic and Orthodox Churches.
xabier, your deeply knowledgeable posts are always a joy to read. I know we are in a time of massive change. It seems likely many will die. Yet I have to say “we are not dead yet”. That is the whole western tread from the rise of reason in monotheism in the Levant, to individual rights and voice in Greece, to the Renaissance of the Italian city states, to the enlightenment in England and other European nations is not dead yet.
Thanks, Ed.
No, we’re not dead yet, and life still seems worth it.
I’m worried about the growth of the new kind of totalitarianism in the West, the atmosphere of crude propaganda and the decline of university culture described by Kunstler, so in that sense I’m on the side of Enlightenment still.
Rights? What rights?
https://www.ocf.berkeley.edu/~arihuang/academic/abg/slavery/slavery.gif
http://www.abeatingheart.ca/wp-content/uploads/2014/11/ANIMAL-CRUELTY-BULL.jpg
Western ‘civilization’ is an abomination
Great post.
I have often wondered if Islam was the original environmental movement…. fighting against a system that has destroyed the planet?
Maybe Bush was right — they hate us because of our way of life….
Just a thought
https://i1.wp.com/www.robhopkins.net/wp-content/uploads/2017/06/1394653-James-Howard-Kunstler-Quote-Americans-are-suffering-so-much-from.jpg
Come now, Donnie Boy, pay up:
Trump owes lenders at least $315 million, disclosure shows
http://www.reuters.com/article/us-usa-trump-ethics-idUSKBN1972XM?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29
(this Cheeto Jesus routine is getting boring)
Renewable energy is a scam and don’t even get me started on Tesla anything.
https://www.technologyreview.com/s/601514/germany-runs-up-against-the-limits-of-renewables/
https://www.wsj.com/articles/germanys-expensive-gamble-on-renewable-energy-1409106602
http://www.businessinsider.com/131-years-to-replace-oil-2010-11
http://www.abc.net.au/news/2016-12-12/renewable-energy-mix-played-role-in-sa-blackout/8111184
https://www.nationaleconomicseditorial.com/2017/06/02/carbon-capture-plant-bad-investment/
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
https://ourfiniteworld.com/2017/01/30/the-wind-and-solar-will-save-us-delusion/
https://phys.org/news/2017-06-reveals-green-incentives-co2-emissions.html
http://euanmearns.com/50-re-in-the-uk-the-ugly-facts/
https://srsroccoreport.com/wind-solar-technology-wont-stop-the-collapse-of-the-u-s-empire/
All one needs to know is a Tesla S battery weighs 1200lbs and stores the equivalent energy of two gallons of diesel. 15lbs. How much energy does it take to mine 15lbs compared to 1200lbs which still has to be refined manufactured into a battery then charged.
Life cycle analysis shows diesel cars are greener.
two gallons of diesel only weighs six pounds. but you make an excellent point
Actually, JT Roberts is right. Two gallons of diesel weigh about 14.28 lbs.
Thanks Don
Just something to put in your hat. All hydrocarbons are approximately 21,000btus per pound. It’s all a mass relationship.
https://srsroccoreport.com/petrodollar-system-in-trouble-as-saudi-arabia-continues-to-liquidate-foreign-exchange-reserves/
The stabilization of oil prices in the $50-60/bbl range was meant to have one particular, material impact on Saudi finances: it was expected to stem the accelerating bleeding of Saudi Arabian reserves. However, according to the latest data from Saudi Arabia’s central bank, aka the Saudi Arabian Monetary Authority, that has not happened and net foreign assets inexplicably tumbled below $500 billion in April for the first time since 2011 even after accounting for the $9 billion raised from the Kingdom’s first international sale of Islamic bonds.
….. Whatever the reason, one thing is becoming clear: if Saudi Arabia is unable to stem the reserve bleeding with oil in the critical $50-60 zone, any further declines in oil would have dire consequences on Saudi government finances. In fact, according to a presentation by Sushant Gupta of Wood Mackenzie, despite the extension of the OPEC oil production cut, the market will be unable to absorb growth in shale production and returning volumes from OPEC producers after cuts until the second half of 2018. Specifically, the oil consultancy warns that due to seasonal weakness in Q1 for global oil demand, the market will soften just as cuts are set to expire in March 2018.
The Saudi’s have two serious problems:
As the Saudi’s cut their oil production due to the OPEC agreement, the U.S. shale energy companies ramp up production because they are able to produce oil by shifting any losses to Brain-Dead investors looking for a higher yield.
This destroys the ability for OPEC to drain global oil inventories, so the oil price continues to trend lower. Which means the Saudi’s may have to liquidate even more foreign exchange reserves in the future on lower oil prices. Rinse and Repeat.
The Saudis are planning a 5% IPO – Initial Public Offering in 2018 of their estimated $2 trillion of their oil reserves and are hoping to get $200 billion. However, energy analysts Wood Mackenzie estimates that the value of the reserves are more like $400 billion, not $2 trillion. This is due to all the costs, royalties and 85% income tax to support the Saudi Government and the 15,000 members of the Royal Saudi Family. Thus, Wood Mackenzie doesn’t believe there will be much in the way of dividends left over.
That being said, I highly doubt the Saudi’s have the 266 billion of oil reserves stated in the new 2016 BP Statistical Review. The Saudi’s produce about 4.5 billion barrels of total oil liquids per year. Thus, their reserves should last them nearly 60 years.
Now… why on earth would Saudi Arabia sell a percentage of its oil reserves if it has 60 more years of oil production in the future???? Something just doesn’t pass the smell test. Is it worried about lower oil prices, or maybe it may not have all the reserves that it states?
This guy knows-
http://www.statestreet.com/executive-leader/HooleyJay.html
How do you know he knows?
I think the plan is to depress oil prices using the shale scam as a lever. Fidelity, Vanguard, and State Street have virtually unlimited access to capital and the fed has got their back. All that E&P red ink is just that to them, ink. It’s the cost of doing business. SA will be squeezed until they say uncle Sam, and the population reduced to serfdom much like Iraq, but without a shot being fired. Mad Dog is tied up there anyway. If I were a Saudi Royal, I’d be packing my golden chute.
You understand that this would end BAU —- and their lives along with ours?
http://www.websophist.com/Spock_DoesNotCompute.jpg
https://m.youtube.com/watch?v=k78tUxw1qwg
Greece has been “saved” and another rescue bailout has been approve!
“Investors” cheer and markets soar in Greece! Appears the Greeks can continue to live large, compared to other nation States I. The EU. Never mind they are close to the two poorest members!
British Prime Minister Benjamin Disraeli: “There are three kinds of lies: lies, damned lies, and statistics.”
https://m.youtube.com/watch?v=c5YOMtEMsxw
Ingrates…they don’t know how good they have it!
https://www.reddit.com/r/collapse/comments/6hqjny/saudi_arabia_headed_for_total_collapse/
Attention Doomy Preppers:
http://www.zerohedge.com/news/2017-06-16/lynching-epidemic-breaks-out-venezuela
Very Mad Maxian…. keeping in mind – Mad Max is the part that happens — before the collapse…. it’s the good part
i’m confused, the article says lynching, but what is seen is immolation. is this a term lost in translation? lynching usually involves a rope and a tree.
The OVCS says some 60 people were recorded as killed in lynchings in the first five months of this year alone. Last year there were 126 such killings — a surge from the 20 reported in the previous year, coinciding with the worsening of political tensions and economic chaos.
I read recently of Indian farmers murdering their neighbours due to poor crops: caused, obviously, by witchcraft exercised by those neighbours. Poor devils.
Communal murders, everyone joins in to share the blame. Beat them to death in the fields.
Imagine being a dirt-poor farmer, watching your crops wither, and suddenly your neighbours surround you and beat you to death for being a witch.
It’s the logical end of the all the mumbo-jumbo that the lunatic Archdruid espouses – I’ve always noticed how he never touches on the links between magic and human and animal sacrifice, which is intellectually dishonest to say the least. Well, the man is deluded.
he’s also a blowhard and an ass, to put it bluntly.
“The problem with the American milieu is not that it’s all the same. The trouble is that it’s all the same lousy quality. It’s all the same bad design and bad idea.
I like to think of it this way, what people identify as the immersive ugliness of their surroundings. When you’re sitting in a car for example, on an 8 laner in the USA, one of those commercial boulevards where the street is lined with muffler shops and Taco stands and big box stores and parking lots and other furnishings and accessories of suburbia, people regard that as ugliness. But there’s more to it, because this immersive ugliness actually represents entropy.
It’s entropy made visible, and entropy in the physical universe is really the force behind things running down or dying or moving towards death and stasis. That’s really the quality that’s being reflected in the environments that we create in America. And it’s no surprise that it’s punishing to the human psyche.”
http://www.resilience.org/stories/2017-06-16/james-howard-kunstler-living-moment-unprecedented-incoherence/
If you’re on the left, what we have in the USA is a new kind of Maoism. Mostly seen on campus, and it’s an anti-free speech despotic movement that used to be about identity politics – that’s how it started – and the ideology of victimisation, but it has really turned into something else now completely different. What it’s really about now is just the pleasure of coercing other people. I think the analogue to that is exactly what happened in the cultural revolution in China in the mid 1960s, which started out supposedly as an attempt to correct the thought of people who were not conforming, but ended up really just being a matter of young people enjoying pushing other people around. And that’s what’s happened in the USA on the left.
On the right you have Trumpism which is just a celebration of incompetence and buffoonery, all based on the idea that we’re going to make America like it used to be in 1962, and that’s not going to happen. What’s most amazing about the whole situation is that the places where people ought to do their thinking, places like the universities, and the thinking classes in general, are absolutely AWOL, as they say in the military. Absent without leave. They are not on the scene. They are not raising their voices. They are not making sense. We are living in a moment of unprecedented incoherence.
++++++++++++++++++++
Exactly, Cultural revolution Mk.2.
Self-righteous coercion, bullying others because you know the Truth and because, hell, it’s just great to push people around and abuse them with ‘right ‘ on your side.
Desire for power, desire to poke one’s nose into every aspect of another person’s life, and police their thoughts.
Laughable in way, but dangerous if they acquire power over you.
Trumpism is nothing but ignorance and demagoguery in comparison. These people, on the other hand, truly aspire to One-Party dictatorship…….
Atlas Shrugged… in real life…
I agree with what JHK is saying here. And this uglification of the human environment isn’t limited to the US. It’s a post-WW2 development that has taken place in countries all over the world at varying paces.
I have always strongly disliked modern suburbia, sprawl and the kitschy shopping mall/strip malls that I feel blight townscape and countryside alike. I’m convinced that living in such an environment a factor in driving people to distraction, depression, dementia, and desolation. I eventually solved my personal problem with it by no longer taking my own opinions on things as if they were written in stone. Now, when I hear myself starting off on another anti-modernist rant or a lament at the tackiness of modern commercial boulevards and big box stores, I quickly counter with, “there you go again channelling Prince Charles on architecture!” and I remind myself that thoughts are just thoughts and not something I am obliged to serve blindly like a slave. This helps defuse any anger or rage at the state of the world that may be brewing inside me on that particular day.
After all, why should we take ourselves and our opinions so seriously? Nobody else does.
Too true, Tim. It’s an unstoppable flood of ugliness and tawdriness anyway, irreversible.
I was getting worked up over the other depressing aspect of life today, the slobby way people dress in town, their utter lack of self-respect compared to the past.
But then I thought to hell with that, what a waste of mental:and anyway, it’s their business, nothing can change it, they are the perfect accompaniment to modern architecture.
And if you dress a bit better yourself, the fairer sex certainly notice ; the slobs are, in fact, doing me a favour! 🙂
You’ll want to bring the young lady a gift, wouldn’t you?????
We aren’t imagining a future of space stations and flying cars anymore
AT E3 IT’S THE END OF THE WORLD, AND NOTHING FEELS FINE
https://www.wired.com/story/e3-games-end-of-the-world
More on my own “progression of collapse” anecdotal story:
I’m reporting from one of those middle American cities that has been booming with no sign of letting up. The past 5 years here have been GOOD. Everyone is working, making money, building, growing, and so on. I keep waiting for cracks to appear but locally we seem oblivious to all the problems in the world. It hasn’t been until the past few months that I can sense something very dark and ominous emerging.
When municipal Q1 sales tax receipts came in low, it started a panic among city leaders. A major city planning effort we’ve been anticipating for years was put on hold just before contracting with our consulting team. This project has now been waffling for almost 2 months as management and elected officials argue about how to cut dollars out of the project, while technical staff pushes back trying to maintain the integrity of the plan. We’re now in danger of losing the project entirely, either because it’s gutted so badly we’ll have to put it off until adequate funding is available, or because our consultants may bail on us since they are losing work while we jerk them around. This effort is, by the way, extremely important to almost all of the critical issues in the community- not doing it will be a major loss.
In my 15 years in local government I’ve never seen such a dramatic reversal and breakdown of support for a citywide community plan effort like this. Colleagues who have been here 20, 25 years say they’ve never seen it either.
This drama is playing out against the backdrop of ongoing financial contingency planning and worry about the potential of budget cuts.
This feels like a turning point, like clouds gathering, and the weather about to change. The whole city waits in anticipation for the Q2 numbers to arrive in July…
Froggman-
Really interesting to read how things are doing where you live. Where I live is so out of the loop on growth in the economy you can barely give a house away.
Everything is just superb.. until the point it isnt.
All the while there are some who muse, look, guys, the storm is coming, and its going to be bad. Real bad.
But our primal insticts and our normalcy bias dont register a problem, until the sabre tooth tiger is growling his fangs, in our face.
Then one fine morning the storm arrived. And people went nuts.
What Gail writes about and what we comment here on OFW is an mathematical certainty. What will happen, will happen, short of a Star Trek type Zero Point energy technology and/or alien/divine intervention.
How can the Q2 numbers be any better?
Prepping is Futile
Myth: We have prepared successfully for disasters in the past, and we will prepare successfully for resource scarcity.
Reality: Disasters with which we are familiar and for which we are accustomed to preparing— either natural disasters such as earthquakes, floods, volcanic eruptions, and hurricanes, or manmade disasters such as oil spills and nuclear leakages—are • Precipitated by a single, well-defined, catastrophic event; and • Limited in terms of frequency and geographical scope. Preparation for natural and manmade disasters has been possible because:
• The preparatory requirements associated with each disaster type are generally well understood (although not always fully implemented); and • Sufficient surplus human resources and natural resources have been available during our era of “continuously more and more” to enable thorough preparation and effective response—i.e., rapid emergency response and eventual total recovery. Disaster victims have known that “help is on the way”, typically within days, if not hours. They have also known that “things will return to some semblance of normalcy”, typically within months, if not weeks or days—almost always through tremendous contributions of “outside assistance”(surplus resources).
As a result of our preparatory efforts, disaster related disruptions to critical societal support systems—such as water distribution, food distribution, energy generation and distribution, sanitation, healthcare, transportation, communications, and law enforcement—have been limited in terms of severity and duration. Imminent disasters related to ever-increasing NNR scarcity, with which we are totally unfamiliar, will be: • Precipitated by a currently unpredictable series of increasingly severe shortages associated with an ever-increasing number of NNRs, goods, and services; and • Continuously increasing in terms of frequency, geographic scope, severity, and duration. Attempts to prepare for disasters related to NNR scarcity are therefore futile because: • The specific “unraveling” scenario associated with ever-increasing NNR scarcity cannot possibly be known in advance; and • Surplus resources, especially NNRs, will not be available during our new era of “continuously less and less” to address ever-worsening shortages, outages, disruptions, and resulting conflicts. As disasters related to NNR scarcity become increasingly prevalent and severe, and as the general public becomes aware of the fact that “help is not on the way” and that “things will not return to normal”, social order will completely disintegrate and societal collapse will ensue. Disruptions resulting from disasters that occurred during our historical era of “continuously more and more” were temporary—impacted populations recovered, and preparation facilitated the recovery processes. Disruptions resulting from ever-increasing NNR scarcity will be permanent— humanity will not recover, and no amount of preparation will alter that reality or its inevitable consequences.
MYTH Post-collapse Preparation Is the Answer Well-prepared individuals, groups, and communities will survive our impending collapse and maintain healthy, fulfilling, and productive lives in its aftermath.
Reality: Those who survive our collapse will be those who can obtain sufficient life sustaining essentials—especially clean water and food—on a continuous basis, both during and after collapse. Those who store large quantities of these essentials and those who attempt to produce food, either individually or in communities, will be easy targets for the vast majority who have neither the foresight to store nor the skills to produce. No matter how remote or secluded your sanctuary, somebody will know about it; and they will come to call when they become desperate; and they will be well armed and devoid of compassion. You can prepare for a last stand, but you cannot prepare for post-collapse survival. Post-collapse Life Will Be Preferable to Our Industrial Lifestyle Paradigm
Myth: Industrialization has brought nothing but misery and degradation to the human race; our quality of life (and spiritual wellbeing) will improve substantially in a post-collapse world.
Reality: The post-collapse lifestyle awaiting the few who survive will, under the best of circumstances, share many attributes with pre-Columbian America. Unfortunately, the realities associated with subsistence level existence bear little semblance to the Hollywood accounts. Those who anxiously await our post-collapse world will be disappointed, assuming they live to experience it. The fact that nobody is opting to jettison the amenities afforded by an industrialized way of life in favor of a hunter-gatherer lifestyle today should be sufficient proof that our future way of life is not something to be anticipated. Industrialism is not inherently “evil” or immoral; it is simply physically impossible going forward.
Nice summary – where did you find this?
The Book “Scarcity humanities final chapter”
Nobody likes an unhappy ending…
8 reviews…
https://www.amazon.com/Scarcity-Humanitys-Chapter-Christopher-Clugston/dp/1621412504
Ha, I just posted a summery of that book in another comment (to Dolph)
Did you read the whole thing Cliff? I haven’t, but have seen it referenced in other books.
Yes I did. And I even emailed the author and talked to him little. nice guy.
Great read. Everyone should have a copy.
“No matter how remote or secluded your sanctuary, somebody will know about it; and they will come to call when they become desperate; and they will be well armed and devoid of compassion,”
I guess you’re mostly right. But if you got 50 friends and family to one of these, with a huge amount of food and water, in theory you could wait calmly the dieoff (and the mounting radiation). From famished mobs, you would have nothing to fear. You would not even need weapons to defend it.
(But of course for the military,it would be a piece of cake.)
http://mw2.google.com/mw-panoramio/photos/medium/95879642.jpg
What about at Castelo De Walt Disney in sunny Fla….any chances there? 😉
http://c8.alamy.com/comp/CE9TNP/cinderellas-castle-magic-kingdom-walt-disney-world-orlando-florida-CE9TNP.jpg
Naah. It’s not high nor strong enough. Indeed, it seems made of Lego.
Get a digger in there and create a moat — then fill it with crocodiles…. and maybe….
Crocodiles wouldn’t do it, they would be eaten by the zombies. I’d say the 10 meters high walls would suffice to keep everybody off (except the tomahawked military).
Yep – they make good eatin….
Consider this …. if this very moment the shops closed … all of the food stored in homes was consumed already … the farms were abandoned ….and you now had to find enough food to stay alive….
What would you eat?
I am in a remote area of the west coast right now — not many people here — just bush and ocean…. if I were facing the above situation right now — I would not have the slightest clue where to start….
I have fishing rods…. but fish are not that easy to catch…. I don’t have any guns here but likewise … it is not easy to find and kill animals — and there would no way to store the meat anyway so I’d need to be killing almost every day. I have no idea what can be eaten in the bush…..
Then of course there would be the radiation pulsing through the air and water….. massive amounts of radiation
Plenty of fish in the sea… I walked down to the local “pier” and caught some cod and mackerel just last week. Brought the kids too so they could learn where food comes from…
The system has already gone exponential, people. Everything we see around us has been in the making for 100, possibly 200 years.
The American and French revolutions scared the TPTB our of their minds. Those are the only real examples of successful revolutions. They decided to never again allow a popular rebellion in the core. Russia tried one but we all know they bungled it from the onset, and only became a superpower by large scale repression and militarization to defeat Nazi Germany, which itself was something of a failed revolution.
What that means is that most of what we discuss here is moot. I come and comment because it’s interesting.
We don’t have any power over the forces of global corporatism. Look at what they did to JFK, the only president to challenge them. Look at how they have completely captured the working classes in America and China. Look at how they have securitized the oil of the Gulf Arab states in perpetuity, until every last field is exhausted.
Enjoy your food and entertainment and whatever else you can! After this it’s a return to feudalism, forever.
http://imgur.com/a/W85ZN
While hopeful about the future for France following Macron’s election victory and “optimistic” about the longer-term future, luxury tycoon Bernard Arnault warned that business is in a “very strange period” due to low and negative interest rates and “companies like LVMH are paid to borrow money, which is dangerous.”
A financial crisis could be just around the corner, according to the chief executive of LVMH, who has described the global economic outlook as “scary”.
“For the economic climate, the present situation is…mid-term scary,” Bernard Arnault told CNBC Thursday.
“I don’t think we will be able to globally avoid a crisis when I see the interest rates so low, when I see the amounts of money flowing into the world, when I see the stock prices which are much too high, I think a bubble is building and this bubble, one day, will explode.”
http://www.zerohedge.com/news/2017-06-16/lvmh-ceo-warns-economic-crisis-unavoidable
Yes … explode…. one day…..
http://peakoil.com/consumption/expect-the-longest-economic-expansion-since-wwii-says-economist
“Expect the ‘longest economic expansion’ since WWII, says economist”
“The U.S. will not be going into recessions anytime soon,” Thorpe said.
This goes to what dolph an I have been writing about – no collapse apparent in our neck of the woods and apparently not in the US per se’. Those holding their breath expecting disaster may want to exhale and draw in a fresh breath of air. Keep those lungs inflated and respirating, the kidney’s processing fluids, the liver pulling out toxins, keep the heart timed well via the autonomic system, consume healthy food, drink water, get some exercise for your body and mind, make some more money, stash away some more freeze dried food and go out and have a good time! This is your life and until the fat lady sings the game is still on, the clock is ticking and you just have to ask yourself; “What do I want to do today and all the rest of my exciting tomorrow’s?”
well according to the Federal Reserve and CBO in DC they are projecting the US economy to grow at no more than 2% annually for the next decade.
You, Dolt and some other dupe all agree. That settles it. You have successfully controverted years of studious arguments presented by Gail with your meticulous research to find a quote you like.
Remember this one?
Alan Greenspan circa 2007: “The U.S is not about to enter recession anytime soon”
I haven’t forgotten that. It’s just that our system is now on life support until the end.
You see, the next drop is going to be game over for the entire system. That’s why the managers are working overtime to keep everything intact. All of you even agree on that.
But the drop just keeps getting postponed and postponed. You think it will happen tomorrow, I’m reminding you all it’s going to be decades.
Not decades (plural) unless we stumble on a huge cache of NNR’s. We’d be lucky with 5 or 10 years tops.That is widely accepted by those not in De-lu-is-stan.
And NNR’s are just one of many systems nearing collapse.
http://www.populationinstitutecanada.ca/keypapers/SCARCITY-by-C-Clugston-19-pg-summary-by-John-Bermingham-May-2012.pdf
Yeah Snorp I really can’t see us having a lot of time left….no matter how you approach the predicament, everything is effed up….I just came back from a nice golf game and I was thinking to myself why did this have to end in this period..I would have been so happy with 2040-2050…but the laws of physics don’t give two shi.ts about us humans…I guess that’s how the cookie crumbles..
http://www.billfrymire.com/blog/wp-content/uploads/2014/08/overheat-pressure-stress.jpg
I’d chop off my left hand if it meant 2030….
You’re right FE, even 2030 would have been amazing…
ITEOTWAWKI and Eddy-
Do you remember the Cadbury Secret commercial? Anything….????;-)
I think we should give that!
Joe u mean the Caramilk Secret ads from the 80s? If so remember this one from ’82….man time flies..I remember seeing this ad while watching “You can’t get more Canadian than that show” The Littlest Hobo (remember that show)…man how the eff does 11 years old become 45 in no time 😉
https://www.youtube.com/watch?v=Lu066haghDQ
ITEOTWAWKI-
Lol, you got it!!!!. Awesome! And the Littlest Hobo….F**K yeah, the most Canadian show ever;-)
Wish we could sit around a campfire;-)
Not to worry about the NMRs Snorp.We’ll just launch all those asteroid mining ventures. You know….solid iron asteroids, solid cobalt asteroids….
Yep we’re heading for a world like that show from the 60s:
It’s amazing how no nation on earth in the 2060s was able to track International Rescue back to their base on Tracy Island.
Bergen you remind me of a guy
https://youtu.be/o3FVBKic5Ek
If government figures reported inflation (CPI) 2% higher, we’d be in a chronic recession.
https://www.reddit.com/r/collapse/comments/6g2d7j/collapse_of_global_civilization_by/
Again, stop that.
Cliff, you really need to back up your collapse claims with documentation, man.
And here we have on exhibit a human donkey — whatever he reads in the MSM he takes it as truth… no questioning .. no application of common sense…. feed it to him and he will eat it.
Alas 99.9999% of all humans are donkeys…. so don’t feel so bad Bergen.
Of course, the Greeks bought much on their own heads.
But I find the complacency of Northern Europeans and others rather disgusting and uncivilised: most people seem to forget that their grandparents were mostly hard-pressed and ill-nourished peasants and workers fearful of what tomorrow might bring……
Greece is a macro example of the $20 offer challenge…
Greece as a country was quite happy to join the EU which resulted in the country’s borrowing rates dropping close to the level of that of Germany (because it was implied that if Greece got into trouble the rest of the EU including Germany would be forced to back stop Greece)…
And then Greece ran up massive debts….
It’s kinda like if I were to co-sign a loan for 250k for my heroin addicted relative….
As Greece is a ‘democracy’ this cannot be blamed on the government — the people of Greece were quite happy to live large while the good times rolled….. basically they voted for the ‘$20m’ option ….
Xabier,
When I look at the debt graph of Greece through the years. I see that Greece is just a year or two ahead of Italy. And just three or four years ahead of France, UK, Ireland and Finland. (If we have the time to go there)
The smug northern europeans dont remember that everything was indeed fine in Greece, untill 2010. Then the interest rates on the sovereign debts started to rise and created the present situation.
If we took any government in the EU and made their sovereign debt interests four times higher from present levels.. Pop Quiz; what would happen?
https://4.bp.blogspot.com/-X1zzQGVbFUE/WUK0m8eHpqI/AAAAAAAAvnY/Q5PorxJ2KIkdKaEz7caDMaf8LkTB64hLACLcBGAs/s640/13092296_585062798335047_1507334245_n.jpg
https://media.tenor.co/images/adbff7f0763e2cb3de89649798873d05/tenor.gif
Nice art, but they forgot Hawaii and Alaska.
The US Senate has demanded that sanctions against Russia needs to increased in an obvious attempt to replace Russian fossil fuel with American. Merkel now clearly sided against this move: Foreign Minister Gabriel accuses the US Senate of interfering in the European energy supply.
http://www.spiegel.de/politik/deutschland/us-sanktionen-gegen-russland-angela-merkel-unterstuetzt-sigmar-gabriels-kritik-a-1152445.html
Merkel is no dummy she knows that the US will never be able to supply Europe’s needs of energy from the US shale industry. lol
Russia interfered with the US presidential election and that is technically an act of war, so any kind of minimal sanctions pales in comparison to what should happen. If Europe suffers indirectly due to those sanctions then that’s the collateral damage that needs to take place. If it were me, I’d pull out every diplomat in Russia and exile all Russian diplomats, put a 10 year moratorium on any Russian products sold in the US and that would become permanent if there is a 2nd attempt to alter our elections. As it stands Russia has not been served the feedback equal to the benefits they receive from getting Trump into office, who is the chaos president just like Marco Rubio said he would be. That’s Russia’s goal when interfering with elections, i.e. to cause chaos in those countries. It’s working, and if people don’t think Russia made a difference, then just look at the reports of their hacking of voter information – all they had to do was affect 2-3% of the vote in several key swing states and that would change the election. Also their timing of releasing email information on Hillary and other associated with her was assisted from this end by the Trump campaign. Between purposeful leaks and voter tampering Russia got their guy, Trump into office. I’m outraged and every American should be but what we are getting is a lot of stonewalling by the Republicans because they just want power and don’t care how they get it. If they had their way, they’d link up with Russia for every election and that may still happen.
If Russia really did interfere then why doesn’t our intelligence departments release the evidence of that? The same intelligence agency that lied about Iraqi leaders involvement with Oil-Queda and had WMD’S? The same intelligence agency that lied TWICE about Assad gassing his own people. The same intelligence agency that recently blamed the conflict between Qutar and Saudi Arabia on a Fake news story planted by russian hackers. Even though Al-Jazera released hacked emails months prior that showed the US and UAE and Israel were planning the whole thing well in advance. Its obvious that if there was any election hacking it was most likely done by our own government.
Clapper perjured himself twice before congress (we know from Snowden).
When the head of the NSA is a known liar, it is hard to have confidence in the fidelity of information being released, especially when they give no evidence, and say “Believe US, we are the NSA”.
Time for you to widen your reading…. Russia is at, or near the point, of not being beholden to soon-to-be-has-been Dumberica and its crumbling alliances in order to support its economy or hinder its growing hegemony.
I won’t elucidate further. By the likes of your posts to date, you lack the alacrity which would qualify you as deserving of my time. I am not about to go start kissing frogs hoping a prince will appear!
Feel free to borrow this and pass it to Dolt and Berger — I have extra copies….
https://twocent2c2.files.wordpress.com/2015/08/capture-delusion-blog-08-15.png
https://4.bp.blogspot.com/-vS7S4iELW3I/WUMYUpIiOiI/AAAAAAAAvn8/-eSZnZxVjSMBdu9XmUncSWVMjTlLMt_-QCLcBGAs/s640/images%2B%252838%2529.jpg
The Israelites don’t control Russia anymore, that’s why they are so intent on getting you to be angry at them for no reason.
Even smart ones like B9K9 missed this.
Pot and ketle nonsense
If I wanted to read regurgitated US propaganda I would click cnn.com
Here’s the thing…
There is a comment limit on each of Gail’s articles… so unless you have something to post that is useful interesting or at least amusing …. then you should refrain from posting … because most are ignoring your posts — and you are bringing us closer to the comment limit.
And that no doubt causes Gail anxiety — as she will feel that she has to come up with another article sooner than she otherwise wanted to.
No comment limit. Commenting times out after around 20 days.
Bergan-
How did you ever end up here? Your post is so crazy I actually saved it to show people. I’ve never done that here before.
There is a certain level of political sophistication you would expect when thinking about energy scarcity.
Bergen…utter rubbish.
I’m outraged and every American should be
Lack of control over one’s emotions to the point where one bawls like a six-year-old who’s mummy won’ buy him another ice cream, plus expression of certainty that all 320 million of one’s fellow citizens should share the emotion and emulate the behavior. Has that behavior ever worked for you?
You may be right that Russia interfered in the US elections. How you could possibly know that is beyond my comprehension. But I grant it’s not beyond the bounds of credibility. Putin, that crafty old fox, may well have fixed it for Brexit and then shifted last week’s UK election to weaken May. He may also have hacked Macron into Office. He could well be controlling Merkel like a Manchurian candidate and have orchestrated the current crisis between the GCC nations and Qatar—all as part of a dastardly underhand plan to get all of his adversaries at each other’s throats.
We have just as much evidence that Vlad did all these things as we have that he put Trump into office. But who needs evidence when we have feelings of outrage and certainty and cartoon scenario? Indeed, I know exactly how Putin did it.
https://youtu.be/datMjH31b14
Given its the NSA that has the goods on everyone including Merkel https://www.theguardian.com/us-news/2015/jul/08/nsa-tapped-german-chancellery-decades-wikileaks-claims-merkel
Unless Russia has deployed a similar system….. then….
Funny how its ok for America to fix elections … but even the hint of someone tainting a US election and its a big deal
CIA espionage orders for the last French presidential election
https://wikileaks.org/cia-france-elections-2012/
Bergen you are full of it.
It’s a ‘scary’ time with a global crisis on the way, LVMH CEO says
http://www.cnbc.com/2017/06/15/be-careful-a-global-crisis-is-coming-says-lvmh-ceo.html
Worth revisiting the effect of these new technological marvels in the major shale players that have reduced their breakeven oil price. Earnings:
EOG -$1.07/sh
CLR -$0.54/sh
WLL -$4.31/sh
OAS -$0.77/sh
Those are all minus signs.
These videos about hunger in Greece that Jeremy posted recently were 2011-2013.
Yesterday, Greece received another tranche of ~10B .. Anyway, my reading of the story is still valid, Greece is kept on some tight – minimal near starving allowance, just to keep the global security goals intact, plus having some pretending resemblance of the functioning EU, basically they capitulated on their national interest, hanging on to a chimer things get better somehow sometime in the future.
Tzipras and Varoufakis spilled enough beans already, how they were treated by TPTB. When in gutter not an easy way getting out, simply there was not enough stamina to repudiate the debt and face likely military coup. Should they have (gamble on it) done it, things would be much better today on the ground. Well some would be not amused by Chinese/Russian and or Iranian navy parked there today, but that’s to be expected..
That being said, I’d not be in the position of making fun of them, it’s tragedy of previously easy life and its consequences..
It is certainly a tragedy. Just kept on life support , Merkel’s ‘We have left sufficient support in place.’
I can fully understand Greeks being very wary of their military, just as the Spanish are.
Torture comes all too easily to those people, and indeed to all the extremists, Left or Right, who lie just under the surface in Europe. After all, if you know what’s right and true, well then, it’s only correct to eliminate those who oppose you…….
The treatment of the Greeks should have blown the cover of the EU as a guarantor of civility and decency, but alas many fail to see that.
It is like the Soviet Union: ‘Yes, there are faults and mistakes have been made, but we represent a great ideal, let’s not lose sight of that!’
The old excuse for barbarism and totalitarianism.
Tragedy is when someone insists that a crack whore putting their newborn through the was cycle is part of a Grand Plan.
The Program
All God’s Will.
Let Go…etc.
How is it a tragedy?
Sure – a dramatic drop in one’s standard of living sucks…. but a tragedy?
A tragedy is when you do a job and you don’t get paid… a tragedy is when you are so god damn poor — so utterly desperate — that your wife has to whore her ass to fat bald old foreigners to earn money to feed her family … a tragedy is when dinner is boiled rice with salt… a tragedy is when you sleep in a filthy hovel on straw mat… a tragedy is when your child is sick and you have no money for medicine….
THIS is a tragedy:
Hm, uh, ok, “tragedy” in terms of most contemporary Greeks was too wordy, you are more or less correct on this one.. Although, there are prolly few percents of pop who already fallen into similar abyss, but again they should blame their docile ~middle class and local elites in the first place.
Again it’s a process, so there might come a day, when EURos would have to triage Greece in order to shield temporarily some more semi/core important country instead.
Around that point the Greece might erupt into true rebellion, however given the delay not much getting out of it, only further deprivation.
The Egyptians tried that… then they realize the authorities are not messing around…. they opened fire with live ammo on the crowds…. Egypt’s been pretty quiet ever since….
In addition to this … in order to effectively rebel the people would need a backer — since there is nothing any of the major players want in Greece then I doubt the Russians or Chinese or Americans would support a rebellion …
In fact it is all their interests to maintain the status quo in Greece… nobody wants the country to go to pieces resulting potentially resulting in a banking crisis.
The Greeks will be left to suffer… and suffer … and suffer….. and then we will join them… and we will all be eating boiled rat
In the scenario I portrait above, it’s the future time of hard triage in order to protect the core, in practical terms that means no longer support for Greek debt, banking system anymore. Perhaps only some MIC/defense related operation on limited basis. That means by that time the Europe is in deep turmoil anyway, e.g. selectively pushed countries of EURzone, brakeup of DE-FR core union of single currency and gov, etc.
That’s a threshold of real upheaval, i.e. mil/police taking sides, .. , obviously we are not there yet by a long shot (several steps have to be played out). In the meanwhile Greece will just continue to hibernate on the scraps from the table, doing nothing apart from phasing in more dosage of austerity..
The Egyptian case is not good companion example of this. As they are cleverly sucking resources and support from everybody now: both the West (+Gulfies) and the East.
As I mentioned a feat the Tzipras-Varoufakis types mused about BUT WERE NOT able to pull off.. be it for combo of sheer incompetence-weakness, MIC/defense threatening a coup, and no mandate from sheeple to play hardball yet..
Eurogroup Statement on Greece
http://www.consilium.europa.eu/press-releases-pdf/2017/6/47244661151_en.pdf
(full report pdf at the link)
hattip @econundertow
He’s Fast Eddy, the Almighty….
Just shrugs it off as a “drop in living standards”!
No job, no income, hand outs for food, no electric, no prospects, rent eviction,
No big deal…Fasts been there, done that himself many times, in between his end of the world party vacations! (Sarcasm).
This fella got a complex one of Huge Proportions!
But it is entertaining for some.
It’s not entertaining… it just is.
I was in Kenya 7 years ago — I observed an antelope giving birth — it was surrounded by a number of predators who raced in and tried to snatch it — the mother was charging them trying to protect her baby — eventually one of the jackals got it…. the mother was beside herself with grief.
Most people would observe this, feel sadness… and perhaps want to kill the jackals to help the mother.
I felt nothing. I just observed.
And I thought about how this was a perfect microcosm of how the world works — the strong kill and eat the weak. Always.
Better to be strong — than weak.
Greece is weak. She is very fortunate that the strong let her live at all. Of course they have a vested interest in keeping Greece alive
There is not much starvation going on in Greece.
Maybe their credit is cut off, so no new bridges to nowhere, sports arenas or hyperloops. I expect the same will play out on the micro level, persons will not be allowed to buy cars, take vacations or do unnecessary home remodeling, but they will not become homeless and starving (until much later)
According to a Reuters report from the same month, food banks in Greece no longer know if they can meet the needs of numbers. One food bank in Athens is now serving 11,000 families – increased from 2,500 in 2012 and 6,000 in 2014. Of those living in poverty in Greece, around 1.2million are pensioners. The situation is no better for the working-age population: unemployment is almost at one in four and youth unemployment is now at 48 per cent
Tsipras and pals are not innocent victims here trying to do their best and being held down by TPTB to use that term… they’re willing sellouts just like the administrations that came before them. Yes, they get to rule arbitrarily over this little patch of ground (so long as they don’t step on anything important that belongs to TPTB, that goes without saying!) and in exchange they continue enforcing this strange experiment of just how far and fast can one deliberately strip down a supposedly top-tier ‘developed’ country , confiscate all assets and convert the population into slaves, without kicking off a rebellion in response.
The greek army has also sadly been gutted beyond recognition, it’s more just for keeping up the image of a functioning military anymore. Yes they still buy some expensive toys but the essential basics are completely lacking.. what percentage of plumbing fixtures on military bases are broken and there is no budget to repair or replace them? Is there TP or do the enlisted men have to carry their own and guard it from being ‘borrowed’? How much ammunition do recruits get to use for training on their rubbishy 30 year old rifles so worn out they’d be better off used as blunt objects to swing at the enemy instead of shoot?
No, the greek army is not going to be used to enforce this insanity.
The police, on the other hand, seem happy with their shrunk and re-shrunk salaries and still willing to enforce a regime of surrealistic confiscation and taxation. Some cops demonstrated recently (while different branches of the cops held them back from the parliament) about pay and pension cuts, but they still overall seem content to keep showing up for the job.
They change whole sections of tax code every few months, so most people have been so jaded by it all that they just say ‘who knows what it will be like by then’.. and the experiment in accelerating collapse a bit ahead of the resource decline curve goes on. It doesn’t seem like the particular measures rolled out are part of a single comprehensive strategy, it seems more like they keep making this stuff up as they go, with the foriegn powers holding the greek govt’s leash even a bit surprised it’s still holding together so long… so, yeah, give it the works and turn the screws a bit more, see what happens this time.
people are still surviving but on less and less, and the past 7 or 8 years has been a progressively more total drawdown of almost any kind of stored wealth found anywhere… but even here… so far the lights are still on this late in the game. there are still a few more rounds to go before it’s lights out (and they will probably suck a lot worse than anything thus far)
It’s fascinating to watch and also rather scary to be inside of it, and wears one down for it to keep on stumbling through , let it burn already is what most people think and say anymore.
I would be a ‘sell-out’ too if an Economic Hitman showed up and said — Fast…. I suggest you do not push your country to default because my bosses would not like that…. my bosses are very powerful … they can destroy you … in fact they can eliminate you…..
Now be a good boy and we’ll give you some bones when you finish up here — you’ve seen how Mr Blair made tens of millions doing nothing after performing tricks for us? And Mr Clinton — he’s doing quite well…
Live Large… or don’t live at all. It’s up to you
Which is exactly what would have happened.
Brexit Vote:
http://izquotes.com/quotes-pictures/quote-if-it-s-a-yes-we-will-say-on-we-go-and-if-it-s-a-no-we-will-say-we-continue-jean-claude-juncker-242160.jpg
Sounds like the British version of Nancy Pelosi.
No, we don’t have wits of this calibre in the UK.
Jean-Claude is actually one of the world’s most famous Luxembourgers.
I’m sorry to say I can’t think of the names of any others.
http://www.reuters.com/article/us-europe-carsales-idUSKBN1970I0?il=0
“European car sales rise 7.7 percent in May, nearing pre-crisis levels”
Strange…
All over Europe, people have suddenly stopped buying cars
We suddenly stopped buying cars.
All over Europe, new car sales are suddenly down. Not a little bit, a lot. The shift suggests consumers are uncertain about their economic prospects in the near term.
In the UK, registrations of new cars dipped 28.4% in April following a change in vehicle excise duty (VED) the month before. The increase in VED tax accelerated some purchases and delayed others, but the April slump was greater than the March bump, as this chart from Pantheon Macroeconomics shows.
New car registrations in the 27 EU countries fell 6.6% year-over-year in April, according to Pantheon. They had risen 11.2% in March.
In the core Eurozone countries, new registrations fell 5.1%, down from a 11.5% increase in March, Pantheon said.
New registrations in France declined 6.0%.
Germany went down 8.0% year-over-year.
Italy was down 4.6%.
https://static.businessinsider.com/image/591ae8bfdd0895dd1a8b4a6c-1200/image.jpg
https://static.businessinsider.com/image/591ae8bfdd0895dd1a8b4a6d-1200/image.jpg
https://static.businessinsider.com/image/591ae8bfdd0895dd1a8b4a6e-1200/image.jpg
https://www.businessinsider.com.au/europe-buying-cars-sales-2017-5?r=UK&IR=T
April had a nearly 7% drop
https://www.metalbulletin.com/Article/3717747/EU-new-cars-sales-down-66-in-April.html
Seems to be a 180 turn in a single month— maybe everyone won the lottery?
Massive rebates?
Or maybe the EU has finally recovered!!!!
https://ih0.redbubble.net/image.41156060.6841/flat,800×800,075,f.jpg
Or maybe its….
http://zignallabs.com/wp-content/uploads/2017/04/fake-news.jpg
http://www.azquotes.com/picture-quotes/quote-when-the-going-gets-tough-you-have-to-lie-jean-claude-juncker-91-77-40.jpg
Falling auto sales in Europe are not good at all. Raising the tax on autos is a good way to make sales fall.
Admittedly sales rose before the fall, but not enough.
Every european bought a new car last year.
Used vehicle prices were immensely inflated during the “Cash for Clunkers” program when the government, to bail out the automakers, bought for all practical purposes an entire generation of perfectly good and affordable older cars and destroyed them so the people would be forced to move up to newer vehicles along the entire chain. This caused a surge in used vehicle prices from 2009 onward.
http://wolfstreet.com/2017/06/15/suddenly-hawkish-yellen-brushed-off-dip-in-inflation/
2.0 coming?
As you say, Cash for Clunkers raised used car values. This is the same effect that lower interest rates would have.
This is one of the temporary beneficial effects (plus raising loan to value, and raising length of payout). At some point, we run out of ways to make cars cheaper, and more people cannot afford the cars. Values drop, as they are dropping now.
I think the automakers, the FED and the government will conspire to create another “Cash For Clunkers” type program to keep carmaggedon at bay a bit longer. What it will be this time remains to be seen.
Perhaps they can just buy up all the new inventory sitting in parking lots … and dump it in the ocean …. once the corals grab hold it could make an amazing dive site…
So investors trying to sort through this mess by using fundamental analysis have been left in the dust years ago. Fundamentals no longer matter in this market. Valuations have been surgically removed from any sense of fundamental reality.
“The majority of equity investors today don’t buy or sell stocks based on stock specific fundamentals,” Marko Kolanovic, global head of quantitative and derivatives research at JPMorgan, explained in a note to clients, cited by CNBC.
“Fundamental discretionary traders” now account for only about 10% of trading volume in stocks, he said. Passive and quantitative investing account for about 60%; this share has more than doubled over the past decade.
These “big data strategies are increasingly challenging traditional fundamental investing and will be a catalyst for changes in the years to come,” he said.
https://thumbs.dreamstime.com/z/cartoon-attractive-woman-bubble-wow-face-girl-retro-vintage-fashion-female-character-person-art-pop-look-open-mouth-60426814.jpg
Is she glad to see me or you, fast eddy?
There are a lot of reasons for this, including the enormous amounts of liquidity in the markets, after the Fed, the ECB, the Bank of Japan, the Bank of England, and the Swiss National Bank have created $11 trillion out of nothing since the onset of the Financial Crisis and used that money to buy $11 trillion of securities – in the SNB’s and BOJ’s case even common stocks. They now sit on $15 trillion in assets.
Under such relentless buying pressure, fundamentals in the markets have become useless. People still truly engaged in it – rather than in churning out “fundamental” rationalizations for irrational stock prices – are being ridiculed. But algorithms have picked up the slack.
http://wolfstreet.com/2017/06/15/what-happens-when-the-machines-start-selling/
Perhaps someone thinks there is a new model, where companies can get along without profit. At least, this seems to be where the system is headed.
It would seem that in order for everyone to be engaged in profitable ventures, growth would have to be quite robust. Since it seems growth is over, not much will be profitable anymore. We seem to be at a crossroad of some sort for sure where all the fundamentals that used to apply, no longer apply.
https://pbs.twimg.com/media/DCYbYVdU0AAn3bs.jpg
So the US has joined Mexico, South Africa, and Turkey in raising interest rates. Great company!
Hope this table posts with link here.
https://pbs.twimg.com/media/DCYbYVdU0AAn3bs.jpg
hat tip @econundertow
Try this instead:
https://twitter.com/charliebilello/status/875417284977807365
That is a great chart. Thanks! Not many others raising interest rates, and the ones that are, are having financial problems.
The business of Hope is the most profitable of them all. Or as said in the Matrix “Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and your greatest weakness.”
Excess oil inventories to last until 2018 – IEA
https://www.ft.com/content/08ca8486-dc42-3df4-b127-8ea63de1ffa3
http://peakoil.com/production/excess-oil-inventories-to-last-until-2018-iea
The date keeps getting put off.
Yeah I noticed that trend as well. LOL
Republican Missouri Representative Mike Moon as he decapitates a chicken then tears out its still beating heart to make a point about abortion
http://www.news-leader.com/story/news/politics/2017/06/13/southwest-missouri-lawmaker-beheads-chicken-make-point-abortion/391876001/
Good grief!
Kind of similar to what congress is doing with the constitution.
This post seems to garner lot of views and comments. I am still at page 7 and have no time to read all yet… whew! so much for FE’s end of the world party…
Cobalt, a key battery material has become more scarce. Its price has rocketed from $32,750 per tonne at the start of January to $56,250
https://www.reuters.com/article/us-autos-electric-ahome-idUSKBN196033
wow that is a sign of things to come
Just remember, people’s incomes are not really higher. In fact, there is more tendency toward wage disparity. So they cannot afford increasingly high-priced cars. Demand cannot go up at high prices.
Looks quite busy compared to last time I was in Nelson; earthquake strengthening or refugee influx…? No one here is ever going to listen to some fanciful story about an extinction level event. Not least the Motueka green-team!
Anyway, people seem a little less stressed here than ‘them-up-north!’
Had to explain the ‘Harem-At-The-Shite Rollover Of-Fossil-Fuels theory to Mis Last (Hats-r-off theory) and we are still negotiating that one. She gets the boatload of champagne part, but not the boatload of assistant hostesses…takes time I guess.
Perhaps just start with one or two…. to get her used to the idea…. then go from there
Harems: endless bossing about, trying on new clothes, doing their nails and bitching – any wife should love it.. As long as she is Wife No. 1!
Definitely need to hire a You Nick.
‘them-up-north!’
Spoken like a true Mainlander!!! Lol.
There was a guy who used to comment on X-Ray Mikes Collapse of Civilization blog a few years ago. He was based in New Plymouth & was on council at one stage but I can’t find a reference to him now. He seemed pretty well informed & was frustrated by local council (wonder why hahaha).
Wow… imagine putting these thoughts in front of council ….. they probably committed him….
Haven’t read anything from him since & I tried to follow up what he wrote as he put across some good points.
He’s probably feeding the fish off the NI west coast by now.
A council sponsored burial in an old Ford Zephyr………………….
An interesting site
What the Industry is Talking About
Discover the most discussed topics plus the latest comments, questions & answers from industry pros.
http://oilpro.com/#home/discussion
MikeBlack: it is interesting to me how much more frequent, and vocal, the worldwide oil industry’s criticism of the US shale oil industry’s out of control spending spree has become. People have clearly had enough of low, volatile oil prices. This particular oil price nose dive, down 20% the past 2 months, in the face of a worldwide effort to cut production and raise prices, seems to have really pissed people off. Me too.
Its not “cheap” oil, Mike; it is actually very expensive and woefully unprofitable to extract. So expensive, and so unprofitable, that the shale oil industry cannot pay its indebtedness back now (probably not even at 85 dollar oil) and the E&P sector of the S&P is the worse performing sector so far in 2017. Not good since I can’t find a stinking shale oil company that has generated any free cash flow in over three years. Americans think its cheap oil because they don’t know, and don’t care where all the money is coming from to pay for it. I know you know.
And you are absolutely correct, OPEC had nothing whatsoever to do with the 65% collapse in oil prices beginning mid 2014. NOTHING. The data is very clear on that. I have been completely down and out several times in my long career, and it was right to blame OPEC. Not this time. Can’t do it. This one is entirely on the US shale oil industry.
Why did the price collapse? Anyone?
quantative easing was stopped by the central banks in anerica
you must understand cliffy the elites are managing the end of cheap oil and the transition to an economy based on hard to get resources i can see that you are not 100% brain-washed like certain individuals i will not mention
The recent run-up in prices to the $50+ level was unsustainable.
The price level that can be sustained is determined by wage growth and debt growth. These are not growing enough, on a worldwide basis. In fact, the debt pulse is negative. (Falling interest rates helps debt growth, but that is not happening.) The latest US rise in interest rate puts further downward pressure on oil prices.
Growing wage disparity is part of the story. Demand is really maintained by the bottom 90%, because there are so many of them. If their wages are not growing enough, they don’t buy enough cars and houses and taxi rides and restaurant meals. This puts downward pressure on commodity prices.
The 90% consuming the milk, mean that there is cream for the fat cats.
I think the downward commodity price pressures are similar to what is happening with new cars. The prices are too high. The global economy (which was built on cheap energy) can not afford the higher prices. So, (just like the new car market) inventory backs up and prices drop. Another problem is producers of commodities cannot make a profit at the current prices either. So, it is a predicament we are in. Something has gotta give at some point. Something major will break down.
Sunny Nelson, a place near the end of the world, but still not far enough to escape it! Good coffee-shop and great barber here Fast! Bit of a hike for you I suppose.
We live in the Nelson vicinity…. but I am seldom there in the winter…. mostly on the west coast … queenstown … or overseas…..
I like Twizel.
Queenstown is too hip and cool.
The views across the lake are world class in that region….
http://www.swaindestinations.com/new-zealand/images/activities/background/queenstown-to-christchurch-via-mount-cook.jpg
As is the west coast drive…
http://c8.alamy.com/comp/EW0MMY/coastline-punakaiki-paparoa-national-park-west-coast-south-island-EW0MMY.jpg
Queenstown is overrun with tourists…. but it has the best skiing options and a rink… so plenty to do…
I was born & raised in Canterbury as was my sister. In 6 weeks I’ll be back there visiting all my folk. A pretty amazing part of the world, but then I’m biased.
Remember the Population Bomb? It’s Still Ticking
https://www.nytimes.com/2017/06/15/opinion/sunday/remember-the-population-bomb-its-still-ticking.html?_r=1
https://media.giphy.com/media/n8iVtgWrBghjO/giphy.gif
Yup too many people. Solution remove 99.9% of the people.
Electric Car Boom On Hold As Key Ingredient Vanishes
http://oilprice.com/Energy/Energy-General/Electric-Car-Boom-On-Hold-As-Key-Ingredient-Vanishes.html
http://imgur.com/a/l02x8
Maybe to put the oil industry conundrum in context we’ll use beer as an analogy.
So let’s say I’m a brewer that owns his ingredient production, namely hops and barley. I pay my workers in beer and sell the excess at a going rate of $5.00 per pint.
My workers agree to bring me the needed ingredients to make 100 pints of beer in exchange for one pint. In the process of brewing the beer I drink a pint leaving me 98 pints to sell. The government tells me I have to give them one pint for every 10 I sell.
I discover over the course of a few years that my barley and hop fields are diminishing at a rate of 5% per year so I increase my planting size to compensate. Mean while my workers tell me they can’t produce 100 pints worth of ingredients for one pint they can only produce 25. On top of that the quality of the barley has fallen and I’m so exhausted trying to produce a good brew I now drink 5 pints for every 100 pints I produce.
I’m now consuming 9 pints and sell 91 pints. Still giving the government 10. All in all not to bad.
This progresses until the day comes when my workers suddenly tell me things are horrible. We can only produce enough ingredients for 5 pints sometimes only 2 for every pint you give us. I’m noticing that the barley is even worse now. What use to be an hour to brew is taking 2 or 3 or 4. The stress is driving me mad so now drinking 10 pints for every 100 I produce.
I’m trying to figure out why I’m going broke. I realize that I have to raise my price to stay solvent and cover fixed cost. Since I’m having to pay my workers now 20 pints and I’m drinking 10 , government 10 I have only 60 to sell so I have to raise my price 50%.
All the pub owners grumble at $7.50 per pint but hey what are you going to do?
Then the day comes when the workers say we can’t break 2 pints worth of ingredients for the pint your giving me. I’m now consuming 15 pints and have a raging headache. I realize that I need to double my present price to keep going. So I raise it to $15.00 a pint.
The pub owners revolt there is no way we can sell beer at $15.00 per pint.
So you go back to your workers and tell them we’ve got a big problem. So you sit down and have a meeting. At the meeting you ask the workers why things are so bad. They tell you that the field are in steady decline and we’ve been consuming a lot of pints getting new fields ready for production. You determine that you have to cut that part of the business out to stay afloat. That brings your ratio back to 1:3. So that allows me to restructure the price per pint to $10.00.
The pub owners say nothing doing. We’ll give you $7.50 or nothing.
So my choice is I close shop, bring in investors, or liquidate assets. So I start With investors. Since no one really knows the conditions in my fields and I have good cash flow why not leverage them as equity for investment?
“These fields have years of life in them” I say. “This could be years of investment returns for any who buy shares. Why over the last 80 years these field have produced thousands of pints of beer which you know all to well because you have been consuming them. Imagine the returns you’ll receive over the next 80 years. ”
Well the investors flood in. All eager to have a piece of the brewery. Everything seems better operations are being funded all the pubs are open and well supplied. The beer is flowing freely. I’ve been able to even buy out another brewer.
But all the while the 5-6% decline rate is ticking away. You tell the workers that now that you have a little breathing room we need to keep volumes just go to fields that will give us the biggest bang. Do worry about long term development we just need immediate volumes. So they do.
Things simple don’t improve but I have huge paper value so I turn to the banks to fund operations and pay my investors their dividends. They never noticed that I had leveraged all my assets because they spent their dividends on more beer.
The day finally arrives when the workers come in and tell me the fields are done we just can’t produce more than 1:1.
The government who has been my silent partner all along finally says. “Listen your problem is our problem what do you need? More money more time? We’re here to help you.”
You try to explain that I need more barley at a cheaper price but there isn’t any.
The government gives you a long confused stare and asks “why do you need barley?”
It’s at that moment you realize your on your own.
So You go back to your workers and tell them.
“Let’s drink what’s left and close the doors.”
Actually the governments response would be.
“Why do you need barley I thought we were talking about beer. Barley is the Agricultural Committee we’re Tobacco and Alcohol you’ve come to the wrong place”
Last call!
Well done JT!