Will China Bring an Energy-Debt Crisis?

It is easy for those of us in the West to overlook how important China has become to the world economy, and also the limits it is reaching. The two big areas in which China seems to be reaching limits are energy production and debt. Reaching either of these limits could eventually cause a collapse.

China is reaching energy production limits in a way few would have imagined. As long as coal and oil prices were rising, it made sense to keep drilling. Once fuel prices started dropping in 2014, it made sense to close unprofitable coal mines and oil wells. The thing that is striking is that the drop in prices corresponds to a slowdown in the wage growth of Chinese urban workers. Perhaps rapidly rising Chinese wages have been playing a significant role in maintaining high world “demand” (and thus prices) for energy products. Low Chinese wage growth thus seems to depress energy prices.

(Shown as Figure 5, below). China’s percentage growth in average urban wages. Values for 1999 based on China Statistical Yearbook data regarding the number of urban workers and their total wages. The percentage increase for 2016 was based on a Bloomberg Survey.

The debt situation has arisen because feedback loops in China are quite different from in the US. The economic system is set up in a way that tends to push the economy toward ever more growth in apartment buildings, energy installations, and factories. Feedbacks do indeed come from the centrally planned government, but they are not as immediate as feedbacks in the Western economic system. Thus, there is a tendency for a bubble of over-investment to grow. This bubble could collapse if interest rates rise, or if China reins in growing debt.

China’s Oversized Influence in the World

China plays an oversized role in the world’s economy. It is the world’s largest energy consumer, and the world’s largest energy producer. Recently, it has become the world’s largest importer of both oil and of coal.

In some sense, China is the world’s largest economy. Usually we see China referred to as the world’s second largest economy, based on GDP converted to US dollars. Economists use an approach called GDP (PPP) (where PPP is Purchasing Power Parity) when computing world GDP growth. When this approach is used, China is the world’s largest economy. The United States is second largest, and India is third.

Figure 1. World’s largest economies, based on energy consumption and GDP based on Purchasing Power Parity. Energy Consumption is from BP Statistical Review of World Energy, 2017; GDP on PPP Basis is from the World Bank.

Besides being (in some sense) the world’s largest economy, China is also a country with a very significant amount of debt. The government of China has traditionally somewhat guaranteed the debt of Chinese debtors. There is even a practice of businesses guaranteeing each other’s debt. Thus, it is hard to compare China’s debt to the debt level elsewhere. Some analyses suggest that its debt level is extraordinarily high.

How China’s Growth Spurt Started

Figure 2. China’s energy consumption, based on data from BP Statistical Review of World Energy, 2017.

From Figure 2, it is clear that something very dramatic happened to China’s coal consumption about 2002. China joined the World Trade Organization in December 2001, and immediately afterward, its coal consumption soared.

Countries in the OECD, whether they had signed the 1997 Kyoto Protocol or not, suddenly became interested in reducing their own greenhouse gas emissions. If they could outsource manufacturing to China, they would be able to reduce their reported CO2 emissions.

Besides reducing reported CO2 emissions, outsourcing manufacturing to China had two other benefits:

  • The goods being manufactured in China would be cheaper, allowing Americans, Europeans, and Japanese to buy more goods. If more “stuff” makes people happy, citizens should be happier.
  • Businesses would suddenly have a new market in China. Perhaps the people of China would start buying goods made elsewhere.

Of course, a major downside of moving jobs to China and other Asian nations was the likelihood of fewer jobs elsewhere.

Figure 3. US Labor Force Participation Rate, as prepared by Federal Reserve Bank of St. Louis.

In the early 2000s, when China started competing actively for jobs, the share of people in the US workforce started shrinking. The drop-off in labor force participation did not level out until mid-2014. This is about when world oil prices began to fall, and, as we will see in the next section, when China’s growth in average wages began to fall.

Another downside to moving jobs to China was more CO2 emissions on a worldwide basis, even if emissions remained somewhat lower locally. CO2 emissions on imported goods were not “counted against” a country in its CO2 calculations.

Figure 4. World carbon dioxide emissions, split between China and Rest of the World, based on BP Statistical Review of World Energy, 2017.

At some point, we should not be surprised if countries elsewhere start pushing back against the globalization that allowed China’s rapid growth. In some sense, China has lived in an artificial growth bubble for many years. When this artificial growth bubble ends, it will be much harder for China’s debtors to repay debt with interest.

China’s Rapid Wage Growth Stopped in 2014

Rising wages are important for making China’s growth possible. With rising wages, workers can increasingly afford the apartments that are being built for them. They can also increasingly afford consumer goods of many kinds, and they can easily repay debts taken out earlier. The catch, however, is that wage growth cannot get ahead of productivity growth, or the price of goods will become too expensive on the world market. If this happens, China will have difficulty selling its goods to others.

China’s wage growth seems to have slowed remarkably, starting in 2014.

Figure 5. China’s percent growth in average urban wages. Values for 1999 based on China Statistical Yearbook data regarding the number of urban workers and their total wages. The percentage increase for 2016 was estimated based on a Bloomberg Survey.

This is when China discovered that its high wage increases were making it uncompetitive with the outside world. Wage growth needed to be reined in. Its growth in productivity was no longer sufficient to support such large wage increases.

China’s Growth in Energy Consumption Also Slowed About 2014 

If we look at the annual growth in total energy consumption and electricity consumption, we see that by 2014 to 2016, their growth had slowed remarkably (Figure 6). Their growth pattern was starting to resemble the slow growth pattern of much of the rest of the world. Energy growth allows an economy to increasingly leverage the labor of its workforce with more energy-powered “tools.” With low energy growth, it should not be surprising if productivity growth lags. With low productivity growth, we can expect low wage growth.

Figure 6. China’s growth in consumption of total energy and of electricity based on data from BP Statistical Review of World Energy, 2017.

It is possible that the increased rate of electricity consumption in 2016 is related to China’s program of housing migrant workers in unsalable apartments that took place at that time. The fact that these apartments were otherwise unsalable was no doubt influenced by the slowing growth in wages.

This decrease in energy consumption most likely occurred because the price of China’s energy mix was becoming increasingly expensive. For one thing, the mix included a growing share of oil, and oil was expensive. The proportion of coal in the mix was falling, and the replacements were more expensive than coal. There was also the issue of the general increase in fossil fuel prices.

Lower Wage Growth in China Likely Affected Fossil Fuel Prices

Affordability is the big issue with respect to how high fossil fuel prices can rise. The issue is not just buying the oil or coal or natural gas itself; it is also being able to afford the goods made with these fuels, such as food, clothing, appliances, and apartments. If wages were depressed in the developed countries because of moving production to China, then rising wages in China (and other similar countries, such as India and the Philippines) must somehow offset this problem, if fossil fuel prices are to remain high enough for extraction to continue.

Figures 7 and 8 (below) show that oil, natural gas, and coal prices all started to slide, right about the time China’s urban wages growth began shrinking (shown in Figure 5).

Figure 7. Oil and natural gas prices, based on BP Statistical Review of World Energy data.

Figure 8. Coal prices between 2000 and 2016 from BP Statistical Review of World Energy. Chinese coal is China Qinhuangdao spot price and Japanese coal is Japan Steam import cif price, both per ton.

The lower recent increases made China’s urban wage growth look more like that of the US and Europe. Thus, in 2014 and later, Chinese urban wages present much less of a “push” on the growth of the world economy than they had previously. Without this push of rising wages, it becomes much harder for the world economy to grow very rapidly, and for it to have a very high inflation rate. There is simply not enough buying power to push prices very high.

It might be noted that the average Chinese urban wage increases shown previously in Figure 5 are not inflation adjusted. Thus, in some sense, they include whatever margin is available for inflation in prices as well as the margin that is available for a greater quantity of purchased goods. Because of this, these low wage increases may help explain the recent lack of inflation in much of the world.

Quite likely, there are other issues besides China’s urban wage growth affecting world (and local) energy prices, but this factor is probably more important than most people would expect.

Can low prices bring about “Peak Coal” and “Peak Oil”?

What does a producer do in response to suddenly lower market prices–prices that are too low to encourage more production?

This seems to vary, depending on the situation. In the case of coal production in China, a decision was made to close many of the coal plants that had suddenly become unprofitable, thanks to lower coal prices. No doubt pollution being caused by these plants entered into this decision, as well. So did the availability of other coal elsewhere (but probably at higher prices), if it is ever needed. The result of this voluntary closure of coal plants in response to low prices caused the drop in coal production shown in Figure 8, below.

Figure 8. China’s energy production, based on data from BP Statistical Review of World Energy, 2017.

It is my belief that this is precisely the way we should expect peak coal (or peak oil or peak natural gas) to take place. The issue is not that we “run out” of any of these fuels. It is that the coal mines and oil and gas wells become unprofitable because wages do not rise sufficiently to cover the fossil fuels’ higher cost of extraction.

We should note that China has also cut back on its oil production, in response to low prices. EIA data shows that China’s 2016 oil production dropped about 6.9% compared to 2015. The first seven months of 2017 seems to have dropped by another 4.2%. So China’s oil is also showing what we would consider to be a “peak oil” response. The price is too low to make production profitable, so it has decided that it is more cost-effective to import oil from elsewhere.

In the real world, this is the way energy limits are reached, as far as we can see. Economists have not figured out how the system works. They somehow believe that energy prices can rise ever higher, even if wages do not. The mismatch between prices and wages can be covered for a while by more government spending and by more debt, but eventually, energy prices must fall below the cost of production, at least for some producers. These producers voluntarily give up production; this is what causes “Peak Oil” or “Peak Coal” or “Peak Natural Gas.”

Why China’s Debt System Reaches Limits Differently Than Those in the West

Let me give you my understanding regarding how the Chinese system works. Basically, the system is gradually moving from (1) a system in which the government owns all land and most businesses to (2) a system with considerable individual ownership.

Back in the days when the government owned most businesses and all land, farmers farmed the land to which they were assigned. Businesses often provided housing as part of an individual’s “pay package.” These homes typically had a shared outhouse for a bathroom facility. They may or may not have had electricity. There was relatively little debt to the system, because there was little individual ownership.

In recent years, especially after joining the World Trade Organization in 2001, there has been a shift to more businesses of the types operated in the West, and to more individual home ownership, with mortgages.

The economy acts rather differently than in the West. While the economy is centrally planned in Beijing, quite a bit of the details are left to individual local governments. Local heads of state make decisions that seem to be best based on the issues they are facing. These may or may not match up with what Beijing central planning intended.

Historically, Five-Year Plans have provided GDP growth targets to the various lower-level heads of state. The pay and promotions of these local leaders have depended on their ability to meet (or exceed) their GDP goals. These goals did not have any debt limits attached, so local leaders could choose to use as much debt as they wanted.

A major consideration of these local leaders was that they also had responsibility for jobs for people in their area. This responsibility further pushed them to aim high in the amount of development they sought.

Another related issue is that sales of formerly agricultural land for apartments and other development are a major source of revenue for local governments. Local leaders did not generally have enough tax revenue for programs, without supplementing their tax revenue with funds obtained from selling land for development. This further pushed local leaders to add development, whether it was really needed or not.

The very great power of local heads of state and their administrators made these leaders tempting targets for bribery. Entrepreneur had a chance of getting projects approved for development, with a bribe to the right person. There has been a recent drive to eliminate this practice.

We have often heard the comment, “A rising tide raises all boats.” When the West decided to discourage local industrialization because of CO2 concerns, it gave a huge push to China’s economy. Almost any project could be successful. In such an environment, local rating agencies could be very generous in their ratings of proposed new bond offerings, because practically any project would be likely to succeed.

Furthermore, without many private businesses, there was little history of past defaults. What little experience was available suggested the possibility of few future defaults. Wages had been rising very rapidly, making individual loans easy to repay. What could go wrong?

With the central government perceived to be in control, it seemed to make sense for one governmental organization to guarantee the loans of other governmental organizations. Businesses often guaranteed the loans of other businesses as well.

Why the Chinese System Errs in the Direction of Overdevelopment

In the model of development we are used to in the West, there are feedback loops if too much of anything is built–apartment buildings (sold as condominiums), coal mines, electricity generating capacity, solar panels, steel mills, or whatever else.

In China, these feedback loops don’t work nearly as well. Instead of the financial system automatically “damping out” the overcapacity, the state (or perhaps a corrupt public official) figures out some way around what seems to be a temporary problem. To understand how the situation is different, let’s look at three examples:

Apartments. China has had a well-publicized problem of  building way too many apartments. In about 2016, this problem seems to have been mostly fixed by local governments providing subsidies to migrant workers so that they can afford to buy homes. Of course, where the local governments get this money, and for how long they can afford to pay these stipends, are open questions. It is also not clear that this arrangement is leading to a much-reduced supply of new homes, because cities need both the revenue from land sales and the jobs resulting from building more units.

Figure 9 shows one view of the annual increase in Chinese house prices, despite the oversupply problem. If this graph is correct, prices have increased remarkably in 2017, suggesting some type of stimulus has been involved this year to keep the property bubble growing. The size of an apartment a typical worker can now afford is very small, so this endless price run-up must end somewhere.

Figure 9. Chinese house price graph from GlobalPropertyGuide.com.

Coal-Fired Power Plants. With all of the problems that China has with pollution, a person might expect that China would stop building coal-fired power plants. Instead, the solution of local governments has been to build additional power plants that are more efficient and less polluting. The result is significant overcapacity, in total.

May 2017 article says that because of this overcapacity problem, Beijing is forcing every coal-fired power plant to run at the same utilization rate, which is approximately 47.7 % of total capacity. A Bloomberg New Energy Finance article estimates that at year-end 2016, the “national power oversupply” was 35%, considering all types of generation together. (This is likely an overestimate; the authors did not consider the flexibility of generation.)

Beijing is aware of the overcapacity problem, and is cancelling or delaying a considerable share of coal-fired capacity that is in the pipeline. The plan is to limit total coal-fired capacity to 1,100 gigawatts in 2020. China’s current coal-fired generating capacity seems to be 943 gigawatts, suggesting that as much as a 16% increase could still be added by 2020, even with planned cutbacks.

It is not clear what happens to the loans associated with all of the capacity that has been cancelled or delayed. Do these loans default? If “normal” feedbacks of lower prices had been allowed to play out, it is doubtful that such a large amount of overcapacity would have been added.

If China’s overall growth rate slows to a level more similar to that of other economies, it will have a huge amount of generation that it doesn’t need. This adds a very large debt risk, it would seem.

Wind and Solar. If we believe Darien Ma, author of “The Answer, Comrade, Is Not Blowing in the Wind,” there is less to Beijing’s seeming enthusiasm for renewables than meets the eye.

According to Ma, China’s solar industry was built with the idea of having a product that could be exported. It was only in 2013 when Western countries launched trade suits and levied tariffs that China decided to use a substantial number of these devices itself, saving the country from the embarrassment of having many of these producers go bankrupt. How this came about is not entirely certain, but the administrator in charge of wind and solar additions was later fired for accepting bribes, and responsibility for such decisions moved higher up the chain of authority.

Figure 10. China current view of solar investment risk in China. Chart by Bloomberg New Energy Finance.

Ma also reports, “Officials say that they want ‘healthy, orderly development,’ which is basically code for reining in the excesses in a renewable sector that has become yet another emblem of irrational exuberance.”

According to Ma, the Chinese National Energy Administration has figured out that wind and solar are still about 1.5 and 2.5 times more expensive, respectively, than coal-fired power. This fact dampens their enthusiasm for the use of these types of generation. China plans to phase out subsidies for them by 2020, in light of this issue. Ma expects that there will still be some wind and solar in China’s energy mix, but that natural gas will be the real winner in the search for cleaner electricity production.

Viewed one way, we are looking at yet another way Chinese officials have avoided closing Chinese businesses because the marketplace did not seek their products. Thus, the usual cycle of bankruptcies, with loan defaults, has not taken place. This issue makes China’s total electricity generating capacity even more excessive, and reduces the profitability of the overall system.

Conclusion

We have shown how low wages and low energy prices seem to be connected. When prices are too low, some producers, including China, make a rational decision to cut back on production. This seems to be the true nature of the “Peak Coal” and “Peak Oil” problem. Because China is reacting in a rational way to lower prices, its production is falling. China is already the largest importer of oil and coal. If there is a shortfall elsewhere, China will be affected.

We have also given several examples of how the current system has been able to avoid defaults on loans. The issue is that these problems don’t really go away; they get hidden, and get bigger and bigger. At some point, all of the manipulations by government officials cannot hide the problem of way too many apartments, or of way too much electricity generating capacity, or of way too many factories of all kinds. The postponed debt collapse is likely to be much bigger than if market forces had been allowed to bring about earlier bankruptcies and facility closures.

Chinese officials are now talking about reining in the growth of debt. There is also discussion by heads of Central Banks about raising interest rates and selling QE securities (something which would also tend to raise interest rates). China will be very vulnerable to rising interest rates, because of stresses that have been allowed to build up in the system. For example, many mortgage holders will not be able to afford the new higher monthly payments if rates rise. If interest rates rise, factories will find it even harder to be profitable. Some may reduce staff levels, to try to reach profitability. If this is done, it will tend to push the system toward recession.

We likely now are in the lull before the storm. There are many things that could push China toward an energy or debt crisis. China is so big that the rest of the world is likely to also be affected.

 

 

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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912 Responses to Will China Bring an Energy-Debt Crisis?

  1. Sven Røgeberg says:

    “The Tesla narrative is based on an illusion, a contradictio in adjecto – the promise that humankind can shop and consume itself into a sustainable future. However, even a million Teslas on the world’s roads will not impact the environment for better or worse. It is a systemic issue. The Financial Times agrees. Sustainability and promoting the purchase of raw-material consuming heavyweight products are mutually exclusive. There is no right life in the wrong, to paraphrase Theodor Adorno.
    At the time of writing, the company’s precarious financial position shows that it remains a bottomless pit. Let’s go in.” https://seekingalpha.com/article/4122890-tesla-approaches-terminal-decline

    • Davidin100millionbilliontrillionzillionyears says:

      the Tesla “leadership” has a serious lack of wisdom.

      they continue to pour money into Autopilot, while their basic car has quality issues.

      but then their fearless leader had a brainstorm to solve everything:

      https://www.digitaltrends.com/cars/elon-musk-camped-out-roof-gigafactory/

      genius!

    • Thanks! That is quite the article. It makes a person wonder why anyone would buy shares in the company, or cars from Tesla for that matter. I like this section about the batteries:

      Gross margin for energy storage and generation was negative with -1.1% at the end of Q3 2016, before the SolarCity business was included into that business segment. Nearly a year later, the storage part of the business performs far worse at -34% (revenue $317 million – $273 million attributable to SolarCity = $44 million with COGS $237 million – $178 million attributable to SolarCity = $59 million).

      Only a total of around 320MW of storage products have been sold since 2015, including Tesla’s Australian subcontractor effort, itself a peculiarity, because instead of using battery cells from its own heavily promoted battery factory, the company had to turn to Samsung SDI to deliver the goods. Surprisingly shortly after, Tesla was able to send a few Powerpacks to Puerto Rico for one of its several controversial post-hurricane-season PR efforts.

      The energy storage business is, like Tesla’s music streaming service or the more recent inter-city ballistic rocket travel system, a loss-making solution to no problem.

    • Davidin100millionbilliontrillionzillionyears says:

      while it might be noble to try to lift all the world’s poor children out of poverty…
      we know there are insufficient resources to accomplish this.

      we also know that many “rich children” will be heading down an economic slope…
      or perhaps off a Cliff into poverty…
      I bet most of the world’s rich don’t know that yet.
      I think they will discover this by 2030.

      but, since it’s 2017 still, and I haven’t posted in a while…
      BAU tonight, baby!

      • Baby Doomer says:

        I have a friend I went to high school with and he is very wealthy because his father owns several Audi and BMW car dealerships in my city…And his entire facebook feed is nothing but eating at steak and lobster dinners always, sailboat rides and cruising the country side in his Porsche. ..He works as a real estate agent in town..And all I can think whenever he post his usual status signaling updates..”holy shit his whole world is going to turn upside down in the near term in ways he could never imagine in his worst nightmares.”…

        • Fast Eddy says:

          The one positive that is going to come out of the end of BAU … is that people like that … who have never known a hard day in their entire lives…. will at some point …. be left with nothing on the menu… except boiled rat.

          The thought of that keeps me going.

      • Niko says:

        BAU this morning, baby!

        • Davidin100millionbilliontrillionzillionyears says:

          and, with a sweet Sunday of decadent food and American football…

          again, BAU tonight, baby!

      • Dennis L. says:

        Shirt sleeves to shirt sleeves in three generations may not be so much the norm now. As society self selects by education and neighborhoods like minded and skilled people tend to aggregate and reproduce. Mozart was from a family of very fine musicians, etc. There is some thought that the three generation meme was from earlier times when the more successful were more in contact with “average” people which does not seem to be the case now. People don’t become rich by being ignorant and it may be self comforting to see them as being in the predicament of the rich man passing through the eye of a needle while ignoring the old axiom that “those who have get.”

        Dennis L.

        • Yes. The social class now is permanent, and it will never change. Gregory Clark, who proved that most of the people in England are descended from those who owned property during the 15th – 18th centuries, also proved that

          it takes 15 generations to see a fall of a family’s status, and a lot of the rare Norman surnames in England, those who came with William the Conqueror 950 years ago, still tend to be among the highest echelon of English socioeconomic tree.

          Selective breeding will make sure that today’s rich will remain that way forever.

          • Davidin100millionbilliontrillionzillionyears says:

            are you forgetting some obvious aspects of the future?

            after The Collapse, the “breeding” of the “rich” will not matter.
            and their paper wealth will not matter.

            their physical assets will be seized by those who have the better “breeding” for life after The Collapse:
            raw physical strength plus skills with weapons will be the best traits to have.

            I don’t see the soft soft soft soft soft “upper class” having any advantage.
            in fact, their soft soft lifestyles now almost ensure that they will have poor survival chances after The Collapse.

            Cheers!

            • The catch is these people will want to shag the richer and suave daughters of the rich after they win power. So after three generations the old farts are back in power. Happened to Napoleon, and the nomads which conquered China. Those who were rich in southern China on year 1000 CE were still rich in the 1960s, when the first cleansing of the elites in 1,000 years took place.

          • Now that women also work, the selection gets to be more and more from both sides of the family. I know that my grandparents on both sides were fairly well educated, as were my parents. This is also true in my husband’s family.

            Women with high status/paying jobs seek men from high paying/status jobs. People at the bottom of the hierarchy find that it is not worth their bother to get married. Tax rates are better if the mother of the children raises the children as “single head of household,” regardless of whether they are living together or living apart. That way, if something goes wrong (jobs not available, partner too much into drugs, better opportunity elsewhere), the partners can easily split. The Department of Family and Children Services serves a huge number of children from this level of society. Generally, benefits are available only until age 18, when the young adult is supposed to be able to be self-supporting.

            The selection isn’t perfect. There are “fall outs” from the middle class. Kids who start using drugs and alcohol, for example.

            • alfredmelbourne says:

              “Women with high status/paying jobs seek men from high paying/status jobs.”
              True – and that is why so many of them are childless. All big cities in the “West” are full of women who left it too late.

  2. Baby Doomer says:

    Peak Industrial Output and the Limits to Growth as a Consequence of Depleting Natural Resources by: Dr Simon Michaux (2017)

    https://www.scribd.com/document/364164648/Peak-Industrial-Output-and-the-Limits-to-Growth-as-a-Consequence-of-Depleting-Natural-Resources-and-Appendices-ACME-v2

  3. Gail. I also tried to become an actuary although I eventually chose another line of work. At least you are at the same page with me that not all lives are worth saving.

    Eugenics was the dominant ideology among the learned people of the world as late as early 1950s, when Departments of Eugenics began to be quietly renamed as Departments of Genetics.

    The infamous Nazi eugenics programs were actually mimicked from existing eugenics programs in USA.

    As resources obtained by fossil fuels were plenty, there was enough room to carry the slack of deformed and otherwise damaged people who would never really function in society. But now things are getting scarce, and there is simply no room to carry these people who would be net consumers for all their lives , and at best will not contribute anything to society or economy (and, usually cause lots of problems – quite a lot of prison pop tend to have lower IQs.)

    • xabier says:

      Slightly confused thinking (just like the Nazis!) : you move without pause between physical deformity and disease to low IQ – they are not at all the same thing.

      I suspect that many people who are on drugs, and in prison today would, in an earlier form of economy, been perfectly happy peasants, fishermen and hunters, and innocuous people – even good parents and OK as neighbours.

      As someone once observed to me, ‘Beethoven would have been eliminated by an eugenics programme.’ They had a point. Most artists would!

      The type of very fit, obedient, but brainless automaton produced in Germany in the 1930’s is not really an admirable ideal: a total lack of capacity for thought -imagination, flexibility – for one thing.

      What we should avoid now is the terrible sentence we impose on parents by keeping very deformed babies alive: I’v seen terrible cases of that, when they should have been able to grieve and move on as in earlier times.

      It is the parents who really suffer. The cost to society is tiny, compared to arms programmes, fake universities and all the other nonsense.

      • I have heard that even with autism, the divorce rates of parents are higher. I have run into mothers of children with problems, whose husbands have left them. I don’t know if there have been studies on this kind of thing. Dads can sometimes find a way out, but it is hard for mothers to. At one time, the answer was, “Send the child to a state-run institution,” but now this option is pretty much gone.

      • Autism is on the rise. Some say that by 2040 or so 1/6 of all children will be autistic.

        I think that if that happens a radical approach to autism will be used , in order to save Civilization.

        Things like CRISPR won’t save it since we don’t really know what causes autism. So, a cheaper and easier solution will be implemented.

        • It may be pollution related, or related to loss of necessary nutrients. It cannot be purely hereditary, because its rise is so sudden.

          • TGN says:

            All infants require bonding and nurturing provided by the mother. Some infants require a much higher level of ‘Mothering’. The later group, if deprived of the required level of ‘Mothering’, will show higher levels of autism, anxiety, depression, and other social dysfunction as they mature. Around 1965 – 1975, the population became significantly more mobile thus degrading a Mother’s extended family support and women turned their infants over to daycare enterprises. Even the best commercial day care staff can not or will not provide the extraordinary emotional support that some infants need. The result is greatly increased emotional dysfunction such as autism.

            • This was the “refrigerator mother” theory that many believed for a while. I think that it has been pretty much debunked.

              Another theory was that women who worked in offices, or lived in houses with clothes driers, didn’t spend enough time outside getting enough Vitamin D. This, together with other issues (too much Roundup getting into the food system, for example), disrupted the systems of infants.

              Another theory was that the huge number of vaccinations that the medical system began requiring of infants lead to mercury poisoning of the very small babies receiving these injections, because mercury was used as a preservative.

              Another theory (perhaps more with respect to ADHD) was that all of the chemicals being added to foods today to give bright colors, desirable flavors, and the right dough consistency are causing problems.

              There are some hereditary aspects that may make some children more sensitive than others to any of these factors.

            • Ed Kitto says:

              Well, who can you trust?

              The US has some of the best scientists in the world.

              https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4392553/
              CONCLUSION

              Glyphosate is the most widely used herbicide on the planet, in part because of its perceived low toxicity to humans. In this paper, we propose that glyphosate’s chelation of Mn, working together with other known effects of glyphosate such as CYP enzyme suppression and depletion of derivatives of the shikimate pathway in microorganisms, may explain the recent increase in incidence of multiple neurological diseases and other pathologies. We have shown that glyphosate’s disruption of Mn homeostasis can lead to extreme sensitivity to variations in Mn bioavailability: While Mn deficiency in the blood leads to impairment of several Mn dependent enzymes, in contrast, excess Mn readily accumulates in the liver and in the brainstem due to the liver’s impaired ability to export it in the bile acids. This pathology can lead to liver damage and PD. Mn depletion in the gut due to chelation by glyphosate selectively affects Lactobacillus, leading to increased anxiety via the gut–brain access. Both low Lactobacillus levels in the gut and anxiety syndrome are known features of autism, and Lactobacillus probiotic treatments have been shown to alleviate anxiety. Increased incidence of Salmonella poisoning can also be attributed to glyphosate, through its impairment of bile acid synthesis. Low Mn bioavailability from the blood supply to the brain leads to impaired function of glutamine synthase and a build-up of glutamate and ammonia in the brain, both of which are neurotoxic. Excess brain glutamate and ammonia are associated with many neurological diseases. At the same time, impaired function of Mn-SOD in the mitochondria results in mitochondrial damage, also a hallmark of many neurological diseases. Mn deficiency can account for poor sperm motility and therefore low fertilization rates, as well as poor bone development leading to osteoporosis and osteomalacia. Sea star wasting syndrome and the collapse of coral reefs may in fact be an ecological consequence of the environmental pervasiveness of the herbicide. Many diseases and conditions are currently on the rise in step with glyphosate usage in agriculture, particularly on GM crops of corn and soy. These include autism, AD, PD, anxiety disorder, osteoporosis, inflammatory bowel disease, renal lithiasis, osteomalacia, cholestasis, thyroid dysfunction, and infertility. All of these conditions can be substantially explained by the dysregulation of Mn utilization in the body due to glyphosate.

            • Glycophosate is, of course, the scientific name of Roundup. It is very much a candidate for causing the rise in autism.

              I don’t remember reading, “Both low Lactobacillus levels in the gut and anxiety syndrome are known features of autism, and Lactobacillus probiotic treatments have been shown to alleviate anxiety.” I think Lactobacillus is found in some types of yogurt.

            • Fast Eddy says:

              What are a few thousand or even million deaths caused by Monsanto …. when one considers that these chemicals are what keep the horde of 7.5 billion humans scratching and clawing across the planet.

              A small price to pay.

            • DJ says:

              Euch, what a disgusting picture!

  4. Davidin100millionbilliontrillionzillionyears says:
    • Thanks! That article has a nice map of how Plague spread from Madagascar to most of the countries up and down the East Coast of Africa. Madagascar has been a very poor country in recent years. China has bought up farmland to produce food, presumably to export to the Chinese, but Madagascar remains poor.

      • xabier says:

        The Chinese lplanners have clearly noted how the British managed international out-sourcing of food supplies in the 19th century, which incidentally led to terrible poverty in rural areas of Britain before WW1, and in the 1930’s too.

        The British peasant of 1760 ate very well; his successor of 1860 very poorly: from beef and ale to bread and weak tea.

        And they say they are not trying to build an Empire…. 🙂

  5. Fast Eddy says:

    The Tesla cult

    Similar to many PR-driven politicians or business leaders, Elon Musk cleverly operates on the boundary of fiction and reality. Tesla Motors’ CEO is deploying an incessant stream of supposedly revolutionary or disruptive plans, concepts and forward looking ideas via social media and public appearances. Over time, what has become known as “The Tesla cult” has developed a near religious intensity – an “us-against-them” style of thinking, an “all-or-nothing” approach to investing, disregarding anything that questions the “revolutionary” and “disruptive” narrative.

    Likely, after the untimely death of Steven Jobs, the public was in search of a charismatic replacement persona on which to latch its dreams of a prosperous future, the appearance of a figure that would usher in an era of feel-good abundance in an ever complex world. According to Elon Musk and his investors, it is obvious that there is only a one size fits all solution: the solar-battery nexus – even though a quick look at a current map of global insolation shows just how uniquely privileged the Southwest of the U.S. is. If Tesla Motors were engaged in wind power, hydro power, geothermal power, thermal solar power, tidal power or biomass power, or, even better – energy conservation and sustainability – Tesla acolytes would quickly change their tune to celebrate an alternative approach to the global energy and transportation conundrum.

    The dogmatic approach to the solar-battery nexus evokes of one of Abraham Maslow’s famous cognitive biases: “If your only tool is a hammer, every problem looks like a nail.”

    The notion to “save the planet” by way of isolated technological fixes “from above” is irrational – sustainability is a highly complex issue, an intricate amalgamation of societal, economical and environmental issues that require systemic thinking and proper research. Ever since the sustainable agenda was launched with the Gro Harlem Brundtland report in 1987, it became apparent that the problem of a sustainable future for all humankind is overly complex and that, in fact, simple preservationist actions on a local and regional level can accomplish far more in a shorter timeframe at lower cost to society and its citizens.

    https://seekingalpha.com/article/3990417-debunking-tesla-mythology

    • If Tesla collapses, I wonder if Elon Musk’s fate will be similar to that of Aubrey McClenahan, who died in a firery crash after negative news about his high-flying company appeared.

      • Fast Eddy says:

        I suspect not… because I suspect Tesla is not his creation — that he has almost nothing to do with operations….

        I suspect he is nothing more than the front man… talking up the stock….. what does he know about running anything — particularly an auto manufacturing company.

        So when it fails… I suspect he’ll wash his hands of it and go on Living Large

    • Davidin100millionbilliontrillionzillionyears says:

      will America become “great again”?

      or will America fall off the proverbial Cliff?

      we should know by 2030.

      and that is VERY SOON.

      IC IC baby!

      • jupiviv says:

        Xwhat I consider appropriate!

        Cynically optimistic conclusion.

        ^Your ‘worldview’ in a nutshell.

      • JH Wyoming says:

        Maybe we should go all in on having Trump & Putin working together to eliminate competition in elections. It’s possible ‘The People’ are more interested in entertainment than their own best interests.

        • Fast Eddy says:

          I’d vote for Paris Hilton … or Beavis… or Homer Simpson ….or a stray dog…. politics has always been entertainment…. the money runs the show

    • Tim Groves says:

      Could you, perchance, be the entity previously known as Cliffhanger?

  6. i1 says:

    I’m thinking it makes sense for Elon to fake his own death here. He could volunteer to be the first chimp aboard a space-x rocket and blow himself up.

    • i1 says:

      Then, reincarnate as a movie producer and make a musk movie biography.

      • Davidin100millionbilliontrillionzillionyears says:

        no, Elon needs to be here for various reasons.

        he should be in the driver’s seat for his tests of a Tesla on full autopilot.

        then he should be the passenger for all tests of the Hyperpoop…

        excuse me, that should read Hyperloop, of course.

        finally, he should be the “astronaut” on the first SpaceX mission to Mars.

        and why, you may ask, should he have all the fun?

        maybe it’s just karma.

  7. Fast Eddy says:

    On June 4, 1963, President John F. Kennedy signed Executive Order 11110, authorizing the US Treasury to issue paper currency that could be redeemed for silver held by the treasury.

    As a result, this US currency was printed in denominations of $2 and $5 and inscribed with the words “United States Note” instead of “Federal Reserve Note.”

    Kennedy’s order was intended to wean the Federal Reserve System away from printing money, beginning a smooth transition toward returning the printing press to the hands of the American government.

    He was correcting a clear violation of the US Constitution and an absurd situation in which the US government could not print its own money. It was a quiet and inconspicuous coup d’état. For the bankers who had founded the Federal Reserve, their greatest fear was about to come true. Now with one stroke of the pen, their plans to establish complete control over the US government and American society were faced with a clear and present danger. Because the fact was that the issuance of these small banknotes was to be followed by the complete suspension of the Fed’s right to print money. So what was that agency to do then? Regulate the financial market, monitoring it so as to forestall any crises? Fine, regulating and monitoring is all well and good. Just stop printing money …

    The Federal Reserve’s monopoly on the issuance of its own dollar, which is for some reason considered to be the “US dollar,” hinges on a single act of legislation that was signed by President Woodrow Wilson in December of 1913. Consequently, a single, different act of legislation would be enough to destroy this monopoly. But John F. Kennedy failed to realize his agenda. Executive Order 11110 was not revoked but was never actually implemented. For the owners of the Fed, however, the threat remained that the order could be revived by a new US president, potentially JFK’s brother Robert, who in his position as US Attorney General fully grasped the implications of what was happening.

    And the equally enigmatic murder of Robert Kennedy, who was a leading candidate headed into the Democratic primary for the 1968 presidential election, occurred exactly five years after the signing of the very executive order that killed his brother. It looks like the very influential bankers from the Federal Reserve sent a clear signal: the clan whose representatives tried to betray the System will no longer be allowed to play a significant role in US politics. And they haven’t.

    http://www.zerohedge.com/news/2017-11-11/who-killed-president-kennedy-and-why

    One does not challenge the El ders…. without deadly repercussions….

    • Thanks! I hadn’t read that version of what happened. Could be.

    • i1 says:

      Yeah, before I woke up, I believed in fairy tales like the ones being spewed by this hack:

      http://www.jillonmoney.com/why-the-fed-matters/

      Here’s a great excerpt:

      “Congress established the Federal Reserve more than a century ago to build a more stable and secure financial system. Prior to the creation of the central bank, the US economy was plagued by frequent episodes of panic, bank runs and failures, which often led to a drying up of credit availability.”

      It’s only a single page article, but quite the slog. However, I will say ignore the fed at your own peril.

      • Fast Eddy says:

        The funny thing…. the comments below are akin to Elon Musk coming clean as follows:

        – Tesla was conceived and funded by the US government – I was invited to front for it
        – Tesla is not a real company in that it was known from day one it would never be profitable
        – Tesla exists only to give the masses hope that there will be a viable future
        – Tesla cars are unreliable clunkers – only a f789ing fool would spend money on one of these

        And even though the truth was spelled out in the clearest possible terms… massive numbers of people would reject what Musk said. They would somehow convince themselves that he was lying.

        This is absolutely no different. People will look at these comments — and they will reject the theory that the Fed runs the world.

        If you ask them why a private company was given the right to print the world’s reserve currency — and not the US government — they will still not ‘get it’ …. they will still reject the theory.

        Because from grade one they have been taught that they live in a democracy. It has been hammered into their heads over and over and over a again.

        And to some degree there is democracy — politicians and bureaucrats administer the empire…. but they are ultimately responsible to the El ders… they are not micro managed …. so long as they follow the general principles laid out by the El ders there is no need to step in …. other than when big issues are involved that require war… then they take direct marching orders…

        Think of this like a massive corporation — thing General Electric – run by a CEO and a board of directors. These people do not get involved in the minutia of operating the companies within the group – all of that is delegated.

        They simply direct the company and make get involved only at the very highest level.

        Their minions understand what is required and make sure the show runs smoothly. If they screw up — are incompetent – or attempt to rock the boat — they are fired.

        “I care not what puppet is placed on the throne of England to rule the Empire, … The man that controls Britain’s money supply controls the British Empire. And I control the money supply.” Nathan Rothschild

        “Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. … Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.” — Mackenzie King, Canadian Prime Minister 1935-1948.

        “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.” – Woodrow Wilson, after signing the Federal Reserve into existence

        “Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breath when they speak in condemnation of it.” ― Woodrow Wilson

        • There are an awfully lot of things that are believed by “everyone.” Solar panels and wind turbines have the power to save us. If we would just change what we are doing, we could prevent climate change. Economic growth can go on forever. We don’t really need fossil fuels.

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