Economists have given us a model of how prices and quantities of goods are supposed to interact.
Figure 1. From Wikipedia: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.
Unfortunately, this model is woefully inadequate. It sort of works, until it doesn’t. If there is too little of a product, higher prices and substitutions are supposed to fix the problem. If there is too much, prices are supposed to fall, causing the higher-priced producers to drop out of the system.
This model doesn’t work with oil. If prices drop, as they have done since mid-2014, businesses don’t drop out. They often try to pump more. The plan is to try to make up for inadequate prices by increasing the volume of extraction. Of course, this doesn’t fix the problem. The hidden assumption is, of course, that eventually oil prices will again rise. When this happens, the expectation is that oil businesses will be able to make adequate profits. It is hoped that the system can again continue as in the past, perhaps at a lower volume of oil extraction, but with higher oil prices.
I doubt that this is what really will happen. Let me explain some of the issues involved.
[1] The economy is really a much more interlinked system than Figure 1 makes it appear.
Supply and demand for oil, and for many other products, are interlinked. If there is too little oil, the theory is that oil prices should rise, to encourage more production. But if there is too little oil, some would-be workers will be without jobs. For example, truck drivers may be without jobs if there is no fuel for the vehicles they drive. Furthermore, some goods will not be delivered to their desired locations, leading to a loss of even more jobs (both at the manufacturing end of the goods, and at the sales end).
Ultimately, a lack of oil can be expected to reduce the availability of jobs that pay well. Digging in the ground with a stick to grow food is a job that is always around, with or without supplemental energy, but it doesn’t pay well!
Thus, the lack of oil really has a two-way pull:
(a) Higher prices, because of the shortage of oil and the desired products it produces.
(b) Lower prices, because of a shortage of jobs that pay adequate wages and the “demand” (really affordability) that these jobs produce.
[2] There are other ways that the two-way pull on prices can be seen:
(a) Prices need to be high enough for oil producers, or they will eventually stop extracting and refining the oil, and,
(b) Prices cannot be too high for consumers, or they will stop buying products made with oil.
If we think about it, the prices of basic commodities, such as food and fuel, cannot rise too high relative to the wages of ordinary (also called “non-elite”) workers, or the system will grind to a halt. For example, if non-elite workers are at one point spending half of their income on food, the price of food cannot double. If it does, these workers will have no money left to pay for housing, or for clothing and taxes.
[3] The upward pull on oil prices comes from a combination of three factors.
(a) Rising cost of production, because the cheapest-to-produce oil tends to be extracted first, leaving the more expensive-to-extract oil for later. (This pattern is also true for other types of resources.)
(b) If workers are becoming more productive, this growing productivity of workers is often reflected in higher wages for the workers. With these higher wages, workers can afford more goods made with oil, and that use oil in their operation. Thus, these higher wages lead to higher “demand” (really affordability) for oil.
Recently, worker productivity has not been growing. One reason this is not surprising is because energy consumption per capita hit a peak in 2013. With less energy consumption per capita, it is likely that, on average, workers are not being given bigger and better “tools” (such as trucks, earth-moving equipment, and other machines) with which to leverage their labor. Such tools require the use of energy products, both when they are manufactured and when they are operated.
Figure 2. World Daily Per Capita Energy Consumption, based on primary energy consumption from BP Statistical Review of World Energy and 2017 United Nations population estimates.
(c) Another “pull” on demand comes from increased investment. This investment can be debt-based or can reflect equity investment. It is these financial assets that allow new mines to be opened, and new factories to be built. Thus, wages of non-elite workers can grow. McKinsey Global Institute reports that growth in total “financial assets” has slowed since 2007.
Figure 3. Figure by McKinsey Global Institute showing that growth in debt in financial instruments (both debt and equity) has slowed significantly since 2007. Source
More recent data by McKinsey Global Institute shows that cross-border investment, in particular, has slowed since 2007.
Figure 4. Figure by McKinsey Global Institute showing that global cross-border capital flows (combined debt and equity) have declined by 65% since the 2007 peak. Download from this page.
This cross-border investment is especially helpful in encouraging exports, because it often puts into place new facilities that encourage extraction of minerals. Some minerals are available in only a few places in the world; these minerals are often traded internationally.
[4] The downward pull on oil and other commodity prices comes from several sources.
(a) Oil exports are often essential to the countries where they are extracted because of the tax revenue and jobs that they produce. The actual cost of extraction may be quite low, making extraction feasible, even at very low prices. Because of the need for tax revenue and jobs, governments will often encourage production regardless of price, so that the country can maintain its place in the world export market until prices again rise.
(b) Everyone “knows” that oil and other commodities will be needed in the years ahead. Because of this, there is no point in stopping production altogether. In fact, the cost of production is likely to keep rising, putting an upward push on commodity prices. This belief encourages businesses to stay in the market, regardless of the economics.
(c) There is a long lead-time for developing new extraction capabilities. Decisions made today may affect extraction ten years from now. No one knows what the oil price will be when the new production is brought online. At the same time, new production is coming on-line today, based on analyses when prices were much higher than they are today. Furthermore, once all of the development costs have been put in place, there is no point in simply walking away from the investment.
(d) Storage capacity is limited. Production and needed supply must balance exactly. If there is more than a tiny amount of oversupply, prices tend to plunge.
(e) The necessary price varies greatly, depending where geographically the extraction is being done, and depending on what is included in the calculation. Costs are much lower if the calculation is done excluding investment to date, or excluding taxes paid to governments, or excluding necessary investments needed for pollution control. It is often easy to justify accepting a low price, because there is usually some cost basis upon which such a low price is acceptable.
(f) Over time, there really are efficiency gains, but it is difficult to measure how well they are working. Do these “efficiency gains” simply speed up production a bit, or do they allow more oil in total to be extracted? Also, cost cuts by contractors tend to look like efficiency gains. In fact, they may simply be temporary prices cuts, reflecting the desire of suppliers to maintain some market share in a time when prices are too low for everyone.
(g) Literally, every economy in the world wants to grow. If every economy tries to grow at the same time and the market is already saturated (given the spending power of non-elite workers), a very likely outcome is plunging prices.
[5] As we look around the world, the prices of many commodities, including oil, have fallen in recent years.
Figures 3 and 4 show that investment spending spiked in 2007. Oil prices spiked not long after that–in the first half of 2008.
Figure 5. Monthly Brent oil prices with dates of US beginning and ending QE.
Quantitative Easing (QE) is a way of encouraging investment through artificially low interest rates. US QE began right about when oil prices were lowest. We can see that the big 2008 spike and drop in prices corresponds roughly to the rise and drop in investment in Figures 3 and 4, above, as well.
If we look at commodities other than oil, we often see a major downslide in prices in recent years. The timing of this downslide varies. In the US, natural gas prices fell as soon as gas from fracking became available, and there started to be a gas oversupply problem.
I expect that at least part of gas’s low price problem also comes from subsidized prices for wind and solar. These subsidies lead to artificially low prices for wholesale electricity. Since electricity is a major use for natural gas, low wholesale prices for electricity indirectly tend to pull natural gas prices down.
Figure 6. Natural gas prices in the US and Canada, indexed to the 2008 price, based on annual price data provided in BP Statistical Review of World Energy, 2017.
Many people assume that fracking can be done so inexpensively that the type of downslide in prices shown in Figure 6 makes sense. In fact, the low prices available for natural gas are part of what have been pushing North American “oil and gas” companies toward bankruptcy.
For a while, it looked like high natural gas prices in Europe and Asia might allow the US to export natural gas as LNG, and end its oversupply problem. Unfortunately, overseas prices of natural gas have slid since 2013, making the profitability of such exports doubtful (Figure 7).
Figure 7. Prices of natural gas imports to Europe and Asia, indexed to 2008 levels, based on annual average prices provided by BP Statistical Review of World Energy, 2017.
Coal prices have followed a downward slope of a different shape since 2008. Note that the 2016 prices range from 32% to 59% below the 2008 level. They are even lower, relative to 2011 prices.
Figure 8. Prices of several types of coal, indexed to 2008 levels, based on annual average prices provided by BP Statistical Review of World Energy, 2017.
Figure 9 shows the price path for several metals and minerals. These seem to follow a downward path as well. I did not find a price index for rare earth minerals that went back to 2008. Recent data suggested that the prices of these minerals have been falling as well.
Figure 9. Prices of various metals and minerals, indexed to 2008, based on USGS analyses found using this link: https://minerals.usgs.gov/minerals/pubs/mcs/
Figure 9 shows that several major metals are down between 24% and 35% since 2008. The drop is even greater, relative to 2011 price levels.
Internationally traded foods have also fallen in price since 2008.
Figure 10. Food prices, indexed to 2008 levels, based on data from the United Nations’ Food and Agricultural Organization.
In Item [4] above, I listed several factors that would tend to make oil prices fall. These same issues could be expected to cause the prices of these other commodities to drop. In addition, energy products are used in the production of metals and minerals and of foods. A drop in the price of energy products would tend to flow through to lower extraction prices for minerals, and lower costs for growing agricultural products and bringing products to market.
One surprising place where prices are dropping is in the auction prices for the output of onshore wind turbines. This is a chart shown by Roger Andrews, in a recent article on Energy Matters. The cost of making wind turbines doesn’t seem to be dropping dramatically, except from the fall in the prices of commodities used to make the turbines. Yet auction prices seem to be dropping by 20% or more per year.
Figure 11. Figure by Roger Andrews, showing trend in auction prices of onshore wind energy from Energy Matters.
Thus, wind energy purchased through auctions seems to be succumbing to the same deflationary market forces as oil, natural gas, coal, many metals, and food.
[6] It is very hard to see how oil prices can rise significantly, without the prices of many other commodities also rising.
What seems to be happening is a basic mismatch between (a) the amount of goods and services countries want to sell, and (b) the amount of goods and services that are truly affordable by consumers, especially those who are non-elite workers. Somehow, we need to fix this supply/demand (affordability) imbalance.
One way of raising demand is through productivity growth. As mentioned previously, such a rise in productivity growth hasn’t been happening in recent years. Given the falling energy per capita amounts in Figure 2, it seems unlikely that productivity will be growing in the near future, because the adoption of improved technology requires energy consumption.
Another way of raising demand is through wage increases, over and above what would be indicated by productivity growth. With globalization, the trend has been to lower and less stable wages, especially for less educated workers. This is precisely the opposite direction of the change we need, if demand for goods and services is to rise high enough to prevent deflation in commodity prices. There are very many of these non-elite workers. If their wages are low, this tends to reduce demand for homes, cars, motorcycles, and the many other goods that depend on wages of workers in the world. It is the manufacturing and use of these goods that influences demand for commodities.
Another way of increasing demand is through rising investment. This can eventually filter back to higher wages, as well. But this isn’t happening either. In fact, Figures 3 and 4 show that the last big surge in investment was in 2007. Furthermore, the amount of debt growth required to increase GDP by one percentage point has increased dramatically in recent years, both in the United States and China, making this approach to economic growth increasingly less effective. Recent discussions seem to be in the direction of stabilizing or lowering debt levels, rather than raising them. Such changes would tend to lower new investment, not raise it.
[7] In many countries, falling export revenue is adversely affecting demand for imported goods and services.
It is not too surprising that the export revenue of Saudi Arabia has fallen, with the drop in oil prices.
Figure 12. Saudi Arabia exports and imports of goods and services based on World Bank data.
Because of the drop in exports, Saudi Arabia is now buying fewer imported goods and services. A person would expect other oil exporters also to be making cutbacks on their purchases of imported goods and services. (Exports in current US$ means exports measured year-by-year in US$, without any inflation adjustment.)
It is somewhat more surprising that China’s exports and imports are falling, as measured in US$. Figure 13 shows that, in US dollar terms, China’s exports of goods and services fell in both 2015 and 2016. The imports that China bought also fell, in both of these years.
Figure 13. China’s exports and imports of goods and services on a current US$ basis, based on World Bank data.
Similarly, both the exports and imports of India are down as well. In fact, India’s imports have fallen more than its exports, and for a longer period–since 2012.
Figure 14. India’s exports and imports of goods and services in current dollars, based on World Bank data.
The imports of goods and services for the United States also fell in 2015 and 2016. The US is both an exporter of commodities (particularly food and refined petroleum products) and an importer of crude oil, so this is not surprising.
Figure 15. US exports and imports of goods and services in US dollars, based on World Bank data.
In fact, on a world basis, exports and imports of goods and services both fell, in 2015 and 2016 as measured in US dollars.
Figure 16. World exports and imports in current US dollars, based on World Bank data.
[8] Once export (and import) revenues are down, it becomes increasingly difficult to raise prices again.
If a country is not selling much of its own exports, it becomes very difficult to buy much of anyone else’s exports. This impetus, by itself, tends to keep prices of commodities, including oil, down.
Furthermore, it becomes more difficult to repay debt, especially debt that is in a currency that has appreciated. This means that borrowing additional debt becomes less and less feasible, as well. Thus, new investment becomes more difficult. This further tends to keep prices down. In fact, it tends to make prices fall, since new investment is needed to keep prices level.
[9] World financial leaders in developed countries do not understand what is happening, because they have written off commodities as “unimportant” and “something that lesser-developed countries deal with.”
In the US, few consumers are concerned about the price of corn. Instead, they are interested in the price of a box of corn flakes, or the price of corn tortillas in a restaurant.
The US, Europe and Japan specialize in high “value added” goods and services. For example, in the case of a box of corn flakes, manufacturers are involved in many steps such as (a) making corn flakes from corn, (b) boxing corn flakes in attractive boxes, (c) delivering those boxes to grocers’ shelves, and (d) advertising those corn flakes to prospective consumers. These costs generally do not decrease, as commodity prices decrease. One article from 2009 says, “With the record seven-dollar corn this summer, the cost of the corn in an 18-ounce box of corn flakes was only 14 cents.”
Because of the small role that commodity prices seem to play in producing the goods and services of developed countries, it is easy for financial leaders to overlook price indications at the commodity level. (Data is available at this level of detail; the question is how closely it is examined by decision-makers.)
Figure 17. Various indices within US CPI Urban, displayed on a basis similar to that used in Figure 7 through 11. In other words, index values for later periods are compared to the average 2008 index value. CPI statistics are from US Bureau of Labor Statistics.
Figure 17 shows some components of the Consumer Price Index (CPI) on a basis similar to the trends in commodity prices shown in Figures 7 through 11. The category “Household furnishings and operations” was chosen because it has furniture in it, and I know that furniture prices have fallen because of the growing use of cheap imported furniture from China. This category shows a slight downslope in prices. The other categories all show small increases over time. If commodity prices had not decreased, prices of the other categories would likely have increased to a greater extent than they did during the period shown.
[10] Conclusion. We are likely kidding ourselves, if we think that oil prices can rise in the future, for very long, by a very large amount.
It is quite possible that oil prices will bounce back up to $80 or even $100 per barrel, for a short time. But if they rise very high, for very long, there will be adverse impacts on other segments of the economy. We can’t expect that wages will go up at the same time, so increases in oil prices are likely to lead to a decrease in the purchase of discretionary products such as meals eaten in restaurants, charitable contributions, and vacation travel. These cutbacks, in turn, can be expected to lead to layoffs in discretionary sectors. Laid off workers are likely to have difficulty repaying their loans. As a result, we are likely to head back into a recession.
As we have seen above, it is not only oil prices that need to rise; it is many other prices that need to rise as well. Making a change of this magnitude is almost certainly impossible, without “crashing” the economy.
Economists put together a simplified view of how they thought supply and demand works. This simple model seems to work, at least reasonably well, when we are away from limits. What economists did not realize is that the limits we are facing are really affordability limits, and that growing affordability depends upon productivity growth. Productivity growth in turn depends on a growing quantity of cheap-to-produce energy supplies. The term “demand,” and the two-dimensional supply-demand model, hide these issues.
The whole issue of limits has not been well understood. Peak Oil enthusiasts assumed that we were “running out” of an essential energy product. When this view was combined with the economist’s view of supply and demand, the conclusion was, “Of course, oil prices will rise, to fix the situation.”
Few stopped to realize that there is a second way of viewing the situation. What is falling is the resources that people need to have in order to have jobs that pay well. When this happens, we should expect prices to fall, rather than to rise, because workers are increasingly unable to buy the output of the economy.
If we look back at what happened historically, there have been many situations in which economies have collapsed. In fact, this is probably what we should expect as we approach limits, rather than expecting high oil prices. If collapse should take place, we should expect widespread debt defaults and major problems with the financial system. Governments are likely to have trouble collecting enough taxes, and may ultimately fail. Non-elite workers have historically come out badly in collapses. With low wages and high taxes, they have often succumbed to epidemics. We have our own epidemic now–the opioid epidemic.
Saudi Arabia is learning that preparing for life after oil is easier said than done
https://qz.com/1071503/saudi-arabias-national-transformation-program-2020-preparing-for-life-after-oil-is-easier-said-than-done/
I can’t wait to be a new tourist to a Saudi Entertainment hub!
camel races!
place your bets!
FEMA may run out of funds on Friday: senators
http://www.reuters.com/article/us-storm-irma-fema/fema-may-run-out-of-funds-on-friday-senators-idUSKCN1BI2NHutm_campaign=trueAnthem:+Trending+Content&utm_content=59b1c61204d3011b70b270b6&utm_medium=trueAnthem&utm_source=twitter
Sharply falling commodity prices generally precede economic recession or depression. With global investment static or falling, debt soaring in most major economies and wealth disparity growing, we are clearly heading for depression. This is the beginning of thermodynamic collapse. The only way to avoid it or exit from it would be to develop another high-EROI energy source that can replace almost free energy provided by fossil fuels. Some form of modular, passively safe, mass-produced nuclear reactor is the most likely candidate at the present time.
Even if successful, economic growth in a finite environment can never continue for very long. It is a logical impossibility – Liebig’s law will prevent it in one way or another. And the longer it goes on, the greater the ecological damage. Even our greatest successes begin to look like failures.
The only long-term solution would be to leave the planet and begin space manufacturing in high-Earth orbit. Up there, there is practically infinite room for growth, abundant resources from the moon and asteroids and endless uninterrupted solar energy. This was Gerard O’Neills’ idea and would appear to be Jeff Bezos’ idea as well. I cannot see any other solution that would allow industrial civilisation to continue. To survive as anything resembling civilisation, we must escape from the gravitational prison that we are confined within. Nuclear power should be expanded rapidly to hold off the thermodynamic collapse long enough to accomplish this. The question is, can we implement O’Neill’s vision today using the new Space X and Blue Origin heavy launchers? I.e, would they be cheap enough if mass produced? How do we begin putting that plan into action?
Tell you what Tony …. skip Jeff Bozos… he doesn’t know anything about space stations.
Fast Eddy Enterprises on the other hand has extensive experience in this area — be a part of the future — http://www.investfasteddyenterprisesspacecolonyNOW.com
Tony, your summary is good, but the solution is greater complexity which doesn’t work.
Tony (Seba) says:
“The only long-term solution would be to leave the planet and begin space manufacturing in high-Earth orbit. Up there, there is practically infinite room for growth, abundant resources from the moon and asteroids…”
cheap, Tony?
NO!
by the way, some basic essentials for human life are free on earth…
like air!
perhaps you’ve heard of it?
ANYTHING done in space is astronomically expensive!
(astronomical – see what I did there?)
so by eliminating that idea…
are there then NO long term solutions?
hint: there are about zero.
there is practically infinite room for growth, abundant resources from the moon and asteroids and
Sounds like China on steroids. How are us non-elite earthling workers supposed to pay for all these goodies once our manufacturing jobs have been off-planeted?
Russia Is Preparing for a Massive War, But We Don’t Know Where, Warns Ukrainian President
“Obviously the Kremlin is checking how ready not only the Russian military but the entire Russian state is for a big war with the West,” he concluded.
https://www.yahoo.com/news/russia-preparing-massive-war-don-103208378.html
Sensible on Russia’s part. Carry a big stick if you don’t want to have to use one…….
https://uploads.disquscdn.com/images/363387ec7684526b123f1b997c86b72dfe0c341bec0ac03fdbd10d64f398be7a.gif
Wow!
http://www.weatherwizkids.com/wp-content/uploads/2015/02/snowstorm.jpg
DI, I’m wondering if this could be the first trillion dollar (in damage) hurricane. Just ignore FE.
If you put a trillion dollars of infrastructure in front of a massive storm…. you will get a trillion dollars damage
The MORE ons are at it again….. saying exactly what the MSM tells them to say….
Correct, the damage will be a record….based upon record population and development!
If only the hurricane would strike MORE on ville …. and drown all the More ons!
That would mean a deluge in DelusiSTAN! (Sorry, I couldn’t resist that.)
But there was at least an attempt to make the recent construction “hurricane resistant.” That may help.
https://wolfstreet.com/2017/09/07/global-stock-prices-fueled-by-ugly-earnings/
https://wolfstreet.com/wp-content/uploads/2017/09/US-SP500-adjusted-EPS-2007-2017-09-02.png
World earnings seems to follow pretty much the same pattern as cross-border investments that I showed in Figure 3.
https://wolfstreet.com/wp-content/uploads/2017/09/GLobal-MSCI-forward-earnings.png
https://gailtheactuary.files.wordpress.com/2017/09/growth-in-financial-assets-has-slowed-since-2007-by-mgi.png
I suppose without profits, it is harder to make investments.
Saudi Aramco CEO sees oil supply shortage as investments, discoveries drop
https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR
Deutsche Bank boss calls on ECB to halt cheap money. warning he sees price bubbles in stocks, bonds and property.
https://www.reuters.com/article/us-germany-banks-rates/deutsche-bank-boss-calls-on-ecb-to-halt-cheap-money-idUSKCN1BH0WE?il=0
It seems that money has no where to go as nothing is productive/profitable anymore. Limits to growth has arrived.
Meanwhile in the world’s most insane property market – Hong Kong — people are debating whether or not to dump their cash into insanely overpriced property that offers almost no yield….
Now if that is not a signal that growth (other than bubbles) has ended… then I don’t know what is.
but wait!
Bitcoin is at $4,700…
and NO WAY that’s a bubble!
Bitcoins REALLY are worth that much!
I’m holding a few in my hand right now.
they are so nice and shiny.
guy on a street corner sold them to me for $1,000 each.
ha ha ha ha ha!
boy, did I rip him off or what?
Bitcoin = BAU…
IC is being saved by Bitcoin!
you heard it here first!
Thanks that gave me a good laugh…..and yeah you sure did rip him off, are they gold, silver or platinum?
Hello Gail, could you please to something with the technical settings, so that IT becomes possible to get a better reading of this last post on iPhones. In the past this has not been a problem.
I am not sure what I need to do. I will have to ask tech support.
Can you explain specifically what is wrong? I tried OFW on my iPhone, and it seemed to work fine.
My phone isn’t the newest model, and I am using it inside the USA. What is different about yours? Are others running into problems too?
OFW works fine on my phone as long as the download speed is sufficient to cope with the graphs and images.
The large number of graphs and images are a problem, I will agree.
Hi!
Most sites, also yours before this last one, have the possibiity on my iPhone to switch to a format that makes the text more easy to read by pressing the ikon with 3 or 4 horisontal bars on the left side up on the site.
I asked at tech support and was told that a change had been made, so the site is already optimized for mobile. Thus, the button is no longer needed.
Are you you having a problem reading the site? There is also a possibility that I could look into using a “more modern” theme that has been better optimized for mobile devices.
Aerial footage has revealed the horrific damage left behind by Hurricane Irma on the tiny Caribbean island of Barbuda.
https://www.tvnz.co.nz/one-news/world/watch-heart-breaking-aerial-footage-shows-utter-carnage-island-barbuda-90-destruction-after-hurricane-irma
Stark before and after pictures show how luxury Caribbean hotels, holiday hotspots and airports were left in ruins by Hurricane Irma in just a few hours
: http://www.dailymail.co.uk/news/article-4861468/Stark-photos-Irma-s destruction.html#ixzz4s17Glezx
NEW HURRICANE IRMA UNFATHOMABLE POWER
http://www.dailymotion.com/video/x5zuvuu
It doesn’t look THAT bad. Damaged, yes, but I don’t see “destroyed”. Those are some tough buildings! Especially the beachfront stuff. It is mostly intact. Must have some strong building codes.
Big deal…. look at what we did in Syria … if Muther Nature thinks she’s so bad… we’ll stuff a nuke into the eye of one of her tantrums and teach the bit ch a lesson!
http://faculty.fordham.edu/davenport/Syria/syria-16.jpg
Trump is floating the idea of ending the debt ceiling. I don’t remember if Gail said it or another poster on here. But, it looks like someones prognostication may come true:
http://www.zerohedge.com/news/2017-09-07/trump-reportedly-wants-end-debt-ceiling
Sky is the limit. Who needs a debt ceiling? LOL! We’re just making this stuff up as we go. If you have an unexpected expense, like a hurricane from GW hell, then just borrow, cough cough, I mean digitally and spontaneously generate more money like banks do when they lend money. Bonds, bonds, bonds. We can do whatever we want, I guess?!
Think of the Global Economy as the Titanic The Captain and the owners (politicians, economists, corporate leaders) were warned many times (Limits to Growth 1973, Peak Oil, etc) that the course chosen (endless growth) would take the ship into dangerous waters (end of economic growth), but the stakes were high; reputations and money were at stake (corporate profits, political power); so – carry on regardless – full-steam ahead. The Titanic has now collided with the iceberg and is mortally holed; but still it carries on steaming with all the lights on. People on the deck (us) are still partying (taking on debt at fantastic rates) unaware of what is going on below decks; but water (thermodynamic depletion of oil energy, exponential unsustainable debt) is coming in fast.
The Titanic analogy is used often. However, does miss a few crucial things. One thing it misses is that we are massively growing the number of people on board exponentially before we sink.
Yes, the people on the packed lower decks are having far too much fun -not the case on the original ship!
Actually, there are physics issues underlying the course chosen, so the owners really had no choice on the chosen. Many people claimed that there was a way to avoid disaster with answers ranging from (a) wind turbines and solar panels, (b) drill for more oil, or (c) learn to live with less. None of these were real choices, unfortunately.
I hope (c) can be explained more clearly. It’s often repeated that the system must grow or collapse. Lay people for whom money is a mystery may be stumped by this, and attempt to understand it as follows: The system has to grow in order to pay debt with interest. This is because people want to make a profit through lending. Paying debt with interest seems like an exponential growth process that must end when it’s clear that, over time, the prospect of getting repaid loses credibility. If the debt system is simply allowed to run out of steam, computers shut down, trucks stop running, and there is universal mayhem.
A lender looking at this looming catastrophe might consider a different line of business long before the end is due. A catchy phrase I recently heard was, “low profit, high volume.” Finance a lot more things that ensure industrial society keeps working (whatever kind of political or economic system it requires to do so). If medicine, computers and trucking can keep on going, the top 30% of income earners might not even notice if they had to live on half of what they earn now. Just as the New Deal required the rich to take a cut for the good of the economic/industrial system, why would strategic cuts that don’t kill anybody not work now?
What people need is very different from what they want. The money-greed dominant system doesn’t seem workable long term, or to be fixable. If the resources it requires to maintain it for so many billions operate by abstract, digital numbers, 90% of what is actually out there to sustain life is overlooked. It would otherwise require assessment of resources at a much more intimate level than is possible in a top-down, hyper complex global system.
(c) In other words, living with less could grow the economy. Some that have too much could “invest” in the lagging potential economy–greatly expanding the volume of economic players. At some point, rational thinking–the kind of thing that’s missing in my neck of the woods but could help expand economic activity–has to be tried..
The reasons for needing growth go beyond needing to repay debt with interest.
One issue, since the world is finite, it that there is a need to work around depletion. Thus, it becomes more and more expensive to extract resources of any type that are needed. For example, fresh water from wells may be adequate, as long as aquifers are not depleted. But once aquifers are depleted, some other approach must be used. For example, water must be piped in from a distance, or desalination must be used.
A second issue is that world population is constantly rising. This means that there is less and less arable land per person. We must work around this problem in one way or another. A popular way is through irrigation. Of course, this runs into limits as well.
A third issue is that we have a huge amount of built infrastructure such as electric transmission lines, roads, bridges, water pipes, sewer pipes, sewage treatment centers, and hydroelectric dams that must be maintained and repaired. In fact, the amount of required maintenance goes up each year, just to stay even.
Needless to say, energy limits are tied into all of this as well. We need more and more energy resources to fix issues of both of these types. And as the EROEI people tell us endlessly, it takes increasing amounts of energy to extract energy. This is one (smallish) piece of our overall need for growth, or the system will collapse.
Damnable complexity. As the drawings show in the link, replacing the flood control with the water recycling paradigm is alarmingly dependent on complexity, much of it hidden. At least, in the proposed model.
https://www.planetizen.com/node/94649/changing-paradigm-stormwater-management
I suppose it works reasonably well when the amount of water to be recycled is in a range of 50% to 150% of the expected. If it is way to low, or way too high, I can imagine the system breaking down. I expect electricity is needed somewhere in the system; that could be a problem.
Actually, my instinct is to preserve the old wrong headed flood control concrete systems, and provide work keeping it weeded and from rapid deterioration. Then I’d look for a low tech way to perhaps divert flood water at an earlier source. Or hook up a water wheel to the channel such that it did something useful with (some of) the flood water. Whatever. But minimal use of electricity–none directly. Nothing clean and neat.
I’d do something similar with dams, looking for a means to divert some water around it for salmon circulation. I’d try to work something different around the edge that depended on little or no direct electricity…
This is just one example of the “model” I was alluding to:
It takes IC to make abundant, affordable cheap cardboard. But once you have the cardboard, you can shape it with a utility knife. Of course, the utility knife, the tape, the glue all depend on IC, but on the utilitarian rather than the status-oriented aspects of IC.
These utilitarian applications of FF facilitate affordable devices that can be built and operated by simple people, or even children. This kind of production equate an ancillary economic thread that preserves discretionary income and stability. Mortgages, repairs, clothes. A loss from the status economy can be a gain to the utilitarian economy.
And when BAU ends …. something as simple as a cardboard box…. will not be available
Interesting side note on the Titanic. In the bottom of the ship there were open top steel walled sections so if water got in a section it would not sink, but what they didn’t count on is if numerous sections opened up the ship would list and the water would spill over the top of the walled sections and the rest is history as they say. This has nothing to do with your analogy.
Hillary Clinton feared Trump would follow through with his campaign promise to ‘lock her up’ in new memoir
Read more: http://www.dailymail.co.uk/news/article-4860556/Hillary-Clinton-feared-Trump-s-threat-lock-up.html#ixzz4s0p3lvBB
Very interesting, particularly re the auto industry. Nobody should discount intuition. It’s clear to an intuitive that cars are way way overbuilt and don’t comport with a world of scarcity.
Overbuilt and over powered. That 500HP Escalade just sits in traffic jams. Lovely party why is everyone jumping ship. Join the party. We need to pack as many people (suckers) on the boat as we can before it sinks.
SUVS are not built for practicality or to reflect forthcoming scarcity. They are built to satisfy the immediate psychological needs of drivers.
SUVs are believed to be popular because they allow consumers storage to transport large consumer goods, large amounts of groceries for households that have four people in them tops, and to transport the small number of kids that exist in suburbs, these days, to various culturally enriching activities. In places that receive snowfall, I’m told that SUVs are easier to drive in the snow because they have more horsepower. I’m not sure how true any of these benefits are, but I remain skeptical about them.
These explanations leave out human psychology and assume humans make rational decisions about what they buy.
Perhaps, I may be speaking about lower class drivers, but it seems like a lot of drivers are drawn to SUVs because they provide more protection from aggressive driving than smaller cars. Many drivers are terrified of a fatal rear end collision with a larger car. Many drivers seem to believe that by driving in a semi-truck, the additional metal will protect them from serious injury or death.
Another reason why people are drawn to SUV cars is because they believe that by driving them, they will be able to dominate smaller cars on the road. In essence, being in a larger vehicle gives them permission to driver more aggressively. Aggressive driving if done correctly, may lead to slightly shorter commutes for drivers. SUVs, to many frivers, confer a slightly higher level of status for those who drive them and status means an advantage.
In summary, I think that the inefficiencies of SUVs are inversely correlated to how much they satisfy the psychological needs of their drivers.
Don Draper has convinced people of all of the above — and the MSM has as usual — made up their minds for them
Not a bad idea to jump ship!
Just wait till the massive worldwide oil shortages hit the world economy in a few years. People will turn into animals.
Pingback: Why Oil Prices Can’t Bounce Very High; Expect Deflation Instead - Deflation Market
Saudi Arabia rulers are privatization
public assets of saudi arabia before bankrupt of saudi arabia
The great Saudi sell-off: why bankers and lawyers are flocking to the Gulf
Don’t even think about getting the Sunday morning flight from Dubai to Riyadh. The same applies to the Thursday afternoon slots going back.
Both – and many in between – are booked solid by investment bankers, corporate lawyers, accountants, consultants and PR advisers who appreciate the weekend comforts of the UAE, but who know the big business is to being done in Saudi Arabia.
A huge economic transformation is planned for the kingdom, and the fees on offer are well worth a few days of strawberry juice in the puritan luxury of a five-star hotel in the Saudi capital.
Saudi Arabia is lining up a privatisation of state assets that dwarfs the Thatcher “revolution” of the 1980s, and rivals the 1990s dissolution of Soviet assets in scale and significance. It has hung a “for sale” sign on virtually every sector of Saudi economic life: oil, electricity, water, transport, retail, schools and healthcare. Even the kingdom’s football clubs are due to be auctioned off.
The sell-off programme is the central part of the economic transformation plan envisaged under the Vision 2030 strategy. With oil stuck around the $50 mark, Saudi budgets are creaking and deficits are widening. Around $75 is regarded as the break-even point for the national finances.
But in 13 years, if all goes to plan, the kingdom will be financially stable, with a more dynamic economy and society, less reliance on oil and government spending, and with a thriving private sector that releases the pent-up entrepreneurial spirit of Saudi men and (whisper it in the kingdom) Saudi women.
It is, of course, a big “if”, but for an economy stuck in the rentier mentality of the 1930s – when it became a country under the house of Saud and oil was discovered, and which has been ruled by the strict orthodoxy of Wahhabi Islam ever since – this will be nothing less than a revolution
https://www.theguardian.com/world/2017/sep/02/great-saudi-sell-off-bankers-lawyers-flocking-gulf?CMP=share_btn_tw
Yes, political catchwords will usher in a libertarian revolution in a barren desert.
All the Saudi Wahhabi death cult knows is “Death to America”
Saudi Arabian Collapse Continues
http://www.ianwelsh.net/saudi-arabian-collapse-continues/
Actually, the big “if” is whether there is cheap energy from elsewhere that Saudi Arabia can get to do much of anything, in a part of the world that is too hot and dry for very many people to live in. The Guardian writer doesn’t seem to understand this, though.
Also KSA has to import all the sand they use for construction because their sand is to fine, smooth, and salty.
“According to trade economics, capital flows have been on the decline since mid-2014. Money flowing out of the economy was higher than money flowing into the Saudi economy. Majority of investors seem to be evading risks due to low oil prices and waiting for the prices to bounce back to their pre-mid 2014 levels. The economy lost capital worth U.S $21,245 million in the fourth quarter of 2016.”
http://us.blastingnews.com/world/2017/09/is-the-saudi-arabian-economy-in-turmoil-001997695.html?fref=gc&dti=623305194398609
Very fine article. The low oil price hit the Saudi economy in many ways. The problem temporarily gets fixed by borrowing more.
Sounds like somebody has been taking propaganda lessons.
great article by gail
Thanks Gail!
The Shale Party Is Going To End Badly
http://peakoil.com/business/the-shale-party-is-going-to-end-badly-google-alert
Agreed that the shale party will end badly. Doubtful that the undersea drillers will do a whole lot better.
Neever mind that. The Ruskies are riding to the rescue with “thermochemical gas fracturing”. It’s a whole new party that could the world a few extra WEEKS of BAU.
Russian scientists and local oil field services companies claim to have created a technology for thermochemical gas fracturing that could be an alternative to hydraulic fracturing and could increase oil production by between 1.7 and 6 times, Russia’s news agency RIA Novosti reports, citing the University of Tyumen’s press service.
In hydraulic fracturing, rocks are fractured with high-pressure injection of fluids, while the new breakthrough technology, as claimed by Russian scientists and media, is creating chemical reactions in the strata that contain oil.
The chemicals react and emit heat and gas, which makes extraction easier and lifts well productivity, according to the scientists and researchers.
The other upside in the technology, the Russians claim, is that the main component in the chemical reactions is ammonium nitrate, which is often used as fertilizer.
http://oilprice.com/Energy/Crude-Oil/Russia-Claims-To-Have-Invented-Alternative-To-Fracking.html
I am all for thermo nuclear fracking
More on those opioids – “Nearly half of working-age American men who are out of the labor force are using painkillers daily… Over the last two decades, working-age American men have been ever so quietly exiting the labor force. These days, around 12% of prime-age men, those between 25 and 54, are neither employed nor looking for work—up from around 8% in the mid-1990s. During that same time, and nearly as quietly, America began pounding painkillers: between 1999 and 2015, sales of prescription opioids per person more than quadrupled.”
https://qz.com/1070206/nearly-half-of-working-age-american-men-who-are-out-of-the-labor-force-are-using-painkillers-daily/
Maybe they’re just self-medicating to deal with the new reality where they can’t bully and oppress women in the workplace, anymore. I say good riddance! The workplace is no longer as safe haven for misogyny, white supremacy , homophobia, Islamophobia, fat-phobia, transphobia, and ablelism, and greed. We’ve made a lot of progress but we need to make even more. We’ve got to take on the energy bigots and environmental bigots that are condemning us to a boiling planet! We have free and accessible energy sources just waiting to be tapped! We’ve got to fight the Doomers, and their false narrative. Doomers are just bigots who hate progress,
-Progressively Yours
Fighting Fossil Fuel Oppression since 2009!
Shoehorning in your fallacious sermon there just a tad, Progressively Yours!
You people are talking about civilization ending right around the time marginalized groups are finally beginning to making some progress…and marginalized groups are suppose to view this as a coincidence?? I don’t think it’s a coincidence. I think this an elaborate effort to disenfranchise people who are finally starting to be recognized as human. The real threat is warming and you guys are deliberately downplaying that. Coincidence?? I don’t think it’s a coincidence.
-Progressively Yours
Fighting Fossil Fuel Oppression since 2009!
I see marginalized groups making progress because they are being used as a last resort to grow the economy. Everything and the kitchen sink will be thrown at this to create growth until the bitter end.
Think about gay marriage and the boost it will give to the economy. This group of people (that once “married” without fanfare) will now have gift buying parties, fancy clothing, honeymoons and divorces that will fuel more growth.
Everything will be fair game as long as it adds some incremental growth to the economy.
I disagree Greg. Lesbian/Gay/Transgender rights are just a distraction to stop people thinking about more important issues such as why they are getting poorer every year.
It’s not as if gays hoard all their money and give it to cat charities when they die if they are unable to get married, so I don’t see how gay marriage helps the economy. The total amount of money being spent stays the same.
Perhaps a few fewer children, since Lesbian/Gay/Transgender have a below-average number of children, I expect. In fact, I expect that part of the reason for the trend this direction is because young people don’t see any point to adding children to an overcrowded world, especially when they can barely support themselves. Creating a couple that can’t reproduce themselves without help from outside (sperm donor or adoption) eliminates the possibility of unplanned children.
Giving women more rights also allowed for more growth as well.
I agree. Adding women to the labor market was a big piece of what spurred economic growth during and after WWII. The amount of goods and services that families could afford to buy went way up.
I agree that giving controversial groups more attention and legal protections is also a distraction from the larger predicament we are in. So, it is a win win all the way around. Increases consumption and growth and distracts the public view away from the predicament we are in.
Womens equal rights movement leads to two income household. More consumption. Everyone needs to go to college, get a degree, more consumption. Get a loan to do it – more consumption. The latest push is literally inclusion for everyone regardless. Just consume and grow folks. Everyone come sit at the table and eat til you drop. And fight with each other too so you won’t fight with your masters.
https://www.funnypica.com/wp-content/uploads/2012/05/Ugly-Fat-People.jpg
“Womens equal rights movement leads to two income household. More consumption. Everyone needs to go to college, get a degree, more consumption.”
I thought two income household resulted from c. 1970 end to real growth in wages and the fact that energy wasn’t extending as far as it once did. I’m not sure what that has to do with college. Contemporary loss of industrial jobs to outsourcing meant the only remaining jobs needed college degrees (as the former, well paying industrial jobs did not).
Gotta have more growth of the system collapses. That is the bottom line.
How are you fighting fossil fuels?
This is what awaits you …. so I will understand if we don’t hear back from you
http://www.kitchenknifeking.com/wp-content/uploads/2015/12/What-is-a-Whetstone.gif
Just curious, how are you fighting FF “oppression” since 2009. Gosh, I’m glad you posted. I have just been waiting for a truly intelligent leader to post on this board. Do you drive a Car? Do you ride in one? Or do you ride a train, bus or plane? Do you eat food…grown with “oppressive” fossil fuels? Do you live in a structure, consisting of materials made with FF? Do you use electricity, made possible by FF? Are you an idiot….educated in today’s Maoist university PC campuses? I think so.
+++++++++++++++++++
http://www.2783.me/works/wp-content/uploads/2012/11/mechero_750w.jpg
We want more of this!
I tend to agree with the first half of your post, but think you may not have been on OFW long enough to see why there is no meaningful alternative fuel source to fossil fuels. I don’t follow the arguments all too clearly, although I need little convincing. I just haven’t seen a fossil fuel source of fuel that wasn’t ugly (in a nastier, more sinister, more covered up way than are fossil fuels).
fossil fuel-*alternative* scource
Progresively Yours. Having read that, I just have to ask: what is your opiate of choice? And where might one procure it? Strong stuff, clearly. 🙂
Fight the Doomers? Are you sure you know what this site is all about?
The workplace is no longer as safe haven for misogyny, white supremacy , homophobia, Islamophobia, fat-phobia, transphobia, and ablelism, and greed. We’ve made a lot of progress but we need to make even more.
https://pics.onsizzle.com/i-dont-always-talk-to-liberals-but-when-i-do-17562744.png
Burning More Coal — since … I can remember.
We MUST burn even more – can you not grasp the urgency of this?
“Commodities revenue at major banks took a further knock in the first half, sinking to an 11-year low amid poor performances in energy.
“Combined income at 12 top banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. slid 41 percent to $1.3 billion in the first six months of the year, analytics firm Coalition Development Ltd. said in a report Thursday. Earnings were particularly hit in power and natural gas.
“Banks’ commodities revenues — now the smallest in Coalition data going back to 2006 — have been shrinking in recent years amid regulatory scrutiny, low volatility, curbs on proprietary trading and diminished investment by their hedge-fund clients. This year’s drop is also likely to reflect bad performance at Goldman Sachs, whose once mighty commodities unit is now struggling…”
https://www.bloomberg.com/news/articles/2017-09-06/banks-commodities-pain-deepens-as-revenues-slump-to-11-year-low
Thanks! That is interesting. People keep assuming that prices have to go back up, but it doesn’t seem to work out that way.
Great effort by the Krishna people in Hungary. And now imagine feeding 7,5 billion people that way.
https://youtu.be/xEts9eGNtNY
I can’t understand why anyone bothered with wheat before IR 🙂
https://www.nytimes.com/interactive/2017/09/02/upshot/fentanyl-drug-overdose-deaths.html?smid=tw-nytimes&smtyp=cur
Drug Deaths are skyrocketing
Fentanyl-users come from a wide cross-section of society. You may recall that Prince was an addict and Chaka Khan went into rehab last year to detox from it. Popular with doctors, too:
“Diarrhea was Jeffrey Junig’s alarm clock. Boiling in his guts at 3 in the morning, it would send him staggering to the bathroom, panting and coughing, his sweat-soaked hand shaking on the knob. He had to be quiet, fiercely quiet, because good God—what if his wife found out?
“The secrecy was almost as awful as the sickness. He hated those moments when he had to look his wife in the eye and lie, “Nah, just a little tired,” or, “Probably caught that flu going around the hospital,” or whatever other b.s. he could muster just to get away from her long enough to slip into the bathroom and slide a needle into his ankle.
“At least this wasn’t his day off, Dr. Junig told himself as he slumped miserably on the toilet. It’s tough being an addicted anesthesiologist, but it does have its perks: You get your fix on the job, the drugs are free, and if one of your patients dies on the table, well . . . that’s just another tragedy chalked up to “unforeseen complications.”
“One of the most dangerous and best-kept secrets of the medical profession is the epidemic of anesthesiologists who are addicted to their own drugs…”
http://www.menshealth.com/health/the-junkie-in-the-or
Why in the hell would a person want to get high on that awful crap. Every time I have had to be put out by anesthesia it is the worst hangover feeling I could imagine. And, it last for weeks afterwards. Just terrible. Not pleasant at all.
I’ve never tried it but I can imagine that the very potent, sedative, opioid buzz might appeal to someone with a highly strung disposition in a high-stakes job, like an anaesthesiologist or indeed like Prince. I believe he felt it gave him the ‘Dutch courage’ to perform and express himself creatively. It sounds like a very inconvenient addiction though with the short duration of action requiring frequent re-dosing to stave off withdrawal.
Best to stick with runner’s high. Cost is a little exertion and there are multiple side benefits like cool shoes.
Oh for the good old days, when doctors merely drank and smoked their way to an early grave.
Dr Death/Dolph: where are you?
I think that there has always been a tendency for medical doctors to take whatever drugs they are prescribing for their patients, since they are easy to get and seem to have some benefits.
When my father was alive, he was a doctor. In the early days, he was expected to deliver babies in the middle of the night and then to do surgery the next morning. In the afternoons, he saw patients in his office. There was a temptation to take amphetamines to stay awake, and something to help him to go to sleep. About the time I left for college, he took the training needed to become a psychiatrist and work more reasonable hours.
IRMA Map of the winds
https://earth.nullschool.net/#current/wind/surface/level/orthographic=-49.63,15.47,2735/loc=-64.525,19.859
Let’s spare a thought for all those celebrities now in peril in the path of Irma.
I hope none of them runs out of champagne.
https://metrouk2.files.wordpress.com/2017/09/pri_51909026.jpg
Most of us can be thankful for the things we don’t have to worry about, such as second homes in the way of a storm.
Unless they are celebrity doomsteads that are prepped and ready to go for the end of the world as we know it.
thanks for the new article gail more info to mull over i still feel optimistic with the future as i still think a new economic system is being planned but secretly unfortunately as our masters obviously don’t trust us with the knowledge of what privileges and economic gains we will have taken from us when this new economic order finally arrives.
Our leaders are not even mentally strong enough to think about these issues let alone plan any sort of defense or solution to them.
I would suggest the ‘new structure’ is already here, and failing after a decade of illusory recovery.
What remains is for the intense internal social struggle over diminishing resources: crazy politics, class war, totalitarianism, revolutions, etc.
What will replace commodities under “the new economic system”? Perhaps finite is not in your new world.
hey, I see that gasoline demand is way up!
well, at least it is in Florida.
25% of gas stations are sold out!
could this be a sign of an improving economy?
BAU, at least until Sunday!
The only thing that amazes me at the moment is how the system is still going. It must be running on vapors. I expect complete and total collapse of all systems to start this year. Infinite growth with finite resources. It don’t work folks. It can’t work. How is that a 10 year old can grasp this concept but the leaders of our Idiocracy cannot. Damn. I answered my own question. Has anyone noticed that we have created a “non-reversible” civilization. When for example the Roman empire collapsed it was really nothing in the scheme of things. There were still blacksmiths and carpenters and cobblers etc. etc. In other words the knowledge and skills did not die with the civilization. Very easy to pick up the pieces and move on. A total collapse today is another matter entirely. These artisans do not exist. We won’t go back to medieval times. We’ll been thrown back to the stone age. Thousands of years of knowledge gone, thanks to the Industrial revolution and our own hubris.
yes!
“running on vapors” since 2008!
perhaps BAU will keep on running for another 9 years.
shouldn’t we hope so?
and why not?
Has anyone noticed that we have created a “non-reversible” civilization.
Yes this is my pet theory. Evolution does not go backwards.
“Evolution does not go backwards.”
People went into the dark ages after a period of prosperity. I think you’ll find people pretty resourceful when push comes to shove. They don’t give up that easily.
I think a point people are missing is that the predicament we are in is on a global scale and much larger than the Roman Empire. There has been only one large scale global collapse of human civilizations that I am aware of. That collapse was from Toba (a volcanic eruption 72000 years ago) and nearly wiped out the entire human race to the point a thousand were left. The majority of past collapses though were isolated. What we face is global collapse.
Consider too if you add the weight of all 7 billion human beings on earth that is roughly 750 billion pounds. That, says Harvard biologist E.O. Wilson, is more than 100 times the biomass of any large animal that’s ever walked the Earth. We are in overshoot.
Agreed that the scale is much larger this time.
if you were a Roman living in the Med, collapse must have felt “global” to you. conversely, if you live in parts of east Africa today, or similar remote and poor areas, it is doubtful that a “global” collapse will be greatly felt. no more MTV?
what YOU face and most on this blog face, is the collapse of a globalized economy and its societal impacts. don’t make it seem worse than it will be, bad as it might get, for us.
There were not 7.5 billion people — soil ruined by petro chemicals — and spent fuel ponds back then….
This time really is… different
Evolution cannot go backwards or forwards any more than our planet can. They are both however always in motion, as are we and the molecules that make up our body. If humans or any other creature exists, it has evolved. I think, therefore I am. It does not get measured in forwards and backwards. You’re overdefining your reality.
If you are alive, it’s because all your ancestors since time immemorial were evolutionary successes. But past performance is no guarantee of future success. Nature also hands out its own “Darwin Awards” to individuals who become the last of the line. Whether you end your time by ODing on opiates or bungee jumping with too long a bungee or getting hit by a bus or expiring due to “old age” in your sleep, you still qualify as an evolutionary failure if you die without leaving any offspring.
Well, I finally succeeded at something in life then! YES!
Higher-level skills and knowledge did disappear with the end of Western Rome, and even the knowledge as to how to make quite basic products like pottery.
However, your point is essentially correct, and I’ve often made it here: best summarised as: ‘Climbing a ladder and kicking the lower rungs away’. We have even more or less eliminated viable small-farm agriculture, structurally, and of course have ruined the soil which was our great inheritance.
Moreover, the higher-level skills in architecture and the arts were available to be accessed at a later date, from Byzantium and Islam, the repositories of the Roman,Greek,Persian civilisations.
The Romans had stronger concrete than we have today. They knew how to braze weld bronze. They produced a room that constantly rotated for Nero. The Byzantines produced sophisticated mechanical objects , for ex a moving bird model. Much of that knowledge was lost.
“back to the stone age” ?
I dunno how stone age was,
but now what we got is dead soils, no more forests, polluted waters, etc…
Wild areas would likely not support too many people.
The stone age would be utopia … compared to the age we are heading into… the age of famine disease violence and radiation poisoning
The people that will do well enough after collapse will be those that require the least.
What I worry about is how people will make an abrupt change from all this electronic gizmo stuff to tilling the soil and reading a book for entertainment. From a mile a second speed of life to once again having the peace and tranquility sit quietly and listen to the sounds of nature. Can people make that transition or will they go mad?
What’s kind of interesting and important is that historically peasants had to have 5-15x kids, not only to provide a buffer for pandemics, higher mortality, military draft, .. But also for the simply reasons of managing the necessary workload, be it on your own or partly compulsory contribution to the feudal as well. Specifically, if you have modest 10-20acres, you can’t mow-scythe (and other operations) it on your own, you need lotsa hands-on people to do it..
Nowadays, it’s possible to do it with the leverage of various machines (cheap energy), one or two adults are enough for the task, you can even do it by remote controls and video, sitting in the shade, having a cold drink..
Unbelievable levels of opulence which must end sometime, probably soon.
I think we are kidding ourselves if we think that “tilling the soil and reading a book” are what in our future. The future is not going to be like the recent past. The peak oil and sustainability folks have concentrated on a story of “having less” and “getting along with less.” The problem instead is having a system than breaks, and we don’t know what to do to start over. The amount of resources aren’t really enough to support the population.
Tilling the soil and reading books is my present. How far into the future I can manage to keep doing them I have no idea. But as I enjoy them and they are “nearly harmless”, I intend to keep going as long as I can with both activities.
If things get tough but not so tough that the hoards and the radiation sneak up on me from over the horizon, I may even consider exchanging some veggies for some good books.
Thanks for the new post 🙂
We can’t go back, even the Amish will choke on the meltdowns. We MUST have IC, or (almost) everything goes away. We have built a (technology) trap and walked in, and can’t get out. It’s all interwoven.
snorp
The ‘borg’ thinks it is so clever — it ends up destroying itself with its cleverness…..
http://i.telegraph.co.uk/multimedia/archive/02570/Laughing_Animals_2570874k.jpg
They will go mad
Everything has a beginning and an end. But we are in uncharted territory, no one knows what is up ahead and how humans will deal with it. Right now, only a marginal group of humans are aware of civilization-wide collapse. When a couple of billions get aware, we might see things turn out quite differently than prophetized.
I agree. It is really to find jobs for computer programmers, when there is no electricity or computers, for example. Even the people who are farmers today are going to find things so changed that they will have a hard time knowing adapting to the new situation. For example, growing only one crop won’t work anymore, when there is no way of sharing surplus with others at a distance. And preserving what one has, and keeping it from mice/insects/others becomes far more important.
Agreed, that it will be tough even for current, small-scale farmers. However, if I had to grow only a single crop it would be…..potatoes! They are easy to plant, incredibly calorie dense, store well for up to a year, grow well in poor soils (in fact, they’ll grow in just straw) and are resistant to insects. You can grow enough for a family of five for a year on an 8th of an acre.
The leaders obviously understand this … they also understand that we grow — or we collapse and we go extinct…
That is why they are doing whatever it takes to keep the global economy growing…
They will of course fail at some point
“… about 200 “underperforming” Gap and Banana Republic locations.
There are currently about 2,000 Gap and Banana Republic stores worldwide, according to public filings, so the closures would likely impact about 10% of them.”
at that rate, BAU will be over in about 10 years!
and that is VERY SOON!
End of Gap and Banana Republic stores = end of BAU? Who’d have thunk it?
If the Gap and Banana Republic are indicators of BAU, then perhaps it should end. Sooner than later.
their clothing is ugly, cheap and poorly made!
Those brick and mortar stores are losing to Amazon.com
Maybe they are just loosing?
Amazon was around long before the current meltdown….
It is definitely having some impact on bricks and mortar… but without a doubt the bigger problem is flat wages — and higher than reported inflation (we are fed fake numbers….)… lack of decent jobs… heavy debt loads
And then there is that other Big Lie…. http://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx
These are the main reasons retail is rolling over
10 years seems like an eternity to me. A lot of us have already been living in a “the power might not come back on tomorrow” type of world for the last decade already. At some point you just stop caring and realize you’re living in the future and bringing on anxiety when the whole time you could’ve just been driving around on a motorcycle blasted out of your mind playing disco music.
That’s pretty much what I have been doing since 2008 —- I call it the End of the World Grand Tour.
200 Gap and Banana Republic stores closing
http://money.cnn.com/2017/09/06/news/companies/gap-banana-republic-stores-closing/index.html
Good article but it mostly appears to be a more consolidated summary of points you’ve already made. I’ve been off this blog for 7-8 months and dont feel too left behind. It should be clear to everyone by now that all financial problems of a severe nature will be papered over until physical limits are reached. I still wager that the biosphere collapses before the economy or we have a nuke party. Usually what ends up happening though is the unexpected. In this case it may be something like a meteor or perhaps the Flying Spaghetti Monster turns out to be real.
sure, TPTB are infallible and will never make even a single big mistake.
so it’s gotta be the Flying Spaghetti Monster.
Good article but it mostly appears to be a more consolidated summary of points you’ve already made.
I for one think novelty is overrated and variations on a theme—if done well and with a worthwhile theme—can be more useful as well as more entertaining. Even great artists and thinkers end up mining and recycling their own ideas or covering the same old ground in the course of their careers.
Gail’s work covers a well-defined and limited field and tends to be descriptive rather than prescriptive. She explores what’s happening in the macro-economy and tries to make sense of it by fathoming how the different phenomena connect with and influence each other, joining dots, extrapolating trends, and pointing out commonly-held misconceptions.
She’s been laboring on this work for a decade or more and so brand new insights are likely to be few and far between. Also, this sort of work is bound to involve revisiting the same topics and points over and over, coming at them from different directions and looking at them from different angles, and this is not by any means a fault.
For readers of her posts, repetition of many of the the same points helps greatly in helping us to become familiar with them is an aid to memory. We are more likely to retain a grasp of ideas we encounter several times than ideas we encounter only once.
Great points. I’ve been on the same themes for 50 years, so I relate well to what you say. McPherson bumped my game up a notch or two, then fizzled out. Gail has helped me even more, and shows signs of being on a much steadier course. In fact, Gail’s and this site’s combined insights on energy make me now believe that steadiness is a now required way to avoid panic and energy drag. When we determine that there is a similar energy dynamic to the technological and the psychological, steady behavior in both areas seem to make sense.
The sun looks more or less the same every dawn. We don’t complain. 🙂
Yes, thanks Gail and Tim.
About 99.9% of the world (outside those extracting oil, and perhaps a few people reading OFW) thinks that the only problem oil could have is high prices. As long as prices are low, everything is fine. Unfortunately, that is not the case.
I feel like I cannot repeat this message too often, in different forms. Peak oilers (quite a few of whom “hang out” at OFW) are sure that prices will rise soon, by a big amount. It is the belief that prices will rise again that keeps the loans to the oil industry rising. It also keeps up faith in all of the “alternatives,” since the belief is that with high prices, these alternatives will suddenly become economic.
Part of the background of this post is that I recently noticed the issue of the dollar amount of world exports falling. This is not an issue I have written about that before. In fact, world exports as a percentage of world GDP seem to have hit a peak in 2008, dipped in 2009-2011, and hit a new slightly lower peak in 2012. Since then, they have been sliding downward. I thought about writing about that issue alone, but I was having a hard time making the topic work as a stand-alone topic. Maybe, if I thought about it, I could find a good way to write about it a different time. It is part of the issue of globalization unwinding.
Thanks for the reply and I get that globalization is unwinding. None of what I said was at all intended to be derogatory or insulting; your work is factual and far more accurate than all of the “infinite growth paradigm” economics we’re taught in college. Human society at large is basically dumb and lead by folks who deny scarcity in order to get elected. These dunderheads then make policies around a culture that worships materialism and look where that got us. Trump is despicable and has the intellect of my black lab that eats rocks. We’re definitely nearing the stupidity cap for leaders.
Most of us agree that something broke with the economy in 2008 and here we are 9 years later doing whatever it takes to keep the fake engine of growth alive. I believe they can keep that going for quite some time. As someone who studied the Enron accounting scandal in depth as well as derivatives, I believe that all financial problems can and will be papered over. People are already being lied to as part of a systemic byproduct of society for believing our leaders, our education system, and choosing to be a part of the game. All they have to do now a days to preserve society is freeze the markets and have a Fed bankers meeting and they pull some random words out of a hat like reverse qualitative interest rates and everything is just dandy.
Real world limits on the other hand cannot be hidden or papered over and will lead to depopulation. Something like Ghawar oil field drying up overnight or the oceans rising a few feet and destroying trillions in infrastructure. We are right on the cusp of many disasters of our own making like antibiotic immune diseases, unthawing of core permafrost with ancient viruses, an ongoing mass species extinction event, warped jet streams, ocean dead zones, the list goes on and on.
Trump is entertainment … he was put in place to distract the masses from the imminent collapse that is staring us in the face — should we look that way.
But we don’t look — because Trump is so fascinating … some love him … some hate him…. exactly the plan…. and the masses are hysterically screaming at each other….
All is going … according to Plan
https://image.shutterstock.com/z/stock-vector-keep-calm-and-just-enjoy-the-show-344355890.jpg
https://sd.keepcalm-o-matic.co.uk/i-w600/keep-calm-and-enjoy-the-show-50.jpg
Maybe, maybe not. I do concur that he is very entertaining but also horrifying.
There was a lot more horror during Obama’s time in office…. remember how the CIA gassed those families in Syria and tried to blame Assad?
And then of course there were the CIA flunky snipers in Ukraine who were shooting down protesters and trying to blame the Russian side.
And let’s not forget how the CIA buddies shot down the Malaysian airliner — what ever happened to that black box? Oh right…. it’s locked away somewhere safe…..
Then we had the annihilation of Libya…. turning it into hell on earth….
If you are into horror as entertainment those were some very good years to be tuned into CNN…
Personally — I do not get off on watching millions of lives ruined….
I prefer a clown with fake red hair and an ego the size of Uranus taking to Twitter with inane commentary….
Trump is the eldeeers version of a jester…. they are under a great deal of stress having to fend off the end of the world…. so who can blame them for wanting a bit of light entertainment as we head towards lights out.
Funny how nobody was horrified by what happened while Obama was the front man.
Everyone was just lov’in it 🙂
Humans really are stewpid f789ing More ONS.
FE, agree 100% ++++++++++++++++++++++++
A strong indicator of reduced real economic activity!
That is probably right!
Don’t ya just hate having to repeat the same things over and over again —- to deaf ears and blind eyes….
Conventional Oil Peaked in 2006 –IEA-EIA-NATURE
http://imgur.com/a/uCz7V
http://www.nature.com/nature/journal/v481/n7382/full/481433a.html
New Oil discoveries by scientists have been declining since 1965 and last year was the lowest in history –IEA
http://imgur.com/a/W60yn
We have been draining our oil reserves by consuming more oil than we discover since the 1980’s – ASPO
http://imgur.com/a/uJ0Rg
Aging giant oil fields produce more than half of global oil supply and are already declining as group – CSM-HOOK 2009
https://www.csmonitor.com/Environment/Energy-Voices/2013/0412/The-decline-of-the-world-s-major-oil-fields
Saudi Arabian oil reserves are overstated by 40% – Wikileaks
https://www.theguardian.com/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks
International Energy Agency Chief warns of world oil shortages by 2020 as discoveries fall to record lows
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
UAE warns of world oil shortages ahead by 2020 due to industry spending cuts
http://www.arabianindustry.com/oil-gas/news/2016/nov/6/more-spending-cuts-as-uae-predicts-oil-shortages-5531344/
Saudi Aramco CEO believes world oil shortage coming despite U.S. shale boom
http://www.foxbusiness.com/markets/2017/07/10/saudi-aramco-ceo-believes-oil-shortage-coming-despite-u-s-shale-boom.html
Halliburton CEO says oil will spike due to oil shortages by 2020 after $2 Trillion in Industry Cuts
https://www.bloomberg.com/news/articles/2017-07-12/halliburton-sees-2020-oil-spike-after-industry-cuts-2-trillion
Total CEO warns we are going to have oil shortages around 2020 due to lack of investment
http://www.boursorama.com/actualites/je-suis-convaincu-qu-on-va-manquer-de-petrole-selon-le-pdg-de-total-patrick-pouyanne-9b2d911a65572f5f989a74319b68d296
Chevron CEO warns US shale oil alone cannot meet the world’s growing demand for crude
https://www.cnbc.com/2017/05/01/us-shale-cannot-meet-the-worlds-growing-oil-demand-chevron-ceo-warns.html
HSBC Global Bank warns 80% of the worlds conventional fields are declining and world oil shortages by 2020
https://www.research.hsbc.com/R/24/vzchQwb
UBS Global Bank warns of industry slowdown and world Oil Shortages by 2020
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12136886/Oil-slowdown-to-trigger-supply-crisis-by-2020-warns-bank.html
Nasdaq: Forecasts worldwide Oil Shortages and Sharp Price Rise by 2020
http://www.nasdaq.com/article/iea-forecasts-oil-shortages-and-sharp-price-rise-by-2020-cm757712
Wood Mackenzie warns of oil supply crunch and world oil shortages around 2020
http://oilprice.com/Energy/Crude-Oil/The-Next-Oil-Price-Spike-May-Cripple-The-Industry.html
MarketWatch :Why investors’ should brace for a devastating oil shortage ahead around 2020
http://www.marketwatch.com/story/why-investors-should-brace-for-a-devastating-oil-shock-ahead-2017-07-03
German Government (leaked) Peak Oil study concludes: oil is used directly or indirectly in the production of 90% of all manufactured products, so a shortage of oil would collapse the world economy & world governments/democracies
https://www.permaculture.org.au/files/Peak%20Oil_Study%20EN.pdf
You should not take this stuff too literally. It is based on two dimensional supply/demand curves. Something is going to happen, but what?
Something is going to happen, but what?
American’s are very angry already. The left because they got smashed in the election. And the right because that is just how they are normally..And they are very divided , drugged , and armed to the teeth. Now add to this formula the mother of all energy crisis’s and 4 dollar a gallon gasoline again. And sheep will go insane!
I would not count on $4 gallon gasoline. More likely, closed banks.
The left are armed to the teeth?
I thought they were anti-gun… snowflake types…. who dance around the fire singing Koombaya… who aspire to drive an EV so they can show up at the organic coffee shop in style….
peaked in 2006…
yes, Cliff, yes!
and yet we have had BAU for 11 more years.
who wants 11 more?
long live BAU!
Cute!
Thanks for the new analysis
Just wait until we experience a 10% or 20% drop in oil supplies. In a few years or sooner we certainly will. When it hits the economic and social damage will be catastrophic The end of Western Civilization, from China to Europe, to the US, will not occur when oil runs out. The economic and social chaos will occur when supplies are merely reduced sufficiently.
the collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like. I’m talking about people eating people. I’m talking about the Worst Catastrophe to ever happen in the history of mankind. Nothing has ever, or will ever come close
That is your view, anyhow. We don’t know precisely what will happen. The result may look like WW3, or it may look like failure to recover from a bunch of hurricanes. We can speculate, that is all.
Meanwhile, I see that perhaps our problems may be put off for three months. http://www.cnn.com/2017/09/06/politics/trump-deal-democrats-republicans/index.html
Anything that the eldddders can control in terms of potential end of the world triggers… does not concern me…. because they have demonstrated again and again that Whatever It Takes… means whatever it takes…. they will do anything.
The debt ceiling does not concern me… they will simply order their minions to vote to increase it…. and it will be increased.
++++++
Been here before…whatever it takes!
‘If we go back to the times of the Roman Empire, we see that the Romans didn’t take the depletion of their gold mines with philosophical resignation. They tried as hard as they could to keep them producing, and the result was “ruin of the mountains”, as described by Pliny the Elder in his Historia Naturalis. The mountains of the Spanish region of Asturias still show the destruction wreaked on them by Roman engineers.
But what the Romans could do to their mountains with picks and hydraulic fracturing is very little in comparison with what we can do to our mountains with explosives and diesel-powered machinery. We are already destroying one mountain after another in order to get at the coal seams they contain. It is a process that is not soon going to stop, as the world’s economy gears up to recover the last accessible ores on the planet. It is truly a war waged against the planet, a take-no-prisoners war. It also is a war that cannot be won. In the long run the planet will recover from the assault of human miners, and the only possible casualties will be us.’
http://energyskeptic.com
Every million barrel decline in production will cut world GDP by about half a $trillion. Image a world where GDP is falling by 15% per year, and continues to do so. Not pretty!
Thanks for the moderate response. Students of past collapses understand that these historical collapses have much more in common on the downside than they do on the upside – with some sudden lurches and a great deal of historical time. In retrospect it can look like infrastructure which is first not maintained, then abandoned or re-purposed, some military and political events mixed in, etc.
Oil fueled expansion looked unique on the upside – but it may be on the downside it is no different than an agricultural or slave labor based civilization unwinding, given that these arrangements represent a similar end result (producing net energy surplus driven complexity) during their creation.
This time really is different, though, with collapse likely being global, and the world dependent on electricity and gas powered vehicles. We also have severe pollution problems. The downslope will be quicker. It is even possible it could be a religious event–although Fast Eddy will dispute this.
For sure it will be couched in those terms, people will be looking for answers that don’t include logic – it will make them feel better, I guess.
I agree that once the troubles get bad enough the churches and mosques and temples will be full, not that this will save them. And later, if some people survive the downslope, they may well develop salvation myths that purport to explain why they were chosen for survival while everyone else was extinguished.
It is even possible it could be a religious event
https://media3.giphy.com/media/ToMjGpocv0a1U7zbXQ4/giphy.gif
You’re right. It’s slim comfort to imagine that the best hopes for breaking ones fall are to hit a few rocks and trees on the way down.
A little fire and brimstone — that would be tremendously entertaining!
Surely a future career as a marauder’s henchmen is a fine path for those who are disillusioned with University educations. A little macabre, perhaps – but one has to find some humor in these matters.
Beyond Wrong…. totally clueless….
It seems like a drop in fuel supply has more of the catastrophic feel when it’s large and sudden. It seems less clear what happens in the 2% per year decline scenario. 6% per year I think would feel catastrophic if that rate is kept up for 5 years.
yes!
there are many scenarios that can be imagined.
the future we will get, say through the 2020’s, is sort of unknown.
some persons like JMG suggest a stair step decline scenario.
big step down in 2008/2009.
similar downward steps could repeat multiple times in the next few decades.
or one big giant humongous ginormous monster step down.
soon?
I would say by 2030.
and that is VERY SOON.
I’m partial to JMG’s view. What averages out to a 2% increase in mortality would leave the world with 5% of it’s current population in short order. A 2% decline per year also looks like 15% lost to a war one year, a whole nation lost to famine a few years later, huge increases in deaths from previously preventable diseases. But, as always I have no idea and don’t really think we can be exactly how it will transpire.
I cannot believe either a 2% or a 6% decline scenario. This would mean that business as usual continues, in some sense, for much of oil extraction. If the banks are closed, and it is not possible to pay employees, oil production will drop much more rapidly. If any of the supply line is not functioning, oil production will drop much more rapidly. Peak Oilers think only in terms of BAU continuing. This is not the right model.
yes, a “smooth” decline seems very unlikely.
7.5 billion people are sleepwalking into a great Malthusian nightmare (trap)
The Road?
Not Taken?
less traveled?
goes on and on and on?
“the collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like”
I was just wondering if “The Road” comes close.
“The road goes ever on and on,
down from the door where it began.
Now far ahead the road has gone,
and I must follow if I can.
Pursuing it with eager feet,
until it joins some larger way.
Where many paths and errands meet,
and wither then, I cannot say.” –J.R.R. Tolkien
Thanks for correcting my misremembering of that line! My Tolkien is a bit rusty.
The Road is the Disney version ….
When BAU goes down — the violence will be unimaginable —- people will be killing and eating each other… because that is what they did in famines before the Oxfam air drops put an end to that…
The cities will be horror shows…. as people flood into rural areas headed for the farms — they will bring the violence with them …. there will be little food available on farms (assuming BAU ends during harvest season…) that people will just rampage through the fields killing the animals and tearing food from the ground…
The worst case scenario I can think of — won’t be remotely close to what this is going to look like.
Consider we are basically pulling the plug on civilization — our life line will be gone….. the police will be gone — the food will be gone —- the planet will be in darkness once the sun sets…. the radiation will be creeping towards you ….
You will welcome death. Happiness will be a quick painless death.
There is no way out. There is no sanctuary.
The scale of this is beyond imagination. Total absolute chaos.
Recall what happened in New York when the lights went out for just one night….
http://time.com/3949986/1977-blackout-new-york-history/
There were still police — there was still food in the cupboards — there was still the expectation that this was no permanent…
And look at how people reacted….
With the one million vehicles destroyed in Harvey, plus the Millions soon to be destroyed in Irma, Jose, Katya and the additional thousands of cars and homes burned to a crisp in the western fires, oil supplies might be able to drop 10 or 20% without problems because of the massive demand destruction. Perhaps mother nature is planning on scaling back demand to match supply, the hard way.
Harvey has already taken a pipeline and some production down in the Gulf.
The oil distribution pipeline is back up again now.
Well that was fast. Lets hope Irma doesn’t take them out for the count and hit TX again. Either way, supplies don’t seem to be an issue it’s the logistics that are the problem.
Of course it was fast. And no – the world did not end like CNN said it would.
This has happened dozens of times in recent history….
Enjoy your MSM drivel….
Irma has not happened dozens of times in recent history. Enjoy your condescending assumptions, however wrong they may be.
She went by another name last time….
It snowed somewhere in the world yesterday – where it has not snowed in 50 years.
That is evidence that the planet is cooling
Yes I am sure you are thinking – what a MORE on Fast is
Be careful about thinking that…. the implications are profound.
Of course you will not get it. It goes with the territory
Pumps are open here again in West Texas. It appears that the refineries are back up and running again. Beaumont’s water is back as well. I believe the Colonial Pipeline is running again as well.
1M vehicles = 0.3% of US vehicle fleet.
This estimate https://www.usatoday.com/story/money/cars/2017/08/31/hurricane-harvey-cars/619785001/ is only 300,000 to 500,000 vehicles. It seems to exclude commercial vehicles however.
Maybe.
But there is no sense in frightening ourselves to death, like children whispering under a blanket about the ghost in the room.
The sun is shining, I’m off to dig holes for apple trees and other things.
When I die, however it happens, some creatures may be able to live off what I plant here: some of the trees I’m planting can live 1,000 yeaas.
Or it might be a radiation-doomed wasteland.
Only the gods know. 🙂
Anomie is a psychological imbalance that leads to prolonged despair, lethargy and yearnings for self-annihilation. It is caused by a collapse of societal norms, ideals, values and standards. It is, in short, a loss of faith in the structures and beliefs that define a functioning democracy. The result is an obliteration of purpose and direction. It leads to what Friedrich Nietzsche called an aggressive despiritualized nihilism.
It’s when the hopium stops working
and how has Nietzsche been doing lately?
I mean, in the last 117 years or so.
ya know?
I’m not sure whether Nietzsche suffered from aggressive despiritualized nihilism, but there’s no doubt he suffered greatly.
On 3 January 1889, Nietzsche [aged 44] suffered a mental breakdown.[63] Two policemen approached him after he caused a public disturbance in the streets of Turin. What happened remains unknown, but an often-repeated tale from shortly after his death states that Nietzsche witnessed the flogging of a horse at the other end of the Piazza Carlo Alberto, ran to the horse, threw his arms up around its neck to protect it, and then collapsed to the ground.[64][65]
In the following few days, Nietzsche sent short writings—known as the Wahnzettel (“Madness Letters”)—to a number of friends including Cosima Wagner and Jacob Burckhardt. Most of them were signed “Dionysos”, though some were also signed “der Gekreuzigte” meaning “the crucified one”. To his former colleague Burckhardt, Nietzsche wrote: “I have had Caiaphas put in fetters. Also, last year I was crucified by the German doctors in a very drawn-out manner. Wilhelm, Bismarck, and all anti-Semites abolished.”[66] Additionally, he commanded the German emperor to go to Rome to be shot and summoned the European powers to take military action against Germany,[67] that the pope should be put in jail and that he, Nietzsche, created the world and was in progress of having all anti-Semites shot dead.[68]
The house Nietzsche stayed in while in Turin (background, right), as seen from across Piazza Carlo Alberto, where he is said to have had his breakdown. To the left is the rear façade of the Palazzo Carignano.
On 6 January 1889, Burckhardt showed the letter he had received from Nietzsche to Overbeck. The following day, Overbeck received a similar letter and decided that Nietzsche’s friends had to bring him back to Basel. Overbeck travelled to Turin and brought Nietzsche to a psychiatric clinic in Basel. By that time Nietzsche appeared fully in the grip of a serious mental illness, and his mother Franziska decided to transfer him to a clinic in Jena under the direction of Otto Binswanger. In January 1889, they proceeded with the planned release of Twilight of the Idols, by that time already printed and bound. From November 1889 to February 1890, the art historian Julius Langbehn attempted to cure Nietzsche, claiming that the methods of the medical doctors were ineffective in treating Nietzsche’s condition. Langbehn assumed progressively greater control of Nietzsche until his secretiveness discredited him. In March 1890, Franziska removed Nietzsche from the clinic and, in May 1890, brought him to her home in Naumburg.
https://en.wikipedia.org/wiki/Friedrich_Nietzsche#Psychological_illness_and_death_.281889.E2.80.931900.29
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Tracking Military Weaponry and War Machines Flowing to America’s Local Police Departments
https://www.forbes.com/sites/adamandrzejewski/2017/08/31/tracking-military-weaponry-and-war-machines-flowing-to-americas-local-police-departments/#bad880a2b636
If the U.S. wanted to end the opioid epidemic all it needs t do is return Afghanistan to the Taliban.
The CIA is going to keep those Afghan poppy fields popping!
Papaver Somniferum (opium poppies) are cultivated under licence in lots of nations, including here in the UK, for the manufacturing of pharmaceutical analgesics – but, yes, Afghanistan and Mexico provide most of the heroin that finds its way into the US. The Chinese are knocking up the really strong and therefore more easily smuggled illicit opioids like fentanyl.
who can we return Big Pharma to?
99% of the world’s opioid addicts are Americans.
A very insightful article, I will be sure to spread the word!
Glad you liked it!
No problemf possible, please give our blog a read! all content is written by students looking to further their knowledge and understanding of the economic world
Economist are basically Astrologers with degrees.
This is not a very diplomatic thing to say to a student economist. Perhaps the models of past economists were not really right. This doesn’t mean that there can’t be future economists who do much better.
Nah. If you could put every economist that ever lived, end on end, you still wouldn’t reach a conclusion.
It’s all about the axioms: ancient Greek doctors used to believe that wounds had to be deliberately infected in order to heal, so that’s what they did, and killed people in the thousands……
This idea was adopted in the Middle Ages, similar results. Treatment of wounds has improved quite a bit since then.
Economists can change their axioms to reflect reality.
But then, currently, they would be unemployable in universities, banks, institutions as the message would be unwelcome.
Right. The same is true for scientific researchers, unfortunately. Unless the researchers can produce a story that leads to a “happily every after” ending, they are out of a job. Or a story that will hide the problem of resource depletion.
Likewise, George Washington survived the War of Independence but was bled to death by his doctors, who were attempting to cure a pneumonia-like infection that he developed after riding around his estate during snow and freezing rain. Of course, the infection might have killed him anyway, the treatment, which ended up drawing off at least half of his blood was guaranteed to do he trick.
Economists are not much different than scientists… both are often wrong….
Anyone still following Don Drapers instructions to drink two cups of red wine per day — because scientists said it was good for you?
Brought to you by your good friends at
Welcome to WineAmerica
The National Association of American Wineries
The mission of WineAmerica is to encourage the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.
http://wineamerica.org/
http://usatradetasting.com/blog/leading-public-relations-companies-wine-business-usa/
Oil prices!
one of my favorite topics!
very comprehensive…
the presentation suggests to me that we are in an endgame of sorts…
that began with the QE response to the 2008/2009 crisis.
the world seems to have entered a phase 2 of this response…
where deflation of commodities is unstoppable.
the unanswered question is how long this endgame will continue.
we know that BAU has mostly survived since 2008.
9 years!
long live BAU!
Charles Ives: The Unanswered Question
9 more years!
9 more years!
9 more years!
9 more years!
say it again!
say it again!
louder!
louder!
Yes, because…
http://mspoweruser.com/wp-content/uploads/2012/02/image9.png
You might be right about deflation of commodities being unstoppable. It is possible that there will be upward ticks on the way down.
For example, it is my understanding is that China has been using growing debt to keep up home prices as much as possible. Housing prices are still rising rapidly (9.7% over prior year), but the rate of growth is slowing. This is a bubble, however.
http://www.businessinsider.com/chinese-debt-risk-to-financial-stability-2017-9?r=UK&IR=T
I understand that coal prices are up in 2017, partly because of the demand from home building, and partly because many mines have been closed.
https://www.reuters.com/article/us-thermal-coal-prices/booming-thermal-coal-price-on-china-demand-cheers-miners-idUSKCN1AX0I9
The article says, “The key question is whether the current boom will last. ‘Chinese coal production continues to fall due to capacity closures … stocking hopes that import demand will remain strong in China in coming months,’ ANZ bank said on Thursday.”
In a way, the coal situation in China is like the oil situation elsewhere. There has been an oversupply problem, which the government is trying to fix. Between the growing debt for more homes and closing a lot of mines, it has been fairly successful so far.
The question is how long it can last. If the Chinese have to pay a lot more for coal to heat their homes or to power their electricity, they will not be able to pay for the now very expensive housing that they are being sold.
At some point the band runs out of encores…..
We need more student economist to read Gail’s work.
“[10] Conclusion. We are likely kidding ourselves, if we think that oil prices can rise in the future, for very long, by a very large amount.
It is quite possible that oil prices will bounce back up to $80 or even $100 per barrel, for a short time. But if they rise very high, for very long, there will be adverse impacts on other segments of the economy. We can’t expect that wages will go up at the same time, so increases in oil prices are likely to lead to a decrease in the purchase of discretionary products such as meals eaten in restaurants, charitable contributions, and vacation travel. These cutbacks, in turn, can be expected to lead to layoffs in discretionary sectors. Laid off workers are likely to have difficulty repaying their loans. As a result, we are likely to head back into a recession.”
Recently there was an updated article regarding how many families in the US are living paycheck to paycheck and it is now up to 78%. I figure that at some point oil supply for a variety of reasons will not keep up with demand and price will rise and with it the number of delinquencies, defaults and bankruptcies. I don’t know that it would mean collapse but it would certainly put more pressure in that direction.
The question is which order events take place. If China implodes in the near future, because of debt problems, demand could drop dramatically.
If the US cannot get its act together in the next month or two, that could substantially drop demand.
If Europe should have a melt down in the near future (perhaps because of failing banks), that would substantially erode demand.
If we can keep users of imported oil from collapsing, and instead have those exporting the oil collapse first, then we might have high prices. But those prices can’t last for very long, without brining down the economies with oil importers, and turning the situation around again.
When one sees those stats… one wonders how the consumer economy has not already collapsed.
We are witnessing economic levitation … a miracle!
The answer in the UK is….. credit cards.
And your wife divorces if you won’t borrow for that essential item, trip,new kitchen, etc.
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Hurricane Irma’s epic size is being fuelled by global warming
https://www.newscientist.com/article/2146562-hurricane-irmas-epic-size-is-being-fuelled-by-global-warming/
Bull$hit. No way that can be proven. It is not of “epic” size. There have been a number of storms with wind speeds of 185MPH, Gilbert, Wilma, Camille, Allen, Andrew to name a few off the top of my head. There is no correlation to global temperature. We have been in a 12 year hiatus since Katrina for major hurricanes. We are overdue.
I believe the wind speed for Irma is being purposely under-stated. Gusts as high as 220 mph have been recorded, before the instrumentation failed.
I believe the moon is made of cheese.
I believe my farts could power a mission to Mars… and back
Of course it is. Add GHG’s that holds more heat in the atmosphere, which is energy, that first gets captured by the oceans but eventually influences the weather. It’s really grade school science but people want to think it’s debatable. So GW didn’t generate the storm, but it did jack it up to a higher intensity due to higher water temps. What a lot of people do not understand is the oceans hold thousands of times as much thermal energy as the atmosphere, so it’s the oceans that generate weather but tweak the atmosphere and more energy goes into the oceans and away we go… But I tell you what, let’s appease the naysayers and just keep adding GHG’s to the atmosphere, to hold more energy, to heat up the oceans and increase weather intensity. Let’s see where it leads us… I’m willing to continue to be part of this madcap experiment.
Or let’s not add energy to the atmosphere, and see where that gets us. I don’t see that we have a lot of options.
Have you stopped driving your car? Heating your home? Have you stopped buying “pretty much anything” made from FF? Then you are the supposed problem. Thought so.
You gotta love these silly clowns who moan and wail about ___ _____ who then leave their airconditioned homes… jump into their cars … and take a spin to the grocery store to buy a loaf of bread….
Then they race back …. and get back on their computers …. and moan some more….
They really should just shut the f789 up.
Seems as if Euan Mearns has been reading a bit of Fast Eddy says….
This is a must read.
The Terrifying Risk of Clyyyymate Chaaaaaange in Scotland
http://euanmearns.com/the-terrifying-risk-of-c$$$$lim$$$$$$ate-cha$$$$nge-in-scotland/
Euan knows a great deal about the ins and outs of climate change, and what is not in current models. He has been skeptical of climate models for as long as I have known him–probably 10 years.
Euan is one who can write negatively about climate change without fear of having his funding taken away. This is not true of most people in the field.
This is a link to Euan’s post. http://euanmearns.com/the-terrifying-risk-of-climate-change-in-scotland/
Ok, but if this is true, why are the prices of stocks, bonds, housing, collectibles, luxury goods, cryptocurrencies, you name it, at all time highs? Why aren’t they deflating?
Asset prices are quite different from commodity prices. Asset prices are governed primarily by interest rates; the lower the interest rate, the higher the asset price. In the case of shares of stock, the higher the perceived growth rate, the higher the stock price. This is how Tesla and Amazon can get such absurd evaluations.
As a sideline note regarding an asset class that is discretionary, I have recently noticed a big reduction in demand for PSA graded baseball cards with prices starting to decline. Not sure if that tells us something about the economy or not.
“I have recently noticed a big reduction in demand for PSA graded baseball cards with prices starting to decline. Not sure if that tells us something about the economy or not.”
Baseball cards are a product of a time, when print was more popular. The majority of younger baseball fans most likely don’t care about baseball cards because they probably have never been exposed to them. Baseball cards a product of a specific time period. The specific time period that baseball cards were a product was a time period when print was popular and profitable. It looks like the golden age of print began in the 1900s and ended in the 1990s. Baseball cards, along with other, more popular print products, such as comic books, newspapers, and magazines all began to decline in popularity and profitability around the same time.
The decline of print has happened gradually enough that it has not become an economic problem. Workers laid off, who worked in print, were absorbed by different sectors of the economy.
To answer your question, declining demand and prices for PSA-graded baseball cards doesn’t mean much for the economy, since only a small percentage of the population will be affected.
If you take the print industry in total, including newspapers, magazines, and books, there has been a major decline affecting quite a few jobs. I imagine it is harder to put together a newspaper route now, because fewer people are buying papers. People who worked in journalism and other writing skills find that their training isn’t as much in demand. Standards on the Internet are lower, and there are not enough dollars involved to keep hiring everyone.
The CB’s keep flooding the market with cheap money to keep the system from cracking up. That’s why this will be the final bubble, because it’s in everything this time.
Good point!
In fact, it is everything, everywhere!
“The Borg IS the Illusion…”
http://ponziworld.blogspot.co.uk/2014/05/the-smartest-people-are-best-liars.html
It will be interesting to see what the-powers-that-be do to ‘extend and pretend’ that all is fine. And, how their manipulations will impact the various complex systems we all rely upon.
Will the ‘collapse’ be long and drawn out (as the Roman Empire’s appears to have been for the most part) or more likely reflect the Seneca Cliff scenario? Only time will tell.
As long as we have the petro-dollar the US will be OK. However, there are a lot of moves being made by Russia, China and Iran to reprice oil in something other than the US Dollar. If that were to happen things could get very very bad for US oil producers overnight.
All commodities seem to be priced in US dollars (not just oil). And this seems to be true, even if the actual trade takes place in a different currency.
So I am not sure that pricing oil in something different makes a difference. If there are two prices for oil (dollar price and other currency price), this difference won’t last for long.
I think what has helped the US is its ability to run a large trade deficit, in its account current. Having the petro currency helps in this regard, but other countries have done this as well. I notice Greece has run a large trade deficit, for a long time. (Not a good role model, however!) I see India has run a big trade deficit. I am not sure it is a great role model either. Large deficits seem to be associated with large imports of crude oil and other fossil fuels.
“So I am not sure that pricing oil in something different makes a difference. If there are two prices for oil (dollar price and other currency price), this difference won’t last for long.” – We can create dollars from essentially thin air. So, that gives the US a huge advantage if oil is priced in dollars. It doesn’t help the debt situation though.
India is using Rupees that it creates from thin air. How is this different? Don’t both affect where the various currencies float?
https://qz.com/887755/government-debt-the-one-economic-indicator-from-india-that-worries-everyone-from-rbi-governor-urjit-patel-to-ratings-agencies-sps-and-moodys/
One difference I see is the very low interest rate the US pays on its debt. This recently was the result of QE. Before that, the low rate was the result of Saudi Arabia recycling petrodollars by using part of its surplus to buy US debt. Also, the fact that other countries wanted to hold US debt (because of the reserve currency status of the US dollar) to use in trade added to the market for US debt, holding interest rates low. Recently, some countries have had even lower interest rates, even negative rates.
Gail, do you not see this endless ‘printing’ of money as problematic. History would seem to suggest that it almost always ends badly with the fiat currency in question being devaluated to such an extent that it is eventually abandoned. I suppose if everyone is ‘devaluing’ at the same time this endgame might be temporarily averted but it would seem to me that as the purchasing power of people’s ‘money’ continues to be lost, much greater social problems will arise.
I think that there is probably more than one thing that is called “money printing.”
If Venezuela or Zimbabwe needs a lot more goods from outside suppliers than it really can pay for (in terms of goods traded in return), then no amount of currency issued to try to fix the gap will really work. The currency of the country will simply drop, relative to other currencies in the world, resulting in rapid inflation. (The US, as holder of the reserve currency, seems to have more leeway than other countries in buying more goods and services than it sells.)
What the US has been doing recently is buying back debt that is already in the marketplace, as a way to hold interest rates down. These funds don’t go directly into circulation. They reduce the amount of debt that is held by the public relating to the the US. If the US had to issue a whole lot of debt in 2008, interest rates would have gone up. This is a chart I found online. Note that the “Held by the Federal Reserve” column increases, so that the “Other” column can stay more level.
The amount of debt held by the Federal Reserve reduces the amount of funds that the Federal Government has to borrow from the public. The extra securities are available for banks to borrow, but it doesn’t directly get into circulation. The fact that the US wants to start selling these securities now probably means that it will have to borrow more from the public. A person would expect this to raise interest rates.
Hi again, Gail. Just commenting on your reply to me (below). It seems to me you’re conflating the US government with the US Federal Reserve which is a cartel of private banking institutions. So, all of the ‘debt’ purchased by the Fed is, in fact, being bought by this banking cartel, not the government. Although the two ‘entities’ work hand-in-hand, it would seem to me that there is a big difference when it comes to debt and the obligations associated with this deb; especially for the taxpayers.
Also, note that the debt-to-gdp ratio in the chart you offer is well beyond the 90% that Reinhart and Rogoff suggest is fundamental (and catastrophic) to debt repayment for sovereign nations (see This Time is Different).
I could be wrong, but if ‘money printing/credit expansion’ were such a wonderfully successful strategy for governments to overcome their addiction to spending, then why has it not worked out so well for the hundreds of previous experiments with such an approach?
‘Also, note that the debt-to-gdp ratio in the chart you offer is well beyond the 90% that Reinhart and Rogoff suggest is fundamental (and catastrophic) to debt repayment for sovereign nations’
I read this when it came out….
In the old normal — this held true – when a single country went beyond the debt threshold — it always ended in near term catastrophe
But in the new normal — the one in which most countries are piling into debt and the CBs are throwing fuel on the fire…. the thresholds can expand and expand and expand….
In one respect this time is different — debts can go well past those quaint thresholds with no repercussions — the question is — how far can they go without resulting in total catastrophe?
And more importantly — can they continue to expand for longer than our supplies of oil do not peak?
My money is on the CBs being able to hold things together in terms of the financial system — and that oil is the trigger.
If shale oil production crashed — or the KSA output dropped dramatically — that would be the end game
You have to remember that this is not my chart. I originally thought it was at Whitehouse.gov, because it is similar to ones I have seen previously at Whitehouse.gov. The page where the downloads come from is prominently labeled “Office of Management and Budget,” and the link is https://obamawhitehouse.archives.gov/omb/budget/Historicals
It may not be 100% up to date, but it is close.
This is another copy of the recent years of the chart that I made an image of.
If you look closely at the chart, the “Federal Reserve System” is considered part of “Held by the Public.” The chart starts at the left with Gross Federal Debt, which is about 20 trillion now.
The amount “Held in Federal Government Accounts,” represents money that was paid in for various types of retirement benefits (mostly Social Security and the Federal Employee Retirement program), but was spent by the government on something else (typically wars). There is non-marketable debt held in those accounts, representing amounts that the government needs to take from future tax revenue, to offset the funds previously spent. The Federal Government also pays interest out of current tax revenue on this debt. This debt is what allows the statement to be made, “It is estimated that Social Security is funded to 2027 (or whatever the year is), considering amounts in the trust fund and expected future contributions by those working.”
Note that this column is the only subtraction to get to “Held by the Public.” The total Held by the Public comes to about 76.5% of GDP. Of the amount Held by the Public, about $2.5 trillion, or 14% of GDP, is held by the Federal Reserve (which is part of the public). This brings the “Other” portion of debt down to about 60% of GDP.
So if we deal only with debt “Held by the Public” debt, Federal Government debt is well under 90% of GDP. It is either about 74% (including that held by the Federal Government Accounts) or 60%, if we exclude what is held by the Federal Reserve System.
As I understand the situation, the reason that so much money was taken in by Social Security and the Federal Employee Retirement program and spent for other things is because of different views on whether accrual accounting can be used for these programs. Actuaries, looking at the big bulge of baby boomers coming through, insisted on putting some higher funding in at earlier dates, that would in theory build up a surplus. The problem is that the US Government (and all other governments, I believe) are on a “Pay as You Go” basis. So there was no way to take these excess funds and invest them for the later benefit of the future retirees. Instead, they got spent quite easily. Since they were collected for a specific purpose, the Federal Government pays interest on the funds it used for a different purpose, and has promised to use part of future general tax revenue to make up what it already spent, plus interest.
You are right. Debt hasn’t worked out very well in the long run, but it does work out for a while. There is an early version of the Reinhart and Rogoff paper that I quote in my article Oil Supply Limits and the Continuing Financial Crisis. What I say in that paper is
This is the chart I used to explain the phenomenon.
As long as countries can keep growing fast enough, they can repay debt with interest. The problem comes when they cannot grow fast enough. This is why Japan has been having so many problems, and this is why China is trying so desperately hard to grow.
Fast Eddy, I don’t disagree that central banks can push the envelope a lot further than imaginable. I guess for me one of the big issues is the belief that complex systems (such as the economic/financial system) can be ‘controlled’. With the myriad of feedback loops and emergent phenomena that arise from such systems, I think it is hubris in the extreme to think such a system can be constantly manipulated without a number of ‘unintended’ and negative consequences…of course, this seems to be what humans do in almost all endeavours.
The tricks cannot work forever… but they might work long enough that our supply of oil falls and kills us first
While all this speculation about what will be the final straw bringing on industrial civilization’s collapse when it finally occurs is ‘fun’, the truth of the matter is we will likely never know–not even in hindsight since having consensus on interpretations is so rare, even in the physical sciences (even if we are able to ‘communicate’ post-collapse).
Having just reread Joseph Tainter’s The Collapse of Complex Societies, I find his argument about diminishing returns to be very convincing as THE major contributing factor.
The other ‘theory’ I have found persuasive is Richard Duncan’s Olduvai Theory. As a species, most of us have lost the ability/knowledge/skills to live independent of the various complex systems, especially the modern agricultural system and electrical grid.
None of us can predict the future with any accuracy but I can’t imagine how many of us would perish with the loss of these two systems. Even the loss of just one of them in a ‘modern/advanced’ society for a prolonged period would wreak chaos and devastation unlike anything we have witnessed in recent times. We seem so close to the edge in so many ways that it may not take much to push us off the cliff…
I think that we are facing a physics problem. The system we are dealing with is a networked system. Diminishing returns are definitely a major issue. In fact, there are diminishing returns to increased complexity and diminishing returns resource extraction. Something very similar happens, when resources per capita falls, because population rises. This is yet another reason why complexity must be used as a workaround.
When we learn one skill, we fail to learn other skills. Young people today are mostly learning to avoid reality by playing video games. In fact, quite a few adults are following this route as well.
I think Fast Eddy deserves a place at the table with those other gentlemen for his research that confirms that when BAU goes 4000 spent fuel ponds boil and burn …. and release the equivalent of 56,000,000 Hiroshima bombs worth of radiation …..
This toxic nightmare will spread across the planet entering the food chain and kill everything that moves
Not that there will be much food remaining in the food chain ….. once the grocery stores empty and 7.5 billion hungry people have a go at whatever is left… cats dogs hobby farms… rats…. young children….
My immediate concern is the next month or two. The United States needs legislation passed that will raise the debt limit. Also, provide for funding for next year. It wouldn’t hurt if the Affordable Care Act problems could be ironed out as well.
The R’s railed against Obama for repeatedly raising the debt limit, so it is incumbent on them to find a way to balance the budget using only the funds available – lol. Just had to have a good laugh over it.
I was referring to our oil problems. But yes, you are right, there are other problems outside of oil. Diminishing returns is popping up everywhere one looks. Just lots of problems out there any of which has a small chance of causing major economic disruption. But, taken together, there is significant risk of an event that will trigger a financial collapse similar or worse than 2008.
The United States’ funding problems are closely related to its energy problems. If we had a rapidly growing supply of low-cost to produce energy, we would not have funding problems. There was a small budget surplus when Bill Clinton was president, and oil prices were low.
IMO briefly Growth. The question of growth is the bottom line.
Is it a chicken and egg conundrum? Has declining growth caused the price of oil to fall or, has the rising price of oil caused growth to stall?
Of course there MUST be a cause, it’s not happening naturally. BUT there is one thing that has seen record growth……..debt.
Debt is a symptom of scarcity. Scarcity in essential commodities that support the market and consumer orientated world, enabled and created by cheap fossil fuels. The diminishing returns (declining EROI) caused by the “growth” in expensive FF’s has in turn led to the “growth” in debt. The increased debt has allowed for the production of commodities that naturally would have been exhausted, similar to a played out silver mine.
Consumers along with producers and governments are more in debt than ever before and debt alone is keeping us alive. Because debt is THE vital component of the financial world (stocks and bond markets) which is propping up governments, the likely early harbinger of collapse is declining debt or more precisely its decline in overall availability.
There appears to be enough debt to keep Greece and other basket cases alive but not enough for Venezuela…..why is that?
A big part of what allowed oil prices to fall was the rising dollar relative to other currencies. The rising dollar corresponded to the end of QE3. When other currencies fall relative to the dollar, oil becomes becomes more expensive in these currencies.
Of course, if there had not been a weakness there to begin with, this situation would not have arisen. The price of oil had risen too high relative to wages. When some “little thing” pushed it a bit further, it began to slide.
Bandits
Basically Venezuela removed itself from Western banking and investment. Greece has been selling infrastructure to secure debt. If Madauro would just play nice instead of pivoting to Russia and China the relief would come. Instead sanctions will be tightened until the West can declare a massive humanitarian crisis that force the US to intervene. Suddenly western oil majors have sweetheart deals in the Orinoco field.
Iraq, Syria, Libya, etc.
Greece has absolutely nothing to be exploited.
Without a doubt Venezuela is being punished for not kowtowing…. the US won’t even allow it to remain on life support (like Greece) because a) it will not take down the global financial system and b) you kiss that god damn ring or we kick you in the teeth when you are down
Because Maduro is not kissing the ring….
Mother of All Hurricanes is coming!
But it may be going East of the US coast–or at least East of Florida.
https://www.sfwmd.gov/weather-radar/hurricane-model-plots
I agree that the most likely track will take Irma east of Florida.
Once East of FL, it will just move off into the Atlantic. The jet stream has substantially shifted and with it any chance of hitting FL (in my opinion).
I agree. Getting a Cat 5 to hit the US mainland is hard to do. It has only happened 3 times in the last 100 years. I believe the last was Andrew in 1992. So, it has been a while. I am reading a lot of articles Inciting panic. That is not a wise thing to do. It looks like folks are evacuating so some of the wording I am seeing out there in the press like “total annihalation of Miami” is not helpful.
Still looks like it will hit Florida. Nonetheless, the wind field for Irma is ginormous, so even a near miss will be very painful, as Houston shows, where the eye of Harvey was some 200 miles to the south. And any northwards run would put the east coast as far north as Maine in the firing line, including NY.
And right behind Irma is Hurricane Jose. The one-two punch as it were.
That one may steer off harmlessly into the north Atlantic. We’ll see, it’s about two days behind Irma.
Have you read the WSJ article on Growth and Inflation? It seems that your work on this subject would dovetail with the authors, but the rationale for the problem differs?
https://www.wsj.com/articles/the-markets-big-puzzle-what-is-happening-to-growth-and-inflation-1504698403?mod=e2tw
I saw the title of the article, before I put my article up. In fact, I changed the title of my article to specifically mention deflation, after I saw the article.
But no, I haven’t read the article. I figured that if this was the market’s big puzzle, perhaps I should be giving an answer to it.
Oil price staying low will keep economy stable.
I don’t see a fast collapse – just muddling along.
And, guess Irma will destroy the Virgin Island and Puerto Rico. Hardly centers of civilization. All the geoengineering efforts were not for nought.
Oil prices staying low will keep the economy stable for a while. At some point, we end up with failing producers, however. Venezuela is already headed in that direction.
I don’t see a fast collapse – just muddling along.
American Psychological Association’s Concise Dictionary of Psychology: “An unpleasant reality is ignored, and a realistic interpretation of potentially threatening events is replaced by a benign but inaccurate one.”
Hey Cliffhanger, instead of marrying yourself to the idea of fast collapse, what if there was another possibility? A realistic scenario would be a disease, war, or climate change disaster wiping out billions of people. That would tend to stretch the remaining resources farther now, wouldn’t it? And how do we know that certain governments haven’t already realized this. The American government has been robbing third world countries of resources, in particular oil, for decades now.
No it wouldn’t.
It does not fix the fact that the cost of production of oil exceeds what people are able to pay.
If you cut the population by half that would be an even bigger disaster — because it would mean a collapse in demand for oil — and the industry would implode.
In pretty sure costs, currency rates, interest rates and other factors would all majorly change if half of the persons on the planet suddenly disappeared. All of what you’re scared of can mostly be papered over and reset. If people can’t afford something then the government will subsidize it forever.
In DelusiSTAN…. yes of course…. DelusiSTAN is the only place in the universe where such a perpetual economic motion machine exists…
Unfortunately we are not in DelusiSTAN…. and most of the members of FW do not have low enough IQs to meet the immigration requirements.
Alas we are doomed to suffer and die in this dimension….
Actually we are living in Delusia Stan right now. Have you not observed the quantitative easing, the bailouts of banks and corporations, the endless drilling at a loss? This can go on forever…until hard limits are reached or a major population collapse occurs. Then it will change.
Forever —- until hard limits are reached.
Which is it?
Pretend forever. Like the infinite growth paradigm.
As always, spot on! Thanks. Max