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?

  1. Baby Doomer says:

    Apple’s market value drops $45 billion in a week on fears of plunging iPhone X demand


  2. Fast Eddy says:

    To establish the link between plastic and disease, Dr Lamb and her colleagues examined 159 coral reefs from Indonesia, Australia, Myanmar and Thailand.

    As well as documenting the plastic waste they saw, the scientists visually examined nearly 125,000 corals, looking for evidence of disease.

    They found that when plastic was in contact with coral, the chance that it also showed signs of disease increased by a factor of more than 20 compared to coral that was plastic-free.

    “We know that plastics are widespread in the ocean, and it’s no surprise to me that corals are encountering them,” said Professor Richard Thompson, a marine biologist at the University of Plymouth who was not involved in the study.

    Professor Thompson added that in his own work he has documented over 700 species encountering plastic debris, and evidence of harm coming to them as a result.

    “Laboratory studies have shown that plastic encounters can cause really subtle, chronic effects and harm, compromising the ability of organisms to grow in the normal way for example,” he said.

    “Any compromise like that is going to make creatures more susceptible to the risks of other diseases.”


  3. Fast Eddy says:


    Plastic trapped in reefs around the world is having a serious impact on coral health, according to a new study.

    More than 11 billion pieces of plastic were lodged in the Asia-Pacific oceans corals, researchers from New York’s Cornell University who studied them.

    This debris appeared to be leading to a greater prevalence of coral diseases, they wrote in their findings published in the journal Science.

    This contact with plastic increases the likelihood of disease striking corals from 4 per cent to 89 per cent.

    “Our work shows that plastic pollution is killing corals,” said senior author Professor Drew Harvell, an ecologist at Cornell.

    It is though that the increasein disease could be due to plastic items blocking light and oxygen from reaching the corals, which require both to survive.

    Depriving them of these could also make corals more susceptible to infection by harmful microbes, known as pathogens.

    Plastic could also actively transport pathogens into coral reefs.

    “Plastic debris acts like a marine motorhome for microbes,” said Dr Joleah Lamb, a marine biologist at Cornell University and lead author of the new study.

    “Plastic items – commonly made of polypropylene, such as bottle caps and toothbrushes – have been shown to become heavily inhabited by bacteria. This is associated with the globally devastating group of coral diseases known as white syndromes,” said Dr Lamb.

    White syndrome is spread by bacteria, and causes parts of corals to die leaving a white band of dead tissue.

    “What’s troubling about coral disease is that once the coral tissue loss occurs, it’s not coming back,” said Dr Lamb. “It’s like getting gangrene on your foot and there is nothing you can do to stop it from affecting your whole body.”


    • 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.
      Gail Tverberg says:

      I doubt it. Prices will never get this high.

  4. Baby Doomer says:

    This week we were informed that Caterpillar reported profits and revenue that “handily” beat Wall Street’s expectations-CNBC” As it turns out December 2017’s quarterly revenue of $12.9 billion was the exact same as it was in December 2008. Yes, you read that right. Meaning that all of the stock gains in the past 10 years were compliments of stock buybacks.

    “The secret to global recovery is mass layoffs”


  5. Trump is winning
    Trump is making us a little more like him, and politics a little more like the tribal clash he says it is


    A year in, that presidency looks surprisingly normal. Trump has largely outsourced his agenda to the congressional GOP and their allies inside his administration. As a result, he has pursued policies similar to what Marco Rubio or Ted Cruz or Jeb Bush might have pursued: repeal of Obamacare, tax cuts for corporations, deregulation for the energy industry. When he goes to Davos — and, note, he goes to Davos! — he gives the kind of speech any Republican might give at Davos.

    Ideologically disruptive forces like Steve Bannon have been forcibly ejected from Trump’s orbit, and the president himself has abandoned his more heterodox views on taxes, trade, health care, and China. Trump remains an immigration hardliner, but of a sort that has long been represented within the Republican Party.

    Trump’s opponents can take comfort in their success at resisting and wounding this incarnation of Trump’s White House. Given the economy’s performance and the GOP’s dominance of Congress, it is surprising how little the Trump administration has achieved, and how steep the price has been. The effort to repeal Obamacare was a debacle. The tax cuts passed, but they passed while polling in the 20s and 30s — a disaster given that the policy, at least in its early years, is designed to shovel free money at families and corporations

    “Even a critical story, which may be hurtful personally, can be very valuable to your business,” Trump said in his 1987 book The Art of the Deal. He goes on to recall the lesson he learned being attacked for a particularly gaudy skyscraper he sought to build. “The point,” he says, “is that we got a lot of attention, and that alone creates value.”

    This is the law by which Trump lives his life. Attention creates value, at least for him. Before Trump, every politician hewed to the same basic rule: You want as much positive coverage, and as little negative coverage, as possible. Trump upended that.

    His rule, his realization, is that you want as much coverage as possible, full stop. If it’s positive coverage, great. If it’s negative coverage, so be it. The point is that it’s coverage — that you’re the story, that you’re squeezing out your competitors, that you’re on people’s minds


    • djerek
      djerek says:

      >Trump is making us a little more like him, and politics a little more like the tribal clash he says it is

      This is a reversal of cause and effect. Trump is the result of politics becoming more of a tribal clash, not the cause. This is exactly what happens every time in history a multicultural society faces the end of growth and declining future prospects.

      • JH Wyoming says:

        The net effect of all the controversial antics Trump initiates to generate a news cycle is gnawing at the value of the dollar and causing a lot of disagreement between family members. I tried to link an article about the splintering of families over their arguments about Trump but the screen froze due to script. Its reminiscent of what happened during the Vietnam war. Trump is so self involved he doesn’t care what effect it has when he sticks his finger into the hornets nest. Some may see it as beneficial but generally it’s very disruptive. Disruptive would be good if it moved the yardstick towards something better but it doesn’t, so it’s just wasted energy and pits people against one another instead of bringing them together. Putin/Russia succeeded in helping Trump get into office to cause problems. That’s why we keep seeing photos of Putin smiling. I wouldn’t say Trump is winning, I’d say Russia has won and continues to win.

        • Baby Doomer says:

          Putin idea to spread fake news with bots and trolls was genius! Since most people on the right will believe anything that confirms with their extremist ideology! Studies show almost all the fake news comes from the right! And its not because they are stupid its because they are scared! And are scared to question or fact check what they are told.

          • 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.
            Gail Tverberg says:

            “Studies show almost all the fake news comes from the right!”

            I expect that most of the people studying the issue are coming from the left. I expect it depends on your perspective. Peak oil is in some sense a fake news story. They thought that they had the right story, but it isn’t really right. The idea that we can fix climate change is a fake news story. It is certainly believed by a lot of people on the left.

  6. Fast Eddy says:

    The depraved human… meets the desperate human….


    Watch what happens when BAU goes….

    • most funny thing in this article

      in many German cities, Saarbrücken’s sex industry really exploded in 2008 when Romania and Bulgaria were acceded to the EU. “Prostitution has reached intolerable levels here,” says Saarbrücken’s mayor, Charlotte Britz. There are at least 100 brothels in the city. I walk past five in the ten minutes it takes me to get from the train station to her office. Their garish hoardings look strikingly out of place in the pretty cobbled streets.

      Britz, 55, sips tea from a china cup as she recounts stories of men being approached by prostitutes in supermarket car parks and even, once, at a funeral. Residents complain about used condoms littering the bus stops their children use to go to school. “I am not OK with that,

    • jupiviv
      jupiviv says:

      Prostitution is a way for men to have sex without the complicated and often inscrutable economic and legal responsibilities of marriage or romance, so of course it must be vilified and penalised everywhere by feminists and alt-right “conservatives”.

  7. Baby Doomer says:

    All the peak oil stories that were idiotically ignored because of shale will return with a vengeance!

  8. Dennis L. says:

    Agree with the first sentence, not sure about the second. Perhaps death is necessary to be rid of ideas that don’t work. Somewhere I read this about obsolete scientific ideas, the old ones would only be gone when those who had discovered them passed.

    • Sungr says:

      A great deal of truth to that.

      • 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.
        Gail Tverberg says:

        Sorry I am not yet finished with my new post. Comments will cut off later today. I hope to get the new post up tomorrow.

        • addicts usually benefit from cold turkey

        • Sungr says:

          Gail- with your new post- maybe you could let us know what sub-topics etc that could benefit from a more thorough discussion ie to help advance your work.

          Commentary here often seems to cover a lot of generalist ground…… and could use a bit more focus at times.

          • 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.
            Gail Tverberg says:

            I know, but a lot of my readers are new, or don’t understand what they are reading. Commenters represent a selection of readers who are “much above average.”

            Academic research tries to write to the “much above average” readers, with its narrow focus. What I see over and over is that the authors of the academic articles do not understand the context of the prior academic articles that they quote from. They produce unwarranted conclusions based on their misunderstandings of prior papers. The peer reviewers are by and large not a whole lot better. So this approach tends to lead to a narrow selection of people thinking that they know a whole lot more than they really do. It tends to pass along a lot of wrong conclusions endlessly. It also excludes a lot of readers.

            Try to skip over parts that seem repetitive.

            • Tango Oscar
              Tango Oscar says:

              I agree with Gail. Part of the diversity of commenters also allows people from different specialties to hypothesize in other near topics like electricity, advanced parts of the economy, or even physics and math. Cognitive dissonance and confirmation bias are very easy to recognize in this environment, making it a different platform than those that accept the infinite growth paradigm as “good.”

    • JH Wyoming says:

      D, there is a line above your post, meaning it’s a new post, but the context seems to be a reply to some other post? Which one or maybe it was deleted?

  9. Fast Eddy says:

    ‘We loot or we die of hunger’: food shortages fuel unrest in Venezuela

    As the country’s economic problems mount, towns and cities have been hit by an outbreak of looting and violence

    Evidence for his prediction can be found in towns and cities across Venezuela that have been hit by an outbreak of looting and mob violence. Angry about empty supermarket shelves and soaring prices, some people are breaking into warehouses, ransacking food trucks and invading outlying farms.


    Let’s repeat the last bit…. for the doomy preppers:

    ‘and invading outlying farms’

    Keeping in mind that Venezuela has NOT collapsed yet — there is still some food — there is still electricity and petrol….

    Most people are still plugged into BAU….

    ‘And when BAU collapses…. the humans will descend on the organic farms … like so many locusts’ Fast Eddy 29/01/2018

    • DJ says:

      A few of those in the picture would do well losing 10-15 kgs.

    • Dennis L. says:

      It is my understanding that during feudal times the lords did not send the peasants to fight, they sent the “sons of the elites” as they well understood the peasants made the income and probably the elites were an expense. Those feudal lords had castles, which I am sure you have seen in your travels, which were designed to keep those without out and those who were useful safe; that made being useful a real incentive. Rather than a homestead, perhaps a castle of stone, high walls and whatever is the flavor of the day for defense.
      As I keep repeating, someone is going to make it and it will be a group. Your container might still be useful to attract some useful labor and keep them happy on the weekends.

      • Fast Eddy says:

        There are no peasants… there are only facebookers… and a few doomsteaders… both groups will be dead within a month.

        This ain’t 1357

      • Sungr says:

        Some of the immigrant groups in the US are living a much more practically grounded lifestyles than the anglos.

        Beans, rice, peppers, manual skills, old pickups, flea markets.

    • reminds me of commenters on ofw

    • and people dont realise, that the Venezueala problem has been brought about by inept and corrupt politicians—they havent actually hit the real shortage level yet—where there’s nothing anywhere.

  10. Dennis L. says:

    I disagree strongly. Larry Nassar did his own thing, what we do affects those around us. At the end of life, reflecting back there is something peaceful in having done minimal harm to others and to have at times been lucky enough to do some good. Michigan state will play out, Penn State is on the record books and expediency was harmful to both the perpetrator and the victim. Without meaning and something to give to life becomes nihilistic. If death is the proper perspective, why bother?

    • Artleads says:

      Because life is so unlikely and so brief. A desperately good thing.

      • Tango Oscar
        Tango Oscar says:

        Life is unlikely? They just discovered life on rocks here that’s 3.5 Billion years old, not much after Earth formed. Furthermore there are Billions of other stars in our galaxy and then there are at least 100 Billion more galaxies, each with Billions of more stars. If you think this is the only planet with life, that’s the equivalent of putting a cardboard box over your head and declaring yourself the only intelligent life in the universe.

        • problem will be finding another empty planet with a vacant lease we can take on

        • JH Wyoming says:

          “If you think this is the only planet with life, that’s the equivalent of putting a cardboard box over your head and declaring yourself the only intelligent life in the universe.”

          So true, and I needed a Monday AM laugh – thanks.

  11. Baby Doomer says:

    Global debt is the danger: beware the butterfly moment – Financial Times

    The world economy is recovering but it is still panic stations for central banks. For them, global debt is like the sword of Damocles — an ever-present danger.

    It stands at about 330 per cent of annual economic output, up from 225 per cent in 2008, according to the Bank for International Settlements.

    After the 2008-09 financial crisis, the hope was that a combination of economic recovery, inflation and austerity would shrink the debt mountain. This, though, was too optimistic. Growth has been below par, inflation subdued and austerity self-defeating.

    In two respects, the global economy is living on borrowed time.

    First, global economic growth is so debt-addicted that no big economy can cope with a rapid tightening in monetary conditions. This means that substantive deleveraging, when it comes, will hurt growth.

    Second, central banks need to reverse their policies, since continuing low rates and excessive leverage may well result in an explosive cocktail of multiple asset price bubbles. Reversal, however, means that central banks will be unable to control volatility and keep a floor under asset values — something they have relied on to promote excessive risk-taking.

    What is less certain is whether the current level of debt can spark a 2008-style credit crunch caused by runaway debt in the financial and household sectors. Today, high leverage appears most evident in the corporate sector, especially in the US and China.

    In any event, spiralling global debt appears to be so out of control that the world will struggle to pay off the interest, let alone make a material dent in its size.

    The global economy is vulnerable to the butterfly effect, the part of chaos theory that says small changes can lead to big outcomes. Rates will have to remain lower for longer, forcing investors seeking decent returns to move ever higher on the risk curve.


    This is very alarming!

    “It stands at about 330 per cent of annual economic output, up from 225 per cent in 2008, according to the Bank for International Settlements.”

  12. Dennis L. says:

    Jordan Peterson’s new book “12 Rules for Life” is out and I have just begun to read it. Sociologists have been at it for fifty or sixty years and not much is working. Peterson does a nice job of collecting ideas that have withstood the test of time and putting them together in manner that is self consistent and yet invites questions.

    It seems we all need rules judging from the behavior of the elites; the behavior at Michigan State, that one would assume is a liberal institution run by a modern woman is most disturbing.

    • “Rule 7: Pursue what is meaningful (not what is expedient). Meaning is how you protect yourself against the suffering that life entails.”

      “meaning” is a human fabrication…

      so there’s nothing more to life than to try to “do our own thing”.

      Rule 13: all humans soon will enter the nothingness of eternal death…

      that’s the proper perspective for the previous 12 rules.

      • jupiviv
        jupiviv says:

        ““meaning” is a human fabrication…”

        Which means that this assertion contradicts itself.

      • Tango Oscar
        Tango Oscar says:

        Meaning is subjective. And you’re in for a rude awakening when your body exprires. You honestly think it’s a coincidence that we are all here observing what’s about to be a planet wide collapse? Are we not questioning and reexamining our lives? If you truly believe in nihilism then you’re doing nothing but wasting your precious time here. Go get a Ferrari and break the speed limit or something.

    • Noah Smith writes:

      “Why are the country’s families disintegrating, and what might be done to reverse the process? The fundamental cause could be economic — a lack of jobs for men, some claim– but that doesn’t mean economists will have much more than that to say about the issue.”

      “The fundamental cause could be economic…”

      or it could be DECLINING ENERGY RESOURCES…


      • Noah Smith concludes:

        “In the end, though, it will be up to sociologists themselves to come out of the academy and help put American society back together. Come on, people. Your country needs you.”

        way to go, Noah!

        rah rah rah, let’s get Progress going again!

        it’s a never ending source of amazement that writers with a national audience can be so clueless.

  13. adonis says:

    i found this piece of propaganda from christiana figueres very telling that gobal worming is really a way to foster economic growth it all seems to be part of their goal we are being managed into a ‘staircase collapse’ that means that the TBTB are in the know and have prepared accordingly ‘World Communism’ is the end result these are the ‘the good ole days’ finite worlders stock up while you still can. https://y7hm11ssjqz3179dx16u82gm-wpengine.netdna-ssl.com/wp-content/uploads/2015/08/Christiana-Figueres.pdf

    • JH Wyoming says:

      And you bought all that?

      • “… ‘World Communism’ is the end result…”

        wow… of all TPTB, who was the one who told you that?

        “… these are the ‘the good ole days’…”

        uh, BAU tonight, baby?

        “… finite worlders stock up while you still can.”

        yes, I have!

        TP and bottled water and dark chocolate…

        many hundreds of pounds of dark chocolate!

        • kschleunes
          Kurt says:

          Yes, chocolate! Those sneaky elites/elders/ptb can never take our chocolate away!

        • Info The Fifth Law
          Energy^2 says:

          Add to the list what relieves wounds from lashes, as it might turn a slavery future – Ouch!

          It is physics, man! 🙂

          Doesn’t matter whether it comes in the form of communism inside capitalism, capitalism inside communism – those lashes hurt more than anything in the past history of humans 🙂

          • kschleunes
            Kurt says:

            More chocolate?

          • Artleads says:

            “Add to the list what relieves wounds from lashes, as it might turn a slavery future”

            There was this German guy on another blog, who kept saying that death is in the driver’s seat of reality (my words). Death, which he didn’t fear, was his friend. We think life is the real thing, but it might be just the most unlikely blip, something that we mistakenly think is the governing principle when it is only an exception to reality. And then I thought something similar about slavery. What if slavery is the basic reality? Work from morning to night with amazing efficiency. Even scratching an itch might get you killed. You mightn’t even be able to think of such a think. Sleep for a few hours would be a luxury. I suspect that is closer to our essential reality than we think. But I’m an optimist, just the same.

            • Fast Eddy says:

              If I was certain there was ‘heaven’ …. I’d have offed myself when faced with the slightest difficulty in life… let’s say I was famished… ordered a pizza… and the boy was 7 minutes late…. triple back flip off the 40th floor it would be.

  14. Pingback: Men flyget står ju för så liten del av utsläppen | Förändringens tid

  15. Worth watching for everyone who likes a varied diet. Take a look at a great geopolitical thinker at work, on different issues like the shape of the vast american continent with it’s riversystem, which enabled the US to project it’s power, first in the Carabien, then over both the Atlantic and the Pasific. Why the frontier experience is so important if you want to win wars. What Trump understood about the devestating effects of globalization in the hinterland, but the Republican party missed. Why the Indian sea is like an energy highway, and access to it so important for China. About who is the real enemy of North-Korea, and what has changed in the staff and administration of the State departement over the years, and much more!

  16. Baby Doomer says:

    The Biggest Year Yet For U.S. Shale

    According to The Wall Street Journal, the shale industry has spent $265 billion more than it has generated since 2010.


    • cool… this is greatly needed…

      that $265 billion is a figment created out of thin air…

      but the oil pulled out of the ground is very real…

      I hope they can do another $265 billion in the next 7 years…

      Burn More Oil.

      • Baby Doomer says:

        that $265 billion is a figment created out of thin air…

        Actually its millions of American’s pensions accounts…

      • Dennis L. says:

        David, it is a good deal. Not even paper, but digital marks on a screen were traded for a real asset that is useful. Only those collecting tomorrow will be short changed; but then so many here think there is no tomorrow. Conclusion, it is a good deal and good business.

  17. Fast Eddy says:

    Margin Call is a 2011 American independent drama film written and directed by J. C. Chandor. The principal story takes place over a 24-hour period at a large Wall Street investment bank during the initial stages of the financial crisis of 2007–08.[2][3] In focus are the actions taken by a group of employees during the subsequent financial collapse.[4] The ensemble cast features Kevin Spacey, Paul Bettany, Jeremy Irons, Zachary Quinto, Penn Badgley, Simon Baker, Demi Moore, and Stanley Tucci.



  18. Fast Eddy says:

    Again… we see a demonstration of how TBTF … means TBTF….. if the situation is critical…. it can be papered over with more debt….

    And there will be a queue around the block to fund this — particularly if it carries a decent return — because the buyers of this debt understand that it is backed by the power of the Fed — because ultimately the Fed will not allow these entities to fail….

    Of course at some point the Fed fails…. but then everything fails….

    So it is logical to buy these bonds….


    Given the CBs are determined to keep BAU alive …. this could go on for quite some time….

    We need to get our minds around the fact that what previously would have crashed a market — is highly unlikely to crash a market now. This is the new normal.

    It’s pedal to the metal till the end of days.

    • xabier says:

      Makes me think of WW1: 90% casualties in a few hours should end a unit, (and the war) but when you are quite prepared to throw the whole youth of country into it, the game plays on. The very highest stakes: rationality and all previous norms go out of the window…..

    • Sungr says:

      “We need to get our minds around the fact that what previously would have crashed a market — is highly unlikely to crash a market now. This is the new normal.”

      That sounds like “It’s Different This Time” thinking, FE.

      I hope you don’t have much $$$ in the markets.

      By my reckoning we are close to that point in overpriced markets where it gets real quiet. The point when those overpriced market valuations start to feel less like a victory lap and more like an airplane going into a stall…….and oh from so high an altitude ooh my.

      You can feel a change in the air when market dynamics change.

      • JH Wyoming says:

        “By my reckoning we are close to that point in overpriced markets where it gets real quiet. The point when those overpriced market valuations start to feel less like a victory lap and more like an airplane going into a stall…….and oh from so high an altitude ooh my.”

        I agree, sungr. That comes from experience too, as I could have made more in the Dot.Com boom but stayed in until it busted. What I remember is just before it went south, it was so high people were astounded and then it started going up in big chunks almost every day. That was the point in time everybody and his brother had bought into the idea it would just keep going higher, but then the floor fell out and it was really hard to sell even at much lower prices. This is the “It’s so high I can’t believe it!”, stage. That’s followed by days of going down big chunks, interspersed with days it does go up, but not anywhere near as high as it goes down the other days, and it deflates.

        I think what happened in 08 is the govt. bailed the situation out for the big corp’s, then followed that up with cash for clunkers, super low interest, QE, you name it, anything to keep BAU up at a lofty level. Now it will be time to pay the piper. No CB on earth is going to be able to keep this balloon floating higher, so it will all have to plummet back to Earth. Defaults galore until it all settles out. At that point we’ll find out if collapse occurs or it sparks back to life.

        • jupiviv
          jupiviv says:

          This bubble is the first step towards collapse, with finance getting decoupled from the actual economy. It will continue for as long as enough people (want to) believe that the above is *not* the case, or as long as the actual economy keeps functioning (by lightening its burdens), or both.

          • DJ says:

            One thought.

            Other bubbles lasted as long as enough people wanted to believe. When enough sold the bubble burst.

            This is the Everything Bubble. Even if you don’t believe you can’t leave the “market”. There is no way to sell not trusting the currencies, not wanting to pay taxes, not believing in growth.

            You can somewhat sell the everything bubble by earning and consuming and working as little as possible, but you can’t move your assets out of the Everything Bubble.

            Therefore this bubble can (and has) last longer than the dotcom och tulip bubble.

      • Sungr says:

        I am looking at a number of factors……..and not liking what I see.

        One of those factors is the US Congress. These guys are now convinced that printing money can go on forever. It’s quiet. Nobody says anything. No alarms go off. Nothing bad happens until you get a systemic crisis…………….

        That Congressional mindset shift from fiscal responsibility to fiscal anarchy is a big bad warning sign. It’s likely a part of the deterioration of sanity and the speeding up of events in the imperial collapse.

        Investor savings at historic lows. At his point in 1999, the warrior tech investors were openly calling out to “keep the faith”.

        Another scary sign is the fact that a 1% rise in interest rates has the potential to set off a bond-pocalypse.

      • Sungr says:

        “I think what happened in 08 is the govt. bailed the situation out for the big corp’s, then followed that up with cash for clunkers, super low interest, QE,”

        I think what happened is the CBs in 2008 went all in with the stimulus, QE, foreign bank infusions, zero rates. The expected results were that an avalanch of stimulus would produce such an economic pickup that the resulting monster boom would make the huge stimulus costs manageable. But this never happened and the global economy mostly limped along. The monster boom never happened. And now we are f@cked with near 0% rates for the last 9 years which have fundamentally damaged asset markets everywhere.

        So we are sitting with high-altitude asset prices as the CB works to raise interest rates and to wind down their book.

        Lots of pins. The Illinois 107Billion muni bond offering is one of those. Along with other nasty pension funding situations- and today here we are still relatively functioning at the moment and before any serious torpedoes to the global economy.

      • Fast Eddy says:

        But it is different….because the CBs are unlikely to stop supporting the markets… because the minute they step back… BAU ends…

        2007 was nothing — and it nearly killed BAU — this time their are tens of trillions of debt that are ready to explode… everything is a bubble… the CBs cannot pull the punch bowl.

        I am 99.99999% certain that there will be only one more crash — this will happen when the CBs push on a string — it will not arrive because the US shuts down over a debt impasse… it will not arrive because the CBs suddenly normalize interest rates (although they may kick off collapse by slightly raising rates trying to tamp down the bubbles)…. it will not happen because the UK Brexits (not allowed) … if the CBs can control it … then it will not take down BAU…. they will do anything ot keep this train roaring ahead….

        The correct position for an investor is to have money in the markets — waiting to step in and buy assets on the cheap after a bust up is a waste of time – not gonna happen…

        And this could go on for many more years — because — this time IS different.

        Never before have the CBs done what they are doing now.

        And they cannot stop

        • Dennis L. says:

          I tend to agree, perhaps an explanation is not that the markets are going up, currencies are going down. WB suggested a book, “The Death of Money.” Interesting read; in this view, it has happened before. If WB goes down 75%, he will still have some companies that make money, he(or successor) can buy distressed properties.

        • Info The Fifth Law
          Energy^2 says:

          CBs real role in today’s World is almost non-existent, like presidents, prime minsters, heads of states and the famous, like Soros, Gates, etc.

          The World and how it is run is done in far more complex and well-steered process leading it straight into pre-determined, well predefined directions. This far, CBs or few other individuals wouldn’t have a clue on what’s going on, yet alone deciding anything in it.

          No more random, free nature are left in the Future. Although it unfolds a new every second before our eyes. The Future is dead.

          To that extent, one may safely believe that century-long pre-planning has turned the future a history. The Future is practically dead for the ordinaries, by the agency of Over-Organisation.

          It is like “The Death of the Future“, if you like, FE.

          When somebody says CBs, I think how much that is different from Karadishian?

          Note: Above Over-Organisation is the 1958 thesis of Huxley not genuine personal thoughts :):):)

          • Fast Eddy says:

            So who is making the decisions on QE and keeping interest rates at record lows? How is loaning cash to insolvent companies to keep them from imploding? Who is loaning trillions to corporations which is used to buy back shares to keep the markets roaring?

            Tooth Fairy?

            Santa Claus?


            • Info The Fifth Law
              Energy^2 says:

              None of above, afraid, FE!

              ‘Blue and Red Teams’ simulations were very well established in war academies since the 1950s and 1960. By now, those are so matured, abundantly computerised and advanced, they are the only intelligent capacities around able to run our incredibly complex world, in the disciplined manner and continuity observed over the decades.

              What CBs? Do you think that the complexity of our economy today can be controlled just by adjusting the interest rate, debt ceiling or money issuance? Leave these to the media to talk about and neo economists to keep modelling for it’s Minsky Moment, endlessly! 🙂 🙂 🙂

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