Will the World Economy Continue to “Roll Along” in 2018?

Once upon a time, we worried about oil and other energy. Now, a song from 1930 seems to be appropriate:

Today, we have a surplus of oil, which we are trying to use up. That never happened before, or did it? Well, actually, it did, back around 1930. As most of us remember, that was not a pleasant time. It was during the Great Depression.

Figure 1. US ending stocks of crude oil, excluding the Strategic Petroleum Reserve. Amounts will include crude oil in pipelines and in “tank farms,” awaiting processing. Businesses normally do not hold more crude oil than they need in the immediate future, because holding this excess inventory has a cost involved. Figure produced by EIA. Amounts through early 2016.

A surplus of a major energy commodity is a sign of economic illness; the economy is not balancing itself correctly. Energy supplies are available for use, but the economy is not adequately utilizing them. It is a sign that something is seriously wrong in the economy–perhaps too much income disparity.

Figure 2. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.

If incomes are relatively equal, it is possible for even the poorest citizens of the economy to be able to buy necessary goods and services. Things like food, homes, and transportation become affordable by all. It is easy for “Demand” and “Supply” to balance out, because a very large share of the population has incomes that are adequate to buy the goods and services created by the economy.

It is when we have too much income and wage disparity that we have gluts of oil and food supplies. Food gluts happened in the 1930s and are happening again now. We lose sight of the extent to which the economy can actually absorb rising quantities of commodities of many types, if they are inexpensive, compared to wages. The word “Demand” might better be replaced by the term “Quantity Affordable.” Top wage earners can always afford goods and services for their families; the question is whether earners lower in the wage hierarchy can. In today’s world, some of these low-wage earners are in India and Africa, or have no employment at all.

What is Going Right, As We Enter 2018?

[1] The stock market keeps rising.

The stock market keeps rising, month after month. Volatility is very low. In fact, the growth in the stock market looks rigged. A recent Seeking Alpha article notes that in 2017, the S&P 500 showed positive returns for all 12 months of the year, something that has never happened before in the last 90 years.

Very long runs of rising stock prices are not necessarily a good sign. According to the same article, the S&P 500 rose in 22 of 23 months between April 1935 and February 1937, in response to government spending aimed at jumpstarting the economy. By late 1937, the economy was again back in recession. The market experienced a severe correction that it would not fully recover from until after World War II.

The year 2006 was another notable year for stock market rise, with increases in 11 out of 12 months. According to the article,

Equity markets rallied amidst a volatility void in the lead-up to the Great Recession. Markets would make new all-time highs in late 2007 before collapsing in 2008, marking the worst annual returns (-37%) since the aforementioned infamous 1937 correction.

So while the stock market consistently rising looks like a good sign, it is not necessarily a good sign for market performance 6 to 24 months later. It could simply represent a bubble forming, which will later pop.

[2] Oil and other commodity prices are recently somewhat higher.

Recently, oil prices have been too low for most producers. Now, things are looking up. While prices still aren’t at an adequate level, they are somewhat higher. This gives producers (and lenders) hope that prices will eventually rise sufficiently that oil companies can make an adequate profit, and governments of oil exporters can collect adequate taxes to keep their economies operating.

Figure 3. Monthly average spot Brent oil prices, through December 2017, based on EIA data.

A major reason for the recent upward trend in commodity prices seems to be a shift in currency relativities for Emerging Markets.

Figure 4. Figure from Financial Times showing currency relativities based on the MSCI Emerging Market currency index.

While the currency relativities for emerging markets had fallen quite low when commodity prices first dropped, they have now made up most of their lost ground. This makes commodities more affordable in Emerging Market countries, and allows them to do more manufacturing, thus stimulating the world economy.

Of course, if China runs into debt problems, or if India runs into problems of some sort, or if oil prices rise further than they have to date, the run-up in currency relativities might run right back down again.

[3] US tax cuts create a bubble of wealth for corporations and the 1%.

With low commodity prices, returns have been far too low for many corporations involved with commodity production. “Fixing” the tax law will help these corporations continue to operate, even if commodity prices remain low, because taxes will be lower. These lower tax rates are important in helping commodity producers to avoid collapsing as a result of low commodity prices.

The problem that occurs is that the change in tax law opens up all kinds of opportunities for companies to improve their tax situation, either by changing the form of the corporation, or by merging with another company with a suitable tax situation, allowing the combined taxes to be minimized. See this recent Michael Hudson video for a discussion of some of the issues involved. This link is to a related Hudson video.

Groups evaluating the expected impact of the proposed tax law did their evaluations as if corporate structure would remain unchanged. We know that tax accountants will help companies quickly make changes to maximize the benefit of the new tax law. This is likely to mean that US governmental debt will need to rise much more than most forecasts have predicted.

In a way, this is a “good” impact, because more debt helps keep commodity prices and production to rise, and thus helps keep the economy from collapsing. But it does raise the question of how long, and by how much, governmental debt can rise. Will the addition of all of this new debt raise interest rates even above other planned interest rate increases?

[4] We have been experiencing artificially low oil prices since 2013. This helps the economic growth to be higher than it otherwise would be. 

In February 2014, I published an article documenting that back in 2013, oil prices were too low for oil producers. If a person looks at Figure 3, oil prices were over $100 per barrel that year. Clearly, oil prices have been much too low for producers since that time.

Unfortunately, it looks like these artificially low oil prices may be coming to an end, simply because the “glut” of oil that developed is gradually being reduced. Figure 5 shows the timing of the recent glut of oil. It seems to have started early in 2014.

Figure 5. US Stocks of crude oil and petroleum products (including Strategic Petroleum Reserve), based on EIA data.

If we look at the combination of oil prices and amount of oil in storage, a person can make a rough estimate of how this glut of oil might disappear. Quite a bit of it may be gone by the end of 2018 (Figure 6).

Figure 6. Figure showing US oil stocks (crude plus oil products) together with the corresponding oil prices. Rough guess of how balance might disappear and future prices by author.

Of course, one of the big issues is that consumers cannot really afford high-priced oil products. If consumers could not afford $100+ prices back in 2013, how would it be possible for oil prices to rise to something like $97 per barrel by the end of 2018?

I am not certain that oil prices can really rise this high, or that they can stay at this level very long. Certainly, we cannot expect oil prices to rise to the level they did in July 2008, without recession causing oil prices to crash back down.

What the Economy Needs Is Rising Energy Per Capita

I have published energy per capita graphs in the past. Flat spots tend to represent problem periods.

Figure 7. World per Capita Energy Consumption with two circles relating to flat consumption. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects (Appendix) together with BP Statistical Data for 1965 and subsequent, divided by population estimates by Angus Maddison.

The 1920-1940 flat period came shortly after the United Kingdom reached Peak Coal in 1913.

Figure 8. United Kingdom coal production since 1855, in figure by David Strahan. First published in New Scientist, 17 January 2008.

In fact, the UK invaded Mesopotamia (Iraq) in 1914, to protect its oil interests. The UK wasn’t stupid; it knew that if it didn’t have sufficient coal, it would need oil, instead.

There were many other disturbing events during this period, including World War I, the 1918 flu pandemic, the Great Depression, and World War II. If there are not enough energy resources to go around, many things tend to go wrong: countries tend to fight for available resources; jobs that pay well become less available; deflation becomes more likely; population becomes weakened, and epidemics become more likely. I wrote about the 1920 to 1940 period in a recent post, The Depression of the 1930s Was an Energy Crisis.

The 1980-2000 flat period included the collapse of the Soviet Union, in 1991. The Soviet Union was an oil producer. The Soviet Union collapsed after prices had been low for a long time.

Figure 9. Former Soviet Union oil consumption, production, and inflation-adjusted price, all from BP Statistical Review of World Energy, 2015.

Even many years after the collapse of the Soviet Union, population growth in former Soviet Union countries and its affiliates was much lower than in the rest of the world.

Figure 10. World population growth rates between 2005 and 2010. Source: https://en.wikipedia.org/wiki/List_of_countries_by_population_growth_rate

Lower population (through falling birth rates, rising death rates, or rising emigration) are a major way that economies self-adjust because of falling energy per capita. Economies tend to fix the low-energy per capita problem by adjusting the population downward.

Recently, we have again been hitting flat periods in energy consumption per capita.

Figure 11. World per capita consumption of oil and of total energy, based on BP Statistical Review of World Energy data and UN 2017 population data.

The slowdown in world energy consumption per capita in 2008-2009 was clearly a major problem. Oil, coal and natural gas consumption fell simultaneously. Oil consumption per capita fell more than the overall mix, especially affecting countries heavily dependent on oil (Greece with its tourism, but also the US, Japan, and Europe).

The recent shift in political strategy to more isolationist stances also seems to be the result of flat energy consumption per capita. It is doubtful that Donald Trump would have been elected in the US, if world energy consumption per capita had been growing robustly, and if wage disparity had been less of a problem.

The primary cause of the 2013 to 2016 flat trend in world energy consumption per capita (Figure 11) is falling coal consumption (Figure 12). Many people think coal is unimportant, but it is the world’s second largest source of energy, after oil. We don’t have a good way of getting natural gas production to rise enough, to make up for loss of coal production.

Figure 12

Wind and solar simply do not work for solving our problem of flat or shrinking energy consumption per capita. After spending trillions of dollars on them, they make up only a tiny (1%) share of world energy supply, according to the International Energy Agency. They are part of the little gray “Other” sliver on Figure 13.

Figure 13. Figure prepared by IEA showing Total Primary Energy Supply by type from this IEA document.

Something Has to “Give” When There Is Not Enough Energy Consumption per Capita

The predicament we are facing is that energy consumption per capita seems to be reaching a maximum. This happens because of affordability issues. Over time, the price of energy products needs to rise to keep up with the rising cost of creating these energy products. But if energy prices do rise, workers earning low wages cannot afford to buy goods and services made with high-priced energy products, plus honor all of their other commitments (such as mortgages, auto loans, and student loans). This leads to debt defaults, as it did in the 2008-2009 recession.

At some point, the affordability problem can be expected to hold down energy consumption. This could happen in many ways. Spiking prices and affordability issues could lead to a worse rerun of the 2008-2009 recession. Or if oil prices stay fairly low, oil-exporting countries (such as Venezuela) may collapse because of low prices. Even if oil prices do rise, we may find that higher prices do not lead to sufficient additional supply because investment in new oil fields has been low for many years, because of past low prices.

As long as the world economy is expanding (Figure 14), individual citizens can expect to benefit. Jobs that pay well are likely to be available, and citizens can afford to buy goods with their growing wages. People who sell shares of stock and people who get pension benefits can all receive part of this growing economic output.

Figure 14. Author’s image of an expanding economy.

Once the economy starts to shrink (Figure 15), we start having problems with dividing up the goods and services that are available. How much should retirees get? Governments? Today’s workers? Holders of shares of stocks and bonds? Not all commitments can be honored, simultaneously.

Figure 15. Author’s image of declining economy.


One obvious problem in a shrinking economy is that loans become harder to repay. The problem is that there is less left over for other goods and services, after debt plus interest is subtracted, in a shrinking economy.

Figure 16. Figure by author.

Changing interest rates can to some extent help offset problems related to higher energy prices and shrinking supply. The danger is that interest rates can move in the wrong direction and make our problems worse. In the lead-up to the Great Recession of 2008-2009, the US raised short-term interest rates, helping to puncture the sub-prime mortgage debt bubble.

Figure 17. Figure comparing Case-Shiller Seasonally Adjusted Home Price Index and Federal Reserve End of Quarter Target Interest Rates. See Oil Supply Limits and the Continuing Financial Crisis for details.

We now hear a lot of talk about raising interest rates and selling QE securities (which would also tend to raise interest rates). If growth in energy consumption per capita is already flat, these changes could make the problems that the economy is facing even worse.

Our Economy Works Like a Bicycle

Have you ever wondered why a two-wheeled bicycle is able to stay upright? Research shows that a bicycle will stay upright, as long as its speed is greater than 2.3 meters (7.5 feet) per second. This is the result of the physics of the situation. A related academic article states, “This stability typically can occur at forward speeds v near to the square root of (gL), where g is gravity and L is a characteristic length (about 1 m for a modern bicycle).”

Thus, a bicycle will be able to continue in an upright manner, as long as it goes fast enough. If it slows down too much, it will fall down. Our economy is similar.

Gravity plays an important role in determining the speed of a bicycle. If the bicycle is going downhill, gravity gives an important boost to the speed of the bicycle. If the bicycle is going uphill, gravity very much pulls back on the bicycle.

I think of the situation of an economy having rising energy consumption per capita as being very much like riding on a bicycle, speeding down a hill. The person operating the bicycle would not need to provide much extra energy to keep the bicycle going.

If energy consumption per capita is flat, the person riding the bicycle must provide the energy to make it go fast enough, so it doesn’t fall over. This is somewhat of a problem. If energy consumption per capita actually falls, it is a true disaster. The bicyclist himself must provide the energy necessary to push the bicycle and rider uphill.

In fact, there are other ways that a speeding bicycle is analogous to the world economy.

Figure 18. Author’s view of analogies of speeding upright bicycle to speeding economy.

The economy needs a constant flow of outside energy. In the case of the bicycle, the human rider can provide the energy flow. In the case of the economy, the energy flow comes from a mixture of various fuel types, typically dominated by fossil fuels.

Growing debt (front wheel) is important as well. It tends to pull the economy along, because this debt can be used to pay wages and to buy materials to make additional goods and services. Thus, the effect of this increase in debt is indirect; it ultimately works through the bicyclist, the gears, and the back wheel.

In fact, the financial system as a whole is important for the “steering” of the economy. It tells investors which investments are likely to be profitable.

The gearing system of the bicycle plays a modest role in the system. Changing gears allows greater efficiency in the use of the energy that is available, under certain circumstances. But energy efficiency, by itself, cannot operate the system.

If the human rider does not provide sufficient energy for the bicycle to go rapidly enough, the bicycle glides for a while, and then falls over. The world economy seems to be similar. If the world economy does not obtain enough energy per capita, economic growth tends to slow and eventually collapses. The collapse can relate to the whole world economy, or to parts of the economy.

The Problem of Parts of the Economy Not Getting Enough Energy

We can think of the economy as being made up of many bicycles, operated by bicycle riders. At the beginning of the post, I talked about the problem of wage disparity. This issue occurred at the time of the 1930’s Great Depression and is occurring again now.

We might call wage disparity “too low a return on the labor of some workers.” In groups of animals in ecosystems, too low a return on the effort of these animals is what causes ecosystems to collapse. For example, if fish have to swim too far to obtain additional food, their population will collapse. It should not be surprising that economies tend to collapse, when the return on the efforts of part of their workers falls too low.

Wage disparity has to do with how well the operators of bicycles are doing. Are the operators of these bicycles receiving enough calories, so that they can keep pumping their bicycles fast enough so that the speed is high enough to remain upright?

If energy consumption per capita is growing, this greatly helps the operation of the economic system. If there is growing availability of inexpensive energy, machines of various types, including trucks, can be used to increasingly leverage the labor of workers. This increased leveraging helps each worker to become more “productive.” This growing productivity, thanks to growing energy consumption, allows more goods and services to be produced in total. It also allows the wages of the workers to stay high enough that they can afford to buy a reasonable share of the output of the economy. When this happens, “gluts” of unaffordable goods are less of a problem.

If energy consumption per capita is flat (or worse yet, falling), greater “complexity” is needed, to keep output of goods and services rising. Greater complexity involves more specialization and more training of individual members of the economy. Greater complexity leads to larger companies, more government services, and more wage disparity. Unfortunately, there are diminishing returns to complexity, according to Joseph Tainter in “The Collapse of Complex Societies.” Ultimately, increased complexity fails to provide an adequate number of high-paying jobs. Wage disparity becomes a problem that can cause an economy to collapse.

If there is not enough economic output, the physics of the economy tries to “freeze out” workers at the bottom of the hierarchy. Workers with low wages cannot afford homes and families. The incidence of depression rises. Debt levels of disadvantaged groups (such as young people in the US) may rise.

So the situation may not be that the whole world economy fails; it may be that parts of the economy collapse. In fact, we are already seeing evidence that this is taking place. For example, life expectancies for US men have been falling for two years, because of growing problems with drug overdoses.


In 2017, the world economy seemed to be gliding smoothly along because the economy has been able to get the benefit of artificially low energy prices and artificially low interest rates. These artificially low prices and interest rates have given a temporary boost to the world economy. Countries using large amounts of energy products, including the US, especially benefitted.

We cannot expect this temporary condition to continue, however. Low oil prices have already started to disappear, with Brent oil prices at nearly $69 per barrel at this writing. The trends in oil prices and oil stocks in Figure 6 are disturbing. If oil prices begin to rise toward the price needed by oil producers, they are likely to trigger a recession and a drop in world energy consumption, just as spiking prices did in 2008-2009. There is a significant chance of collapse in the next 12 to 24 months. It is hard to know how widespread such a collapse may be; it may primarily affect particular countries and population groups.

To make matters worse, our leaders do not seem to understand the situation. The world economy badly needs rising energy consumption per capita. Plans to raise interest rates and sell QE securities, when the economy is already “at the edge,” are playing with fire. If we are to keep the world economy operating, large quantities of additional energy supplies need to be found at very low cost. It is hard to be optimistic about this happening. High-cost energy supplies are worthless when it comes to operating the economy because they are unaffordable.

Many followers of the oil situation have had great faith in Energy Returned on Energy Invested (EROI) analysis telling us which kinds of energy supplies we should increase. Unfortunately, EROI doesn’t tell us enough. It doesn’t tell us if a particular product is scalable at reasonable cost. Wind and solar are great disappointments, when total costs, including the cost of mitigating intermittency on the grid, are considered. They do not appear to be solutions on any major scale.

Other researchers looking at the energy situation have not understood how “baked into the cake” the need for economic growth, rising per capita energy consumption, and rising debt levels really are. Rising debt is not an error in how the financial system is put together; a bicycle needs a front wheel, or it cannot operate at all (Figure 18). I have written other articles regarding why debt is needed to pull the economic system forward.

This economic growth cannot be “fake growth” either, where a debt Ponzi Scheme seems to allow purchases that real-life consumers cannot afford. Quite a bit of what is reported as world GDP today is of a very “iffy” nature. If China builds a huge number of apartments that citizens cannot afford without subsidies, should these be counted as true GDP growth? How about unneeded roads, built using the rising debt of the Japanese government? Or recycling performed around the world, because it makes people “feel good,” but really requires substantial subsidies?

At this point, it is hard for us to know where we really are, because every government wants to make GDP results look as favorable as possible. It is clear, however, that 2018 and 2019 can be expected to have more challenges than 2017. We have interesting times ahead!

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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2,782 Responses to Will the World Economy Continue to “Roll Along” in 2018?

    • I noticed his example of a good country is Norway according to Trump is a very high “energy per capita” country. The problematic countries are very low energy-per-capita countries. We need a less vulgar way of describing low energy-per-capita countries. People from low energy-per-capita countries have generally had very little education. (Either that, or we are taking the best-educated people from poor countries, and moving them to rich countries, leaving the low energy-er-capita countries worse off than they were before.) Education is a big piece of what high energy-per-capita buys. Culture may be a problem as well. Many very poor countries allow multiple wives, for example.

      The reason why people want to move from the areas that Trump is concerned about is not that they currently have resources, but that they used to have resources. Too many of the countries were rich in resources at one time, but are no longer.

      • xabier says:

        The museums of the industrial world are full of beautiful works of art originating in countries, continents and cities which once had resources, and empires.

        • Fast Eddy says:

          Was in the British Museum a few years ago with M Fast…. and I commented how there was no admission fee… and M Fast said — that’s the least they could do considering everything in here is stolen.

          Nice one Madame… very nice….

          • xabier says:

            The Victorian imperialists might have been thieves, but at least they had some style – they got the pick of the world.

      • Brian Woods Snr. says:

        Governance. That’s the key. A country may be well endowed with natural resources but if the rulers are kleptocrats – then it will be a ‘toilet bowl’.

        In respect of the different amounts of liquid fossil fuels consumed per person per day, they are giving quite contradictory outcomes when I convert the values to liters/person/day.

        First world countries should be above 12 liters; second world countries will be below 7 liters and above 3 ; third world will lie in range 3 liters or below. China and India should be in 1 to 2 liter range; India is, but China gives a value of almost 6! Data needs careful analysis.


        • Fast Eddy says:

          A country may be well endowed with natural resources but if the rulers are kleptocrats – then it will be a ‘toilet bowl’.

          I prefer to call the rulers of these countries puppets…. we put them in power… they allow us to rape the resources… they get a nice slice of the pie for playing ball… and if they refuse to play ball…

          Our long years of negotiations with foreign countries… have yielded no results thus far. With the oil revenues we could meet our entire budget and combat poverty, disease, and backwardness among our people. Another important consideration is that by the elimination of the power of the British company, we would also eliminate corruption and intrigue, by means of which the internal affairs of our country have been influenced. Once this tutelage has ceased, Iran will have achieved its economic and political independence. The Iranian state prefers to take over the production of petroleum itself. The company should do nothing else but return its property to the rightful owners. The nationalization law provide that 25% of the net profits on oil be set aside to meet all the legitimate claims of the company for compensation. It has been asserted abroad that Iran intends to expel the foreign oil experts from the country and then shut down oil installations. Not only is this allegation absurd; it is utter invention.[31]

          They get this:


    • Karl says:

      All of our countries are going to be “Holes” once the depletion rates overtake the frackers……..

  1. MG says:

    The Czech presidential election 2018:

    The dark-skinned FEMMEN activist attacks the current president and presidential candidate Milos Zeman (he worked in the area of economic forecasts during the communism) during his voting




    • Mark Nunez says:

      “The dark-skinned FEMMEN activist attacks the current president and presidential candidate Milos Zeman …”

      Not much of an attack if you ask me. More like an over-reaction to a non-violent protest.

      • MG says:

        She was very close, entered into his private zone. According to other articles, her fater was from Angola and mother from Ukraine.

        I ask myself, if it is possible that a white-skinned woman of European origin would attacked him, too? The text “Zeman is Putins s1 u t”, she had on her naked body, is just one part of this scene among various other components, like her biological characteristics.

  2. I ran across an article in the WSJ called, Merkel Edges Closer to Fourth Term as Chancellor.

    According to the article, it is not yet a “done deal,” but it looks like there is hope.

    I would describe the magic ingredient as more debt. According to the article,

    Friday’s agreement is heavy on extra spending. It foresees some €46 billion ($55.4 billion) in new expenditures, mainly benefit increases, and includes a €10 billion tax cut over four years—smaller than anticipated and only benefiting lower earners.​ Not included in this figure are additional but still unquantified payments to pensioners.

    While conservatives in Ms. Merkel’s camp will lament the scale of the tax cuts, they will likely welcome a decision to limit the number of new refugees entering the country to 220,000 a year.

    I think that the US tax change will be seen in retrospect to be very much a more debt scheme. There were goodies for almost everyone; it wasn’t just tax cuts for the rich. It seems like Germany is following the same route.

    Perhaps all of the additional governmental debt will keep things together a bit longer, and allow fuel prices to rise a little higher.

    • Fast Eddy says:

      If you cut taxes… you need to make up for that loss of revenue in some other manner… so yep — pile on more debt.

      Alas it does not seem to matter – at least anytime soon …. look at Japan’s debt… the dung is piled so high it should have fallen over years ago….

      • You can use the debt to create lots of jobs. Eighty year old ladies can pour tea for visiting tourists.

        You can have crossing guards and extra police, wherever they might be helpful. You can pave every stream with stones.

        You can build roads that have no cars, and bridges that are rarely used. And big concrete rocks to hold back the sea.

        People with jobs will feel good, because they are at least somewhat benefiting the system.

        But at some point, the system worldwide has to stop working. The amount of resources extracted each year starts falling. Some “bicycles” will fall over. Maybe whole economies will fail.

  3. Fast Eddy says:

    Stuuuupid humans:

    • Perhaps people are smart enough to know that savings won’t work. Debt and less savings is what keeps the economy going, at least temporarily.

      • Fast Eddy says:

        It’s the consumer confidence part I was referring to…. 🙂

      • jupiviv says:

        “Perhaps people are smart enough to know that savings won’t work.”

        Bit of a non sequitur, since most people aren’t thinking about the whole economy when choosing to save/spend.

        • You are right. Most people don’t think about this issue. But if they do think about buying a house or a car or getting a university degree, a lot of them will figure out that they will need a loan. Otherwise, they will work their entire lives, and never save up enough.

      • MudGod says:

        It is capital that builds a strong economy and that can only come through savings. Debt binges always lead to a bust.

      • Tim Groves says:

        According to the conventional wisdom, some must save so that others can spend. Unless, of course, your numbers come up.

        This is a day which Castleford woman, Viv Nicholson will never forget. On 30th September 1961, her and then husband, Keith scooped £152,319 from winning the football pools. In today’s money this would amount to £5m. When asked what she would do with her fortune, she famously replied, “I’m gonna spend, spend, spend.” Famously, with her new found wealth, Viv Nicholson’s life began to spiral out of control.

        After blowing her fortune on lavish clothes, cars, holidays abroad and alcohol, their lives took a tragic turn when Keith was killed in a car crash in 1965. A court wrangle ensued, as Nicholson fought to gain what was left of their fortune, which was in his estate. She remarried in the 70s, but like Keith [he] was killed in another car accident. During her wealthy years and afterwards, when she had spent all the money, her life descended into alcoholism and bankruptcy. In the late 70s, after a short, abusive marriage, she quit drinking and became a Jehovas Witness. A book and film musical was made about her life in 1998 and she launched a short-lived fashion boutique. In older age Nicholson earned just a widow’s pension, but from time to time would appear on local television. By the time she had passed away in April 2015 she had gone through a £5m fortune (in today’s money) had five husbands, four children and plenty of champagne.

        • Sorry, conventional beliefs are wrong. Promises are the basis of everything. Debt is very similar to shares of stock. We need one type of “funding” or another. We started making promises of future payment, back when we were hunter-gatherers, so that specialization and economies of scale could take place. Promises don’t require anything. If we want to build a machine which has future usefulness, we need to pay the workers with the hoped-for future benefits of the machine. This necessitates debt.

          • MudGod says:

            Debit with interest is the problem because in order to pay off the interest you have to grow the economy which according to OFW is no longer possible.

            • No. The problem is a lot more basis than debt with interest. Partly, it is related to the fact that world population is constantly growing. We have to produce more and more, just to stay even.

              In order to produce more and more, we have to extract resources that are increasingly difficult to extract. Somehow, this requires either higher cost, or increased complexity (machines and specialized jobs), or both.

              Furthermore, to pay for this all, we need to have shares of stock, or perhaps debt. The amount of goods and services has to be continually rising to match up with the promises underlying the sale of shares of stock or of issuing debt.

  4. Fast Eddy says:

    We have our first ___ ____ grooopy …. repenting…. look how easy it is… 3 small words…. just 3….

    If anyone is having trouble saying these 3 words…. then how about some baby steps…. just type in a happy face – like this: 🙂 ….. I will take that as a sign that you admit you are wrong but prefer not to put it in writing

    Of you could just post this . That would also be taken as a sign of repentance.

  5. Fast Eddy says:

    Tears indicate total sincerity …. so feel free to let it all hang out….. after nearly 12 years being burdened and frustrated by the belief that we were destined to broil…. surely there must be some tears of relief … or even joy!!!

    I am considering launching a class action suit against A l G ore…. citing mental anguish caused by his fra ud ulent scheme…. on a personal level I was at one point close to committing su ici de because of feelings of neg ativity about the future…. I will let the rest of you reformed ___ ___ ers

    We really need to stick it to that Sun of a B it
    ch …. flying around in that go dd a mn airplane and living large…. while telling us to walk to the corner store instead of driving …. if he’d had his way we’d all be living in blo ody grass huts while he luxuriates in his 9 million dollar mega mansion on the sea….

    How dare he play us like that!!!!

    I will let the rest of you ex- ___ ___ ers know if this law suit goes ahead. Maybe we can settle with him and get that mansion and a private jet.

    • jupiviv says:

      “after nearly 12 years being burdened and frustrated by the belief”

      Ah well there’s your problem, and also I imagine that of the rest of the BAU-or-bust club. Unrealistic beliefs invert themselves when their possessor realises they cannot be believed. Personally, I’ve never been one for beliefs of any kind, within any context.

      • Pintada says:

        jupiviv says, “Personally, I’ve never been one for beliefs of any kind, within any context.”

        Absolutely sir!

        But, when one tries to separate belief from fact, or belief from a likely truth, one has to have knowledge, and must be able to face the simple reality that we cannot know everything. We all have our main thing that we really understand, and the lucky among us have things that we are just now learning.

        It is a sad and pathetic creature that claims to be sentient and yet believes that purposeful and hubristic ignorance is something of which to be proud. There are so many people out there with no clue, and no way to be educated that it is mind boggling to me. Worse than the fact that people don’t get science is the fact that many, a vast majority in my experience, also have no clue how to be decent. That is, they have no idea how a worthwhile person should interact with the world, their fellow man, or the universe. For example, most religious people go to church as a way to make more money.

        So, now I find that BAU will likely go on yet another year, and humanity will get to rape and pillage for at least another 365 days. It is deeply saddening.

        • What makes you say, “Most religious people go to church as a way to make more money”?

        • Tim Groves says:

          Pintada, a lot of what you said about people resonates with me emotionally. Indeed, I’ve said a lot of the same things myself at one time or another. For example, I went through my anti-religion tirade as a teenager, and boy! was I disappointed as a young adult when I discovered that most people I encountered either personally or via the media never quite managed to make it past emotional adolescence.

          But then again, the only person I have a modicum of power over is Yours Truly. Over others, at best I have influence. Lamenting the fact that over people fall short of my standards of decency, morality, maturity or intellectual excellence or pitying them for their faults or judging them unworthy on my scale is one of the ways I violate the precepts of being a decent, moral, mature and intellectually excellent being.

          Why should we expect others to live up to our standards and why should we be peeved when they don’t? Isn’t it enough that we notice how others behave and how we react to their behavior?

          I asked Uncle Bertie what he thought, and with all the subtlety of a well-baked fortune cookie, he told me:

          • jupiviv says:

            “Why should we expect others to live up to our standards and why should we be peeved when they don’t?”

            Then why are you telling this to others, or being peeved when they don’t agree?

            • Tim Groves says:

              I’m not peeved in the least and I’m telling this to Pintada as a perfectly legitimate response to what Pintada wrote. Pintada’s writing literally wreaks of being peeved.

              He/She/It/They appear(s) to be channelling Lisa Simpson.

              By the way, when you wrote “Then why…..”, you raised a non sequitur, which is a logical fallacy. If you’d have simply asked “Why….” you would have been standing on firm logical ground, but starting off with “Then” was an attempt to link two things that are in no way connected.

              A non sequitur is something said that has nothing to do with what was said previously. Non sequiturs often sound a bit absurd because there is no logical leap from one statement to the next. If you don’t find it a bit absurd, that might be because you are tone deaf to logical consistency and therefore easy prey for True Believer cults of all kinds.

            • jupiviv says:

              This is more of the same self-contradiction I pointed out earlier. Vanity of vanities; all is vanity!

            • Tim Groves says:

              OK, my bad. That should have been “reeks of being peeved”.

              Being peeved, on the other hand, if it goes on too long, wreaks havoc on the human psyche. That’s why it’s a kindness to encourage sufferers to wean themselves off the habit.

            • Tim Groves says:

              It’s so very easy to see the vanity in other peoples words and deeds, but so difficult to recognize it in our own. Also, it’s no easy matter to be able to judge whether we are actually pointing out other people’s faults or merely projecting our own. Finally, a lot of what we are trying to communicate goes over the heads of the people it’s intended for because they are less intelligent or more stu-pid than we are or they aren’t paying attention. Don’t you agree?

        • Tim Groves says:

          For example, most religious people go to church as a way to make more money.

          In my experience, most religious people go to church in order to practice their religion, and it usually costs them money. But perhaps your definition of “religious people” differs from mine.

          Was she religious?

          How about him?

          “The fate of mankind, as well as religion, depends on the emergence of a new faith in the future. Armed with such a faith, we might find it possible to re-sanctify the earth.”
          —Al Gore

  6. Pintada says:

    Look at these charts if you doubt the reality of AGW. The Arctic sea ice volume is at least 3 standard deviations below the average. What are the odds of that in a world that is not warming? 1:1,000,000 or more (am I wrong there Gail?). The methane is coming, soon.


    • HideAway says:

      The simplest experiment to do is to place some water and ice in a pot. Put in a thermometer 0’C. Add heat, still 0’C until the ice melts, then watch the temperature rise.

      It is staggering the number of people that do not understand latent heat and what is happening to the Earth’s volume of ice.

      It appears that belief is more important than science.

      Despite this, peak FF is still a much bigger issue, with no way out.

      When oil prices next spike upwards, with CBs trying to control inflation at the same time, we get to enjoy (NOT) the next step down the Seneca cliff, hopefully not the big one!!

    • We can all agree that the climate is changing. It may be warming. The point is that we can do nothing about it.

    • Davidin100millionbilliontrillionzillionyears says:

      oh, no!

      the methane is coming!

      the methane is coming!

      run for the hills!

    • Fast Eddy says:

      But Al Gore bought ocean level property for $9M – why?

      • Fast Eddy says:

        Could it be that he is right – renewable energy will put an end to ___ ___ and his property will triple in value?

        Someone should check to see if Al is buying up ocean level properties around the world…

        Now that would be smart!!!

    • Slow Paul says:

      So what will happen when all the arctic sea ice has melted?

  7. psile says:

    This Tourism Hotspot Could be the World’s First City to Run Out of Water (Video)

    For the first time, a major city may run out of water this year.

    South Africa’s city of Cape Town has been grappling with water shortages that are the result of what the Weather Channel calls the worst drought to hit the country in 100 years. The situation may result in Cape Town officials shutting off all of the city’s water taps this April.

    Irregularly dry winters have created exceedingly low dam levels within the country, leading city representatives to set a “Day Zero” date, which is when they believe the country will see dam levels drop below 13.5 percent and lead to the mandatory shutting off of all taps.

    Currently, the date is set for April 22. That’s a week earlier than the previous date set for April 29, with the city’s current dam levels only providing 19.7 percent of water that is actually useable.

    Going off the rails on a crazy train…

    • Not a good situation. The fancy video that doesn’t say a whole lot.

      If the price of energy were free, countries would desalinate enough water for their population. So this is partly a high-cost energy problem.

      It is also a population problem. The population of South Africa was 13.6 million in 1950 according to the UN; now it is something like 57 or 58 million. I imagine that the population of cities has grown even more than the total population. And people expect more landscaping, based on your photo.

      A third issue is industrial use of water. Electric power plants use a lot of water; so do coal processing plants. I would presume that South Africa stays away from bottling water and other high water use industries.

      So I wouldn’t blame the problem entirely on the drought.

      This article says Cape Town’s water crisis: driven by politics more than drought. According to it,

      The Western Cape is the only province in the country run by the official opposition party, the Democratic Alliance. South Africa’s ruling African National Congress runs the rest. This means that the relationship between national government and the Western Cape is complicated, as the water crisis shows.

      Two tiers of governance – the Western Cape province and the City of Cape Town – went above and beyond what was required to prepare for drought. The system failed, however, at the level of national government.

      Wasteful expenditure in the national Department of Water and Sanitation, erroneous water allocations to agriculture and a failure to acknowledge or respond to provincial and municipal calls for help obstructed timely interventions.

      The author blames the problems at the national level on “debt, mismanagement, and corruption.” Later it says,

      Had systems in national government been running smoothly, Cape Town’s water crisis could have been mitigated. Appropriate water allocations would have made more water available to Cape Town. And with timely responses to disaster declarations, water augmentation infrastructure could have been up and running already.

      Cape Town teaches us that water crises are rarely a matter of rainfall. Understanding disasters like droughts involves seeing the issue from many different perspectives, including politics.

    • Slow Paul says:

      Sounds like a good candidate for the next peripheral country to collapse.

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