Nine Reasons Why Globalization Can’t Be Permanent

Since the late 1990s, globalization has seemed to be the great hope for the future. Now this great hope seems to be dimming. Globalization sets up conflict in the area of jobs. Countries around the world compete for development and jobs. If there is not enough cheap-to-produce energy to go around, huge wage disparity is likely to result.

We know from physics and history that economies need to grow, or they collapse. The wage disparity that high-wage countries have been experiencing in recent years is evidence that the world economy is already reaching energy limits. There are no longer enough jobs that pay well to go around. Any drop in energy supply is likely to worsen the job situation.

Most observers miss this problem, because they expect high oil prices to signal energy limits. This time, the signal is low wages for a significant group of workers, rather than high oil prices. This situation is possible in a networked economy, but it is not what most people look for.

Unhappy citizens can be expected to react to the wage disparity problem by electing leaders who favor limits to globalization. This can only play out in terms of reduced globalization.

History and physics suggest that economies without adequate energy supply can be expected to collapse. We have several recent examples of partial collapses, including the Great Depression of the 1930s and the collapse of the Soviet Union. Such collapses, or even more extensive collapses, might occur again if we cannot find energy alternatives that can be quickly scaled up to replace oil and coal in the very near term. These replacements need to be cheap-to-produce, non-polluting, and available in huge quantities.

The story that the economy doesn’t really need a growing supply of very cheap-to-produce energy is simply a myth. Let’s look at some of the pieces of this story.

[1] The world economy needs to grow or it collapses. Once all of the nations of the world are included in the world economy, one obvious source of growth (incorporating nations that are not yet industrialized into the world economy) disappears. 

The reason why the world economy needs to grow is because the economy is a self-organized system that operates under the laws of physics. In many ways it is like a two-wheeled bicycle. A bicycle needs to roll quickly enough, or it will fall over. An economy must grow quickly enough, or debt cannot be repaid with interest.

Also, government promises may be a problem with slow growth. Pensions for the elderly are typically paid out of tax revenue collected in that same year. It is easy for a mismatch to take place if the number of younger workers is shrinking or if their wages are lagging behind.

Figure 1. Author’s view of analogies of speeding upright bicycle to speeding economy.

I explain a little more about my bicycle analogy in Will the World Economy Continue to “Roll Along” in 2018?

Economies throughout the ages have collapsed. In some cases, entire civilizations have disappeared. In the past 100 years, partial collapses have included the Great Depression of the 1930s, the collapse of the central government of the Soviet Union in 1991, and the Great Recession of 2008-2009. Economic collapses are analogous to bicycles falling over.

[2] A growing supply of energy products is extraordinarily important for keeping the world economy operating.

We can see in Figure 1 that the energy of the person operating a bicycle is very important in allowing the operation of the bicycle to continue. In the world’s economy, the situation is similar, except that we are facing a problem of a world population that is continually growing. In a sense, the economic situation is more like a rapidly growing army of bicycles with riders. Each member of the economy needs goods and services such as food, homes, clothing, and transportation. The members of the economy can collapse individually (for example, growing suicide rate) or in much larger groups (collapsing government of a country).

Figure 2. World population according to the United Nations 2017 historical estimates and Medium forecast of population growth after 2017.

In an economy, we have a choice regarding how much energy to use. If more energy is used, workers can have many tools (such as trucks and computers) to leverage their productivity. If all goods are made with few energy inputs other than human labor, most workers find themselves working in subsistence agriculture. The total amount of goods and services produced in such an economy tends to be very small.

If supplemental energy is used, many more jobs that pay well can be added, and many more goods and services can be created. Workers will be rich enough that they can pay taxes to support representative government that supports many services. The whole economy will look more like that of a rich nation, rather than the economy of Somalia or Haiti.

Individual nations can grow their economies by using available energy supply to create jobs that pay well. Globalization sets up competition for available jobs.

If a given country has a lot of high paying jobs, this is likely to be reflected in high per capita energy consumption for that country. There are two reasons for this phenomenon: (1) it takes energy for an employer to create jobs, and (2) workers can use their wealth to buy goods and services. This wealth buys more goods and services made with energy products.

[3] One measure of how well the world economy is doing is world energy consumption per capita. On this basis, the world economy is already reaching limits.

Figure 3. World energy per capita and world oil price in 2016 US$. Energy amounts from BP Statistical Review of World Energy, 2017. Population estimates from UN 2017 Population data and Medium Estimates.

It is clear from Figure 3 that energy consumption tends to move in the same direction as oil price. If “demand” (which is related to wages) is high, both oil price and the amount of energy products sold will tend to be high. If demand is low, both oil price and the amount of energy products sold will tend to be low.

Since 2014, energy consumption has remained quite high, but oil prices have fallen very low. Today’s oil prices (even at $70 per barrel) are too low for oil producers to make adequate investment in the development of new fields and make other needed expenditures. If this situation does not change, the only direction that production of oil can go is down, rather than up. Prices may temporarily spike, prior to the time production falls.

Looking at energy consumption per capita on Figure 3 (above), we notice that this amount has been fairly flat since 2011. Normally, in a growing world economy, a person would expect energy consumption per capita to rise, as it has most of the time since 1820 (Figure 4).

Figure 4. 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 fact that energy consumption per capita has been nearly flat since 2011 is worrying. It is a sign that the world economy may not be growing very rapidly, regardless of what government organizations are reporting to the World Bank. Some subsidized growth should not really be considered economic growth. For example, some Chinese cities have been buying off the country’s housing glut with borrowed money. A better accounting would likely show lower GDP growth for China and the world.

Looking more closely at Figure 3, we note that energy per capita hit a high point in 2013, just before world oil prices began sliding downward. Since then, world energy consumption per capita has been trending downward. This is part of the reason for gluts in supply. Producers had been planning as if normal growth in energy consumption would continue. In fact, something is seriously wrong with demand, so world energy consumption has not been rising as fast as in the past.

The point that is easy to miss is that (a) growing wage disparity plus oil gluts and (b) high oil prices are, in a sense, different ways of reflecting a similar problem, that of an inadequate supply of truly inexpensive-to-produce oil. High-cost-to-produce oil is not acceptable to the economy, because it doesn’t produce enough jobs that pay well, for each barrel produced. If oil prices today truly represented what oil producers (such as Saudi Arabia) need to maintain their production, including adequate tax revenue and funds to develop additional production, oil prices would be well over $100 per barrel.

We are dealing with a situation where no oil price works. Either prices are too high for a large number of consumers or they are too low for a large number of producers. When prices are low, relative to the cost of production, we tend to get wage disparity and gluts.

[4] The reason why energy demand is not growing is related to increased wage disparity. This is a problem for globalization, because globalization acts to increase wage disparity.

In the last section, I mentioned that demand is closely connected to wages. It is really wage disparity that becomes a problem. Goods and services become less affordable for the people most affected by wage disparity: the lower-paid workers. These people cut back on their purchases of goods such as homes and cars. Because there are so many lower-paid workers in the world, demand for energy products, such as oil and coal, fails to grow as rapidly as it otherwise would. This tends to depress prices for these commodities. It doesn’t necessarily reduce production immediately, however, because of the long-term nature of investments and because of the dependence of oil exporters on the revenue from oil.

Figure 5 shows that China and India’s energy consumption per capita has been rising, leaving less for everyone else.

Figure 5. Energy consumption per capita comparison, based on energy data from BP Statistical Review of World Energy 2017, and UN 2017 Population Estimates.

A major way that an economy (through the laws of physics) deals with “not enough goods and services to go around” is increased wage disparity. To some extent, this occurs because newly globalized countries can produce manufactured products more cheaply. Reasons for their advantage are varied, but include lower wages and less concern about pollution.

As a result, some jobs that previously would have been added in developed countries are replaced by jobs in newly globalized countries. It is probably not a coincidence that US labor force participation rates started falling about the time that China joined the World Trade Organization in 2001.

Figure 6. US Labor Force Participation Rate, as prepared by Federal Reserve Bank of St. Louis.

Lower wages for unskilled workers may also occur as the result of immigration, and the resulting greater competition for less skilled jobs. This has been a particular concern in the UK.

[5] Adding China, India, and other countries through globalization temporarily gives a boost to world energy production. This boost disappears as the energy resources of the newly added countries deplete.

Both China and India are primarily coal producers. They rapidly ramped up production since joining the World Trade Organization (in 1995 for India; in 2001 for China). Now China’s coal production is shrinking, falling 11% from 2013 to 2016. Both China and India are major importers of fossil fuels (difference between black line and their own production).

Figure 7. China’s total energy consumption compared to its energy production by type, based on BP Statistical Review of World Energy, 2017.

Figure 8. India’s total energy consumption compared to its energy production by type, based on BP Statistical Review of World Energy, 2017.

China and India’s big surge in coal production has had a major impact on world coal production. The fact that both countries have needed substantial imports has also added to the growth in coal production in the “Other” category in Figure 9.

Figure 9 also shows that with China’s coal production down since 2013, total world coal production is falling.

Figure 9. World coal production by part of the world, based on BP Statistical Review of World Energy, 2017.

Figure 10 shows that world GDP and world energy supply tend to rise and fall together. In fact, energy growth tends to precede GDP growth, strongly suggesting that energy growth is a cause of GDP growth.

Figure 10. World three-year average GDP growth compared to world three-year average energy consumption growth. GDP data is from the World Bank, based on 2010 US$ weights of GDP by country; energy consumption is from BP Statistical Review of World Energy, 2017.

If a growth in energy consumption is indeed a primary cause of world economic growth, the drop in world coal production shown in Figure 9 is worrying. Coal makes up a large share of world energy supply (28.1% according to Figure 12). If its supply shrinks, it seems likely to cause a decline in world GDP.

Figure 11 shows energy consumption growth on a basis comparable to the energy consumption growth shown on Figure 10, except for different groupings: for the world in total, the world excluding China, and for the combination of the US, EU, and Japan. We can see from Figure 11 that the addition of China and Japan has greatly propped up growth in world energy consumption since 2001, when China joined the World Trade Organization.

Figure 11. Three-year average growth in energy consumption, for the world total; the world less China and India; and for the sum of the United States, the European Union, and Japan. Energy data from BP Statistical Review of World Energy, 2017.

The amount of the “benefit” was greatest in the 2003-2007 period. If we look at Exhibit 10, we see that world economic growth was around 4% per year during that period. This was a recent record high. Now the benefit is rapidly disappearing, reducing the possibility that the world energy consumption can grow as rapidly as in the past.

If we want world energy consumption per capita to rise again, we need a new large rapidly growing source of cheap energy to replace the benefit we received from China and India’s rapidly growing coal extraction. We don’t have any candidates for a suitable replacement. Intermittent renewables (wind and solar) are not candidates at all. According to the IEA, they comprised only 1% of world energy supply in 2015, despite huge investment. They are part of the gray “Other” slice in Figure 11.

Figure 12. Figure prepared by IEA showing Total Primary Energy Supply by type from this IEA document

Academic studies regarding wind and solar have tended to focus on what they “might” do, without considering the cost of grid integration. They have also overlooked the fact that any energy solution, to be a true energy solution, needs to be a huge energy solution. It has been more pleasant to give people the impression that they can somehow operate a huge number of electric cars on a small amount of subsidized intermittent electricity.

[6] On a world basis, energy consumption per capita seems to need to be rising to maintain a healthy economy. 

When energy consumption is growing on a per capita basis, the situation is similar to one in which the average worker has more and more “tools” (such as trucks) available at his/her disposal, and sufficient fuel to operate these tools. It is easy to imagine how such a pattern of growing energy consumption per capita might lead to greater productivity and therefore economic growth.

If we look at historical periods when energy consumption has been approximately flat, we see a world economy with major problems.

Figure 13. 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 flat period of 1920-1940 seems to have been caused by limits reached on coal production, particularly in the United Kingdom, but also elsewhere. World War I , the Great Depression of the 1930s, and World War II all took place around this time period. Charles Hall and Kent Klitgaard in Energy and the Wealth of Nations argue that resource shortages are frequently the underlying cause for wars, including World Wars I and II.

The Great Depression seems to have been a partial economic collapse, indirectly related to great wage disparity at that time. Farmers, in particular, had a difficult time earning adequate wages.

The major event that took place in the 1990 to 2000 period was the collapse of the Soviet Union in 1991. The central government collapsed, leaving the individual republics to operate independently. The Soviet Union also had strong trade relationships with a number of “satellite” countries, including Cuba, North Korea, and several Eastern European countries. In the next section, we will see that this collapse had a serious long-term impact on both the republics making up the Soviet Union and the satellite countries operating more independently.

[7] The example of the Soviet Union shows that collapses can and do happen in the real world. The effects can be long lasting, and can affect trade partners as well as republics making up the original organization.

In Figure 14, the flat period of the 1980-2000 period seems to be related to intentional efforts of the United States, Europe, and other developed countries to conserve oil, after the oil price spikes of the 1970s. For example, smaller, more fuel conserving vehicles were produced, and oil-based electricity generation was converted to other types of generation. Unfortunately, there was still a “backfire” effect related to the intentional cutback in oil consumption. Oil prices fell very low, for an extended period.

The Soviet Union was an oil exporter. The government of the Soviet Union collapsed in 1991, indirectly because with these low oil prices, the government could not support adequate new investment in oil and gas extraction. Businesses closed; people lost their jobs. None of the countries shown on the Figures 14 and 15 have as high energy consumption per capita in 2016 as they did back when the Soviet Union collapsed.

Figure 14. Per capita energy consumption for the Soviet Union and three of its satellite countries. Energy data from BP Statistical Review of World Energy, 2017. Population data from UN 2017 Population data and Middle Estimates.

The three satellite countries shown on Figure 14 (Bulgaria, Hungary, and Poland) seem to be almost as much affected as the republics that had been part of the Soviet Union (Figure 15). This suggests that loss of established trading patterns was very important in this collapse.

Figure 15. Per capita energy consumption for the three largest (by population) republics that made up the Soviet Union. Energy data from BP Statistical Review of World Energy, 2017. Population data from UN 2017 Population data and Middle Estimates.

Russia’s per capita energy consumption dropped 29% between peak and trough. It had significant fossil fuel resources, so when prices rose again, it was again able to invest in new oil fields.

Ukraine was a major industrial center. It was significantly impacted by the loss of oil and gas imports. It has never recovered.

The country that seemed to fare best was Uzbekistan. It had little industry before the collapse, so was less dependent on energy imports than most. Of all of the countries shown on Figures 14 and 15, Uzbekistan is the only one that did not lose population.

[8] Today, there seem to be many countries that are not far from collapse. Some of these countries are energy exporters; some are energy importers.

Many of us have read about the problems that Venezuela has been having recently. Ironically, Venezuela has the largest oil reserves in the world. Its problem is that at today’s prices, it cannot afford to develop those reserves. The Wikipedia article linked above is labeled 2014-2018 Venezuelan protests. Oil prices dropped to a level much lower than they had been in 2014. It should not be surprising that civil unrest and protests came at the same time.

Figure 16. Monthly average spot Brent oil prices, through December 2017, based on EIA data.

Other oil producers are struggling as well. Saudi Arabia has recently changed leaders, and it is in the process of trying to sell part of its oil company, Saudi Aramco, to investors. The new leader, Mohamed bin Salman, has been trying to get money from wealthy individuals within the country, using an approach that looks to outsiders like a shake-down. These things seem like very strange behaviors, suggesting that the country is experiencing serious financial difficulties. This is not surprising, given the low price of oil since 2014.

On the oil-importer side, Greece seems to frequently need support from the EU. The lower oil prices since 2014 have somewhat helped the country, but the basic shape of the energy consumption per capita chart makes it look like it is struggling to avoid collapse.

Figure 17. Greece energy per capita. Energy data from BP Statistical Review of World Energy, 2017; population estimates from UN 2017 Population data and Medium projections.

There are many other countries struggling with falling energy consumption per capita. Figure 18 shows a chart with four such countries.

Figure 18. Energy consumption per capita for Japan, UK, Italy, and Spain. Energy consumption from BP Statistical Review of World Energy; population from UN 2017 Population data and Medium Estimates.

In a sense, even though oil prices have been lower since 2014, prices haven’t been low enough to fix the economic problems these countries have been having.

China is in a different kind of situation that could also lead to its collapse. It built its economy on coal production and rapidly growing debt. Now its coal production is down, and it is difficult for imports and substitution of other fuels to completely compensate. If slowing growth in fuel consumption slows economic growth, debt will become much harder to repay. Major debt defaults could theoretically lead to collapse. If China were to collapse, it would seriously affect the rest of the world because of its extensive trading relationships.

[9] Leaders of countries with increasing wage disparity and unhappy electorates can be expected to make decisions that will move away from globalization. 

Unhappy workers are likely to elect at least some leaders who recognize that globalization is at least a small part of their problems. This is what has happened in the US, with the election of President Trump.

The hope, of course, is that even though the rest of the world is becoming poorer and poorer (essentially because of inadequate growth of cheap-to-produce energy supplies), somehow a particular economy can “wall itself off” from this problem. President Donald Trump is trying to remake trading arrangements, based on this view. The UK Brexit vote was in a sense similar. These are the kinds of actions that can be expected to scale back globalization.

Conclusion

Having enough cheap energy for the world’s population has been a problem for a very long time. When there is enough cheap-to-produce energy to go around, the obvious choice is to co-operate. Thus the trend toward globalization makes sense. When there is not enough cheap-to-produce energy to go around, the obvious choice is to try reduce the effects of globalization and immigration. This is the major reason why globalization can’t last.

We now have problems with both coal and oil. With the decline in China’s coal supplies, we are reaching the point where there are no longer enough cheap energy supplies to go around. At first glance, it looks like there is enough, or perhaps even a superabundance. The problem is that no price works. Producers around the world need higher oil prices, to be compensated for their total cost, including the cost of extraction, developing new fields, and the tax levels governments of exporting countries need. Consumers around the world are already having trouble trying to afford $70 per barrel oil. This is what leads to gluts.

We have been told that adding wind and solar to the electric grid can solve our problems, but this solution is simply absurd. If the world is to go forward as before, it somehow needs a new very large, very cheap supply of energy, to offset our problems with both coal and oil. This new energy supply should not be polluting, either.

At this point, it is hard to see any solution to the energy problems that we are facing. The best we can try to do is “kick the can” down the road a little farther. Perhaps “globalization light” is the way to go.

We live in interesting times!

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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2,343 Responses to Nine Reasons Why Globalization Can’t Be Permanent

  1. Third World person says:

    btw why war in Ukraine is happening any reason

    and who is winning this war Russia separatist backed by Russia
    or Nazi Ukraine backed by usa
    https://www.theguardian.com/world/2017/nov/12/ukraine-on-the-front-line-of-europes-forgotten-war

    • psile says:

      Galician nationalism, which came to power with the junta in 2014, is virulently anti-Russian. Actually it’s anti-minorities in general. These rubes were the perfect club with which the U.S. attempted to clobber Russian influence out of south-east Ukraine, which is pro-Russian. But the Nazis and their American backers overplayed their hand and lost Crimea and probably the Donbass too.

      At the moment the conflict is largely frozen, although the Nazis shell the breakaway region everyday and carry out terrorist operations as well. Even though the junta signed an agreement (Minsk Accords) to work towards a peaceful solution of the conflict, being Nazis, they have no intention of abiding by this.

      When the next phase of the real shooting war commences my money is on the separatists, with a little help from Russia. As they’re better trained and motivated than the Galician hillbillies being sent there to try and kill them.

    • xabier says:

      Long-term plan to break up the Russian Federation and destroy Russia as a regional/global power. And, of course, grab control of her resources.

      • psile says:

        This is about as likely as week with two Tuesday’s. It was tried back in the 90’s when Russia was on its knees, after the collapse of the Soviet Union. The country was being hocked, spliced and diced, and islamic terrorists funded by the CIA were running amok in the Caucasus. That’s when Putin showed up to put the broom through. In times of crisis someone like him always appears to get the country back on track and Russia is now 10 times tougher than it was back then.

        • djerek says:

          Russia also has orders of magnitudes more men willing to fight and die for it than America has at this juncture.

  2. Third World person says:

    does anybody why usa army has invaded Niger

    does Niger has some oil

  3. Ed says:

    https://www.youtube.com/watch?v=KkpqA8yG9T4
    Fusion energy solved by MIT, two cents per kilowatt hour.

    • Fast Eddy says:

      I am suddenly 7 fee 4 inches tall and have been signed to play centre for the LA Lakers at a salary of 28 million dollars per year.

      • Ed says:

        It also solves gerbil warring.

        • Ed says:

          that should read gerbil limeaid change

          • djerek says:

            So it’s going to somehow stop the sun’s radiation output from varying? Amazing.

            • Fast Eddy says:

              This is very powerful technology indeed… imagine that …. we can now control the sun!!!

              Leo must have known about this — because Al told him…

              It went down like this:

              Hey Al – I see you bought that ocean level pimp pad for 9 big ones… what’s the story there bud… you told me that the oceans were going to rise 7 metres by 2020 and change…

              Oh sorry Leo — I was gonna have my people ring your people and give you a heads up on that…. what’s happened is MIT is going to perfect this fusion thing… and it will allow them to control the sun …. so that when the sun’s activity causes XXX XXXXing…. they just turn a dial and the planet auto-cools….

              I am front-running that buying up as much ocean level property as I can afford….

              Ah I see Al… I appreciate your giving me this inside info.

              Hey I was down in Belize last month and I saw this really cool island for sale — it was pretty cheap at just a few mill…. because it is only inches above sea level….

              Leo – you need to get on that….before word gets out that MIT has solved XXX XXXing…. the price will go through the roof if you wait

              That’s exactly what I am thinking Al…. I’ll get my people on this immediately.

              Good for you Leo — hey listen …. I need to get on the private jet to head to Rio for a XXX XXXing conference.. let’s touch base in a few weeks …. I want you to march with me in a kkllimate thing in New York…. yes yes… exactly … the longer we keep the ho ax going the more ocean front properties we can buy on the cheap….

              Ok cya buddy!

          • Fast Eddy says:

            Wouldn’t it be easier just to call it what it is? Forget about KKKLllmate CCCChange… and XX XXXX … and goobal gabble….

            Just use the word ho ax. 4 simple letters… easy to say … easy to type

            • futhark says:

              Gerbil Warring is real. It bleached the coral reefs and Michael Jackson. Poor Jacko wrote “Earth Song” in an attempt to appease it, but when Gerbil Warring found out it was really just a limey(!) tune, stolen from the Moody Blues “Nights in White Satin”, Gerbil Warring killed the hapless artist.

      • Ed says:

        and they want to site the test prototype in the middle of a major urban area Boston.

    • djerek says:

      2 cents per KWh after how much cost to R&D the thing and build one? $1T?

    • doomphd says:

      Ed, this magentic confinement fusion video is from 2016. you should ask for an update, like where are they now after spending X mo-ron billions on silly confinement fusion?

    • jupiviv says:

      “Fusion energy solved by MIT”

      Not unless they’ve tested it successfully, so no. Besides, as someone in the comments points out, the benefits are pretty much the same as LFTRs except with far more investment and potential problems. If thorium couldn’t give us Nirvana, this isn’t likely to.

      • HideAway says:

        Fusion solves nothing!!

        Just because it ‘might’ be possible to replace Fossil Fuels with a different type of energy (fusion), totally ignores Liebig’s law of the minimum. There will be other resource constraints that become just as big a problem.

        The theory of ‘fusion saving us’ from a lack of energy, (and Gerbil Waning) relies upon all existing internal combustion engines and heating needs, turning to electrical provision, or perhaps hydrogen based propellant.

        Copper comes out as a major need in a total electrical society, yet we are currently mining it at an average grade of 0.6%, way down from the average grade of over 1% just 20 years ago. Reserves are likewise falling.

        Most of the major copper mines are not conveniently located next to a major city/power grid, they tend to be in isolated locations, so liquid fuel is needed to mine them.

        Realistically, even if enough copper could be mined, then something else will become the limiting factor to the endless growth needed to keep IC going. Fusion would just add another layer of complexity. What we really need is another planet or 2’s worth of resources to keep going for another century or so, but then it would become 5 or 10. All that happens is the inevitable collapse is delayed.
        Shame we don’t have an extra planet’s resources close at hand.

        • Energy^2 says:

          One wishes Fusion reactors and few other new Fission Nuclear technologies in the pipeline are built with Solar and Wind energy, not fossil fuels.

          Then, if the total energy put into constructing Fusion exceeds the energy it ever produces, no harm done!

          A win-win approach, say. 🙂 🙂 🙂

          • wish science

            wish economics

            wish politics

            a quick rub of the old lamp and the global economy can run forever

          • “No device can generate energy in excess of the total energy put into constructing it”.

            that should read—constructing AND its lifetime usage

            then it might make sense

            thus—you can build a steam engine, investing xxxxx calories of energy in materials and construction, but if you run it for 100 years, the calories in the coal used represent infinetly more energy input—but the device cannot exceed the calorific input contained in the coal itself.

            • Energy^2 says:

              It won’t run for 100 years continuously, but it will fail and disintegrate well before that point while trying to match the energy put into constructing it.

              That’s why you find junkyards full of all sorts of energy-generating devices with their masses and parts-count 99% as anew, yet they turned useless, owing to few thous of metal and rubber intolerance here and there caused by Entropy internal to their internal matter.

              All the useful energy a brand new car produces, diesel or petrol-powered, up to the first ever engine’s oil change is less than the total energy expended in making the new lubricant, packaged and available, starting the energy-audit from the point when solar has been captured to make the base fossil fuels in the distant past.

              Watch youtube for the massive energy put recently in repairing the spillway of Oroville Dam in California. Thousands of years has taken nature to formulate all the FF we burned making the machinery and fueling them for that exercise. The dam will never have the endurance to match all that energy, yet alone the rest of energy expended in making it and other repairs since few decades ago.

              Nuclear plants go offline for months every two years or less for repairs and refueling. The energy expended in each repair cycle far exceeds all the useful energy generated since last repair – and so on.

              Is this applicable to information, social, financial and control systems, like what’s called software, robotics and AI?

              Is it applicable to civilisation?

              If so, even if we stop making any new energy devices today, the FF remained in the ground won’t be enough to repair engines we built in the past – for a very long time!

              Joseph Tainter refers to this calling it Complexity and Energy. The new thesis puts it in the context of Entropy.

              What colonising Mars? What Star Trek?

              It appears we on Earth are not in energy paradise but energy prison 🙂

            • I am sorry. What you are saying does not make sense to me.

              There are occasional glimmers of understanding, but other parts make no sense at all.

            • i couldn’t make any sense of it either

            • i used the steam engine as a reference because there have been plenty of steam engines that are documented as running for over 100 years–no doubt with repairs, but with broadly the original mechanism

              other than that, my appraisal holds good i think, in general terms

            • Energy^2 says:

              Gail and Norman Pagett – Glad to hearing that. Yes, it is very traumatic and lengthy process decoupling from abundance.

              Norman Pagett – A steam engine would not even run for a couple of hours without added lubrication and that is extra Energy, yet alone running continuously for 100 year unattended without repairs and overhauls, and that is total Energy far exceeding all the useful Energy produced by it since last repair!

            • in trying to write concise and readable comments, one assumes a basic level of common sense, rather than writing a 10 page treatise on the function and maintenance of the steam engine

              i did actually say—with repairs etc

            • Energy^2 says:

              Norman Pagett – Yes, repairs mean going back to square one – Extra Energy.

              Think of that extra energy, coming in the form of a fresh 4 liter lubricant jar replacing an engine’s old oil after travelling 10000 km in your family car – as being something that has come a result of a process occurred millions of years ago capturing solar energy into a stuff. Then massive forces turned trillions tonnes of that stuff to fossil fuels. Then we spent energy finding and extracting the FF, also understanding how refining it, building refineries and refine it. Then bottling and transporting it to your workshop. building a workshop site where it will be changed. Lighting the site. Ensuring a worker is trained enough to execute the change. Manufacture pumps that lift the car. Bringing tools, communicating and documenting, testing…, and so on…

              Since last repair, the car has not produced enough useful energy travelling, which can match that total trail of expended energy involved in making the new engine-oil, and changing it. Period.

              At 100000 km, not only the engine-oil will be changed but spark plugs and nozzles, filters and few other things, and that makes the ratio even worse…

              How much less? Back to the original photosynthesis process millions of years ago, all the solar energy physically captured was < 2% in total. That means 50 times less, so far.

              Add the immense planetary forces in heat and pressure which have broken organics matter to FF, and that would make it 10000 times, so far, conservative!

              Add the energy expended in FF extraction, the extraction machinery, refineries, transportation, servicing, sustaining all people involved in the process end-to-end – and you will end up with a variance of many orders of magnitude (>100000, optimistic)

              EVs are no better. They also use lubricants, ball bearings, suspensions, rubbers – and above all their batteries and electrical components like capacitors, etc.

              Silicon for solar cells remain in high temperature ovens for days until melted and this is only one small step in the process. Each solar panel travels miles in production lines until assembled. Soldering is very energy intensive, etc.

              No need to mention wind turbines as their height and mass are enough to tell the story.

              Changing oil for a family car is nothing compared to how turbines and alternators wear and tear in power plants, whether hydro dams, Nuclear, gas, steam, jet engines, ship engines, army tanks, generators and ships, combined harvesters, etc…

              In short, “No device can generate energy in excess of the total energy put into constructing it“.

              The thesis is now being software-simulated against Facebook, Twitter and few others aiming to identify: If these systems are considered energy-generating devices for social control, will they ever generate total positive outcome that matches and justifies the total energy put into running them?!

              The Romans have built their vast road networks employing just 20000 workers a day over 600 years (Smil 2017). That achieved with no fossil fuels.

              How primitives humans are burning all FF reserves in the world in just 300 years with globalised life style and endless wars, ending up with technologies, culture and practices requiring > 100000 times more energy to maintain compared to the useful energies they will ever produce before they fail and die?

              This is now the new addition to Joseph Tainter 1980s’ Collapse and Energy thesis. 🙂

        • doomphd says:

          with enough energy, you can mine granite for its accessory copper, and phosphate.

          • Energy^2 says:

            doomphd – Theoretically, if Energy is not an issue, Lead can be turned into Gold, seriously (actually, Isaac Newton was also an Alchemist).

            I would imagine that Fusion reactors will start with generating infinite grid energy then also open their business for Alchemy, too.

            Who said metaphysics was wrong upon the start of the age of enlightenment?

            Now we are back (600 years?) to it and its concepts, full steam ahead!
            Hurray
            🙂 🙂 🙂

            This is how FFs are magical, indeed!

            • futhark says:

              Not entirely magical. Uranium decays into lead. Apply fire to tough raw flesh, and it turns into tender edible meat, with all the deadly bacteria killed – another form of alchemy. As has been pointed out, cooking was crucial to the development of the modern human, and humans are the only animals that cook.

            • Energy^2 says:

              futhark – Re-read your statement: ‘Apply fire’, ‘cooking’, ‘cook’ – and that’s all Energy. Since 18th century and earlier, we mainly used FF for it.

              Why Gold doesn’t decay into Platinum, why Mercury doesn’t upgrade to Gold?

              Physics, Nature Laws & Energy?

              Even with energy consumed, mine and enrich enough Uranium to run a newly built N. power plant and you’ll find that all the useful energy the plant produces will NOT exceed all the thousands-of-years-worth of astronomical solar and planetary energies responsible, since the distant past, for creating the FF that has been expended in gaining knowledge, designing, mining, building and operating the Nuclear device – Alchemy doesn’t help!

              One can try this himself: “Take shoes off and Turn off lights – no fossil fuels and nothing is from the fossil fuels age around you and your wife, not even a piece of road, a shelter or a spanner; Next:

              – Walk and start growing a forest
              – Wait until the forest grown dense
              – Sustain yourself & company, farming
              – Charcoal woods
              – Manage to use the charcoal to reach metal minerals ores
              – Build tools and then machinery
              – Continue until you build an energy-generating device of useful work (say a gas turbine generator)

              After the century or two you’ll take to achieve that, run the turbine, avoiding any repairs, to generate energy equal to the total energy expended in making it so far, including what sustained the multi-generation grandsons and daughters that have taken over as you became older and older.

              The Fifth Law predicts that the turbine will fatally fail beyond repair well before reaching that goal.

              Run the experiment, switching from gas turbine to any other type of energy generating devices, and you’ll always find the energy generated from the device cannot exceed the energy put into constructing it.

              Note: Knowledge is provided a bonus, left for you in the equation to allow the experiment to go on, otherwise knowledge makes the most energy necessary making an energy-generating device, as it involves skill sets built over time.

              Alchemy doesn’t work, and we are back once more to where we needed a new age of enlightenment! 🙂 🙂 🙂

            • djerek says:

              “we are back once more to where we needed a new age of enlightenment!”

              As Martin Heidegger said, “only a god can save us now”.

          • HideAway says:

            doomphd, “with enough energy”.

            Ahhhhhhh!!!!

            You need the energy in the right form and in the right place. A sudden breakthrough of fusion for example, will NOT suddenly produce a whole lot more copper from traditional sources.
            Everyone would think it is the solution, when it clearly will not be!! The hope of fusion is to turn all current FF use into electrical, but you need to have the copper available NOW for that to happen. The rate of economic copper depletion is a major concern for any type of cornucopian future, it simply is not there in an economically viable resource. The current giant phorphyrys and IOCGs that provide much of the current copper mine supply, are mostly in remote areas that rely on oil for their extraction and processing, then transport of the concentrate.

            It becomes another catch 22, you need the copper to make a ‘fusion electric powered’ world work, but we don’t have the fusion yet.
            A breakthrough in fusion now, would take another 10-20 years before more than 1 or 2 were commercially up and running. They would rely on all sorts of materials from around the world to work properly. They would become ever more expensive to build as the resources to build them are in decreasing grades everywhere, while the energy needed to extract them (FFs) become more expensive because of depletion.
            We need the fusion/solar/wind electrical energy to be cheap and unlimited, yet need the copper,cobalt,nickel,lithium etc,etc to make it possible, but we need the fusion/solar/wind energy to get the low grades of copper,cobalt,nickel,lithium.

            Maybe if we had fusion working 50 years ago, or nuclear breeder reactors working properly 50 years ago, the other materials would have made future growth possible, but they were not working 50 years ago, nor are they today.
            It doesn’t matter now about a breakthrough of fusion or not, something else will be prove to be a constraint in a world of 7.6b people and growing, while all resources are depleting.

            Hence Liebig’s law of the minimum comes into play no matter what the breakthrough.

        • alternative energy systems produce electricity
          electrical energy cannot function without—–

          ta–daaaaaa—-insulation

          and insulation comes from?—ta daaaaaaaa—oil.

          and electricity is itself useless without machinery to put it to work

          • Greg Machala says:

            I agree Norm. All this banter about solar and wind building nuclear power plants is silly. Solar and wind cannot build anything without fossil fuels. And without fossil fuels there is no machinery for solar and wind to power.

          • Christiana says:

            Insulation can come from wood. Old cabins always were made from wood.

          • theblondbeast says:

            Come on – we’ll just go back to using asbestos cloth to wrap our wiring! We don’t need oil to mine asbestos – that’s what the slaves are for! (/sarc)

            • JesseJames says:

              When I was in college I worked a summer job in a petrochemical industrial supply. One product we made for chemical plants back then was covering chemical hose With asbestos braided cloth for insulation. We would pull the cable through the asbestos tubing, the tie it. One day I had to reorganize our storage room for all the spools of asbestos. One of my most clear memories is being in and working in that room with asbestos floating in the air like a thick blanket! Of course I had no filter over my nose or anything.
              Fast forward….I have never suffered any ill health from it and am still healthy!

            • Good that this was only one day on a summer job.

        • Fast Eddy says:

          Instead of trying to evade the censors using terms such as … Gerbil Waning

          Let’s just agree to use the phrase: The Great Hoax

      • JesseJames says:

        Is anyone familiar with SolarReserve?
        They have a commercial solar powered molten salt plant operating in Nevada,. They have contracts/licenses to install new plants worldwide, particularly in Australia and South Africa.
        Their technology can store power for generation during off hrs. The Crescent Dunes plant in Nevada is 110 MW and can store up to 10hrs of power for off hours delivery.
        This technology would seem to bypass the problem with chemical batteries.
        I would like to understand how much the electricity costs to generate and what they sell it for. The plant consumes an extremely large area…possibly up to a mile in diameter.
        It has a 30yr lifetime. In principle, it could theoretically keep a small town in power 24/7.
        http://Www.solarreserve.com

        • I looked up Crescent Dunes plant in Nevada. https://www.utilitydive.com/news/crescent-dunes-csp-plant-producing-power-after-8-months-offline/447804/ This July 2017 article said that it came back online, after being offline for 8 months, because of a leak in a container of molten salt. The article also says,

          The project sells power to NV Energy under a 25-year power purchase agreement for $0.135/kWh, about twice the cost of power from a gas-fired plant.

          The article also says

          Last year, SolarReserve also floated plans to build a $5 billion, 2,000 MW project in Nevada, but it’s unclear whether or not the project has moved forward. An analyst for Bloomberg New Energy Finance told Bloomberg that absent significant federal and state subsidies beyond the investment tax credit, “there is virtually no way this project will be able to deliver electricity at a price that’s competitive today, much less five years from now.”

          I looked up the Port Augusta solar thermal plant. http://www.solarpaces.org/solarreserve-breaks-csp-price-record-6-cent-contract/ It has not yet been built. It will be a 150 MW (135 MW net) CSP plant, with eight hours of storage. It won the auction with a bid of the equivalent of 6.1 US cents per kWh. (Very good!)

          The Copiapo Chili project with thermal storage was bid at 6.3 cents per kWh in early 2017. https://cleantechnica.com/2017/03/13/solarreserve-bids-24-hour-solar-6-3-cents-chile/

          If Solar Reserve can actually offer the product with storage at a 6 cents per kWh price (without lots of downtime for fixes), then they have a winning combination, I expect. Solar Reserve is a Limited Liability Corporation, so it doesn’t have 10-K reports and stock prices to look at.

          These are relatively small plants. When they talk about electricity for, say, 75,000 homes, you probably have to divide that amount by three (25,000) if you want electricity for homes, businesses, and associated government faclities. The solar back up is for 8 or 10 hours (depending on the facility). So I am not sure it will hold for 24 hours, even on sunny days. If there are a string of cloudy days, or in the winter when the sun shines less, I expect it will deliver less electricity. And of course there are problems like the leak in a molten salt container in Nevada, that kept the plant unavailable for 8 months. So I wouldn’t want to count on the facility 24/7. But it might be part of a portfolio, if the costs can really be kept to the 6 cents per kWh bid level.

          • Someone mentioned to me that contracts for electric power are very thick documents. This person thought that the headline price per kWh may actually be the low end of a price range, or have some provisions we are not aware of. It would be helpful to know if there are missing details that we are not aware of.

            • JesseJames says:

              Good inputs Gail. I also question the 75000 homes story. Also, like you say, unplanned downtime would crater any industries that depend on them. But, if they can be cost effective, and we do not yet know that they are, multiple plants could be built for redundancy. This tech could be one cog in a distributed system. I still don’t think that anything out there can compete with FF generation.

  4. Fast Eddy says:

    The pollution is pouring into Hong Kong as China Burns More Coal….

    Now here’s the thing…. you’ve got Green Groopies screaming at the HK govt because they killed subsidies on EVs…. (the govt indicates that they did this because EVs are more polluting than ICE vehicles because they are…. yep you got it — POWERED BY COAL)

    Then you’ve got Green Groopies screaming at the HK govt because they are choking on smog from the coal fired plants across the border.

    You’ve got yourself a classic Catch 22 here…. a Perfect Storm of f789ing id io ts bleating outside the gates like stu pid sheep….

    Fortunately …. the govt is not elected… therefore they do not have to pander to the f789ing idi ots…. because if they did then the smog rolling into HK … would only be worse….

    https://www.sciencedaily.com/images/2018/02/180207151823_1_900x600.jpg

    • Fast Eddy says:

      The right side of that photo looks smog free…. the solution here is obviously to locate an apartment for rent in that area… and move there…..

      I have also been told that the smog only settles at levels above 6ft off the ground…. so anyone taller than that…. should just hunch over all the time…..

      Problem solved.

  5. jerry says:

    Get this?

    Oil World Turns Upside Down as U.S. Sells Oil in Middle East

    The United Arab Emirates, a model Persian Gulf petro-state where endless billions from crude exports feed a giant sovereign wealth fund, isn’t the most obvious customer for Texan oil.

    Yet, in a trade that illustrates how the rise of the American shale industry is upending energy markets across the globe, the U.A.E. bought oil directly from the U.S. in December, according to data from the federal government. A tanker sailed from Houston and arrived in the Persian Gulf last month.

    https://www.bloomberg.com/news/articles/2018-02-06/u-s-oil-heads-to-middle-east-in-latest-sign-of-shale-s-spread

  6. Jason says:

    The article states that the farm supplies food to dozens of families, not 50. The owner speculates he could support 50, but nowhere is it stated 50 families are being sustained by a one acre farm.
    Gail has probably done a calculation determining how many calories a typical 4 member family needs to consume each year to survive. I doubt one acre could sustain 2 families. All these green articles are propaganda and just keep people feeling good about the future.

  7. The Second Coming says:

    The Coopers have been farming at Limestone Permaculture Farm for close to a decade. They grow organic produce, and raise sheep, goats, and chickens. They also keep bees and build with recycled materials, and The farm is powered by energy from wood, water, and the sun – pretty much every greenie’s dream come true. TreeHugger said co-owner Brett suggested they can feed 50 families from the one-acre farm.
    https://inhabitat.com/1-acre-permaculture-farm-in-australia-feeds-50-families/
    This family in Australia completely shifted the way they source their food – with remarkable success. When wife Nici suffered an illness, the Coopers decided to start growing their own produce at home in Newcastle, and now their one-acre Limestone Permaculture Farm supplies dozens of families with fresh food. They also offer permaculture education and internships, sharing what they’ve learned with the greater community.

    • grayfox says:

      Interesting homestead. Probably does provide high quality, nutritious food to the family and as many as 50 families, but not total food supply to either. The usual labor-saving trappings of a modern home and yard. Perfectly wonderful as long as BAU continues.

      • The Second Coming says:

        Folks, you can click the link and read the article and watch the video clip.
        Just provided it to help with those that think it is impossible to provide for themselves or families on an acre of property. Of course, if there was cooperation among the community households that would provide better output and security.
        A lot of the know how has been figured out, we here need to apply it.
        Easier said, than done.
        Found some great podcasts on this subject that folks may want to select to listen what interests them.

        https://realeyeshomestead.com/permaculture-realized-podcast/

        Of course, there are numerous reason to claim it can’t be done or won’t work past BAU.
        So, no need to post it…

        • The Second Coming says:

          The thing there may be some to survive the bottleneck of collapse. Doubt those with the attitude “its all over, and nothing will work” can be the next offshoot of humankind, if there are any.
          Surprising, listened to a podcast of a noteworthy author of a massive work on Forest Gardening

          • Dan says:

            The Coopers have never had sheer violence on their doorstep. I don’t mean some guy showing up on the porch wanting a cup of milk and punching Mr. Cooper in the face violence. Real violence, kill everybody, burn it all, rape it all, piss on corpses, take the shoes off dead bodies violence.

            The next “offshoot of humankind” will have some Donner party genes in their DNA and when they are sitting in the cave fighting over bones around the campfire they surely won’t speak of what bad old grandad and their crazy uncle had to do to get them there.

            • Fast Eddy says:

              +++++++++++++++

            • Fast Eddy says:

              One way to understand how humans will react to the end of more ….

              Notice what happens when governments attempt to increase the tax rate on the very wealthy….

              Or when they try to reduce pensions and other entitlements on the working class.

              They do not roll over and accept these things….. they get downright ornery….

              They will do just about anything to make sure their piece pie does not shrink.

              Now imagine what the reaction will be when there is almost no pie at all… when there are only crumbs in the from of permie doomsteads here and there….

          • Fast Eddy says:

            On the contrary – those who recognize the futility of the situation … will be some of the first to pick up guns… and kill/enslave the forest gardeners and permie doomies…. and eat their babies.

        • DJ says:

          Many say gold is of no use.
          No one would sell food for gold in a crisis.
          If you sell gold you will be robbed for the remaining gold.

          Still venezuelans are selling gold now.
          https://www.theguardian.com/world/2018/feb/12/venezuelan-middle-class-economic-crisis-pawn-shops

          • Fast Eddy says:

            BAU has not collapsed… not in Venezuela… not anywhere….

            So gold still has value…

            But when any of the countries that any of us live in blows out…. BAU will quickly go to pieces… and gold will be worthless…

            You won’t be able to trade a kg of gold … for a can of beans….

            • DJ says:

              But for now a ring, maybe 1/10 oz of gold, buys many, many kg of beans in Venezuela.

              And probably there are a few Venezuelans grateful for their gardens.

        • Fast Eddy says:

          Meanwhile in the real world….

          Starving mob beat cattle to death with rocks in desperate search for food in Venezuela as the country’s economic collapse continues

    • Fast Eddy says:

      Koombaya… Koombaya… standing ovation for Koombaya…. let me guess… they are also big fans of essential oils….

      Meanwhile…. did I mention that if we stopped using chemical sprays on crops… the F789ing world would collapse into total starvation within a week?

      And that Koombaya-ists with their little hobby farms (that use electric pumps for irrigation and washing machines and chain saws and all the other gifts of BAU)…. would take on the shimmer of a bucket of diamonds…

      And 7.8 billion greedy hungry vicious humans… would pour through the gates and over the fences… and eat the whole f789ing lot in less than 30 seconds

      Koombyf789ingya.

      Let’s take a look at this joke

      The Coopers offer farm tours, workshops, internships, and a permaculture design certificate at their New South Wales farm. They still have jobs and only work the farm part-time, but are hoping to transition to permaculture farming full-time. “We feel there has been an awakening across our beautiful country, self-reliance is on the rise again; urban and rural homesteading has people taking their food and energy supply back into their own hands,” the Coopers say on their website. “With each passing day we are transitioning to a more wholesome life, creating a more fulfilling and positive future, not just for ourselves but also for our family, friends, and community.”

      https://inhabitat.com/wp-content/blogs.dir/1/files/2017/09/Limestone-Permaculture-Farm-Full-Width-Tall-1580×530.jpg

      Yep …. almost everyone has their version of utopia….

      • Fast Eddy says:

        Let’s play a game — who can see evidence of BAU in that image … let’s make a list.

        I spy with my BAU eye:

        – plastic sheeting which I assume is their greenhouse
        – I see more plastic sheeting covering some raised beds
        – I see metal fences
        – I see houses made of milled timber and concrete and nails and other industrial materials
        – I see solar panels from a factory in China no doubt coupled with batteries which will require replacements from a factory in China
        – I see a number of vehicles from the overhead shot on the website
        – in the video I see some stinky hippy types and other assorted MORE ons — probably woofers providing free labour in return for a dose of Koombaya
        – I see corrugated metal around the fruit trees to keep animals from eating them
        – in the video I see plastic irrigation pipes which are no doubt connected to a water pump which is no doubt powered by a coal fired plant
        – I see tools that were made in BAU factories and shipped half way around the world

        This is truly inspiring stuff!

        Isn’t it amazing what BAU can do!

        Bravo… BRAVO!

  8. Baby Doomer says:

    US has no evidence of Syrian use of sarin gas, Mattis says
    https://apnews.com/bd533182b7f244a4b771c73a0b601ec5

    This means Trump committed a war crime against Syria!

    • Fast Eddy says:

      You see… this is why presidents NEVER initiate war crimes proceedings against their predecessors….

      Remember how Obama said – in response to the war crimes committed by the Bush admin — we must not look back we must move on….

      Then he committed his own set of war crimes — including overseeing the gassing of women and children in Homs…. then trying to pin that on Assad… remember how just before he did that he made the statement ‘using chemical weapons would go over the line – and the US would need to take action if Assad did that’ – then of course as any rationale person would do Assad ordered… a CW attack!!!

      Anyways I digress….

      POTUS never punishes previous POTUS…. because he knows that this sets a dangerous precedent….

      Because he KNOWS that the el ders are going to order him to commit war crimes at some point….

      So any MORE ons who are operating on a grade 3 level….

      If Obama were to have had Bush hung (a la Saddam) ….. for faking WMD and torturing thousands….

      Then Obama opens himself up for attacking Syria and Libya without legal justification …. gassing women and children…. and killing and maiming hundreds of thousands of innocent people….

      Think About It.

      • Baby Doomer says:

        John Kerry claimed doctors without borders was one of their witnesses to the gas attack blamed on Assad..And Doctors without borders put on their website that they had nothing to do with the attack and were applauded that their name was being used…

  9. adonis says:

    01.06.18

  10. Baby Doomer says:

    US economic growth is all an illusion

    Here’s what a Wall Street hedge fund mogul, Paul Singer, head of Elliott Management Corp., told his clients the other day:

    “Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth,” Singer wrote. “When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.”

    https://nypost.com/2014/11/06/us-economic-growth-is-all-an-illusion/

    • Energy^2 says:

      Many on this forum have already predicted an answer for Singer’s question “…how long a system can last doing what it is doing?”;

      “The system will last for as long as there is affordable, high density energy sources like Fossil Fuels, available for it to run its engine”.

      If one could magically supply the Roman Empire in its final century or two with dirt-cheap fertilizers and agri machinery, it would likely have lasted few more centuries, even without new territories being concurred for their wealth.

      Effortless, free-of-charge free-of-energy Energy matters! 🙂 🙂 🙂

      If one splits the world into two, one has energy the other energy-less, known ff reserves today will be enough to keep the energised-tier doing what it’s doing for another century. Another split at the end of the extra century adds another one….

      At the end, humans will always default to physical Slavery, not only because greed and evilness etched in their DNA but because physics, and this is what ff made us, including Singer, unable to see since Carnot’s steam engine back in 1824! 🙂 🙂 🙂

      Prediction is now made. Hurray!

    • Davidin100millionbilliontrillionzillionyears says:

      it’s just digits on computers…

      but yes, digits on computers can cause real world effects…

      by 2030, things could be getting shaky.

    • JH Wyoming says:

      Debt has to rise in step with needed growth levels. If growth slows, debt increases to artificially jack it up, so it’s not surprising debt is rising faster than wealth.

      • xabier says:

        Debt has become the one ‘resource’ that we can control and increase on demand.

        Sadly, t will be trumped by the per capita decline of real, viable resources.

        But for the time being, it keeps our engines running.

        • Good observation:

          Debt has become the one ‘resource’ that we can control and increase on demand.

          • HD UK says:

            Hi Gail talking about debt, can you comment on this graph? Interbank lending appears to have fallen sharply, closely followed by a fall in the stock market. Haven’t we been here before? https://fred.stlouisfed.org/series/IBLACBW027SBOG?utm_source=series_page&utm_medium=related_content&utm_term=other_formats&utm_campaign=other_format

            • You are right; that chart is concerning. There was a big drop in interbank lending during the 2008 crisis. Wikipedia has an article giving a couple of explanations for it, namely “increase in counter-party risk” and “liquidity hoarding.” This is an article looking back at detail data, after the fact.
              https://voxeu.org/article/what-happened-us-interbank-lending-financial-crisis

              Now the situation seems to be happening again. Are banks concerned about the solvency of other banks, and reflecting it this way? This is an article asking this question:
              https://www.wallstreetoasis.com/forums/interbank-lending-decrease-looking-for-an-explanation
              It points out the massive increase in required reserves of depository institutions in recent years. Could this be part of it?
              https://gailtheactuary.files.wordpress.com/2018/02/required-reserves-of-depository-institutions-to-jan-2018.png

              The gradual increase in required reserves above seem to be related to requirements under Basel III, which of course is intended to help solvency. I wonder if increased Basel requirements in 2017 are having an adverse impact on lending. This article (which isn’t about the current situation) points out:

              Since the advent of Basel III in 2010, banks have been under considerable pressure to improve their capital ratios. . .Looking back at our original example, when the bank replaces $10m of reserves with a $10m commercial loan asset, risk assets increase and the capital ratio reduces. Putting banks under pressure to increase their capital ratios is thus a significant disincentive to lend at risk. This might explain why banks seem to have substituted safe assets (Treasury and Agency securities as well as reserves) for risky ones.

              There seem to be new tweaks to the system that are now being added. They are internally being referred to as Basel IV. (They are really an update to Basel III.) According to a January 8, 2018, Deutsche Bank article:

              The proposals announced recently, referred to as ‘Basel IV’, include updates to the ways banks calculate their capital requirements with the aim of making outcomes more comparable across banks globally. . . One principal feature is the way banks calculate risk weighted assets or RWAs. The BCBS proposes that a calculation of a bank’s RWAs using internal models should not fall below 72.5% of the calculation using standardised models. This lower limit is known as an “output floor”. In addition, when computing RWAs based on internal models, input parameters must not fall below certain minimum levels, so called “input floors”.

              I wonder with these new rules (just announced now), banks are “running scared.” They don’t dare make more loans until they can figure out how this new rules apply to themselves. Basel III rules seem like a place to start looking–they don’t really prevent bank failure, even though they look like they would. At some point, they squeeze lending. Squeezing banks with new Basel rules, at the same time interest rates are going up and the Federal Reserve is selling QE securities does not sound like a good idea.

  11. Baby Doomer says:

    Here Are The 180 Toys ‘R’ Us Stores That Are Closing

    http://fortune.com/2018/01/24/toys-r-us-closings/

  12. Fast Eddy says:

    https://wolfstreet.com/2018/02/09/what-the-headlines-about-tesla-snap-and-twitter-earnings-should-have-said/

    I am beginning to understand what it must have been like for some who lived under communist rule but were not drinking the kool aid

    • djerek says:

      The thing is, under communist rule (at least after Stalin’s time) almost everyone realized that the party line was something between partial and total bullshit. In our society people actually genuinely believe in the propaganda.

      • xabier says:

        Very true, although I get the impression that belief in the Party held good for quite a time after Stalin, well into the 1970’s – after all, living standards just went on improving, and they were promised ‘Full Communism’ in 1980 (!).

        A bit like us being promised that globalism and neo-liberalism would lift all boats even if some corporations do rotten things. .

        The more intelligent seem to have realised on reaching adulthood that it was mostly nonsense, and then reacted by becoming despairingdrunks, corrupt manipulators or tools of the system, or dissidents. Even those who saw that the Party itself was corrupt persisted in believing in the ideal it represented.

        As neo-liberalism has failed, it’s interesting to note that we are being distracted by social issues – LGBT rights, etc, being pointed to as proof of the superiority and goodness of our system.

        • Fast Eddy says:

          Most Russians Prefer Return of Soviet Union and Socialism: Poll

          Over 50 percent of Russian citizens believe the collapse of the Soviet Union was bad and could have been avoided.

          The majority of Russians polled in a 2016 study said they would prefer living under the old Soviet Union and would like to see the socialist system and the Soviet state restored.

          The center also published that nostalgia for the USSR is at an all-time high since 2000.

          This could be tied to the fact that for the first time since the recession era of 2008-2009, Russians are spending more than half of their monthly income on food, according to a study by the Institute of Social Analysis and Forecasting Institute. And state subsidies are minimal.

          https://www.telesurtv.net/english/news/Poll-Most-Russians-Prefer-Return-of-Soviet-Union-and-Socialism-20160420-0051.html

    • Lastcall says:

      It has a definition…’Multiplicative Idiocy’..where ignorance is wider and deeper the greater the numbers involved.

      /Users/Augerup/Desktop/allsorts/Multiplicative Idiocy – The Oatmeal.pdf

  13. JH Wyoming says:

    http://www.bbc.com/news/business-42973529

    Potato plastics; better for the environment and yet another layer of complexity, not to mention we must ask how much crop acreage it would take to produce enough plastic from potatoes to replace FF based plastic?

    • We need more acreage left without human use. Doing this would operate in the wrong direction. Among other things, it would increase deforestations.

    • grayfox says:

      At one time, if you wanted a cup of coffee or a cold drink you got it served in a glass or ceramic container, which was washed and reused over and over, along with plates and utensils, until broken or stolen. We’re going back there. The single use, throwaway containers have been a disaster for the environment.

      • agreed

        but you also had to sit where it was served–pay the server, pay for washing, storing, breakages and so on

        just sayin

        • grayfox says:

          I had a part-time summer job in the early 70’s – a wild-haired teenaged dishwasher in a truck stop diner. $1.85/hr. Good times.

          • lol

            i had a job like that too—driving a coal delivery truck–112lbs sacks on your back—delivered to coal cellars etc

            but i wasnt a doomster then…coal was just burned in fireplaces

    • Artleads says:

      I’m *slowly* getting to internalize Gail’s point (if I even am getting it) that oil producers need higher prices.

      I think it can be done.

      Society needs to support the fossil fuel industry. In an organized way. Not just left up to market forces. Dense fossil fuels taken from existing mines, and compensated at a higher (boutique) rate. That arrangement obviates the complexity in making new stuff meant to take the place of fossil fuel products.

      So how do we get a critical mass reoriented to see that FFs, far from being the worst things, are the best things? You can do more with less environmental destruction, including less deforestation.

      What would seem to be needed is to spread FF use out laterally instead of continue the vertical way of current use. First world countries need to hit the pause button and all the rest need to use more FF…in a targeted way that is much better than now at planning. There need to be restrictions–keeping people better served where they are without having them sprawl out beyond.

      The real enemy is the current developer and planning community.

      • djerek says:

        >FF use out laterally instead of continue the vertical way of current use.

        This is not really a possible way to arrange a complex system.

        • Artleads says:

          I’m trying to understand better. Please explain more.

          “The article shares some examples of these hotspot maps, along with a startling conclusion about the lack of long range planning to address and mitigate the loss of biodiversity in most of the world’s sprawling places.”

          https://dirt.asla.org/2018/02/06/new-maps-show-how-urban-sprawl-threatens-the-worlds-remaining-biodiversity/

          So I don’t entirely buy this approach. My type of “sprawl” would require dirt roads and no tree removal, going to outlying built places that already exist and made to yield more economic activity just the way they are. My approach to economic activity would be tourist oriented.

        • xabier says:

          The industrial globalised system was not a rational creation, and cannot, therefore, be re-directed rationally. Control is an illusion, we can only manipulate certain elements (Wall St does this very well, ). but it not total control

          • Artleads says:

            I’m not concerned what “(t)he industrial globalised system” does, being well aware that I have no capacity to even understand much less change it. I’m only concerned about what *I* can do. I’m also convinced that the system is self organizing, which I don’t consider whatever actions 7.5 billion people take as individuals or groups to be irrelevant to the self organizing.

          • Artleads says:

            I’m also convinced that the system is self organizing, which doesn’t mean the actions of 7.5 billion people–as individuals or groups–don’t matter to the self organizing.

      • DJ says:

        Society can’t support fossile fuel use.

        For that, first society must admit there is no alternative, and by that admitting the end is near (4 months or 40 years doesn’t matter), and then most of what society does becomes pointless.

        • Artleads says:

          There are great scholars like Spengler who conclude that societies work in prescribed ways; they begin, they grow, and they die. Their mental reasoning is a whole universe ahead of mine. I can only say that the intuition I depend on, and that has proved more or less correct over the decades, doesn’t see an end to civilization, whether or not it uses fossil fuels.

          Beyond that, I’ve been clear for a very long time that our civilization is too top down, too centralized and complicated for the world to afford. .What is utterly frustrating is how *impossible* it is for western people to understand.that. You always get referred back to way things work now. People try to prescribe a future, or no future, based on the same way of thinking that caused the problem in the first place. That does not and cannot work.

          I take things as I see them, based on simple empirical experience, and not from theory about anything. What kind of society is it that can’t afford fossil fuels? It is a society formed on western systems of belief. I happen not to sharer those beliefs. My flag is that of aesthetics and order. Others’ flag is some sort of determinism or other based on how society works now, having nothing to do with aesthetics or order. It is as if we have no agency to think in any way other than the mainstream way of western civilization.

          From my POV, there is nothing but abundance, even now when everything is gone all to hell. Were I put in prison, and was in fair physical and emotional shape, and had nothing but a blank wall to look at, I’d find a great deal of abundance in that.

          Knowing my limitations, I listen to all the theories on why growth has to happen in such and such a way. But I don’t understand those theories. Their purveyors are probably too smart for my reckoning. So all I can see is that we can control what FF we use, where and how we use it. We can grow our population or reduce it. If you insist on order its more likely you will cope than if you don’t.

          I’m counting on human intelligence to distinguish the immediate need to use FF in relation to how the society works now, from all the different ways it could be applied…while depending on aesthetics to take it to some other stage that I can’t intellectually predict.

          I don’t depend on new buildings to solve anything. The rest of the world is convinced of the contrary. Places can be warmed with FF, but can sometimes be kept warm simply through thicker walls. There is no set way to survive. If you don’t cut down forests, your FF budget is one thing. If you continue to cut them down, your FF budget is something different. There are choices. Planning leads you in one direction, while not planning takes you in another. People have been indoctrinated with very bad ideas. Adopting good ideas requires effort and intelligence. Life is always throwing you crises that can be used to adopt better (more survivable) ideas or to let things go batsh-t crazy. I choose the former, even, as is often the case, I’m the only one rowing in that boat.

          .

          • DJ says:

            Yadda yadda intuition cardboard …

            How do you as a politician force people to stuff away a large % to pension after just having admitted there won’t be a pension?

            How can you allow houses being built and written off over 100 years if they will be worthless in less than 40?

            How can you allow a single immigrant if what we have is finite and every extra capitas resources has to be taken from someone?

            How do you rationalize building infrastructure if there is no future beyond 2020? 2040? 2060?

            Everything governments, EU, central banks and companies does becomes invalid without a future.

            • djerek says:

              “Everything governments, EU, central banks and companies does becomes invalid without a future.”

              Bingo. Their entire legitimacy relies upon a fictional future that cannot ever occur.

            • xabier says:

              I agree, it’s all insane, with no viable future, but the game of make-believe goes on. The pension industry in the UK wants to force self-employed people like me to pay more money into pensions – totally irrational, but they want the rent, today! Much more rational for me to spend the money on a case of wine today,,,,,

            • But if you pay in more now, it gives the industry more to spend on current pension payouts, so that they don’t default as quickly. They don’t want you to think about the rationality. They want you to assume that the world economy will grow for the next 30 years, 50 years, or whatever.

            • DJ says:

              As I see it world leaders only have two choices:
              1. Preach renewables and hope for a miracle.
              2. Claim we have fossil fuels/uranium for hundreds of years. Will not work so good when production starts to decline.

            • We need jobs. Jobs come with “churn.” Jobs come with growth–homes for new immigrants, for example. Without jobs, our whole system comes to a halt. Think about Japan. It is using more debt to try to fix its lack of population growth.

          • It’s not a matter of “affording” fossil fuels

            fossil fuels made themselves ”affordable” by providing the means for their own extraction—ie, the energy that drove the pumps that extracted the water from deep coalseams—coal itself was known about for 000s of years—there was just no use for it in any large scale industrial context. and no way of getting at it below 30ft or so

            Once coal was available in colossal quantities, then the prime use for it was making iron—once iron became ultra-cheap (in terms of effort to produce it) then our industrial society became possible—ships, cannon, wartoys of all kinds.

            That was the sequence of societal progress—you can date it exactly to 1709, when Darby first smelted iron ore using coke.

            this is why turbines and solar panels cannot be ultimately viable—unlike fossil fuels they do not produce sufficient energy to reproduce themselves

            • This is when Wrigley shows the uptick in coal consumption occurring. But you are right about wind turbines and solar panels not producing enough energy to reproduce themselves.

          • xabier says:

            Artleads: if you can find the March issue of The World of Interiors magazine , there’s a very interesting article about a farmhouse made and decorated by a Berber peasant woman. Heated by cows in the basement, and beautifully painted.

            • Artleads says:

              Tried to find it. These mags sure are expensive! From the sound of it, this would work with lots of land and cattle, where the business model created convergence between dairy products, fuel (dung) production, appropriate house design codes, (or whatever) to accommodate the latter, etc.

              I tend to be weak on decoration, so a model like this would be helpful to have around with a whole panoply of attractive treatments which go beyond my excessively basic/crude approach. We have to attract the tourists. 🙂

        • strictly speaking—it should be fossil fuel use can’t (ultimately) support society in the modern context

          ”society” arose only when humankind began to produce surplus energy, first in food, then in material goods etc
          ie—when we grew away from the basic animal level of 1:1 EROEI

          without fossil fuels, society falls back on natural energy sources, which basically are biological, —-plant life and other animals, where we can no longer move faster than the speed of hoof and sail

          • Actually, I think that it started when humans (and pre-humans) began to burn biomass to supplement the food we eat. That began over 1 million years ago. That is what gave humans superiority over other animals. The basic animal level is something like 10:1, because animals have to maintain their metabolisms besides having the extra energy to get their food. Humans have had a different equation, once they learned to supplement their food energy with burned biomass and later other energy forms (using trained dogs for hunting, for example). They had a surplus that allowed their population to overtake that of competitors, long before fossil fuels came along.

            • Yet another important trans-formative threshold event must have been the effects from long distance luxury goods trade at least since 5-20K BC, contributing to much faster social stratification aka the path towards ever insaner ‘rat race’ among humanoids (and vs. the resource base environment)..

            • The thing that people overlook is that industrial agriculture improves efficiency by at least two orders of magnitude (probably more), over trying to farm by poking the ground with a stick. In the US, one industrial farm feeds about 170 people. https://www.fb.org/newsroom/fast-facts

              Economies, even back in the hunter-gatherer era, had a “supplemental energy” component besides a food component. It was the fact that they had a supplemental energy component that allowed the growth of “complexity” (tools and clothing), and the changes in the human body that allowed for more intelligence and less teeth and digestive operations.

              All of these analyses that try to look at food energy separately are interesting, but there should be no expectation that even back in the hunter-gatherer era that the EROEI of food energy should “turn out” like those of animals. And of course, the target for animals has nothing at all to do with 1:1.

          • Artleads says:

            ++++++++++++

  14. JH Wyoming says:

    http://www.bbc.com/news/world-africa-43016321

    Cape Town, S. Africa got rainfall in the amount of .3″ and city dwellers came out to rejoice and let the precipitation fall on them. Now that’s a scene out of the movie, Dune at the end, on the previously dry planet, Arakis. “And how can this be? For he is the Quizat Sadarak!!!

    • Third World person says:

      one of most funny comment in this article

      One pastor, who had led prayer for rain in Cape Town, said his prayers had been answered.

      “It’s a confirmation that I am a true prophet and whatever that I have promised Cape Town has come to pass,” Paseka “Mboro” Motsoeneng said, complaining that the media had not taken his prayer seriously.

  15. Baby Doomer says:

    Impacts of oil price shocks on the United States economy: A meta-analysis of the oil price elasticity of GDP for net oil-importing economies (Oladosu 2018)

    https://www.sciencedirect.com/science/article/pii/S0301421518300417

    https://info.ornl.gov/sites/publications/Files/Pub68032.pdf

    • Of course, the “flip side” of what these researchers are estimating is the beneficial effect on the economy of oil importing nations, when oil prices are lower than the full cost of production (including reinvestment, taxes, and other costs).

      No one talks about this. (Or the beneficial effect of artificially low interest rates, and rising debt levels enabled by these low interest rates.)

      • JH Wyoming says:

        Good point, Gail. The whole system has been artificially tweaked to derive as much short term benefit as possible, which should tell us all it’s a very desperate situation.

  16. jupiviv says:

    Don’t know if this has been posted:

    http://energyskeptic.com/2018/by-2020-it-may-be-clear-to-everyone-that-oil-decline-has-begun/#comments

    The study referred to is by one Michael Dittmar, although Alice Friedemann does not provide a link to it. The paper can be downloaded here:

    https://arxiv.org/abs/1708.03150

    Friedemann thinks that Dittmar overestimates future ME oil production. She is probably right given the technocornucopian nonsense about solar powered supercities in the desert that has lately issued from various Saudi elites.

    She also thinks Dittmar overestimates shale oil production, but here it is more a question of oil prices staying high enough or not (due to low ECOE of net oil production), or investors’ faith in getting returns from future price rises.

      • Fast Eddy says:

        Black gold hemorrhage

        The biggest elephant in the room is oil. Saudi Arabia’s primary source of revenues, of course, is oil exports. For the last few years, the kingdom has pumped at record levels to sustain production, keeping oil prices low, undermining competing oil producers around the world who cannot afford to stay in business at such tiny profit margins, and paving the way for Saudi petro-dominance.

        But Saudi Arabia’s spare capacity to pump like crazy can only last so long. A new peer-reviewed study in the Journal of Petroleum Science and Engineering anticipates that Saudi Arabia will experience a peak in its oil production, followed by inexorable decline, in 2028 – that’s just 13 years away.

        This could well underestimate the extent of the problem. According to the Export Land Model (ELM) created by Texas petroleum geologist Jeffrey J Brown and Dr Sam Foucher, the key issue is not oil production alone, but the capacity to translate production into exports against rising rates of domestic consumption.

        Brown and Foucher showed that the inflection point to watch out for is when an oil producer can no longer increase the quantity of oil sales abroad because of the need to meet rising domestic energy demand.

        In 2008, they found that Saudi net oil exports had already begun declining as of 2006. They forecast that this trend would continue.

        They were right. From 2005 to 2015, Saudi net exports have experienced an annual decline rate of 1.4 percent, within the range predicted by Brown and Foucher. A report by Citigroup recently predicted that net exports would plummet to zero in the next 15 years.

        • Fast Eddy’s quote is from an article by Nafeez Ahmed, called “The Collapse of Saudi Arabia Is Imminent,” written in September 2015. This is a graph of Saudi Arabia and its net exports through 2016.
          https://gailtheactuary.files.wordpress.com/2018/02/saudi-arabia-oil-exports-mazamsciene.png

          You can see that Saudi Arabia’s net exports bounce around a lot. I would describe them as “fairly flat” in recent years. Saudi Arabia’s production has pretty much been able to stay ahead of its consumption. Comparing 2005 (the highpoint in the 2000 to 2010 period) to the 2016, net exports are down by 0.2% per year, which is not really significant.

          Saudi Arabia’s big problems are (1) Low oil prices – it can’t collect enough taxes if the prices are low and (2) Rising population to support with the falling tax revenue. Tax revenue per capita is falling, making it impossible to support programs without debt.

          The question is how long the situation can last.

      • the saudis are building economic hub cities s they wont have to rely on oil anymore

        no need to worry

      • Joel says:

        Still plenty of time for that vacation
        Saudi tourist visa rules to be announced in 2 months
        http://www.arabnews.com/node/1231286/saudi-arabia

    • Yes, this has been posted before, and I did respond to it. http://ourfiniteworld.com/2018/01/31/nine-reasons-why-globalization-cant-be-permanent/comment-page-21/#comment-164056

      I also posted a link to Dittmar’s paper, just as you did.

      You say, “Friedemann thinks that Dittmar overestimates future ME oil production.” I didn’t see this in Alice Friedemann’s post. It may be true, but I expect it is your view, not Alice’s.

      I point out in my previous comment that what Friedemann says about low EROI of tight oil from shale is a common misunderstanding of peak oilers. You refer to this issue as “due to low ECOE of net oil production.” There are two different oil products with practically the same name, so it is easy to confuse EROI papers: (1) heating kerogen to produce oil from oil shale and (2) fracking of wells to produce tight oil from shale. She is right that tight oil from shale is high cost, but this is not what EROI measures. EROI only considers whether a certain piece of costs are high. Other costs (wages, interest on debt, lease costs, etc.) are omitted all together. The low EROI product is the one from heating kerogen; tight oil from shale seems to have a fairly high EROI (mid-20s).

      I don’t really like Friedemann’s title of her article. What Dittmar says that almost everyone will notice is declining is “the current oil-based way of life.” The title seems to imply that they will specifically notice the loss of oil.

      Alice Friedemann is a science writer who has made a hobby of reading non-fiction books. http://energyskeptic.com/about-energyskeptic/ She has a bachelor’s degree in biology with minors in physics/chemistry. She is retired from being a Systems Analyst for 25+ years. She sometimes has some good insights, but she may get things wrong. She lists peak oil educators (Richard Heinberg, Kurt Cobb, James Howard Kunstler) and well as James Hansen among her experts. She doesn’t list me as an expert. Use a little caution in reading her writing.

      • jupiviv says:

        @Gail,

        “You say, “Friedemann thinks that Dittmar overestimates future ME oil production.” I didn’t see this in Alice Friedemann’s post. It may be true, but I expect it is your view, not Alice’s.”

        She says it here:

        “The assumption that OPEC nations (i.e. Saudi Arabia, Iraq, Iran, Kuwait, UAE, and Qatar) can continue producing oil at the current rate is based on potentially exaggerated reserve figures, which went up substantially in 1985 and haven’t budged a barrel down since then. But for OPEC, and all other regions and nations, Dittmar predicts the maximum possible production based on his model, and says that perhaps the Middle Eastern OPEC nations can continue to produce as much oil as they are now until 2050.”

        I don’t see the ME producing oil at current levels for the next ~30 years. I think shale only works in an economy primarily driven by crude oil production. Much of the US production increase is from new deep water wells, I believe.

  17. MG says:

    An article and interview in Slovak about and with a Cezch accountant that provides accounting services in cryptocurrencies. She mentions that the Czech National Bank does not recognize Bitcoin as currency and from the point of view of bookkeeping, it is treated as “intangible movable asset”.

    https://finweb.hnonline.sk/zahranicna-ekonomika/1690491-ceska-uctovnicka-prepadla-kryptomenam-v-bitcoinoch-uctuje-ale-aj-dava-vreckove-svojej-dcere

  18. Davidin100millionbilliontrillionzillionyears says:

    JHK writing today:

    “As of this week, the shale oil miracle launched US oil production above the 1970 previous-all-time record at just over ten million barrels a day.”

    I suppose someone can verify this data.

    his main point is that the decline in the coming years will be symmetrical to the increase:

    the production spike in the past 7 years will be followed by a plunge.

    • DJ says:

      Does he claim we are on the peak now?

    • What JHK says http://kunstler.com/clusterfuck-nation/party-on-dudes/ about oil supply exceeding the peak in the 1970s is pretty much true. There are multiple different reports a person can look at. The Weekly Supply report, which is what JHK refers to, shows an amount of 10,251,000 barrels per day of the week ended Feb 2, 2018. This report doesn’t go back to 1970. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

      The Monthly Supply report, which has the “more correct” data in it, is only complete through November. It shows November crude oil production at 10,038,000. This is still a tiny amount below the peak month in 1970 of 10,044,000. But the weekly amount is well above 10,044,000, and recent adjustments between weekly reports and monthly reports have been upward. So what JHK says is almost certainly right, even if not directly observable from one exhibit.

      I would say that JHK’s main point is that US oil production is very vulnerable to a crash when interest rates rise, because of its high dependence on debt financing. He does show an exhibit from SRSrocco report, showing a rapid drop off of tight oil production prior to 2017. That exhibit makes the claim (which I don’t really agree with, at least based on the “symmetry” reasoning):

      US oil production uptrend, 1970 peak and then decline was symmetrical. The same will happen with the rapid rise and peak of US shale oil production.

      Given that interest rates seem to be rising, it would seem like JHK’s concern is very near at hand.

      • Fast Eddy says:

        Big Oil = TBTF.

        • Quite a bit of tight oil from shale is from smaller companies. But I suppose there is a similar concern for it, especially if it becomes clear that failing companies will not be immediately bought up by other companies, and the new buyers will continue to pump oil as before. There were a lot of failures early on of small companies, but they were bought out.

    • Davidin100millionbilliontrillionzillionyears says:

      I still think it’s pretty cool that Hubbert, in 1956, had the vision to try to calculate the peak, and that he nailed the 1970 peak exactly…

      he lived at a time when QE and TBTF were just random letters…

      or else he might have envisioned something like this 2018 peak…

      so where’s my champagne?

      a new peak!

      that calls for champagne and…

      BAU tonight, baby!

  19. Fast Eddy says:

    ATTENTION PREPPERS ATTENTION PREPPERS!!!!

    I give you … a taste of the future…. (of course such people will live you alone on your Koombaya Farm….)

    LA GRITA, Venezuela (Reuters) – It’s midnight on one of the most dangerous roads in Latin America and Venezuelan trucker Humberto Aguilar hurtles through the darkness with 20 tons of vegetables freshly harvested from the Andes for sale in the capital Caracas.

    When he set off at sunset from the town of La Grita in western Venezuela on his 900-km (560-mile) journey, Aguilar knew he was taking his life in his hands.

    With hunger widespread amid a fifth year of painful economic implosion under President Nicolas Maduro, Venezuela has seen a frightening surge in attacks on increasingly lawless roads.

    Just a few days earlier, Aguilar said he sat terrified when hundreds of looters swarmed a stationary convoy, overwhelming drivers by sheer numbers. They carted off milk, rice and sugar from other trucks but left his less-prized vegetables alone.

    “Every time I say goodbye to my family, I entrust myself to God and the Virgin,” said the 36-year-old trucker.

    While truck heists have long been common in Latin America’s major economies from Mexico to Brazil, looting of cargoes on roads has soared in Venezuela in recent times and appears to be not just a result of common crime but directly linked to growing hunger and desperation among the population of 30 million.

    Across Venezuela, there were some 162 lootings in January, including 42 robberies of trucks, according to the consultancy Oswaldo Ramirez Consultores (ORC), which tracks road safety for companies. That compared to eight lootings, including one truck robbery, in the same month of last year.

    “The hunger and despair are far worse than people realize, what we are seeing on the roads is just another manifestation of that. We’ve also been seeing people stealing and butchering animals in fields, attacking shops and blocking roads to protest their lack of food. It’s become extremely serious,” said ORC director Oswaldo Ramirez.

    Eight people have died in the lootings in January of this year, according to a Reuters tally.

    The dystopian attacks in a country with one of the world’s highest murder rates are pushing up transport and food costs in an already hyperinflationary environment, as well as stifling movement of goods in the crisis-hit OPEC nation.

    They have complicated the perilous life of truckers who already face harassment from bribe-seeking soldiers, spiraling prices for parts and hours-long lines for fuel.

    Government officials and representatives of the security forces did not respond to requests for comment for this story.

    Barred by law from carrying guns, the Andean truckers form convoys to protect themselves, text each other about trouble spots – and keep moving as fast as possible.

    Aguilar said that on one trip a man appeared on his truck’s sideboard and put a pistol to his head – but his co-driver swerved hard to shake the assailant off.

    https://www.reuters.com/article/us-venezuela-economy-trucks-widerimage/mad-max-violence-stalks-venezuelas-lawless-roads-idUSKBN1FT1G9

    https://vignette.wikia.nocookie.net/mgefanon/images/1/17/18876_fantasy_monster_deamon_dark_creature.jpg

    • According to the article,”Rogers predicts the stock market will experience jitters until the Federal Reserve increases borrowing costs. That, he says, will be the point when stocks go up again.”

      This statement by Rogers is absurd. Rising borrowing costs make asset prices of all kinds go down. Fewer people can afford the assets, when borrowing costs are higher. If bonds are paying more, people will buy them instead of stocks. Rising borrowing costs even make commodity prices go down, because they make automobiles and homes more expensive to afford. People cut back on car purchases, and they cut back on driving.

      Perhaps it is time for Rogers to retire.

      • Dennis L. says:

        Assume some invested wealth. Where does one place it? It appears to me the US government is having an issue with which obligation to pay first which is perhaps not unlike many families at the beginning of the month. So does one buy bonds backed by the full faith, etc. of the US government of stocks which can purchase whatever laws, etc. they need from the US government? A guess is stocks, but I really don’t have a clue. Anyone have any ideas?

      • Dennis L. says:

        Regarding driving,
        I have a couple of automobiles, one of which is a Toyota Camry Hybrid. I am driving it into the ground going to dance lessons in the cities. Dance lessons are expensive, but first things first and automakers will wait behind the line for lessons. Gail’s advice has shifted me to purchasing from the service economy.

        • djerek says:

          Buying new cars at this point is insane with the amount of off-lease cars available at much cheaper prices anyway.

      • thestarl says:

        People like him are what is wrong in this world greed

    • ITEOTWAWKI says:

      Next Bear Market will be his and everybody else’s last….

      • Dennis L. says:

        Why not a melt up? WB sent out a note several years previous mentioning a book, “The End of Money.” If someone knows for sure, please advise and I will place my bets.

        • ITEOTWAWKI says:

          No bets to be made…just savour every day..the dancing lessons are a good start 🙂

          • Dennis L. says:

            Yes, it really comes from Gail and her advice, for all of us there are metaphorical dance lessons. There is also a peace of having done one’s best and attempted to live by a set of time tested values. Perhaps, this is only obvious in retrospect.
            Orlov has written on groups that endure. A group is a good thing, we are a group and even with similar beliefs the group can be a bit fractious.

            Thought question: Assume Hirsch report was acted on in time for the US and all the doom predicted on this site comes to pass. How high would the walls around the US need to be?
            Given in that period of time no substitute for liquid fuels(Hirsch was looking at liquid fuels as I recall)were discovered would an policy such as the US has pursued over a similar time period have produced similar results? Which would cost less and which would be politically acceptable? This is not dissimilar to the lifeboat problem.

  20. Dennis L. says:

    So it looks like Laherrere gets it close to correct and EIA is a close second – See Wikepidia, Hirsch Report.

    Met Hirsch in DC, Gail was there as I recall, he and his associate Bezdek presented and afterwards I was fortunate to find them siting around so I asked a simple question, “What are the billionaires doing?” The answer was in effect, we don’t know, they don’t talk to us. Anybody out there know? One billionaire comes to mind who would probably be pretty hard to rob and has considerable mobility and first call on fuel, etc. Any guesses?

    The Hirsch report had the idea that preparations needed to begin ten years prior to peak which HSCB(beautiful Hong Kong building on Victoria’s Peak as I recall)reported as being this year.
    Again, dismiss the doomers, they have been wrong so far, a homestead is more work than is generally imagined(fellow named Todd tried it on a mountain somewhere in CA, nice guy he may have run out of years waiting for it to happen, etc. The JewishFarmer gal was proselytizing about her homestead, last I heard she sold it and moved to the city. Met her in DC as well, nice Catholic girl who married a Jewish professor as I recall. At the time he had given up the tenure track I believe, probably a good move if the world were going to end anyhow. World is still going on and their goats have moved on.

    How many of you have used an outhouse? Grandparents had one, two holer, anyone know why? It was considered a real advance when old toilet seats were installed over the old round holes. Now, what was that joke about a well digger’s butt?

    Building a self sufficient house? I would try passive, now convince the wife to do that, she will want traditional. The issue here is local politics, it is not knowledge of good, low energy construction. All politics is local, in this case very local.

    I’ll save you some work on the Hirsch Report:

    Waiting until world oil production peaks before taking crash program action leaves the world with a significant liquid fuel deficit for more than two decades.

    Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.

    Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

    What are are options again?

    How about some scenarios, realistic, doable, and livable?

    • Baby Doomer says:

      UC Davis Study: It Will Take 131 Years to Replace Oil with Alternatives (Malyshkina, 2010)
      http://pubs.acs.org/doi/abs/10.1021/es100730q

      University of Chicago Study: predicts world economy unlikely to stop relying on fossil fuels (Covert, 2016)
      https://www.aeaweb.org/articles?id=10.1257/jep.30.1.117

    • Hi Dennis,

      Yes, I was at quite a few ASPO-USA conferences. I met Jean Laherrere at one (and still receive e-mails from him). I talked with Robert Hirsh and Roger Bezdek at the conferences. I am still a Facebook friend with Sharon Astyk (the Jewish Farmer lady). ASPO-USA was nice enough to pay the way for Oil Drum writers who would speak at the conference.

      The Hirsh Report is still up on the Department of Energy website. https://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf

      That report gives a table of predicted peak dates, which I think you are referring to. These forecasts were made around 2003 or 2004.

      Projected Date – Source of Projection
      2006-2007 Bakhitari
      2007-2009 Simmons
      After 2007 Skrebowski
      Before 2009 Deffeyes
      Before 2010 Goldstein
      Around 2010 Campbell

      After 2010 World Energy Council
      2010-2020 Laherrere
      2016 EIA (Nominal)
      After 2020 CERA
      2025 or later Shell
      No visible Peak M. C. Lynch (2003 Oil and Gas Journal)

      I think this is the list you are referring to, regarding which authors were correct.

      The authors recommended starting mitigation efforts 20 years in advance. Or certainly 10 years in advance, if 20 years wasn’t possible.

      I note that the report quotes from a 2003 report by the IMF and the IEA saying:

      For the U.S., each 50 percent sustained increase in the price of oil will lower real U.S. GDP by about 0.5 percent, and a doubling of oil prices would reduce GDP by a full percentage point. Depending on the U.S. economic growth rate at the time, this could be a sufficient negative impact to drive the country into recession. Thus, assuming an oil price in the $25 per barrel range — the 2002-2003 average, an increase of the price of oil to $50 per barrel would cost the economy a reduction in GDP of around $125 billion.

      For mitigation, the report recommends a combination of the following:
      1. Conservation, including higher mileage vehicles. Some vehicles might be hybrids, using batteries to improve efficiency
      2. Improved oil recovery. Get more oil out of existing wells using flooding and other techniques.
      3. Heavy oil and oil sands. Particularly from Canada and Venezuela.
      4. Gas to Liquids –Very large amount of “stranded” natural gas (transportation cost are too high to transport it to where it can be used as a gas). Instead, build natural gas to liquid plants to make liquid fuels.
      5a. Coal to liquids
      5b. Oil shale – heat kerogen to provide a liquid fuel
      5c. Biomass to liquids – For example, ethanol from wood or other biomass.
      6. Fuel switching to electricity -For trains and private passenger cars
      7. Other fuel switching –If liquids are currently used in a fixed location, a change might be made to another fuel or electricity, so that the liquids could be used for transportation needs.
      8. Develop a hydrogen economy, with hydrogen as an energy carrier.

      What they end up recommending using is 1, 2, 3, 4, and 5a. In fact, all of these things have been looked into. One issue in all of these is cost. Unless oil is truly high-priced, it is hard to make alternatives that are cost competitive.

      • Dennis L. says:

        Thanks for all you do; I have been fortunate to meet many of the people in the P.Oil world and at a break out meeting sat next to Dennis Meadows and he graciously answered a few questions. You remain a place to discuss ideas in a forthright manner.

        Assuming we need liquid fuels, something will need to be given up and with that jobs lost. This is easy in the abstract, painful in reality. There will be a transition, the question is what form it will take. Doomers have been wrong so many times it seems to be a bad bet, the answer is somewhere, it is very hard to see.

        I enjoyed meeting you and maybe sometime once again our paths may cross. I thank you for the advice to live a bit for today, I dance which is the opposite of Aesop’s fables which my mother read to me as a very small child. A 71, I am backing off a bit.

        You mentioned Bakhitari; unfortunately he was unable to attend due to issues between the US and Iran during that time period. He seemed like a wonderful, intelligent man whom those of us who did not know him would have been fortunate meet. Colin Campbell thought a great deal of him and spoke well of him at Lisbon. Colin was a lucky man, Bobbins( I hope I have the name correct, it has been many years) was a delight.

        Those of you who were not fortunate enough to attend the Lisbon conference missed a chance to see what real wealth could purchase. It was held at the Gulbenkian museum in Portugal and Carlouste was known as Mr. 5%.

        Again, thanks for a wonderful site.

        • I think the issue is as much total energy supplies as liquid energy supplies. All of the discussion about “Peak Oil” has conveniently lost this point. The view that is given is, “We can just get along with less.”

    • Davidin100millionbilliontrillionzillionyears says:

      “What are [our] options again?
      How about some scenarios, realistic, doable, and livable?”

      here’s the thing: humans discount the future…

      what that means in the day to day world is that there is a herd of 7+ billion humans who are trying their best to 1 stay alive and 2 perhaps get a little enjoyment out of life…

      this herd is primarily interested in the next payday and some edible food and clean water…

      so, you tell me… what can one person do that goes against this giant herd?

  21. Baby Doomer says:

    The three richest people in the US own as much wealth as the bottom half of the nation’s population

    http://www.scmp.com/news/world/united-states-canada/article/2119052/three-richest-people-us-own-much-wealth-bottom-half

  22. JH Wyoming says:

    https://www.bloomberg.com/energy

    Wow, oil price is in freefall. WTI down another 1.95 to 59.20

    And the Dow ended up 330 pts.

    Volatility is getting big. At some point it will get so wild the plunge protection boys won’t be able to toss enough at it to stabilize it.

  23. Dennis L. says:

    Is it possible that those of us at this site could come up with some scenarios of how to lead our lives going forward; not a single answer, but a scenarios.
    I have taken Gail’s advice and done some things long deferred and had an unexpected result. Dance lessons seem to be improving my memory; I am approaching them as though I am going to school, practice, and memorize videos and dance charts. Yes, I often look pathetic at my age, but making mental videos seems to be an mental exercise, getting the body to move to those videos is a stretch.
    i have given up on solar even though I have a set of NIFe batteries which I have never filled with solution. Batteries work best in warm temperatures, so do I build a heater for my batteries? Nah, more dance lessons.
    I was a professional but I also due to the circumstances of my childhood learned to build/repair just about anything around a house. If the market tanks or if the government can’t pay SS maybe work for others doing repairing, painting. (My last cleaning lady did just that and with a small telephone pension to quote her, “I raised two daughters and married them off plus had a few laughs on the way.” She was always in demand and had more work than she desired, $20/hour in the early 21 century.
    Throwing up one’s hands is too fatalistic for me, someone is going to make it. Maybe it is a delusion, if that delusion gives me happiness, a sense of self worth and a group of friends, what of it?

    • Trousers says:

      It’s probably best not to worry too much about things and carry on with life as normal.

      Personally I am trying to cut back as best I can on single use plastics, we are making a real mess of the oceans and I can do without drinking straws, bottles of pop, disposable coffee cups, plastic carrier bags and such. That is a very small thing that we can do to make a little improvement.

      • Fast Eddy says:

        You do know that if you throw plastic into a garbage bag by the curbside… it is not going to end up in the ocean….

        Really

        • Trousers says:

          I’ve seen the open landfill sites around here, refuse blows around, gulls pick through, a fair amount of it is finding its way into the environment. The evidence is there to see, plastic bags and such blowing into the surrounding trees and hedgerows. I admit the majority of the problem in this country is probably down to people littering though but I’m no fan of landfill. We have a huge old limestone quarry that has rapidly been filled with refuse. It’s lined with some membrane but there’s no doubt, it’ll be leaching God knows what into the river.

          I’m no Eco warrior but if I can buy a can of pop instead of a plastic bottle I will. I’ll go in a cafe a drink coffee from a porcelain cup rather than take it out, I take my own bags to the supermarket. It’s not a massive imposition to cut back on waste a bit.

          • xabier says:

            Man conquers Nature at last, using…….the plastic bag.

            In response, in her last death spasms, Nature suffocates Mankind.

          • doomphd says:

            i’ve always thought of land fills as the pantries of the future.

          • Fast Eddy says:

            That would be an insignificant contributor…

            The third word is the problem :

            The population of Bangladesh has been estimated to be between 158 and 170 million people. The nation is considered the world’s 8th most populous nation[7] and 11th in population density.[8] While Bangladesh boast of being the world’s fourth largest clothing exporter it also is one world’s largest producers of rice, potatoes, mangos, pineapple, onions, bananas, jute and tea.[9] Most of Bangladesh’s population continues to live on subsistence farming in rural villages[10] with health and education levels remaining relatively low.[11]

            About three decades ago, polyethylene shopping bags were introduced in Bangladesh and rapidly replaced the traditional cloth jute bag. Environmental groups estimated that 9 million plastic bags were dumped daily in the city with only about 10% being dumped into rubbish bins. Over time these castaway plastic bags ended up clogging up drains and sewers.[12]

            In 1989 a catastrophic flood occurred that inundated two-thirds of the country. Again in 1998 a catastrophic flood occurred that inundated about three-quarters of the country. A combination of heavy rainfall within and outside the country and synchronization of peak flows of the major rivers contributed to the flooding. Both floods caused severe damage and loss of life. Environmentalists and urban planners blamed plastic bags for exacerbating the flooding in 1989 and 1998. The flooding was blamed upon plastic carry out bags that had blocked drains and sewers.[13]

            In 2002 plastic carry out bags were banned. But cities still flooded year after year with water covering roadways and coming into houses.[14] Despite an awareness program warning of a steep fine and six months of imprisonment, after about a year the plastic bags began to flood the market again due to a lack of enforcement.[15]

            In many areas of Bangladesh people live in slum like conditions. Trash is deposited in makeshift dumps, along the road and in drainage ditches. Drainage ditches and canals are filled with trash. Less than 50% of all waste in urban areas is collected and disposed of in landfills.[16]

            While plastic bags may have been a contributing factor to acerbate flooding the following are some observations:

            Less than 50% or urban waste is collected and disposed of.
            Trash is dumped in open areas, streets, and makeshift dumps.
            Low-lying areas, drains and canals are clogged with waste including plastic bags.
            Storm sewer systems are substandard and are not maintained.
            Flooding is an annual problem and is not caused by plastic bags.

            https://fighttheplasticbagban.com/2013/05/20/plastic-bag-bans-and-third-world-nations/

            I would imagine Justin Trudeau would accuse me of singling these countries out unfairly…. and no doubt Justin would like to take tax dollars from Canadians to pay for rubbish pick up — or enforcement of plastic bag bans

    • Davidin100millionbilliontrillionzillionyears says:

      “Throwing up one’s hands is too fatalistic for me, someone is going to make it. Maybe it is a delusion, if that delusion gives me happiness, a sense of self worth and a group of friends, what of it?”

      okay, so if you think “someone is going to make it” (and I’ll assume it won’t be you since you seem to be saying you’re as old as the hills), then perhaps a scenario where you “invest” in a young adult or two who might have the potential to survive The Collapse.

      of course, I think you’ll have to find the rare young adult who is tough as nails and not some pampered snowflake… good luck with that!

      and this scenario will have to occur way out in the wilderness away from the starving masses to come…

      such pleasant things to consider!

      do you really want to go there?

      I’ll eat some of my storage of dark chocolate and make no plans beyond 2018 (for now)…

      the future looks utterly bleak for humanity…

      perhaps you should just stick with dancing.

      • Dennis L. says:

        Dancing has been fascinating and appears to strengthen one’s memory.
        Apparently there have been two major human bottlenecks where the population decreased dramatically. If the article I am referencing is correct around one million hears ago the population of humans declined to 10,000 and around 150,000 years ago the population bottlenecked to around 16,000 again if I am skimming the article correctly.
        Hence my thesis, someone will survive, if it has been done, it can be done.

        My first introduction to limits to growth was Fred Hoyle and perhaps a movie I have referenced earlier. In 1975 or so I read “Limits to Growth” and in DC I was very fortunate to sit next to Dennis Meadows and after asking him if I could ask two questions, he graciously answered yes and did so.

        Now, I am fortunate to be at one of the best teaching studios in the world and am off to a lesson with a world champion, she is about 25 or so; priorities change with time. May your day be as good as mine. Be blessed.

        • DJ says:

          I maintain unlike before industrial civilisation personkind now has the possibility to extintict itself.

          This is a one-time opportunity. After the collapse human survival as a species are no longer in the hands of personkind.

          • Fast Eddy says:

            Personkind is an insult to many …. you need to use the proper pronoun… depending on your audience… sometimes you must use snowflakekind… that would normally be when millennials or university students are involved…. transgenderkind…. when tranny freeeks are being addressed…

            And so on ….

            For a full list of the rules of etiquette… (soon to be laws) please contact justintrudeau@canada.gov.wan.ker.ca

        • i think the difference between then and now might be summed up in one word—”awareness”

          if populations contracted to the low thousands, then survivors would only have been aware of their own predicament, not those on other continents.

          they would have been aware only of the knowledge they had–ie hunting, primitive weapons and so on, they would also have had awareness of basic survival in harsh conditions—they would not have been expecting help from anywhere else—government, military etc

          if contraction happened suddenly—ie within a generation say, they would have aware of some kind of disaster—no doubt vengeance of some god or other,

          if it happened over say, 1000 years, then they would had no real awareness, because there was no written language—maybe just legends or folk tales of ”what used to be”. Whatever their circumstance, they could not alter their scale of living—ie the consumption of energy and materials. (unlike us)

          with a very low population, resources (plants and animals) grow faster than depletion rates, so it would have been ”abundance” again as populations expanded

          in our own time, we too will have ”awareness” —but of what used to be, and a ”certainty” that things can be ”fixed” if only we do the ”right thing”—we know about other continents, and cures for diseases and so on—-our ancestors did not

          but our brains are still primitive–we will try to conjure the gods of our past, and no doubt cleanse the world of ”wrongdoers”.—we will do that in the attempt to kickstart the world we had, but without the necessary means.
          The deniers will continue to deny in the face of collapse, because they have no alternative other than denial.

          remember we have the means to annihilate humankind altogether—as denial gets more desperate, we might just do that to ”prove” we’re right.

          —-

          in the meantime, book me a session with your 25 yr old , i want to

        • Fast Eddy says:

          Let her know there are still a few spots in the FE Harem…. tryouts are this Friday at 6pm.

  24. Lastcall says:

    With teflon Minsk in the news for all the wrong reasons..

    https://www.theguardian.com/technology/2018/feb/07/tesla-quarterly-loss-elon-musk-spacex

    …we should take a moment to recognise the true genius of Nikola Tes.la..

    http://theoatmeal.com/comics/tesla

    The difference between Nik Te.sla and T Ed.ison really does seem to embody/ encapsulate etc the nature of the mess we are in today, and why there is no way out other than the big bang!

  25. Fast Eddy says:

    Ok – enough of the serious stuff….

    Who can post the best image of a prominent world figure on the bog…..

    What I am wondering … is why would Queen E… the Pope…. Putin … etc… allow themselves to be photographed in such an undignified position????

    • JH Wyoming says:

      They didn’t – those were photo-shopped.

      • Fast Eddy says:

        So…. you are saying…. they are just like XXX XXXing? Fake?

        • Fast Eddy says:

          So you are saying… that when I type in a search for a famous starlet…. with the word nude …. and up pops a hundred images of the starlet involved in hard core p orn scenes….

          That that is not real????

          Come on…. don’t be so cynical!!!

    • Dan says:

      Meh, I can’t remember the last time I had any privacy in the john. The cat that was brought home over my objections has decided I’m his person so the cat follows me in, usually followed by my wife because that is obviously the best location / position for my undivided attention, lastly my 5 yr old sensing everyone is in the bathroom and that he may be missing out on something comes in. After awhile a person just doesn’t care.

    • JH Wyoming says:

      https://www.bloomberg.com/energy

      Also, oil has been dropping in price along with the stock market and today
      WTI -2.84 to 58.31
      Brent -2.81 to 62.00

      Considering Brent was just above $70. a barrel recently, things are moving down quickly.

      • Dan says:

        DOW is 65 points in the green after being down nearly 500 points 45 minutes ago. The S&P is up as well.

        See there the water is fine and that noise you hear under your bed is just the floor boards creaking.

    • Fast Eddy says:

      I’ve just been quoted a mortgage interest rate that is lower than what I was quoted last year…. so not sure what to make of this….

      One thing is for certain — we know that any significant increase in interest rates will force large numbers of people into default….. likewise governments and corporations…..

      This would set off a deflationary death spiral….

      And end BAU.

      Nobody wants that.

      However perhaps not raising interest rates will set off the death spiral sooner…..

      We see only the tip of the ice berg….

  26. Dennis L. says:

    Enough, I have made my own living most of my life and not until retirement was there time for this sort of forum. Please, post relevant comments, I skim well, but your pictures are not a plus for this site and are making it boring.
    FE, are you real?
    Thanks

    • Fast Eddy says:

      Real?

      Depends on the definition…. there is a good chance I am an avatar in a computer game… injected into the matrix to wreak havoc with DelusiSTANIs…. that does appear to me my main purpose in life — at least for the time being….

      You don’t like my photo montage? Think about it a little…. it’s not just a few prominent people on the bog…. it goes deeper….

      Hint….

      https://i.gr-assets.com/images/S/compressed.photo.goodreads.com/hostedimages/1380396486i/764306.jpg

      • JH Wyoming says:

        Hey, that tie goes well with your shirt.

      • hey—i have a full set of those ellipse guides

        are you trying to tell me something

      • Dennis L. says:

        FE,
        It never seems to work, or at least seldom works; this is arguing ideology which is mostly a belief system. If they work(the Bible has some similarities to a self organizing system) they seem to be very robust, if they are forced from above, they seem to collapse of their own accord.

        My experience was that of a modestly bright professional; to be successful I had to work 25 hours per day and finding time for cutting metaphorical paper dolls would have been impossible, hence my question “are you real?” FE, I enjoy the banter and sometimes you have interesting comments.

        Gail appears to have gotten many ideas correct, perhaps the most subtle is we are self organizing system and we might not like the rules of a self organizing system. It appears far from deterministic and the most promising paper in this area I have seen yet was on random matrices.

        So, for your entertainment, you might rent a 1955 movie I mentioned previously, “Conquest of Space.” It is many of the things your find delusional, it is also prescient and especially so for a movie of 1955(I saw it as a kid). With all the time time you have available, it might be worth blowing a couple of bucks on Amazon. Hint: more than fifty years ago, someone foresaw resource issues, a space station, a trip to mars, gathering resource samples, planting flowers on mars, water issues on mars and yes, questioned whether or not man should continue to expand through out the solar system when limits had been reached on earth. The only part that anyone even seems to be currently pursuing is going to mars as in Musk.

        It is soon time for my dance lesson so as the YouTube welder likes to say, “Be Blessed.” and have a good day FE.

  27. Fast Eddy says:

    See the video ….

    https://foreverspin.com/

    We are little more than monkeys without the hair….

    http://www.adventmessage.com/wp-content/uploads/2015/10/watching-television.jpg

    • I have discovered that if I delete the first comment in a string, the later comments also disappear. This is a comment by Dennis L. that related to a similar comment (with more offensive photos) by Fast Eddy that I deleted:

      FE,
      It never seems to work, or at least seldom works; this is arguing ideology which is mostly a belief system. If they work(the Bible has some similarities to a self organizing system) they seem to be very robust, if they are forced from above, they seem to collapse of their own accord.

      My experience was that of a modestly bright professional; to be successful I had to work 25 hours per day and finding time for cutting metaphorical paper dolls would have been impossible, hence my question “are you real?” FE, I enjoy the banter and sometimes you have interesting comments.

      Gail appears to have gotten many ideas correct, perhaps the most subtle is we are self organizing system and we might not like the rules of a self organizing system. It appears far from deterministic and the most promising paper in this area I have seen yet was on random matrices.

      So, for your entertainment, you might rent a 1955 movie I mentioned previously, “Conquest of Space.” It is many of the things your find delusional, it is also prescient and especially so for a movie of 1955(I saw it as a kid). With all the time time you have available, it might be worth blowing a couple of bucks on Amazon. Hint: more than fifty years ago, someone foresaw resource issues, a space station, a trip to mars, gathering resource samples, planting flowers on mars, water issues on mars and yes, questioned whether or not man should continue to expand through out the solar system when limits had been reached on earth. The only part that anyone even seems to be currently pursuing is going to mars as in Musk.

      It is soon time for my dance lesson so as the YouTube welder likes to say, “Be Blessed.” and have a good day FE.

  28. Fast Eddy says:

    https://wolfstreet.com/2018/02/08/stocks-get-messy-dip-buyers-get-crushed-again/

    https://wolfstreet.com/wp-content/uploads/2018/02/US-SP500-index-2017-02-08.png

    Reminds me of the terrorist tactic …. set off a bomb…. wait for people to arrive and start helping … then hit them with another bomb….

    • Davidin100millionbilliontrillionzillionyears says:

      oh, so we survived 2011 and 2015…

      gee, does that mean we might actually survive this minor hiccup in the markets?

      gee, I don’t know…

      market losses are so SCARY…

      where’s my blankie?

    • Baby Doomer says:

      What about MS-13? Maybe they are manipulating the markets!

    • Today’s Dow started higher (200 points or so) and has been falling. We will see where it ends at the end of the day.

  29. Fast Eddy says:

    Greetings Doomie Permies.

    So…. the markets are aflame…. if the CBs have lost control then we could be days from the eternal black out.

    For those of you in North America… how are those crops coming along?

    Oh right… a du mb question…. it’s winter up that way …. their ain’t no crops….. (I knew that… just playin with ya’ll)

    Now explain to me how this works if the Titanic goes down on Friday…. do you have enough food stored to make it until the next harvest?

    How do you keep friends and relatives and neighbours from showing up begging for a can of beans… or a jar of peaches?

    Try easing your way into the black out…. stop using the washing machine and wash your clothes by hand…..

    Enjoy!

    • We don’t yet seem to have a solution to our budget problem, so we are headed into another shutdown, it looks like.

      • JH Wyoming says:

        It is interesting Gail, how the solving of the last shutdown just a week or so ago only lasted until yet another impending shutdown. Meanwhile there is a push for an infrastructure bill north of 1T, defense budget increases 45 billion this year and 46 more billion next year, the tax cuts are dwindling tax revenue increasing the deficit to dangerous levels already, the ‘conservative’ republicans do not want to keep piling on debt so are not signing on for increasing the debt ceiling, the dems aren’t even thinking about the increasing debt – just wanting something for dreamers (immigrants), so it would seem we are at some sort of critical threshold of debt and what to do about it. Yet another conundrum in the wake of rising energy costs. How many corners are we going to be forced into from which there is no easy way out, before the situation buckles, splinters and cracks apart?

    • Davidin100millionbilliontrillionzillionyears says:

      greetings to all at OFW…

      this could be the end…

      I now will say my fond farewells…

      it was a pleasure chatting with (most of) you…

      perhaps we will meet again…

      maybe even tomorrow night…

      but, at least for one more time:

      BAU tonight, baby!

      • jupiviv says:

        Obviously this isn’t the end of BAU, but–

        “There’s a special providence in the fall of a sparrow. If it be now, ’tis not to come. If it be not to come, it will be now. If it be not now, yet it will come—the readiness is all. Since no man of aught he leaves knows, what is ’t to leave betimes? Let be.”

  30. FRED D GUNTER says:

    “We know from physics and history economics must grow or collapse” Really? Have you ever heard of Degrowth?

    • Yes. In fact I attended a DeGrowth Conference in Montreal in 2012. There are a lot of researchers who support this approach, because with it, a researcher can claim to reach more-or-less happy endings. Just use less energy per capita, and we can all live happily together, as our population continues to explode. Or perhaps encourage a little voluntary use of contraceptives. Unfortunately, the physics of the situation does not support this view, nor does history.

      I see three Degrowth International Conferences in 2018: Sweden, Mexico, and European Parliament. These conferences certainly allow a great deal of oil to be burned, and electricity to be consumed, in the name of saving the planet. These are huge conferences, with lots of people involved.

      The physics of the situation relates to the fact the economies are dissipative structures. Dissipative structures are self-organized complex structures that are able to form in the presence of energy flows. There are many types of dissipative structures: Hurricanes are dissipative structures. Ecosystems are dissipative structures. Star systems are dissipative structures. Individual cells in plants and animals are dissipative structures. Plants and animals, including humans, are dissipative structures. In fact, any self-organized combination of dissipative structures formed by energy flows is a dissipative structure.

      Dissipative structures are temporary. They grow (or, in some cases, maintain a temporary status for a period of time) in the presence of energy flows. Once the energy flows are cut back beyond the requirements of the system, it collapses. A hurricane collapse, if it travels over land for very long. Human cells that are cut off from blood flow carrying oxygen and nutrients will die. A human who is forced to live on a diet that drops from 2,500 calories per day, to 1,800 calories, to 1,500 calories per day, to 1,000 calories per day, to 500 calories per day, to 200 calories per day will die. We can pretend to reduce the energy needs of our economy to match what is available, but the way dissipative structures are formed, with their need for continuing energy supply, this is not possible.

      I would describe Degrowth’s approach as “Saving energy and reducing the impact of pollution through the use of more complexity.” For example, attendees were shown videos of some group that has put together an elaborate approach to treating wastewater by constructing an artificial ecosystem to treat the wastewater. The system would not require much in the way of fossil fuel inputs later, if its works as planned. But it will need earth movers to move dirt into an appropriate pattern, plants and animals brought in from a distance, scientists of various types to design and watch over the system, and workers to actually put the system in place. All of these inputs are energy related. For example, the scientists get paid wages, and use these wages to purchase cars and homes, and to fly to conferences. The scientist also need to commute to work, heat their homes, and conform to cultural norms regarding clothing.

      Because this ecosystem is designed by man, rather than being self-organized, there is a high probability that it will need after-the-fact adjustment. So we are faced with a continuing cost of scientists to watch over they system, recommend small changes to the system, and the need to make physical changes to the system, in years ahead. Needless to say, these all have energy costs as well.

      A major issue that is hard to see is that we are really up against two limits, simultaneously: (1) Energy and (2) Complexity. They are very much tied together, because energy is used to create complexity. Complexity leads to more specialization and to larger organizations. It leads to more wage disparity as well, as some individuals receive advance training, and others do not. Some workers become supervisors in increasingly large organizations. Globalization is another form of complexity. It is of course enabled by adequate energy supplies. Growing use of debt and larger governments are also part of growing complexity.

      We have abundant historical evidence indicating that when civilizations collapsed in the past, the thing that seems to have led to their end was didn’t look like “running out of energy.” It looked a lot more like too much complexity. Adding complexity has always been a workaround for too little energy per capita. For example, irrigation can be added, to allow a given acreage to produce more food for a population. One problem is that adding complexity quickly reaches diminishing returns. Another is issue is that adding complexity leads to wage disparity. See for example, Joseph Tainter’s “Collapse of Complex Societies,” and Turchin and Nefedov’s “Secular Cycles.”

      • JH Wyoming says:

        “I would describe Degrowth’s approach as “Saving energy and reducing the impact of pollution through the use of more complexity.””

        Makes sense that in a situation requiring more complexity, even the way down would include such an idea. However, the human experience has never been an even one, as those that can scoop up as much as possible while the rest scavenge for what remains. I’m sure any kind of contraction will occur along the same lines.

        • Fast Eddy says:

          ‘DeGrowth Conference’

          I am speechless…. an actual conference …. to discuss… willfully killing BAU….. wow

          • These are huge conferences. I went to two days of a five day conference, partly to heckle (ask hard to answer questions), and partly to talk to other people whom I knew who would be there also. There were multiple “tracks.” We were forced to go to quite a few combined sessions, showing all of the wonderful progress that Degrowth projects around the world were achieving.

      • Sven Røgeberg says:

        Exellent summary of important points! Regarding Tainter: As you all know he uses the fall of the Western Roman Empire as one of his case studies of collaps through to much compexity. On the other hand he shows how rare cases of simplification, like the one taking place in the Eastern Roman Empire, could lead to a successful regaining of territory and strength after the losses made during the muslim invasion. The simplification included de-urbanisation and transforming the army into peasants and landlords, reduction of trade and the use of money…
        Would it be possible to immagine some sort of simplification today?

        • djerek says:

          But he also shows that Eastern Rome didn’t collapse because it COULDN’T collapse in the face of the Persian Empire opposing it. The military protection it provided amongst other things made lower returns sustainable.

          • Sven Røgeberg says:

            Have been a while since I read JT, so please explain that point more in depth.

            • djerek says:

              The opposition of other complex societies basically forces the continued existence of the other because even with severely diminished returns on the complexity it is better than the option of being subsumed by the neighboring state. The West had no such pressure being only surrounded by tribal barbarian societies, so there was nothing forcing it to hold together. There’s probably a bit more to his explanation but that’s the big part I recall off the top of my head.

        • The simplification I am writing about in this article is a step-back from globalization. That is a form of simplification. I don’t think it can work, without bringing the whole economy down, however.

    • Fast Eddy says:

      Fast Eddy puts hand up.

      Pick me Fred Pick me!!!!

      Ok Fast Eddy …. what is Degrowth?

      Well…. I’d like to use images if that’s ok….

      Yes of course please do.

      It looks like this:

      http://preparingyourfamily.com/wp-content/uploads/2009/10/DeflationarySpiral-320×2311.jpg

      https://images-na.ssl-images-amazon.com/images/I/51PCupmtcXL._SX355_.jpg

  31. CTG says:

    It could be the snowflake that cause the avalanche or the straw that break the camel’s back. To me, most of the things in the world are “non-linear”. Projecting the past does not mean that it will work for the future. Everything does not go in a straight line. Once it passes a certain point, it will be at a different state.

    http://www.geom.uiuc.edu/education/calc-init/population/img/stable.gif

    Ball is oscillating at Q and with every CB intervention, it goes higher and higher and all of a sudden, it went pass R and then it is now at the S state. S state can be significantly lower than Q (illustration shows it is higher than Q)

    • Davidin100millionbilliontrillionzillionyears says:

      “Projecting the past does not mean that it will work for the future. Everything does not go in a straight line.”

      yes… which also means that these stock market losses will not continue just like this week…

      the markets could go higher, or next week’s losses could be even bigger…

      I think extreme volatility will be more frequent as The Collapse approaches…

      the 2020s will be a wild ride.

    • JH Wyoming says:

      “Everything does not go in a straight line. Once it passes a certain point, it will be at a different state.”

      That’s if for sure, CTG. Seems like we are getting close that certain point, without most people even realizing it, because it’s all been propped up since 08 with CB intervention of one form or another.

  32. psile says:

    I see that the Dow fell another 1,000 points yesterday. Seems like the HFT machines are spitting the dummy.

  33. Fast Eddy says:

    Hmmmm…. I see that NZ offers interest only mortgages https://www.westpac.co.nz/home-loans/your-home-loan-options/repayment-options/

    I had thought that was a China/Australia phenomenon…

    It is also possible to obtain a 0 down mortgage…. if one’s credit standing is solid.

    Now if one were to assume that asset is going to zero (just a matter of when BAU ends) … once could put 0 down…. pay 4.45% interest…. dump the cash that would have been the downpayment into a 12 month term deposit at 3.40% …. offsetting all but 1% of that mortgage payment….

    Hallelujah — nearly FREE MONEY!!!

    http://www.topropepress.com/wp-content/uploads/2017/05/2017-05-21-02-44-48.gif

    • DJ says:

      Sweden has had interest only mortgages for at least 20 years.

      Last few years a typical interest of 1.2%.

      In practice most take on more and more debt as their home rises in value. New car. New kitchen. All-includive in Thailand over christmas.

      Since about a year rules have tightened, new loans has to be paid off 1% a year down to 50%. Lots of exceptions possible.

      • Harry Gibbs says:

        Here in the UK:

        “The City regulator has sounded an alarm about the “significant numbers” of people with interest-only mortgages who may be in danger of losing their homes.

        “The Financial Conduct Authority (FCA) said many interest-only borrowers could face a shortfall in terms of what they owed, and some were avoiding talking to their mortgage lender because they “didn’t want to confront their situation”.

        “There have been a series of warnings about this type of home loan in recent years, fuelling fears that some of those left with a huge bill could end up being repossessed.

        “In 2013 the FCA – whose former boss previously labelled interest-only mortgages a “ticking timebomb” – revealed that about 1.3m homeowners with such mortgages may not have enough money to pay off their home loan when it is due for repayment and face an average shortfall of more than £71,000.”

        https://www.theguardian.com/money/2018/jan/30/interest-only-borrowers-risk-losing-homes-warns-watchdog

        • Fast Eddy says:

          Interest only mortgages should get the alarm bells ringing ….. but nope… this is the new normal…. and it keeps the housing market ticking along….

          I suspect a lot of buyers are being lead down the path to taking on the biggest mortgage possible based on their ability to pay the interest only component…. they could never opt to pay any of the principal…. and they could never make the interest only payments if interest rates moved up significantly…

          If rates move up they just strip and sell the copper pipes …. toss the keys in the gutter…. stuff a mattress in their flash SUV… and look for an empty parking space at a bankrupt Mall….

    • Baby Doomer says:

      I wonder how they’re going to obfuscate peak total liquids. Move the goal posts again and bin all fossil fuels together so that natural gas can mask the decline of petroleum?

      • If the electricity is off, no one will understand if it is a debt problem, or an oil problem, or an electricity problem, or bad decisions by central banks. I think you may be assuming that people will know more about the problem than they really will.

        • Fast Eddy says:

          And that means that we will never be able to tell anyone ‘I told you so!!!’

          Because even when they are gnawing on rat … and you say — we ran out of cheap oil – that’s why we are eating rat…. they will say — there are oceans of oil — it’s all the fault of Bernanke and friends…. those corrupt greedy bankers did this to us.

          I wonder if the hordes will be dragging bankers down the street by their $300 ties…. hanging them from light posts…. then grilling them over coals?

        • Baby Doomer says:

          important to point out the author of this study is no peak oil shill. He is a particle physicist at CERN.

          • I agree. Michael Dittmar is no shill. My objection is more to Alice Friemann’s characterization of Dittmar’s work, than to Dittmar’s work.

            Dittmar’s article is titled as follows, and it sounds pretty reasonable.

            Dittmar, M. 2017. A Regional Oil Extraction and Consumption Model. Part II: Predicting the declines in regional oil consumption. Physics and Society. https://arxiv.org/pdf/1708.03150.pdf

            If a person looks at the article he wrote, near the conclusion it says:

            To put it mildly, the obtained modelled results for future regional oil consumption in almost every part of the planet disagree strongly with essentially all economic-growth-based scenarios like the one from the IEA in their latest WEO 2016 report. Such scenarios assume ongoing growth and would have us believe that the oil required to support such growth will be discovered and produced. It won’t. Even if the models presented in Part I and Part II of this analysis are not perfect, they do reflect the Limits to Growth that are at this point becoming more obvious by the day. By 2020 it may be clear to almost everyone that the current oil-based way of life in the developed and developing countries has begun a terminal decline.

            Whenever that terminal decline begins, one can only hope that people around the globe will be able to learn, quickly, how to live with less and less oil every year, and how to avoid war and other forms of violence, as we travel the path to a future with less and less oil.

            Alice Friedmann has put together an article, taking various sentences from here and there out of Dittmar’s article, and putting them together at the end of her article. She then takes one sentence from the report, and changes it to make it the header for her article. She says,

            “By 2020, it may be clear to everyone that oil decline has begun.”

            In my opinion, this does not say the same thing as

            ” By 2020 it may be clear to almost everyone that the current oil-based way of life in the developed and developing countries has begun a terminal decline.”

            It is sort of close, but not the same. What Dittmar is saying is declining is “the current oil-based way of life.” This is what we will notice is declining, not the quantity of oil extracted. In fact, if you read Alice Friedmann’s article, you can to some extent figure this out. Dittmar doesn’t mention that people will notice that the quantity of oil is declining. The title is sort of misleading.

            The title is aimed at getting attention, in a Peak Oil sort of way. Alice Friemann describes herself as a science writer. She reads a lot of non-fiction material, does her own calculations, and tries to explain it to (other) lay people.

            I have another small complaint. Alice Friedmann says,

            In my opinion, he [Ditmarr] overestimates the amount of North American tight shale oil and tar sands oil that can be produced given their low EROI’s and high energy/monetary cost, but since all his figures are the best possible, he assigns 4.5 million barrels per day (mbd) production for USA tight oil through 2030 and 3 mbd for Canadian tight oil plus oil sands.

            This is the standard error made by people who do not sit down and read the EROEI academic papers themselves. (Dittmar no doubt has!) EROEI reports for tight oil from shale show high EROEIs. The only thing that shows a low EROEI is cooking kerogen at high temperatures for long periods, a process that is sometimes referred to a producing “shale oil.” But this process has nothing at all to do with using fracking to obtain tight oil from shale.

            So as with all writers, including academic writers, a person needs to be very careful in believing what they say. They may not really understand the issue at hand.

            According to this brief biography, Alice has BS in Biology with a minor in Chemistry/Physics, from the University of Illinois. She spent over 25 years as a systems architect and engineer, before retiring to devote more time to science writing. So in some ways, her background does parallel mine.

            • Artleads says:

              “What Dittmar is saying is declining is ‘the current oil-based way of life.’ This is what we will notice is declining, not the quantity of oil extracted.”

              Thanks for clearing that up!!!!! (Actually, I’ve been noticing that decline for a long time–it filters through the entire system, very painfully in the health care system).

            • Energy^2 says:

              Gail, here is a prediction; From now on, shale oil will increase in production at the same rate extracted oil from Iraq will!

              By 2022, Iraq may produce 11 million b/d for export.

              If true, we may treat the phenomenon as a Paradox that no one of us will be able to explain.

              Or, the assumed relationship is owing to the possibility that shale oil is a sub-product of conventional oil.

              i.e. intensive extraction of shale is dependent on non-shale oil to run 🙂 🙂 🙂

              Let’s wait and see!

            • Intensive extraction of shale oil is dependent on the economy as a whole operating. If there is too little energy per capita (whether from lack of conventional oil, or from lack of coal, or because the financial system has “frozen up”), then it will be virtually impossible for any industrial operation to take place, including the extraction of tight oil from shale.

              I don’t see this as a paradox. This is the way the system works.

      • MG says:

        I would say that it is easier to consume natural gas than oil: the pipeline goes right into your house. With the ageing populations, the need for driving is going down, but the need for keeping warm goes up…

        • whether you drive a car or burn gas to keep warm, the equation remains the same—consumption of finite energy

          it isn’t possible to sit elderly people in their homes as a fixed entity, and just pump in energy to keep them alive—the planet doesnt function like that

          that energy has to be obtained by younger stronger people—if they aren’t there, then the system must collapse

  34. CTG says:

    Open discussion – is the CB losing control or it is planned?

    • Ed says:

      Everyone knows the market is over priced and will correct. Nobody cares.

      Chance for the CB to dump and buy back at the bottom and only they know when the bottom has come.

      • CTG says:

        What I meant was that it is a fact that CBs are manipulating it. Question – why let it drop? Is it because it us really out of their control or they want to let it drop for whatever reasons? Theybhave bewn trying their best to prop up the stocks but why let it drop now?

        • Fast Eddy says:

          The way I see it … the stock markets are massive bubbles… if the CBs were to step back and let them adjust – without stepping in …

          We would see the Mother of All Crashes.

          I still think this is a controlled demolition .. walk the markets back to more reasonable levels…. then once the adjustment is made… let them creep back up.

          Operation Goldilocks….

          • CTG says:

            With such a complex system, I think they are dreaming that it will work. As I have said many times, there are way too many “unknown unknowns”. “Bankrupcy – slowly and then all at once”.

            My personal point of view is the same as yours. They want to let it go down a bit but at the end, they will not be able to control the deluge. They think they can control. The key word is “think”

            • Fast Eddy says:

              If we see a repeat of what happened in China in 2015/16…. where the CBs step in with some punitive measures e.g. banning short-selling … then it will time to be concerned…

              But even then… I expect they will be able to right the ship…

              If I am an institutional money manager….. all I care about is making money so that I get a whopping bonus at the end of the year….

              So even if I can see that the market is a stinking pile of dung that should collapse…. if I see that the CBs are going to move heaven and earth to prop the dung heap up ….

              I am not going to be a silly fellow and short the market —- nope — I am going to get in there as early as possible — and ride the wave…

              The CBs have unlimited fire power. Investors do not.

              We saw this story in Hong Kong in 1998…. on a micro scale…. markets were crashing and the big boys were lining up to kill Hong Kong….. the HK Central Bank stepped in and said F789 You…. they poured massive amounts of money into the market — buying up everything — and the shorts were had their nuts handed to them on silver platters….

              This time is different — you have the Mother Ship standing by…. the Federal Reserve… where the true Masters of the Universe reside — and if they so no — then no it is….

              That said — they could have stopped the 2008 crash if they wanted to .. but they didn’t …

              So perhaps they allow another crash — then we see a whole new raft of policies aimed at delaying the collapse of BAU????

              I guess we will find out fairly soon one way or the other. But I doubt (hope?) this is the end of BAU we are witnessing.

            • T.Y. says:

              So far it would appear that gold-mining stocks & junior miners have taken a beating as well, so in my opinion they havent lost control yet.

          • Baby Doomer says:

            Are the central bankers controlling the markets or are the markets now controlling them?

            • Fast Eddy says:

              The Chinese stock market turbulence began with the popping of the stock market bubble on 12 June 2015[1] and ended in early February 2016.[2] A third of the value of A-shares on the Shanghai Stock Exchange was lost within one month of the event. Major aftershocks occurred around 27 July and 24 August’s “Black Monday”. By 8–9 July 2015, the Shanghai stock market had fallen 30 percent over three weeks as 1,400 companies, or more than half listed, filed for a trading halt in an attempt to prevent further losses.[3] Values of Chinese stock markets continued to drop despite efforts by the government to reduce the fall.[4][5] After three stable weeks the Shanghai index fell again on 24 August by 8.48 percent, marking the largest fall since 2007.[6]

              At the October 2015 International Monetary Fund (IMF) annual meeting of “finance ministers and central bankers from the Washington-based lender’s 188 member-countries” held in Peru, China’s slump dominated discussions with participants asking if “China’s economic downturn [would] trigger a new financial crisis.”[7]

              By the end of December 2015 China’s stock market had recovered from the shocks and had outperformed S&P for 2015, though still well below the 12 June highs.[8] By the end of 2015 the Shanghai Composite Index was up 12.6 percent.[8] In January 2016 the Chinese stock market experienced a steep sell-off and trading was halted on 4 and 7 January 2016 after the market fell 7%, the latter within 30 minutes of open. The market meltdown set off a global rout in early 2016.[9][10][11]

              https://en.wikipedia.org/wiki/2015%E2%80%9316_Chinese_stock_market_turbulence

            • Fast Eddy says:

              2015 Government response

              The Chinese government enacted many measures to stem the tide of the turbulence. Regulators limited short selling under threat of arrest.[48] Large mutual funds and pension funds pledged to buy more stocks. The government stopped initial public offerings. The government also provided cash to brokers to buy shares, backed by central-bank cash.[49] Because the Chinese markets mostly comprise individuals and not institutional funds (80 percent of investors in China are individuals[50]), state-run media continued to persuade its citizens to purchase more stocks.

              In addition, China Securities Regulatory Commission (CSRC) imposed a six-month ban on stockholders owning more than 5 percent of a company’s stock from selling those stocks, resulting in a 6 percent rise in stock markets.[51] Further, around 1,300 total firms, representing 45 percent of the stock market, suspended the trading of stocks starting on 8 July.[52]

              Forbes contributor Jesse Colombo contended that the measures undertaken by the Chinese government, along with cutting the interest rate, “allowing the use of property as collateral for margin loans, and encouraging brokerage firms to buy stocks with cash from the People’s Bank of China” caused Chinese stocks to begin surging in mid-July.

              He argued that in general, however, the outcomes of government intervention as it relates to the turbulence will, by its nature, be difficult to predict, but saying that in the longer term, the effect may be the development of an even larger bubble through creation of a moral hazard.[48]

              As of 30 August, the Chinese government arrested 197 people, including a Wang Xiaolu, a journalist at the “influential financial magazine Caijing,”[53] and stock market officials, for “spreading rumours” about the market crash and 2015 Tianjin explosions. The crime of spreading rumours carries a three-year jail sentence after its introduction in 2013.[54]

              The government officials accused “foreign forces” of “intentionally [unsettling] the market” and planned crackdown on them.[55]

              On 1 November billionaire hedge fund manager, Xu Xiang – known as China’s Warren Buffett,[56] or China’s Carl Icahn[57][58] – was arrested for allegedly manipulating the stock market during the 2015 Chinese stock market turbulence.[53][56]

              According to Caixin media, “Calls for China to adopt a circuit breaker mechanism gained momentum after a stock market rout in the summer that saw the Shanghai Composite Index, which tracks the stock prices of all companies listed in the city, plunge from more than 5,000 points in mid-June to less than 3,000 in late August.”[59]

              https://en.wikipedia.org/wiki/2015%E2%80%9316_Chinese_stock_market_turbulence#2015_Government_response

              We are not even close to this sort of situation — yet.

            • Back at the time of the Chinese stock market turbulence that Fast Eddy writes about, I saw articles about how absurdly overvalued companies on the stock exchange seemed to be. I am sure that they are even more overvalued today.

    • I think it is going to be hard to control something that is essentially a worldwide problem. I notice that the Nikkei 225 is down -578, after a few hours of trading. Even if some of the other stock exchanges seem to be doing OK now, things can change rapidly.

      The CBs may have started out thinking that they could allow a little downslide, but are now figuring out it doesn’t really work as easily as they thought. All of the trading operated by computer programs adds to the effect.

      • Energy^2 says:

        People in the Middle East realise now that these critical movements in the market, geopolitics or war theaters don’t come improvised one-step-a-time, but in a long-well-thought-of projects, implementation work-lists and milestones, Gail.

        A project of those is typically lasting for decades leading into a root-level ‘transformation’ of nations, not just markets.

        In regard to ME crude oil, the ‘project’ is now in its 2nd century, and going – strong.

        Master ‘parameters‘ passed into a ‘function‘, are different in the level of freedom and dynamics ‘variables‘ inside the function have, as any software engineer knows.

        Therefore, the materialising thesis of the ‘Dead Future’ might get its increasing followers in the coming years;

        i.e. if everything happens now was pre-decided by a project blueprinted and sealed decades ago, the future turns history 🙂 🙂 🙂

        When people in the ME reach this inner and bitter feeling of their hijacked future by instinct, they migrate out of their home countries in millions, as thinking and adapting to this carefully-crafted, very complex state of affair and reality becomes so mentally stressful and draining, they flee the scene, often leaving everything they own, inherit or emotionally attached to – behind! 🙂 🙂 🙂

        The nightmare is if the whole world becomes a bigger ME! ( joking! 🙂 🙂 🙂 )

    • Dan says:

      (Originally published by the Daily News on October 20, 1987. This story was written by Gerald Connors.)

      The stock market collapsed yesterday, buried under a selling avalanche of more than half a billion shares, as panicked traders recalled the Great Crash of 1929.

      “This has got to be financial panic, worldwide. There can be no question that history is in the making,” commented First Albany Corp.’s chief investment strategist, Hugh A. Johnson.

      The market free-fall easily eclipsed the crash of Black Tuesday, 1929. The Dow Jones Industrial Average plummeted 508 points, more than four times the “old” record of 108.35 set Friday. The blue-chip stocks that make up the Dow lost 22.62% of their value, easily topping the 12.82% decline of Oct. 28, 1929.

      BRESLIN: BLACK MONDAY CRASH BRINGS BACK MEMORIES OF 1929

      The Dow finished at 1,738.74, robbed of all the market’s gains for the past year. The collapse wiped out more than $500 billion worth of market wealth.

      “It was paper when we started out, and it’s paper afterward,” shrugged Sam Walton, believed to be the nation’s wealthiest man, whose holdings dropped more than $1 billion in value in a single day.

      Economists worried that average investors would react less calmly. If consumers feel poorer and decide to spend less, the stock market plunge could create a ripple effect that would devastate the economy.

      New brokers’ diet
      Cover of the New York Daily News on October 20, 1987.
      1 | 3 Cover of the New York Daily News on October 20, 1987. (NY Daily News via Getty Images)

      Pricey restaurants and stores patronized by the affluent employes of the financial markets had already begun to worry about the market’s spillover effects. “Our regular bookings from Wall Street are off 30%-40%. They’re not lunching,” said a spokeswoman for the restaurant 21.

      President Reagan told reporters that the economy itself is sound, but he admitted he was “a little puzzled” about what precipitated the market collapse.

      “I don’t know what meaning it might have – because all the business indices are up,” he said.

      Analysts blamed the fall on concern over the dollar, the deficit, interest rates and the naval action in the Persian Gulf.

      But most, like Reagan, admitted in the end that they were puzzled. The extent of the market collapse seemed unprovoked.

    • Greg Machala says:

      “Is the CB losing control” :

      First, your question is assuming there is one CB. I think there are multiple global central banking players. And to make matters worse, there is probably in-fighting going on in the US Federal Reserve Central Bank as well as the other central banks of the world. I think the volatility we are seeing may be due to these disagreements.

      Second, I think we are beginning to see the limits of easy, debt financing and low/no interest corporate loans. The cheap resources are not being recognized to allow growth from these investments. The money is there, the loans are there, but, the cheap resources to do “stuff” with – is not there. The result is financialization of everything that used to be worth something. There is this illusion amongst “investors” that companies like GE and Exxon are tangible, substantial entities. They are not. They are just random names and acronyms and legal paperwork. What gave them substance is the cheap resource base and workers that made “stuff” from those resources. Without cheap resources corporations are just as virtual as money itself.

      Lastly, I think we are seeing a reflection of the two modes of human nature. Complacency and panic. Historically, there just seems to be no middle ground. This seems to go hand in hand with – grow or collapse. It is easy to fall into the trap of thinking that something virtual (like money or Bitcoin) can replace real resources. Money is faith based and subject to human emotions like complacency and panic. However, resources are real and finite and do not care about emotions.

      • Dan says:

        I remember the 87 crash and I always remembered Sam Walton’s quote form then – “Its just paper”. Excellent discussion and points made all around. Can the CB’s hold it together? I think they can for now, if things go contangion they can’t. The reason being (for both holding it together through a 10-20% correction) or losing control beyond that is because in fact it is just paper. Fiat paper backed by nothing except faith and credit.

        If there is another 2008 style bailout if this thing grows legs and gets ugly enough I think you’ll begin to see some insurrection. Does anyone remember the 99% movement and the near identical talking points from all news outlets (left / right) downplaying it? Does anyone remember the bad ole early 70’s and the oil embargo? I do it is some of my first memories, my father riding a bicycle miles to work and me going with my mother sitting in gas lines.

        My guess is here soon TPTB will get together and get a Belgium or a Sweden to go in and buy up some debt / paper over some losses. It doesn’t matter what it does to the bottom line because is going to pay back anything anyway.

        In the mean time as Greg pointed out, the cheap easy stuff is running out. I think its known to those that matter. As much as I can’t stand Bush / Cheney that was the whole reason for our little adventure into Iraq and why we’re painting Iran to be such a boogey man. We need their oil and we’ll do what needs to be done, but in order to make ourselves feel better we have to do it for “freedom and babies”.

        In the end it’s just paper based on belief that it’s worth something. It’s not and if the CB’s overshoot I’m afraid the curtain may be pulled back just wide enough to see there is nothing but a mental midget in the back pressing buttons and pulling levers with his back up against a brick wall.

      • You make excellent points, including these:
        1. There are many central banks, with differing views.
        2. Without cheap resources, corporations are just as virtual as money itself.
        3. It is easy to fall into the trap of thinking that something virtual (like money or Bitcoin) can replace real resources.

      • Fast Eddy says:

        The CBs see the iceberg… all of it….

        They would be cooperating to try to slow the Titanic… realizing there is no turning away….

        But as we close in on the berg…. and they are no longer able to slow the ship …. I could imagine panic setting in …. screaming matches … fist fights … breaking out on the bridge as officers mutiny against Captain Fed…..

      • Sven Røgeberg says:

        Stay calm, all we need is the artificial experience of resources. This guy is pretty funny: https://medium.com/swlh/inequality-2d1c54082bad

  35. Baby Doomer says:

    Economic collapse: The fall of Troy: A warning from history

    http://www.bbc.com/news/business-42864071

    • Fast Eddy says:

      Then as now, c…..limate c…..hange was a key factor. “We know that led to famine,” says Eric Cline professor of archaeology at George Washington University, Washington DC

      Indeed, pollen analysis, marine and oxygen isotope data show the period experienced 300-year-long droughts. The Mediterranean cooled significantly at this time, reducing rainfall levels over land.

      By 1250BC problems were accumulating. One Hittite queen appealed to Egypt for help, saying “I have no grain in my land”. A Syrian merchant warned that “there is famine in our house, if you do not quickly arrive here we will all die of hunger”.

      https://pbs.twimg.com/media/COE7luuUYAA0y5e.png

      https://www.youtube.com/watch?v=RmwqnqL3Hbg

      Those silly fools — driving around in oil powered cars… … burning coal to produce electricity…. unbelievable!!!!

      And just look at what happened — they collapsed themselves.

      And what have we learned from their folly???

      Very obviously nothing because are doing the exact same things. And look at all the droughts … even worse…. we have even triggered record cold temperatures this time around….

      When will humans ever learn. Burning fossil fuels has always lead to disaster… and we are headed for yet another on any time now.

      I wonder if they had versions of Al Gore and Leo URGING them to stop burning more coal…. maybe they had a movie playing in the cinema similar to an Inconvenient Truth.

      • Fast Eddy says:

        What’s that Madame Fast…..

        ‘In the 1200’s they didn’t have cars… or electricity…. they didn’t have any industry’

        Oh — really?

        Yes – really.

        Well then how is it that they had such rapid and extreme XXX Xxxxing?

        Given that we know that xxx xxxxing is caused by burning coal and oil and stuff like that.

        Well Fast…. give your head a shake…. ask yourself why Leo is building that concrete eco hotel on an island inches above the sea….. and you’ll have your answer…

        Ah ha — Mad-Made XXX XXXX is a LIE.

        LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE LIE

        https://timandjulieharris.com/wp-content/uploads/2017/01/big-lie-1-1920.jpg