The Next Financial Crisis Is Not Far Away

Recently, a Spanish group called “Ecologist in Action” asked me to give them a presentation on what kind of financial crisis we should expect. They wanted to know when it would be and how it would take place.

The answer I had for the group is that we should expect financial collapse quite soon–perhaps as soon as the next few months. Our problem is energy related, but not in the way that most Peak Oil groups describe the problem. It is much more related to the election of President Trump and to the Brexit vote.

I have talked about this subject in various forms before, but not since 2016 energy production and consumption data became available. Most of the slides in this presentation use new BP data, through 2016. A copy of the presentation can be found at this link: The Next Financial Crisis.1

Slide 1

Most people don’t understand how interconnected the world economy is. All they understand is the simple connections that economists make in their models.

Slide 2

Energy is essential to the economy, because energy is what makes objects move, and what provides heat for cooking food and for industrial processes. Energy comes in many forms, including sunlight, human energy, animal energy, and fossil fuels. In today’s world, energy in the form of electricity or petroleum makes possible the many things we think of as technology.

In Slide 2, I illustrate the economy as hollow because we keep adding new layers of the economy on top of the old layers. As new layers (including new products, laws, and consumers) are added, old ones are removed. This is why we can’t necessarily use a prior energy approach. For example, if cars can no longer be used, it would be difficult to transition back to horses. This happens partly because there are few horses today. Also, we do not have the facilities in cities to “park” the horses and to handle the manure, if everyone were to commute using horses. We would have a stinky mess!

Slide 3

In the past, many local civilizations have grown for a while, and then collapsed. In general, after a group finds a way to produce more food (for example, cuts down trees so that citizens have more area to farm) or finds another way to otherwise increase productivity (such as adding irrigation), growth at first continues for a number of generations–until the population reaches the new carrying capacity of the land. Often resources start to degrade as well–for example, soil erosion may become a problem.

At this point, growth flattens out, and wage disparity and growing debt become greater problems. Eventually, unless the group can find a way of increasing the amount of food and other needed goods produced each year (such as finding a way to get food and other materials from territories in other parts of the world, or conquering another local civilization and taking their land), the civilization is headed for collapse. We recently have tried globalization, with exports from China, India, and other Asian nations fueling world economic growth.

At some point, the efforts to keep growing the economy to match rising population become unsuccessful, and collapse sets in. One of the reasons for collapse is that the government cannot collect enough taxes. This happens because with growing wage disparity, many of the workers cannot afford to pay much in taxes. Another problem is greater susceptibility to epidemics, because after-tax income of many workers is not sufficient to afford an adequate diet.

Slide 4

A recent partial collapse of a local civilization was the collapse of the Soviet Union in 1991. When this happened, the government of the Soviet Union disappeared, but the governments of the individual states within the Soviet Union remained. The reason I call this a partial collapse is because the rest of the world was still functioning, so nearly all of the population remained, and the cutback in fuel consumption was just partial. Eventually, the individual member countries were able to function on their own.

Notice that after the Soviet Union collapsed, the consumption of coal, oil and gas collapsed at the same time, over a period of years. Oil and coal use have not come back to anywhere near their earlier level. While the Soviet Union had been a major manufacturer and a leader in space technology, it lost those roles and never regained them. Many types of relatively high-paying jobs have been lost, leading to lower energy consumption.

Slide 5

As nearly as I can tell, one of the major contributing factors to the collapse of the Soviet Union was low oil prices. The Soviet Union was an oil exporter. As oil prices fell, the government could not collect sufficient taxes. This was a major contributing factor to collapse. The collapse from low oil prices did not happen immediately–it took several years after the drop in oil prices. There was a 10-year gap between the highest oil price (1981) and collapse (1991), and a 5-year gap after oil prices dropped to the low 1986 price level.

Slide 6

Venezuela is often in the news because of its inability to afford to import enough food for its population. Slide 3 shows that on an inflation-adjusted basis, world oil prices hit a high point first in 2008, and again in 2011. Since 2011, oil prices slid slowly for a while, then began to slide more quickly in 2014. It is now nine years since the 2008 peak. It is six years since the 2011 peak, and about three years since the big drop in prices began.

One of the reasons for Venezuela’s problems is that with low oil prices, the country has been unable to collect sufficient tax revenue. Also, the value of the currency has dropped, making it difficult for Venezuela to afford food and other products on international markets.

Note that in both Slides 4 and 6, I am showing the amount of energy consumed in the countries shown. The amount consumed represents the amount of energy products that individual citizens, plus businesses, plus the government, can afford. This is why, in both Slides 4 and 6, the quantity of all types of energy products tends to decline at the same time. Affordability affects many types of energy products at once.

Slide 7

Oil importing countries can have troubles when oil prices rise, similar to the problems that oil exporting countries have when oil prices fall. Greece’s energy consumption peaked in 2007. One of Greece’s major products is tourism, and the cost of tourism depends on the price of oil. When the price of oil was high, it adversely affected tourism. Exported goods also became expensive in the world market. Once oil prices dropped (as they have done, especially since 2014), tourism tended to rebound and the financial situation became less dire. But total energy consumption has still tended to decline (top “stacked” chart on Slide 7), indicating that the country is not yet doing well.

Slide 8

Spain follows a pattern similar to Greece’s. By the mid-2000s, high oil prices made Spain less competitive in the world market, leading to falling job opportunities and less energy consumption. Since 2014, very low oil prices have allowed tourism to rebound. Oil consumption has also rebounded a bit. But Spain is still far below its peak in energy consumption in 2007 (top chart on Slide 8), indicating that job opportunities and spending by its citizens are still low.

Slide 9

We hear much about rising manufacturing in the Far East. This has been made possible by the availability of both inexpensive coal supplies and inexpensive labor. India is an example of a country where manufacturing has risen in recent years. Slide 9 shows how rapidly energy consumption–especially coal–has risen in India.

Slide 10

China’s energy consumption grew very rapidly after it joined the World Trade Organization in 2001. In 2013, however, China’s coal consumption hit a peak and began to decline. One major contributor was the fact that the cheap-to-consume coal that was available nearby had already been extracted. The severe problems that China has had with pollution from coal may also have played a role.

It might be noted that the charts I am showing (from Mazamascience) do not include renewable energy (including wind and solar, plus burned garbage and other “renewables”) used to produce electricity. (The charts do include ethanol and other biofuels within the “oil” category, however.) The omission of wind and solar does not appear to make a material difference, however. Figure 1 shows a chart I made for China, comparing three totals:

(1) Opt. total (Optimistic total) – Totals on the basis BP computes wind and solar. Intermittent wind and solar electricity is assumed to be equivalent to high quality electricity, available 24/7/365, produced by fossil fuel electricity-generating stations.

(2) Likely totals – Wind and solar are assumed to replace only the fuel that creates high quality electricity. The amount of backup generating capacity required is virtually unchanged. More long distance transmission is needed; other enhancements are also needed to bring the electricity up to grid-quality. The credits given for wind and solar are only 38% as much as those given in the BP methodology.

(3) From chart – Mazamascience totals, omitting renewable sources of electricity, other than hydroelectric.

Figure 1. China energy consumption based on BP Statistical Review of World Energy 2017.

It is clear from Figure 1 that adding electricity from renewables (primarily wind and solar) does not make much difference for China, no matter how wind and solar are counted. If they are counted in a realistic manner, they truly add little to China’s energy use. This is also true for the world in total.

Slide 11

If we look at the major parts of world energy consumption, we see that oil (including biofuels) is the largest. Recently, it seems to be growing slightly more quickly than other energy consumption, perhaps because of the low oil price. World coal consumption has been declining since 2014. If coal is historically the least expensive fuel, this is likely a problem. I have not shown a chart with total world energy consumption. It is still growing, but it is growing less rapidly than world population.

Slide 12 – Note: Energy growth includes all types of energy. This includes wind and solar, using wind and solar counted using the optimistic BP approach.

Economists have given the false idea that amount of energy consumption is unimportant. It is true that individual countries can experience lower consumption of energy products, if they begin outsourcing major manufacturing to other countries as they did after the Kyoto Protocol was signed in 1997. But it doesn’t change the world’s need for growing energy consumption, if the world economy is to grow. The growth in world energy consumption (blue line) tends to be a little lower than the growth in GDP (red line), because of efficiency gains over time.

If we look closely at Slide 12, we can see that drops in energy consumption tend to precede drops in world GDP; rises in energy consumption tend to precede rises in world GDP. This order of events strongly suggests that rising energy consumption is a major cause of world GDP growth.

We don’t have very good evaluations of  GDP amounts for 2015 and 2016. For example, recent world GDP estimates seem to accept without question the very high estimates of economic growth given by China, even though their growth in energy consumption is very much lower in 2014 through 2017. Thus, world economic growth may already be lower than reported amounts.

Slide 13

Most people are not aware of the extreme “power” given by energy products. For example, it is possible for a human to deliver a package, by walking and carrying the package in his hands. Another approach would be to deliver the package using a truck, operated by some form of petroleum. One estimate is that a single gallon of gasoline is equivalent to 500 hours of human labor.

“Energy consumption per capita” is calculated as world energy consumption divided by world population. If this amount is growing, an economy is in some sense becoming more capable of producing goods and services, and thus is becoming wealthier. Workers are likely becoming more productive, because the additional energy per capita allows the use of more and larger machines (including computers) to leverage human labor. The additional productivity allows wages to rise.

With higher incomes, workers can afford to buy an increasing amount of goods and services. Businesses can expand to serve the growing population, and the increasingly wealthy customers. Taxes can rise, so it is possible for governments to provide the services that citizens desire, such as healthcare and pensions. When energy consumption per capita turns negative–even slightly so–these abilities start to disappear. This is the problem we are starting to encounter.

Slide 14 – Note: Energy percentage increases include all energy sources shown by BP. Wind and solar are included using BP’s optimistic approach for counting intermittent renewables, so growth rates for recent years are slightly overstated.

We can look back over the years and see when energy consumption rose and fell. The earliest period shown, 1968 to 1972, had the highest annual growth in energy consumption–over 3% per year–back when oil prices were under $20 per barrel, and thus were quite affordable. (See Slide 5 for a history of inflation-adjusted price levels.) Once prices spiked in the 1973-1974 period, much of the world entered recession, and energy consumption per capita barely rose.

A second drop in consumption (and recession) occurred in the late 1970s and early 1980s, when easy-to-adopt changes were made to cut oil usage and increase efficiency. These included

(a) Closing many electricity-generating plants using oil, and replacing them with other generation.

(b) Replacing many home heating systems operating with oil with systems using other fuels, often more efficiently.

(c) Changing many industrial processes to be powered by electricity instead of burning oil.

(d) Making cars smaller and more fuel-efficient.

Another big drop in world per capita energy consumption occurred with the partial collapse of the Soviet Union in 1991. This was a somewhat local drop in energy consumption, allowing the rest of the world to continue to grow in its use of energy.

The Asian Financial Crisis in 1997 was, in some sense, another localized crisis that allowed energy consumption to continue to grow in the rest of the world.

Most people remember the Great Recession in the 2007-2009 period, when world per capita growth in energy consumption briefly became negative. Recent data suggests that we are almost in the same adverse situation now, in terms of growth in world per capita energy consumption, as we were then.

Slide 15

What happens when growth in world per capita energy consumption slows and starts to fall? I have listed some of the problems in Slide 15. We start seeing problems with low wages, particularly for people with low-skilled jobs, and the type of political problems we have been experiencing recently.

Part of the problem is that countries with a high-priced mix of energy products start to find their goods and services uncompetitive in the world marketplace. Thus, demand for goods and services from these countries starts to fall. Greece and Spain are examples of countries using a lot of oil in their energy mix. As a result, they became less competitive in the world market when oil prices rose. China and India were favored because they had a less-expensive energy mix, favoring coal.

Slide 16

Slide 16 shows the kinds of comments we have been hearing in recent years, as prices have recently bounced up and down. It is becoming increasingly clear that no price of oil is now satisfactory for all participants in the economy. Prices are either too high for consumers, or too low for the producers. In fact, prices can be unsatisfactory for both consumers and producers at the same time.

On Slide 16, oil prices show considerable volatility. This happens because it is difficult to keep supply and demand exactly balanced; there are many factors determining needed price level, including both the amount consumers can afford and the costs of producers. The bouncing of prices up and down on Slide 16 is to a significant extent in response to interest rate changes, and resulting changes in currency relativities and debt growth.

We are now reaching a point where no interest rate works for all members of the economy. If interest rates are low, pension plans cannot meet their obligations. If interest rates are high, monthly payments for homes and cars become unaffordable for customers. Also, high interest rates tend to raise needed tax levels for governments.

Slide 17

All of these problems are fairly evident already.

Slide 18

The low level of energy consumption growth is of considerable concern. It is this low growth in energy consumption that we would expect to lead to low wage growth worldwide, especially for the non-elite workers.  Our economy needs more rapid growth in energy consumption to provide enough tax revenue for all of our governments and intergovernmental organizations, and to keep the world economy growing quickly enough to prevent large debt defaults.

Slide 19

Economists have confused matters for a long time by their belief that energy prices can and will rise arbitrarily high in inflation-adjusted terms–for example $300 per barrel for oil. If such high prices were really possible, we could extract all of the oil that we have the technical capacity to extract. High-cost renewables would become economically feasible as well.

In fact, affordability is the key issue. When the world economy is stimulated by more debt, only a small part of this additional debt makes its way back to the wages of non-elite workers. With greater global competition in wages, the wages of these workers tend to stay low. The limited demand of these workers tends to keep commodity prices, especially oil prices, from rising very high, for very long.

It is affordability that limits our ability to grow endlessly. While it is possible to argue that more debt might help raise the wages of non-elite workers in a particular country, if one country adds more debt, other currencies around the world can be expected to rebalance. As a result, there would be no real benefit, unless all countries together could add more debt. Even this would be of questionable value, because the whole effort relates to getting oil and other commodity prices to rise to an adequate level for producers; we have already seen that there is no price level that is satisfactory for both producers and consumers.

Slide 20

These symptoms seem to be already beginning to happen.

Note:

[1] This presentation is a little different from the original. The presentation I am showing here is entirely in English. The original presentation included some charts in Spanish from Energy Export Data Browser by Mazama Science. With this database, a person can quickly prepare energy charts for any country in a choice of seven languages. I encourage readers to “look up” their own country, in their preferred language.

In this write-up, I include more discussion than in my original talk. I also added Slides 13 and 14, plus Figure 1.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
This entry was posted in Financial Implications and tagged , , , , . Bookmark the permalink.

3,727 Responses to The Next Financial Crisis Is Not Far Away

  1. Yoshua says:

    A simple model for the oil glut

    The petroleum industry consumes 60% of the energy content in a barrel in the form of capex to produce a barrel of refined petroleum.

    The economy is divided in two. One part of the economy produces capex for the oil industry and receives 60% of the barrels. The other part receives 40% and is in constant contraction due to falling net energy from petroleum production.

    The oil price collapses and the oil industry cuts capex to 50% of the energy content in a barrel.

    The part of the economy that produces capex for the oil industry now receives 50% of the oil and contracts. The other part of the economy now also receives 50% of the oil and experiences a glut.

    In reality this is of course much more complicated. But we are just simple men, what can we do.

    • Tim Groves says:

      I’m just a simple man, but to hazard a guess, I daresay not too far into the future we will be back in oil shortage territory.

    • Jan Steinman says:

      In reality this is of course much more complicated.

      I have pondered this in some detail.

      I think one major “complication” is bankruptcy, which now Wall Street seem to be test-driving as a way of resetting the economy.

      Consider “Company C” (no coincidence at all that “Chesapeake” begins with “C”). It goes to Wall Street, raises tonnes of money, and drills and fracks in the Baaken Formation.

      Taking your numbers for grated for the moment, oil prices fall by 50%, whereas 60% of the original 100% is consumed in “development.”

      But development has already been paid for; all that is left of that is shareholder equity, which is a liability on the balance sheet. So Company C has a couple choices: 1) pump at the marginal cost of pumping for as long as it can, foregoing capital expenditures as long as possible, or 2) try to borrow more money to drill and frack new wells. Note that the “marginal cost” of pumping is way below the development costs, which have all been covered at this point.

      Now, the peak life of a Baaken well is only about 19 months, so Company C starts to get in trouble about 19 months after the price goes below what it costs to develop a new well. At that point, their cash flow begins to dry up, and they can either ask gun-shy investors for more money or declare bankruptcy.

      When they declare bankruptcy, some “chop shop” picks up their assets based on their current operating income, not their sunken costs. The original Company C investors take the haircut. The functioning wells keep pumping, but no new development takes place. This appears to be how the strapless evening gown is staying up, with no visible means of support.

      By this means, IEA’s “undulating plateau” scenario appears to be playing out, with past investors paying to keep the economy rolling. How long this can continue is anyone’s guess, but it certainly seems to have gone on longer than a lot of people (many of them commenting on this blog) have guessed.

      • Many of the quality posters here have been on the trail since at least ~early 2000s, now imagine the resource depletion-civ collapsniks aware folks from ~1960s. This must have been sometimes a true ordeal to witness all these twists so far.

        I gather it also explains a lot of the childish anxiety among the overnight universal sync doomers, simply they went so far through too few ups and downs on the “..are we there yet question..?” Let’s grant them some time, perhaps they could mature one day.

        • Fast Eddy says:

          Nah…

          Up until the near collapse of 2008 — I didn’t even think about doomsday… ya… I knew that infinite growth on a finite planet was impossible — but I never thought the asteroid would hit in my lifetime…

          When you run businesses — and you see revenues fall off a cliff in a matter of weeks — it gives you a different sort of perspective on things I guess…

          All of our employees continued to be paid through this period — so they would have not had the slightest clue as to how close they were to starvation….

          Fortunately the CBs started the Great Print — and we got back on track before we had to slash and burn….

          And as we all know — the CBs are all powerful — they can just print and print and print and print and print —- and we can go on like this forever and ever ahmen.

          Herb Stein would disagree.

          • So, I was correct again, well, that above explanation helps clear it a lot, you are evidently “fast doomer greenhorn” .. Not meant in derogatory way or as an insult though.

            Well, one thing is very probable that after several next waves or recessions, severe geopolitical tremors, and other stuff, you might be still waiting for that real one and only final crash..

      • I think Jan understands what has been happening in this country. In Saudi Arabia and some of the other oil exporters, it is the governments that have been shortchanged. They too are trying to make up the difference with more debt.

        People keep thinking, “The prices have to go up.” So they keep lending more, even when it makes no sense. Or they keep buying shares of stock.

        In fact, with worldwide wages stagnating, it is hard to get prices up high enough. There is really a rather large range of commodities whose prices are too low (oil, natural gas, coal, uranium, quite a few metals). It is really hard to get prices up, without wages up. The plan to try to moderate debt increases makes the problem a lot worse, because quite a bit of the debt would normally be used for wages.

        • Duncan Idaho says:

          First the MENA collapse. Now the EU collapse. What is next? The Trump administration provides clues.

          Depletion of fossil fuels. Climate chaos. Leadership failures. You are witnessing the end.

        • Gail, again you are describing a particular mature “time limited” system near its saturation crisis, braking point.

          I don’t looking forward to it, my living standard would be likely trashed as well, but it smells we are sleep walking into another system “locomotives for potatoes”, no $USD involved anymore or perhaps different basket int payments for the interim. But this time there would be no easy escape route for the west to simply run 300-600% GDP deficits or bomb everybody up anymore..

  2. adonis says:

    Is there a conspiracy by the elites or are they clueless as to the nature of our problems I believe they are acting in secret working diligently towards the solution they know they cannot say the truth for if they did the collapse of our society and the end of BAU would occur instantaneously so in secret they continue to work it won’t be long before we see the fruits of their efforts here is one of the elite’s in a newspaper article telliing us that something big is coming………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..TRILLIONAIRE ROTHSCHILD WARNS HIS OWN CENTRAL BANKING SYSTEM IS FAILING AND BUYS GOLD
    Posted on August 30, 2016 by The Doc 34 Comments 10,880 views
    Share this post:
    Home » Gold » Gold News » TRILLIONAIRE ROTHSCHILD WARNS HIS OWN CENTRAL BANKING SYSTEM IS FAILING AND BUYS GOLD

    rothschildWe have been highlighting the wave of billionaires who are all getting out of the stock market this summer and buying gold. Well, now it’s a trillionaire…

    Submitted by Jeff Berwick, The Dollar Vigilante:

    Of course, he’s not “officially” on top in the “most wealthy” lists… but that is because the Rothschilds have been experts in hiding their wealth for centuries.

    When Jacob’s great-great-great-great grandfather, Mayer Amschel Rothschild, died in 1812, his will explicitly stated that no public inventory of his estate was to be published and that no legal action was to be taken with regard to the value of the inheritance. It’s also been suggested that the Rothschilds use private, unrecorded, limited partnerships to accumulate wealth (you know, like all the ones in the Panama Papers).

    By the end of the 19th century it was estimated that the Rothschild family controlled half the wealth of the world. No one can prove it of course, but it seems likely. You can see their fingerprints on many current events. In fact, their family has likely caused and financed both sides of nearly every war since and control virtually every central bank (to see a full list of all their crimes against humanity click here).

    And so, when Jacob Rothschild says that he is buying gold because the central banks are out of control, you have to laugh. He and his family have been in control of the world’s central banks for centuries.

    But he has said it nonetheless. In his semi-annual address to shareholders of RIT Capital Partners, Jacob Rothschild, announced that they are reducing stock market and currency exposure and increasing their gold holdings and warns that the world is now in “uncharted waters” and that the consequences are “impossible” to predict.

  3. JT Roberts says:

    I was standing on the beach the other day contemplating the meaning of life. My attention was drawn to a piece of sea glass. I couldn’t help but think how obvious spontaneous generation is. Clearly we see self organization of sand into this piece of glass. How could anyone in their right mind believe that objects have purpose or design? Certainly every archaeologist knows deep down what he has found has just appeared. It has always been and always will be.

    As I pick up the glass I notice to my amazement that it has numbers etched into it. This is amazing because it means that as the sand was self organizing it contained information. But more profound is that I can read and understand the information. So the sand must have some cognitive awareness of it’s environment.

    This is absolutely amazing! Clearly demonstrated on just a short stretch of beach are the foundations to all life on earth.

    As I walk along I notice a piece of cobalt blue glass. This fascinates me because the beach is all white sand. I can’t help but wonder is the glass trying to communicate with me? What it trying to say? Is it important?

    My gaze stretches out over the ocean toward the horizon. How I long to know the truth about glass. Maybe I could know it, if only I wasn’t alone on this beach.

    • Tim Groves says:

      “In the beginning, God created the earth, and he looked upon it in His cosmic loneliness.

      And God said, “Let Us make living creatures out of mud, so the mud can see what We have done.” And God created every living creature that now moveth, and one was man. Mud as man alone could speak. God leaned close to mud as man sat up, looked around, and spoke. Man blinked. “What is the purpose of all this?” he asked politely.

      “Everything must have a purpose?” asked God.

      “Certainly,” said man.

      “Then I leave it to you to think of one for all this,” said God.

      And He went away.”
      ― Kurt Vonnegut Jr., Cat’s Cradle

      • jerry says:

        I have heard many such things;
        miserable comforters are you all.
        Shall windy words have an end?
        Or what provokes you that you answer?
        I also could speak as you do,
        if you were in my place;
        I could join words together against you
        and shake my head at you.
        I could strengthen you with my mouth,
        and the solace of my lips would assuage your pain.
        Job 16:1-5 lol

        • i don’t think godbothering will do us much good come shtf time—he’ll say:

          huh—when times was good, you guys didn’t want to know me, now you expect me to come and save yo asses?—i’ve got better planets than this to look after, you’re on your own

          byeeeee

      • Ed says:

        If it were not so you would be bit ching that we are just puppets, slaves. The gift of free will is often not seen by people.

    • You think we are trying to read too much into what we see.

      I will have to admit that the only way I can imagine that the universe could come into being, with all of its laws of physics and self-organizing principles, is by being created by an outside being–a God, so to speak.

      Whether or not that God has specific plans for people on earth, and how those will play out, is a lot less clear. It is possible that humans have been imagining a god to fill their needs.

      In statistics, we talk about Type I and Type II errors. A Type I error is a false positive, and Type II error is a false negative in statistical testing. A person is alway prone to making one or another of these types of errors. Often the consequences of the two types of errors are very different. If they are, a person may give the benefit of the doubt so as to minimize bad consequences/optimize good consequences.

      To falsely say that there is a God who cares about people on earth has essentially no bad consequences, as far as I can see. We may be overoptimistic, but our life on earth is likely better. It may or may not make any difference after death.

      If there is a god who judges people based on whether they figured out that there is a god, then there is an obvious negative consequence to rejecting the hypothesis that there is a god, when in fact the hypothesis is true.

      I don’t see what great satisfaction people get out of “proving” that there isn’t/can’t be a god that cares for us. There is no particular negative to the false belief, so why not just let it be? I agree that many/ most religions are filled with ridiculous stories, but that is not the issue.

      • Mansoor H. Khan says:

        Gail,

        One reason (I think) the universe was created is to glorify a small number of human beings. Mainly the Prophets. Islamic teaching does not explicitly say this but does imply it.

        Also, Hinduism teaches that Universe was created (in part) as a gymnasium for souls to try out various paths (and fail or succeed) and learn the truth by experience and be re-born to try out yet even more paths until the soul merges into God.

        According to the Buddha he attempted to find the beginning of the universe in meditation after he recalled his previous lives and continued to go back in time. He said he could go back as far as he wanted to and all he saw was expansions and contraction cycles. But he did not go as far as to say that there was no beginning to these cycles.

        But I do believe a Noah’s flood (global die-off and extinction this time) is coming and is not too far off. There are no Ark’s/Ships to safely get of the way.

      • Fast Eddy says:

        Gail – you were right in stating that the end of BAU is likely to be an extinction event — you were right in stating that glo-bal war-ming was dumped in our laps to take our focus off the real problems that the world is facing — you were right in stating that renewable energy is a joke and aimed at making us think that there are solutions….

        So you may be right about the god thing as well…. I have no problem with the suggestion that some higher power put this all together.

      • Jan Steinman says:

        To falsely say that there is a God who cares about people on earth has essentially no bad consequences, as far as I can see.

        “We don’t need to worry about the environment; the Lord is coming!” — James Watt, Secretary of the Interior under Ronald Reagan.

        I think the human-centric view of most religions is very dangerous. It causes us to do things we wouldn’t do if we thought that (for example) we did not have God’s permission to have dominion over all the Earth. But being told that in the Bible tends to make us careless with God’s non-human creations — including a 200,000,000 legacy of stored solar energy.

        • Mansoor H. Khan says:

          If there is no purpose to the universe does it matter that if the legacy energy gets dissipated now or later?

          Which it would anyway.

          • Jan Steinman says:

            If there is no purpose to the universe does it matter that if the legacy energy gets dissipated now or later?

            Perhaps not.

            But if there is a “purpose to the universe,” then it may very well matter.

            This touches on Gail’s assertion that there is no downside to a false belief in religion.

            Buddhists might say (for example) that the “purpose” of life is happiness. This implies that one’s duty is to maximize happiness throughout the universe. This implies that one should not simply do something because one can, unless it furthers general happiness more than the infinitesimal amount of personal happiness it may further.

            I think much of humans’ downfall is that we seemingly cannot restrain ourselves from doing any things that we able to do, resulting in much unhappiness for many, and some increased happiness for a few.

            I teach my goats to wait. It is not an easy task. Strangely enough, those higher up the pecking order are more successful at waiting than those at the bottom.

            Why are humans different than goats in this regard? Why is it mostly the humans at the top who cannot restrain themselves? (Although one need only go to Mall*Wart or Costco to see humans at the other end exhibiting lack of restraint.)

            A luxury condo-ship, The World, recently anchored near our small island. I would have said, “docked,” but we lack facilities for docking a 200 metre vessel. So they shuttled some 200 passengers back and forth to our island by Zodiak all day. I don’t know if any of them came to Saturday Market, but a couple friends of ours had “infiltrated” The World, claiming to be interested in buying in. The lowest-cost unit they had available was two million dollars (US), with $500,000 per year in “condo fees.” The next lowest-cost unit was six million.

            I wonder how happy those aboard The World are. I would guess pretty darn happy. But how happy must you be, and how much happiness must you take from others in order to achieve that increment of happiness?

            In The Surprising Science of Happiness, Dan Gilbert asserts that, one year after the event, a person who won $1 million in a lottery is equally as happy as a person who became a quadriplegic from a crash. What does this tell us about the inhabitants of The World? What does this tell us about those who struggle, day by day, to make ends meet?

            A recent experiment shows that African children have more restraint than German children. What does this tell us? Will the African children be more prepared to survive a crash than German children?

            I lead a pretty darned happy life. Would I be happier if I could afford a condo on The World? No. I have learned to be happy with less, and would be disgusted with such blatant excess. I would spend the $2 million and $500,000 annual fees on other things that would increase the happiness of those around me, as strange as that may seem to those in my “anti-fan club.”

            I’m fairly agnostic, perhaps even atheistic. And yet, I believe there is more to the Universe than mere dissipation of energy. The how is important, dammit!

          • Jan Steinman says:

            Gail, can you please release my reply to Mr. Khan? I suspect it got hit for moderation because I included several links. Thanks!

            • Mansoor H. Khan says:

              Ok. I get your way.

              Per Buddhism, suffering is only in the eyes of the beholder. The release from suffering (nirvana) is to realize that beings are soulless and like a machine which has learned how to think and conceive an “I” independent of the physical being (the machine).

            • Sorry. I checked. I don’t have such a comment.

        • Tim Groves says:

          I think Mansoor has gotcha! there Jan.

          In the same vein, if there is no God or similar supernatural moral force that gives us the power to distinguish between good and evil and commands us to good while allowing us to exercise free will, then why should we bother to be good and why should we not be careless with God’s non-human creations?

          And if we try to replace God with human conscience as the arbiter of morality, we are immediately on very dangerous ground as there is no one single human conscience but billions of them.

          It seems to me that modern atheists have rejected the idea of Almighty God but have kept much of the great moral scheme that the theistic religions teach us is God-given, and that this creates as many philosophical problems as it solves.

          • Fast Eddy says:

            Nihilism is the way to go….

            Let’s listen to Doris Day’s tribute to Nihilism …

            • Mansoor H. Khan says:

              Let’s party until wee hours (Collapse) of the night… keep economic growth alive so BAU lasts a little longer…burn more coal now….etc

            • Fast Eddy says:

              You got it Mansoor!

          • Joebanana says:

            “n my lifetime I have murdered 21 human beings, I have committed thousands of burglaries, robberies, larcenies, arsons and, last but not least, I have committed sodomy on more than 1,000 male human beings. For all these things I am not in the least bit sorry.”

            Carl Panzram

            • Tim Groves says:

              Carl had a very tough life.

              Born in East Grand Forks, Minnesota, the son of East Prussian immigrants Johann “John” and Matilda Panzram, he was raised on his family’s farm with five siblings. In 1903, at the age of 12, he stole some cake, apples, and a revolver from a neighbor’s home. Soon after, his parents sent him to the Minnesota State Training School. While there, he was repeatedly beaten, tortured, and raped by staff members in what attendees dubbed “The Painting House”, because children would leave “painted” with bruises and blood. Panzram hated this place of torture so much that he decided to burn it down, and did so without detection.

              In late 1905, he was released from the school. By his teens, he was an alcoholic and was repeatedly in trouble with the authorities, often for burglary and theft. He ran away from home at the age of 14. He often traveled via train cars; he later claimed that on one train he was gang raped by a group of hobos.

              https://en.wikipedia.org/wiki/Carl_Panzram

        • We live in an economy that is a dissipative structure. I don’t think there is really anything we can really do to change the situation. It is subject to a collapse, if we try to “fix” things. We could perhaps have slowed growth, if we had forced debt to grow more slowly, and we had emphasized birth control more. Encouraging a more plant-based diet would have been helpful as well.

          Human’s dominion over other animals is a natural outcome of human’s control of external energy supplies. This began back in hunter-gatherer days. What the Bible documents is the state of affairs as it was, and in fact, is. If the Bible had not made the statement about human’s dominions over the earth, the situation would not have been different.

          We now have a new “religion,” “Humans can control anything they want to.” Physics doesn’t matter. We can grow debt endlessly. We will forever be able to fix old cars that break with spare parts from other old cars. Humans are really in control. If we simply hadn’t been told we had dominion over other animals, we wouldn’t be in today’s fix.

          I see all religions as being intertwined. They represent a documentation of some of the insights people have had over the years, and want to pass down to their children. The purpose of churches is to look at today’s situation, and figure out what pieces of those insights are correct for today’s world. Many of them are not.

          A major function of churches is to connect people who might be able to help each other, partly through friendship and partly through direct help (sometimes in time of need). Religion also connects families. We know that people “do better” when they have connections to other human beings. Religions play a major role in this–whether or not the religious writings seem to make any sense.

      • xabier says:

        For instance, one might think that all the stuff about the Virgin Mary is nonsense.

        But the Virgin Cult had its uses in the Middle Ages: the other day I came across a Spanish pilgrim song from the 13th century, sung at her great shrine at Montserrat:

        ‘Now while you’re here, no stealing, raping or murdering! The Virgin doesn’t like that sort of thing one bit!’

        A cruel, often very violent society, made a little better perhaps by an irrational myth, and with a little hope for the future added into the mix. No harm in any of that. The aura of holy authority could do things which sheer force often failed to impose.

        The traveller and writer Dervla Murphy safely made a trip through the mountains of Ethiopia without any sexual harrassment at all; Ethiopians later explained to her that veneration for the Virgin Mary was instilled in the mountain people, and that they would never touch an unwilling woman in consequence, as it would be sacrilege and damn their souls.

  4. Cliffhanger says:

    Tesla Sales Fall to Zero in Hong Kong After Tax Break Is Slashed
    https://www.wsj.com/articles/teslas-hong-kong-sales-gutted-by-tax-change-1499598003

  5. MG says:

    What are the states today? The states are the companies that have less and less energy and need to import workers, as their populations are dying out when they import energy. Or they go bankrupt, when they produce energy that is too costly to produce and sell to other states-companies.

  6. Dennis L. says:

    For the more adventuresome Quigley’s “Tragedy and Hope” is an interesting read. I first came across it in the seventies and am rereading it now. A fellow named Bill Clinton was apparently a student of Quigley and influenced by him according to some reports.
    The relevant question for this blog might be how does civilization go backward without energy; Quigley recognized the effect of coal and oil on the course of civilizations as well as democratic weapons effect on autocratic rule as compared to specialist weapons. Hint, specialist weapons seem to be a powerful tool for the powerful.

    Dennis L.

  7. Fast Eddy says:

    I would like to declare July 16th an International Holiday — for it was the day that G l obal War min ng was Proved to be a Hoax.

    The hundreds of billions of dollars wasted on this hoax can now be put towards real problems — clean fresh water seems to be a real problem — maybe we could focus the funds on helping with that….

    On this day going forward what is going to happen is that at 11pm across he planet everyone must turn on every light in the house — run the washing machine – the dryer – the hairblower — the stove — the vacuum cleaner — fire up all vehicles…

    As a tribute to BAU. We need to let her know we appreciate her.

    http://www.BAUday.com
    Burn Some Coal!

  8. Fast Eddy says:

    http://wolfstreet.com/2017/07/16/california-bail-out-tesla-ab1184-ev-incentives/

    This is what happens when people believe so passionately in something that is fake…

    We get tax payer money going towards other fake things that supposedly solve the fake problem of us supposedly boiling ourselves to extinction.

    We get EVs – which actually spew more carbon than petrol cars

    Try convincing a Green Groupie that EVs are really really bad for the environment — you’ll get a a taste of what it feels like trying to explain to a cl imate gro.upie that burning fossil fuels has very little impact on the environment

    We get solar installations which generate almost no net power over the life of a panel — and which require that a separate generation system be built to provide power when the sun is not shining (and which has to be keep humming along in the background because it cannot be turned on an off like a light switch) — resulting in a massive nett negative from the panels….

    Try convincing a Green Groupie that solar panels and windmills are really really bad for the environment — you’ll get a a taste of what it feels like trying to explain to a cl imate gro.upie that burning fossil fuels has very little impact on the environment

    A circle jerk of fake…. fake problem — fake response…. fake fake fake….

    • That is quite the proposed rebate plan. I hope the governor has the good sense to veto it.

      • Mansoor H. Khan says:

        But then maybe not. We need growth to keep the financial system alive.

        • assuming you’re not joking—-always difficult to decide on here—-

          you cannot have genuine growth without energy input, which, in terms we understand, means burning oil coal and gas to create employment. The rate and volume of burning must increase year on year to provide % growth, which means in effect:

          that we must go on finding fresh energy sources to keep ourselves employed,

          pay ourselves wages,

          spend those wages to buy stuff,

          which requires more energy to produce

          which we must continually rip the earth apart to find to maintain the function of ”the economy”

          there is another way of course, instead of the messy business of finding energy resources, we borrow or print money, pass it out among the gullible majority, who then spend it, not realising that cash without energy backup is ultimately worthless, and the ”economy” goes into self destruct mode very quickly

          • Well, often times throughout history, the growth impulse (and stagnation or fall) is not universal, rather scattered into variety of regions, enclaves, at the same these forces going opposite directions. Similarly as relative position of societies faced in past decades underwent opposite trends, stagnating/falling West, rising East.

            Granted and it’s understood the precarious situation of today, we don’t have even ~20-30% of pop in agriculture as fall back option. The interconnections is on highest level, e.g. German or Japanese machines can’t be completely serviced in the destination place of these exports etc.

            Nevertheless, in term of trajectory, we are likely not there yet, when there is ~75% of UKs pop on very limited physical direct ration distribution points (i.e. not in form of credit or benefits as of today) and US and other big ones disintegrate into more regional coherent blocks, no aid provided to the ~6B (7.5B – 1.5B) peoples anymore, well that’s a serious threshold by which true advanced collapse stage might be measured. And there will be likely a response of reorganization effort attempt to it as well, i.e. still not definitive global spanning collapse of same intensity guaranteed.

          • Mansoor H. Khan says:

            ok. got it.

            The financial system only needs “nominal” growth not “actual” growth to survive.. Only actual growth requires real stuff. Of course, this means inflation fills the gap. But we are talking about keeping the financial system alive. This would probably buy us time. How much more time? This depends on lots of factors.

            • blow into a balloon

              the balloon inflates, the balloon gets bigger—but you haven’t actually got any more rubber content

              but you keep blowing anyway, because big round balloons look so much better than flat deflated ones. And if your job is balloon inflator in chief, (POTUS maybe?) then you keep on blowing because your job (and ego) depends on it.

              If you could add material rubber to the balloon structure while it was being inflated, then you could keep blowing into the balloon forever.
              Unfortunatelty that isn’t possible.

              Sticking money on the balloon will have no effect on the ultimate outcome.

              so you have a choice—let the balloon go, so it will zap itself around the room and fall to the floor—
              or keep blowing till it explodes.

              messy either way.

  9. Dennis L. says:

    FE,
    What happened to the ice at the north pole and the ice sheets in Antarctica?
    The earth is a fairly large place, are all measurements of the same significance or are phase changes relevant? Ice melting is a phase change.

    Dennis L.

    • Tim Groves says:

      Not a lot of people know this as it isn’t broadcast on CNN, but the Danish Meteorological Institute have now issued the June Arctic sea ice data, which shows a steady recovery in extent since the low in 2010.

      Significantly, this year’s extent of 11.52 million sq km is greater than in 2006, which was 11.50.

      Moreover, temperatures across the Arctic have been consistently below average since the end of April.

      And with the melt season nearly at an end, the Greenland ice sheet has been growing at close to record levels.

      https://notalotofpeopleknowthat.wordpress.com/2017/07/16/arctic-sea-ice-update-2/

  10. Hm, Finland, another human enclave not exactly keen on sync dying act properly overnight…, lolz. Apart from the title, the article deals also with underground network of civilian bunker infrastructure, interesting..

    http://www.zerohedge.com/news/2017-07-16/how-finland-preparing-russian-invasion

    ps bit of irony, Fins contracted gen3+ NPP (incl fuel deal) from Russia recently, preceded by two smaller reactors few decades before..

    ps2 but most importantly do remember “it’s all gibberish”
    – according to our local expert in stuffing containers

    • David F. says:

      “military exercises” sure, all of the biggest armies conduct such training.

      Russia has a leader who needs to appear strong.

      I’m sure the Fins are not worried about a Russian invasion.

      IF they are, they are paranoid.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s