Central bankers seem to think that adjusting interest rates is a nice little tool that they can easily handle. The problem is that higher interest rates affect the economy in many ways simultaneously. The lessons that seem to have been learned from past rate hikes may not be applicable today.
Furthermore, there can be quite a long time lag involved. Thus, by the time a central banker starts seeing an effect, it may be clear that the amount of the interest rate change is far too large.
A recent Zerohedge article seems to suggest that problems can arise with 10-year Treasury interest rates of less than 3%. We may be facing a period of declining acceptable interest rates.
Figure 1. Chart from The Scariest Chart in the Market.
Let’s look at a few of the issues involved:
[1] The standard reason for raising interest rates seems to be concern about inflationary impacts occurring as a result of rising food and energy prices. In practice, the impact of such an interest rate change can be quite severe and quite delayed.
Figure 2 is an illustration from the Bureau of Labor Statistics website showing one of today’s concerns: rising energy costs. Food prices are not yet rising. Normally, however, if oil prices rise, the cost of producing food will also rise. This happens because modern agricultural methods and transportation to markets both require the use of petroleum products.
Figure 2. Figure created by the US Bureau of Labor Statistics showing percentage change in the Consumer Price Index between January 2017 and January 2018, for selected categories.
In fact, raising short-term interest rates seems to have been associated with trying to bring down rising food and energy costs, as early as the 1970s and early 1980s.
Figure 3. US three-month treasury interest rates. Chart prepared by St. Louis Federal Reserve.
The reason why an increase in short-term interest rates is helpful is because it reliably induces a recession. A person can see the close connection between short-term interest rate increases and recessions (gray bars) in Figure 3. Recessions in turn damp down food and energy prices.
The reason why this damping down effect occurs is because when there is a recession, many people are laid off from work. These people purchase fewer goods and services. With people out of work, “demand” for goods and services falls. (Demand is very closely related to “amount affordable.”) We might think of demand for goods and services as helping to maintain the “production” of new homes, new cars, upscale food products, toys, and even consulting services.
When demand falls, fewer goods of practically every type are made. This indirectly leads to less need for commodities of many types, including oil, natural gas, metals, and food. Commodities have very long production cycles, and only modest storage facilities. When lower demand for a commodity such as oil occurs, prices tend to adjust sharply downward, in order to signal the need for lower production. Figure 4 shows that interest rate spikes corresponded to the 1973-1974 oil price spike, the 1979 oil price spike, the 2004-2008 price run-up, and perhaps to other shorter oil price spikes.
Figure 4. Annual averages of Brent oil prices (in 2016$) and 3-month average interest rates, based on data similar to that shown in Figure 3 from “FRED.”
The annual data in Figure 4 loses the detail of month-to-month variations. Because of this, it makes the impact of the Great Recession look much less severe than it really was. Figure 5, using monthly data for recent periods, shows more clearly the severe fall in oil prices following the run-up in short-term interest rates in the 2004-2007 period.
Figure 5. Three-month US Treasury interest rates and Brent oil prices, both on a monthly average basis. Graph by FRED.
If a person looks at the indirect impacts on the economy as a whole, it becomes clear that the rise in short-term interest rates was one of the proximate causes of the Great Recession of 2008-2009. I talk about this in Oil Supply Limits and the Continuing Financial Crisis. The minutes of the June 2004 Federal Reserve Open Market Committee indicate that the committee decided to start raising interest rates at a rate of 0.25% per quarter for the purpose of stopping the rise in energy and food prices.
The huge financial problems that indirectly resulted did not occur until four years later, in 2008. It is likely that most economists are unaware of the connection between the decision to raise rates back in 2004 and the Great Recession several years later.
[2] Higher energy prices squeeze a person’s “spendable income.” Higher interest rates have the same effect.
Economist James Hamilton showed that ten out of eleven recent recessions were associated with oil price shocks. We would argue that if an economy is subject to higher interest rates in addition to higher oil prices, the economy is doubly likely to go into recession. Figure 6 shows an illustration of the situation.
Figure 6. Image by author showing recessionary impact of rising energy costs and interest costs.
A wage earner’s pay does not normally increase as energy costs rise, or as interest costs rise. Even if energy and interest costs are well buried (in higher food costs, or in the higher cost of goods transported across the country, or in higher student loan payments) the amount of income that a person has available to spend on discretionary goods and services falls if energy and interest costs rise. Having both energy and interest costs take a bigger share of available income at the same time is especially a problem.
[3] Reduced interest rates can be used to conceal the adverse impact of rising energy prices.
This is another version of what we saw in Figure 6. If interest rates can be reduced, they can offset most of the bad impacts of higher energy prices. For example, if oil prices are higher, it helps if auto loans and mortgage loans are lower in cost.
Figure 7. Image by author showing that artificially low interest rates can mostly offset the impact of rising energy costs.
Of course, central bankers don’t necessarily think this through. To what extent is today’s economy really dependent on very low interest rates?
[4] Falling interest rates have an almost magical impact on the economy. Rising interest rates reverse these magical impacts, and replace them with very negative impacts.
We saw in Figure 6 how falling interest rates could more or less conceal a rise in energy prices. The following are a few of the additional magical things that falling interest rates can do:
(a) Falling interest can raise asset prices of many kinds, including homes, stock prices, resale prices of bonds, and the price of land.
(b) Falling interest rates can raise commodity prices, making it possible to extract more fossil fuels and metals. Resources that previously did not look economic to extract, suddenly become economic to extract. This change occurs because with lower interest rates, more people can afford to purchase goods that use oil, such as cars and motorcycles. This tends to raise demand for oil products, and thus prices.
(c) Because higher-priced energy extraction becomes feasible at lower interest rates, more advanced technology, at higher prices, suddenly becomes feasible. Jobs open up in research areas that would not previously have made sense at lower energy prices.
(d) Falling interest rates can make the balance sheets of companies holding stocks and bonds as assets look better, because of their rising prices.
(e) Rising asset prices “feed back” into spendable income. People with homes that have risen in value can refinance, and use the proceeds to fix up their home (add an additional room or an updated kitchen, for example). Individual citizens and companies can sell shares of stock that have risen in value and use those proceeds to augment other income.
If interest rates rise rather than fall, the impacts can be expected to be extremely recessionary. The stock market may crash. Homes are likely to lose value because of a lack of buyers that can afford them. Energy resources that seemed to be available can suddenly seem not to be feasible because of low prices.
[5] The economy was able to reasonably tolerate the run-up in interest rates in the 1950 – 1980 period because the economy was growing very rapidly.
A person can see the pattern of short-term interest rates in Figure 3, above. Long-term (10-year) interest rates follow a somewhat similar, but smoother, pattern (Figure 8).
Figure 8. Monthly average 10-year Treasury interest rates, through January 2018, in chart by FRED.
World per capita energy consumption was rising very rapidly in the 1950 to 1970 period. Even in the troubled 1970 to 1980 period, per capita energy consumption continued to rise, although not as quickly (Figure 9).
Figure 9. World per capita energy consumption, with 1950-1980 period of rapid growth highlighted. 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.
When world per capita energy consumption is growing this rapidly, jobs tend to be plentiful and wages tend to rise faster than inflation. According to Figure 10, US wages rose more rapidly than inflation in the 1950 to 1970 period, without wage disparity becoming a problem. Even in the 1970 to 1980 period, when high oil prices were a problem, US wages were able to rise quickly enough to keep up with inflation. Rising wage disparity did not become a problem until after 1980.
Figure 10. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Amounts are inflation adjusted. Based on an analysis of IRS data, published in Forbes.
The share of US citizens in the workforce also rose during the period up to 1980, as an increasing percentage of women joined the workforce (Figure 11).
Figure 11. Employment as a percentage of the population, aged 25-54. Chart from FRED, using OECD amounts.
The thing that made the 1950-1970 period unusual was the growing availability of inexpensive fossil fuels. With fossil fuels, it was possible to add expressways where they had never been before. This allowed more interstate trade and improved the productivity of truck drivers. Labor saving devices allowed women to join the workforce. Farming continued to become more productive, with all of its labor saving equipment. Even as energy prices rose in the 1970 to 1980 period, citizens were able to continue to buy energy products because their wages were rising enough to keep up with inflation.
The growth in productivity was so great that wages plus government benefits (as measured by “Disposable Personal Income”) rose almost too fast. This added inflationary pressures to the economy. It is my opinion that these inflationary pressures contributed greatly to the oil price run-up in the 1973-1974 and the 1979-1981 periods.
Figure 12. Three-year average growth in Disposable Personal Income compared to inflation as measured by CPI-Urban. DPI from US Bureau of Economic Analysis; CPI from Bureau of Labor Statistics. Per Capita Disposable Personal Income is calculated by dividing DPI by US population, also from the BEA.
The run-up in oil prices also to some extent reflected a scarcity problem; note the two spikes in CPI-Urban in the 1970s in Figure 12, which are higher than would be expected, if the problem were simply a problem caused by the very high per capita Disposable Personal Income growth.
A major problem of the 1970s was a decline in US crude oil production for the area outside Alaska.
Figure 13. US crude oil production by type, based on EIA data.
This scarcity problem was significantly mitigated by the development of oil fields in Alaska, Mexico, and the North Sea in the next few years.
One of the things that substantially helped fix the oil problems of the 1970s was the fact that the US, as well as other developed countries, was able to make changes that substantially reduced their oil consumption. These changes included:
- Moving to smaller, more fuel-efficient cars
- Finding fuel substitutes when oil was being burned to create electricity
- Changing oil-based home heating to approaches that used other fuels
Figure 14. Oil consumption by part of the world. Data from BP Statistical Report of World Energy 2017.
The combination of these approaches brought supply and demand more into balance. There was a small dip in consumption in the 1973-1975 period, and a larger dip in the 1979 to 1984 period. In comparison, the Great Recession of 2008-2009 hardly made a dent.
An indirect impact of these changes was the fact that the US economy needed to become more integrated into the world market. The US started importing smaller, more fuel-efficient vehicles from Japan, since Japan was already making these cars. Japan started making other kinds of goods as well to sell to the US and other markets. The US and other countries built nuclear electric generation to replace some of the oil-fired electricity generation. These plants were capital intensive and required growing debt.
Especially after 1981, changes started to take place in the US economy, reflecting its changed role in the world. US companies grew in size, as they began to add overseas markets to their local markets. Wage disparity became more of an issue, as high tech operations required more specialized high-wage workers and fewer of those with only a general education. Increased competition for jobs with workers from lower-wage countries also tended to hold down wages of those without advanced training.
[6] The situation is very different now, compared to the 1970s. It is doubtful that today’s economy could tolerate a spike in interest rates.
Today, we are not seeing rapid growth in per capita energy consumption, the way we were in the 1950 to 1980 period (Figure 9). In fact, world per capita energy consumption is almost flat (Figure 15), the way it was during the period of the Great Depression of the 1930s, and the way it was at the time of the collapse of the former Soviet Union in the 1990s (Figure 9).
Figure 15. 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.
There are other similarities to the 1930s period. Short-term interest rates are back to the low level they were in the 1930s (Figure 3). Growth in Disposable Personal Income per capita is persistently low (Figure 12). Wage disparity is at the high level experienced back in the 1930s (Figure 16).
Figure 16. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.
It is probably because of this renewed wage disparity that we are having difficulty with oil gluts. Oil gluts were also experienced in the 1930s. People with inadequate wages cannot afford goods made with oil products. These gluts occur because of affordability problems–inadequate wages for part of the workforce.
Figure 17. US ending stock of crude oil, excluding the strategic petroleum reserve. Figure produced by EIA. Figure by EIA.
Despite the spike in oil prices that central bankers are concerned about, oil prices are currently too low for producers. Oil exporting countries, such as Venezuela, Saudi Arabia, and Nigeria, depend on high oil prices so that they can collect high tax revenue. These countries are especially hurt by today’s low oil prices.
An increase in interest rates could very easily create a recession and drop oil prices even lower than they are today. Of course, that is precisely the intent of the central bankers. Our problem is that the economy cannot operate without energy products, particularly oil. The cost of producing oil is rising because of diminishing returns. It simply is not possible to drop its price as low as oil-importing countries would like it to be.
[7] Economists and central bankers think that they have good models of how the economy operates, but they really do not.
The economy is a self-organized system that is able to create goods and services using energy products. In fact, it cannot continue its existence, without continued very substantial energy consumption. The economy gradually builds itself up, with new businesses, new consumers, newly invented products, and with transportation and financial systems. I envision the economy as looking something like a child’s toy that is built from many pieces. If one or more pieces are removed, the system could collapse.
Figure 18. Dome constructed using Leonardo Sticks
The economy has been built based on the laws of physics. It requires sufficient energy. It is in many ways like a hurricane that loses power if it is forced to go over land for any distance. A hurricane gets extra strength if it is able to pass over very warm water, which provides the energy it needs. Right now, the world economy is showing signs that it does not have sufficient energy; the standard of living of young people around the world is falling. The return on energy investment is far too low.
While it may be true that the US economy looks like it is at full employment, based on the number of people looking for jobs, the percentage of people aged 25-54 with jobs tells a different story (Figure 11). This percentage has fallen since 2000, at least partly because of globalization.
Unfortunately, the approach that economists are taking to model the economy cannot provide a good representation of how the economy really works. A self-organized system has many feedback loops that are difficult to understand and model. One change leads to other changes that are hard to see in advance. The problem with current models is that they are likely to produce misleading indications.
[8] Conclusion
We have heard the saying, “That which does not kill you makes you stronger.” The theory behind raising interest rates seems to follow a similar line of reasoning. If central bankers can raise interest rates, economies will be stronger.
The catch is that we are too close to the “edge” to be testing an increase in interest rates. Economies, below a certain “stall speed,” cannot repay debt with interest, and cannot hope to provide entrepreneurs with an adequate return on investment. Our low rate of growth is already close to this stall speed.
Given where we are today, it would be quite possible to accidentally “kill” the economy with rising interest rates. This would be especially the case if short-term and longer-term interest rates rise at the same time. A budget with large deficits could cause longer-term interest rates to rise. So could selling large amounts of QE debt.
Also, feedbacks don’t come quickly enough to make necessary course corrections. This makes raising interest rates way too much like playing with physics reactions we don’t fully understand. Interest rate increases (like fission reactions) start chain reactions. In an open environment such as the world economy, we have limited understanding of the outcome of these chain reactions.
The Curse of Energy Efficiency
https://media.newyorker.com/photos/590969256552fa0be682f535/master/w_727,c_limit/101220_r20356_p886.jpg
The more ‘efficient’ our technology, the more resources we consume in a downward spiral of catastrophe.
I agree. It is efficiency that allows energy consumption to grow. The price of energy “services” (energy products together with associated efficiency savings, such as insulation for homes, and more efficient vehicles) needs to keep falling. Citizens need to be able to keep buying more energy services, with the same amount of money. In fact, as efficiency filters into business applications as well, the it helps workers (with their tools) become more efficient.
Jevon’s was a genius, and Malthus was an optimist.
http://images.slideplayer.com/16/5025385/slides/slide_7.jpg
Good chart!
Malthus nor anyone else … anticipated the obscene overshoot that we have achieved… due to fossil fuels….
We are overshoot on steroids, HGH, speed and crack…. in fact our position is just so ridiculous I don’t even think the term overshoot is enough to describe it… we need something more extreme.
The looming global trade war – The Economist
https://www.economist.com/news/briefing/21738392-america-setting-dangerous-new-precedents-it-tries-curb-imports-looming-global-trade
If you have Chrome..Go to “File” and “Incognito Mode”…Then type in the name of this article and search. And then click on it and you can get behind the pay walls. Works for all Financial Times and Wall Street Journal articles as well.
Ukrainian leader Poroshenko threatens Russia with ‘total destruction’ in natural gas dispute
https://www.rt.com/business/420831-poroshenko-russia-destruction-gas/
https://www.zerohedge.com/news/2018-03-08/44-things-you-didnt-know-about-oil
2.) Both Tamerlane and Nadir Shah used camels laden with petroleum casks to frighten off Indian war elephants – once set on fire, the sight of fire made the elephants flee in panic.
It took the stuuuupid humans quite some time to figure out that oil could be used for more than just scaring off elephants…
Alexander (the Great One, ca. 300 BC) had his warriors use their long swords (pikes?) to cut the trunks of the Indian war elephants, which sent them into immediate retreat. Alexander won.
He could have just released hundreds of mice….
When Doughty visited Saudi in the 19th century, the tribal chiefs had little oil lamps and had had them for ages.
It wouldn’t have gone any further without the inventiveness of the West, which sprang from the intense military and commercial competition between micro-states in a naturally fertile and temperate environment.
None of this was inevitable. If Islam had conquered Europe in the 7th-10th centuries our industrial-scientific civilisation, even the concept of the state,would not have arisen, and memerising the Koran, etc, would have been the highest achievement that anyone could have aspired to.
Europe would have been the barbarian fringe of a vast despotic Eurasian empire.
pretty much right xabier
the only point i would make is that politics and religion interfered with scientific progress across Europe too—except for England, where we had had the protestant reformation (as had the Dutch but they had no coal)
that allowed for free thinkers to arise, and science free from god-meddlers, so the industrial revolution kicked off here
And there was a downside to that as well. I’m getting more attached to FE’s notion on the need for very nasty and wicked things. But I don’t see how that doesn’t work better with doing very nice and gentle things somewhere else at the same time. Why only one approach? In fact, I think that’s been the approach of TPTB to some extent. And England has been better at this than others.
Norman – Britain has depleted most of its coal reserves up to managing sending the Titanic to America, not any better than that. Today, most of other FF reserves worldwide are severely depleted up Tesla3, Cancer is still around and almost all our technologies not really hugely advanced then James Watt’s. CGI became very sophisticated, though.
The astronomical amount of energy expended into the achievement accomplished is shaming – compared to what the the ancients managed to discover, workout, document and produce by just looking at the sky.
What’s is called ‘Industrial Revolution’ might be described in the future THE ultimate proof on how humans are primitive – way way more then Chimpanzees – knowing the amount of energy wasted in that process.
couldnt quite grasp your meaning
but
despite all the advances in cgi—you cant eat cgi food, or put cgi fuel in cars—or for that matter pay cgi wages
Let’s commemorate Charles Martel https://en.m.wikipedia.org/wiki/Battle_of_Tours
A bottle of wine… and this downloading …
it’s takes some huevos grandes to roll toward wild polar bears, so as to not scare them. amazing photography.
Let’s check in on the Despair Barometer:
“Long before we receive data from death certificates, emergency department data can point to alarming increases in opioid overdoses,” Schuchat said in a statement. “This fast-moving epidemic affects both men and women, and people of every age. It does not respect state or county lines and is still increasing in every region in the United States.”
CDC provides three shocking statistics from the latest report indicating the opioid crisis is out of control:
Opioid overdoses went up 30% from July 2016 through September 2017 in 52 areas in 45 states.
The Midwestern region witnessed opioid overdoses increase 70% from July 2016 through September 2017.
Opioid overdoses in large cities increased by 54% in 16 states.
https://www.zerohedge.com/news/2018-03-07/cdc-us-opioid-crisis-getting-worse-we-have-emergency-our-hands
This is what happens … when people lose hope of green shoots and a brighter future.
We need an anthem for these people:
and the PTB allow widespread access to opioids. just a coincidence?
Perhaps studies show that people addicted to opioids use less energy and resources.
They are probably less prone to riot…
worked for quite awhile in China. FDR’s father made a fortune selling opioids back the opium producers, IIRC.
But still, the US has far less drug deaths then Russia. I read the “Hillbilly Elegy” by J.D. Vance. And you don’t get it! People are living in a nice environment with lakes and hills and forests, they have a house and a car. And still, they mess everything up! Are they bored? Because you can buy staples very cheap in a supermarket? Are they scared? Because one day the pay cheque will not arrive? Are they jealous? Because in New York you live a “very exiting” live?
Russians have had a long time culture of silence. They bury their sorrows of WW2, Traumas of Stalin era, communism, Afghanistan etc. and are therefore mentally not able to go forward. People are having hard economic situation outside of few areas. Men cannot afford to have good life. Their masculinity is truely to-xic if you allow me to borrow term from USA. Too much orientation to drink hard stuff, even if that has been changing on succesful elite and business life a lot. State has no HIV no injection change programs among the addict nor prevention program, therefore HIV is now running amock now in general population too and having unprotected se-x with russian woman is roulette.
Christina, also, Russian cities and suburbs are often ugl-y and depressive places, especially those build in Soviet Era and housing standards often horrible.
I understand russian male problems But in the USA?
Lately I saw a TV show about german men looking for a wife in Russia. The russian woman were very nice, educated. But they couldn’t find a husband in russia, because they were too old, beeing 40!!!! Russian men the same age were looking for 25 year old woman, or they were so beaten by alcool and health problems, the woman wouldn’t be with them. Astonishing, all that!
I remember reading from one anthropology blog, that substance abuse is a common behaviour in stressed males, kind of a stress reaction, so it is not really wonder, that it is spreading globally. Also in my country use of drugs and also medicine has gone hard up after 2008 and also birth rates has dropped to the levels of famine years of 19th century.
You are from Europe somewhere, aren’t you? Finland?
Gee, funny how a guugle search for “Sackler” doesn’t bring up the man most responsible for this mess.
https://www.esquire.com/news-politics/a12775932/sackler-family-oxycontin/
One man’s mess… is another’s solution
Good grief! Drugs are very much a business! Besides making money for the manufacturer, they are a way of getting patients to come back, over and over, to the doctor for a new prescription.
The number of prescription drugs I am taking is exactly zero, and I hope to keep it that way for a long time.
Gail, yes, I am from Finland.
The Trump doomsayers might turn out to be right
https://finance.yahoo.com/news/trump-doomsayers-might-turn-right-142123574.html
Toys ‘R’ Us Considers Closing All of Its U.S. Stores
https://www.wsj.com/articles/toys-r-us-considers-closing-all-of-its-u-s-stores-1520549311?mod=e2tw
America’s companies have binged on debt; a reckoning looms -Economist
AMERICA’s companies have been powering ahead for years. Amid growing profits, the recession that began in 2007 seems an increasingly distant memory. Yet the situation has a dark side: companies have binged on debt. For now, as the good times have coincided with a period of record-low interest rates, markets have been untroubled. But a shock could put corporate America into trouble.
No matter how it is measured, the debt load looks worrying. When calculated as a percentage of GDP, the total debt of America’s non-financial corporations reached 73.3% in the second quarter of 2017 (the latest available data). This is a record high. Measured against earnings before interest, tax, depreciation and amortisation (EBITDA), the net debt of non-financial companies in the S&P500 hit a ratio of 1.5 at of the end of 2016, a level not seen since 2003. And it remained nearly as high in 2017 (see chart).
https://imgur.com/a/DKm4N
Look at energy debts sky rocketing! Maybe you can use that chart Gail for another article.
‘AMERICA’s companies have been powering ahead for years. Amid growing profits’
Half Of U.S. Companies Are Losing Money
http://www.valuewalk.com/2018/03/what-economic-recovery-half-of-u-s-companies-are-losing-money/
Not powering ahead… rather staying alive … by tapping into low interest loans to fund operations and buy back shares….
The 64-trillion dollar question: How much longer can this go on?
Look at these charts I put together FE….
https://imgur.com/a/jQy4N
previously, this was used along with data that had US manufacturing at 9% of its economy…
UK manufacturing at 12% and overall Europe at 18%…
so even “overall Europe” is BY FAR also an ICS economy…
selling services to each other…
and that’s what FF provides…
large amounts of “energy slaves” so that a small portion of the population actually produces goods while the majority produces services…
I would not call this arrangement a “fake economy”…
I would call it great…
who would prefer a “real economy” where all workers produce goods and not services?
that would be a 100% blue collar workforce…
who here prefers hard labor over providing services?
anyone?
Nicely done! And that concluding image is perfect.
I’m feeling like I need a Xanax and a bottle of red wine ….
How can student debt soar while most still live with the parents? Do they blow everything on avocado toasts?
New iphones every year… Oxycontin tabs…
Student housing has gone nuts, large apartments for parties and sex. Student housing is a very profitable niche for the landlord or so I have been told, no direct knowledge. Bars are another expense. Rec centers with climbing walls, large recreation fields for sports. I watched this from a partial university building. The kids in Recreational Therapy were taking a credit course that had them tying logs(really dowels about 1-2″ dia) with string.
Welders in a nearby tech school would go out and make good money, a young man who was taking one of these course at doubled tuition through a private university nearby(don’t ask, you don’t want to know) and who was going to be an industrial arts teacher couldn’t compute a tangent correctly even though he had a calculator that could have launched a man to the moon.
There is no one really helping these kids, they are just cash cows. Moms need to come home and help their children grow up, parents need to stick it out so they can double team the children when they need a bit of redirection. What we are doing is not working for anyone. Caveat, being a parent is hard and often boring work. Still, it is a beautiful world.
Tuition and fees are outrageous. Tuition is high so professors can spend their time writing academic papers few will read. Fees are absurd so that the schools can afford new football stadiums and a cafeteria full of very fancy food choices. Also fancy green spaces on campus. Even part time students may have fees for the football stadiums and minimum meal packages that they are forced to buy. To many of the people actually teaching courses are part timers, hardly making more than minimum wage.
Maybe a graph over unfunded liabilities?
Also, limits to growth … death rate is the only one where the turning point is happening this far. I believe.
Credit card debt has now reached pre-recession levels
https://finance.yahoo.com/news/credit-card-debt-now-reached-pre-recession-levels-153937655.html
+++++++
Toys ‘R’ Us Is Prepping to Liquidate Its U.S. Operations
https://www.bloomberg.com/news/articles/2018-03-08/toys-r-us-said-to-be-prepping-liquidation-of-u-s-operations
According to the linked article,
Many corporations have fallen prey to this kind of activity.
US military ‘could lose its next war’ with Russia or China, warns Rand Corporation
https://www.ibtimes.co.uk/us-military-could-lose-its-next-war-russia-china-warns-rand-corporation-1651034
The US, Russia and China can’t really go to war with each other. Such would escalate into a nuclear confrontation resulting in the death of billions of people. Then again, maybe that is our destiny.
http://www.bbc.com/news/world-us-canada-43337951
Trump imposes tariffs:
I actually agree with Trump on this, because the US has taken it way too long as far as a trade imbalance goes and this will work towards helping US workers. Tariffs are actually not liked by Republicans. It is actually a Democrat type move, because it tries to help improve worker wages in steel & aluminum. So I tip my hat to Trump on this one.
Here’s another idea: Charge $25. dollar tariff on every single container box from China. That would help the trade imbalance with them.
China is refusing to take certain types of trash for recycling/ processing. This means that a whole lot of containers are going back empty. Before shippers were able to spread their costs over a two-way trip, with both portions paying freight charges. Now, they need to collect enough money to cover the round-trip. looking only at goods imported by the US (and by Europe). Diseconomies of lack of scale say costs will now be higher. This is like a tariff on every container box coming from China. Makes imports from China cost more (or the shipping companies go out of business).
Be interesting if the containers returning to China had the payment in IOU’s (the pieces of paper called $US) for the goods that were on board. Maybe it would sink in that real work is being exchanged for hot air in the form of digital-bits.
Peak everything?
https://www.cnbc.com/2018/03/07/we-may-have-hit-peak-trade-even-without-trumps-tariffs-ubs.html
Currency wars -> Tariff wars -> Real wars.
Will we have the usual sequence?
Absolutely! I agree we have reached peak trade. The tariff fiasco is just grand standing. Won’t do anything. We are all out of bullets to fight off what is coming.
The only thing we haven’t reached is peak cowbell.
The article raises good points–trade already not growing much.
We need to think in per capita term. Trade is already shrinking, per capita, I expect. Using “peak” terminology confuses. The peak comes as a per capita peak.
Tax Law Doesn’t Pay for Itself, Harvard Economists Find
https://www.wsj.com/articles/tax-law-doesnt-pay-for-itself-harvard-economists-find-1520506800?mod=e2twe
take a break from doomerising
listen to bbc radio 4
https://www.bbc.co.uk/programmes/b09th4hf
its a repeat of hitchikers guide to the galaxy—sit back, close your eyes, and take a break for half an hour, and pretend that all is well—as you die laughing
puts the real perspective on everything
42
The country will soon make a hard left turn. Stay tuned…
https://imgur.com/a/U5Yoi
How much more will ‘The People’ be willing to take? So far they’ve been convinced of ‘Trickle Down’, the wealthy are the ‘Job Creators’ and as such deserve special treatment, that the most recent tax cuts just helped a tiny top percentage with table scraps hitting the floor for the rest, and once the social security retirement age is raised to 78 and benefits cut in half, possibly then they will realize they’ve been had and utter some minor disagreement as they drag their disheveled selves back to their minimum wage jobs that only pay a small part of the bills. If they sound off what they’ll find is the politicians are no longer answering to them but instead to the lobbyists in DC, so they will air out their concerns on the internet which will be ignored. ‘The People’ have lost to more powerful players. All people can do now is take it because no one speaks for them.
I get a sense that things are reaching the boiling point though. When people loose everything and they have nothing left to loose – they loose it. – Gerald Celente.
We know that in past collapses, very often governments could not collect enough taxes. They collapsed for lack of taxes. It is easy to see this end point.
As long as the government keeps its hands off SS and Medicare all will be well.
The government will collapse if it tries to keep SS and Medicare as it is. It can’t collect enough taxes to keep both programs operating, as far as I can see. Medicare is a worse problem than Social Security.
By the way, I talked to a neighbor yesterday, who had just come back from her mother’s funeral. She said that her mother was 90 years old. She had had a stroke a few days before she died. They operated on her brain, to remove two blood clots, but despite all of the intervention, she died.
Come on now–no wonder our health care costs are outrageous. We should not be doing brain surgery on 90 year olds with bad prognoses to begin with. (I didn’t say that to the neighbor, obviously.)
Sometimes I just am at a loss for words. This is one of those occasions.
Can’t turn them down though — death panels not allowed….
There was a guy on reddit a few years ago who lived in North Carolina and was bit by a poisonous snake out in the woods. So he went to the ER and they gave him a shot of anti venom. He was there for around 2 hours time. He got the bill and it cost 70k dollars. He went on the internet and found the same Anti Venom he could buy from India for 750 dollars. He posted the bills and everything to prove it too…
BD “The country will soon make a hard left turn. Stay tuned…”
yes!
BD, I think you are absolutely correct!
after the 2020 elections, the Ds will have house of reps, senate and POTUS…
then…
they will own the collapsing economy of the 2020s…
sounds like a plan!
If the 2008 financial crisis had been allowed to run its true capitalistic, bailout-free course, the picture might be a lot different.
https://www.reuters.com/article/us-japan-disaster-nuclear-icewall/tepcos-ice-wall-fails-to-freeze-fukushimas-toxic-water-buildup-idUSKCN1GK0SY
Fukushima update: The ice wall is now complete, and although it was intended to reduce/eliminate water getting into the broken down reactor, the amount of water has actually increased. Next idea!
Find a way to make the whole mess go super critical and melt its way to the Earths magma.
That would be interesting but possibly even more disastrous. How about a bunker busting small yield nuclear blast which would cause the whole mess to plume into the surrounding atmosphere, then cordon off that area for how ever many thousands of years necessary. In a way it would be like pulling a band-aid off all at once to conclude the untenable situation once and for all by just admitting there are no answers except to bomb it and then there would be no more endless hours spent coming up with stupid ideas like an underground ice wall.
That people built the nuclear power industry (400+ reactors) without having any way to deal with a catastrophic failure of this sort and any real plan to deal with the waste tells you everything you need to know about humans’ so-called thinking abilities, intelligence and judgment.
But just think–you could use the byproducts for building nuclear weapons. Wasn’t that enough reason to go ahead?
How about the one on the California coast at San Onofre? It’s now closed, but is a store for nuclear waste, so as long as there isn’t a major earthquake in the period of radioactivity of the material stored, several half lives later, it should be fine, probably.
https://www.cnbc.com/2018/03/06/42-percent-of-americans-are-at-risk-of-retiring-broke.html
‘42% of Americans are at risk of retiring broke’
That’s the title to that article, but as we know there is no retirement if someone is broke. Which of course means many in the baby boom generation will just keep on working where jobs are available, which of course takes jobs away from fresher generations, which puts more pressure on the economy because income is spread over a wider population, resulting in fewer big ticket items like houses and autos purchased. As collapse approaches everything is spreading thinner while the fiscal efforts to jolt the economy into a higher gear are ratcheting up.
Retirement today often seems to happen when a person is laid off and cannot find another job that is at all comparable. A lot of older people are not interested in trying to find a job in a totally different sector, starting at the bottom of the pay scale. I do know a former Cobol programmer who works in a fast food restaurant, but she was fairly young when she was laid off. Also, she is a widow–has no choice but work.
At various times I have encountered professionals from various countries who after moving here have done what are truly menial jobs.They picked up the pieces and began again; it is better than nothing. If the programmer has responsibilities, perhaps she has no options. But, as a programmer, she could have looked forward and transitioned into a different area of programming, or networking, or operations, or………
It is tough emotionally to make a move down; but it is better to move before your options are limited so as to maximize choices. It is not fun, but it does toughen a person, and it makes them “resillient” to use a popular term among the more aware.
With the US debt where it is, I expect a cut in income around 2020 at the latest, SS is cash flow negative now. Again, another pearl from this site.
Cobol is a language that was used a lot, long ago. It is not used as much now. There are a huge number of Cobol programmers around. I know that she started to go to the college where my husband teaches to try to pick up a series of courses that would lead to her having a college degree in programming, besides knowing another language or two, but I think the time/cost hurdle was too great.
I am not sure what, if any, college degree she had originally. Not every programmer has a college degree, especially ones who started years ago. Companies used to be more liberal on who they would train from scratch.
i literally conned my way into a design office years ago for a ‘trial period’ with no experience whatsoever of the products being designed, degree or anything–I stayed 8 years
luckily i had a flair for it.—i knew that much—i was a cheeky beggar
nowadays i wouldnt get through the door
My husband has been teaching computer science without a degree in computer science. He has a Ph. D. in Math. He picked up some computer programming knowledge while in doing his Math Ph.D., back in the day when math and computer science were often taught in the same department. He began teaching, and drifted in the Computer Science direction. He picked up enough coursework (from different schools) for a master’s degree in Computer Science, but never received a master’s degree in computer science. Over the years, he was promoted to Full Professor with tenure in the (now separate) computer science department. He has written practically no academic papers. (He was on the “teaching and service” track–lots of committee work, instead.) He says that he would never be hired today.
two of a kind obviously—except i have no degree in anything except life
and i sometimes think i faked most of that
Sure Gail, but if someone is retirement age and has no money what do they do to pay bills? Bills don’t stop pouring in just because someone is at retirement age. They have to work at whatever they can get.
It is unfortunate that so many people have learned and are learning skills that are utterly useless in the real world.
I think Japanese retirees are resorting to petty crime. https://www.cnbc.com/2016/03/27/japans-elderly-turn-to-life-of-crime-to-ease-cost-of-living.html
I saw a lot of them working as well. Some of the jobs may have been make-work jobs cooked up by the government to keep the unemployment rate low.
the original pension scheme, (UK 1908) had 24 workers supporting each pensioner (males over 70 only) as so few lived that long it didn’t cost much
Now there’s only 4 or may 6 workers per pensioner (depending if you include govt workers taxation or not)
you do the math
i am little shocked by that Cuba has not be collapsed especially
seeing they huge depend on Venezuela oil
they country also survive impact of collapse soviet union and sanctions of usa
Cuban people are very resilient people
and who can forget these guys who pissed off cia
https://upload.wikimedia.org/wikipedia/commons/4/47/CheyFidel.jpg
what ever people think about them cia definitely did not like these guys
Castro died of old age.
The US and Cuba have the same male life expectancy (76.9).
Of course, at 31st world wide, it is nothing to brag about.
(of course, Che was assassinated , but obviously not in Cuba)
I suppose that most Cubans live a simple low energy life. They never industrialized as heavily as the US did. It seems a bit ironic. By starving Cuba of technological advancements through decades of sanctions, the US may actually have prepared Cuba for the collapse of the financial system. In the end Cuba may outlast the US.
btw cuban cigars are very good
another funny thing is Cuban in usa most voting for right wing parties
It’s not really that funny – they’re in the US because they don’t like the communism they have at home.
in no way am i a communist
but has been the concept of thinking of the world as ‘capital’ that has screwed it up for everyone
“has been the concept of thinking of the world as ‘capital’ that has screwed it up for everyone”
Communism takes the same fundamental assumption, it just wants to distribute that capital evenly.
communist leaders tend to think like capitalist leaders—they grab the best for themselves while the common herd have to make do with the leavings
communist leaders are no more altruistic than anybody else, they see to themselves and their immediate tribe first
…some animals are more equal than others.
I have read that both capitalism and communism lead to the same end result – resource depletion, a wrecked financial system and ruin. It is just that capitalism achieves the end result faster.
And as a result, capitalism wins out over communism, while energy supplies are available.
Democracy is a great user of energy. Dictatorship doesn’t use as much. Dictatorship would seem to be the winner in decline.
It’s not a coincidence that the last round of dictatorships arose after the energy constraints with coal…
Scary stuff Gail! But, logical.
A few threads ago they talked about nursing home crisis.
Korea is actually worse. Because Korea does not have a social security (it is available for a very limited basis, but few people bothered to contributed it in the early days), the family has to come up with the cash to maintain the elderly. As a result, poor elderly are simply abandoned by their family members.
For those ‘lucky’ enough to be put into nursing homes, 20 of them are put into one room, cared by 1-2 underpaid nurses and hired hands from China and Southeast Asia, and are put into diapers.
This nursing home fire occurred earlier this year
http://www.bbc.com/news/world-asia-42828023
Miryang is a backwater town, about 1 hr’s drive from the city of Pusan where a few million people live. Because it is cheaper to house the elderly at that town, a lot of people from Pusan and other surrounding cities dumped their parents there where they died.
There is no program to keep the elderly, who are sedated and put into diapers which get changed once in a while.
I agree that putting them to sleep would be a more dignified way.
I’d rather be dead.
UBER IS RUNNING OUT OF WAYS TO SAVE ITSELF
https://media.vanityfair.com/photos/5aa00935bdf96c760a523d00/master/w_1920,c_limit/uber-losing-money.jpg
After burning through $10.7 billion in nine years, Uber still hasn’t found a way to turn a profit.
They seem to have private owners that will put up with their problems, though.
https://www.recode.net/2018/1/8/16865598/uber-softbank-control-board-power-stocks-benchmark-travis-kalanick-dara-khosrowshahi
SoftBank is a Japanese telecom.
A little like the US shale industry.
There could be an oil supply crunch after 2020 due to investment shortfalls
http://newsimg.bbc.co.uk/media/images/47276000/jpg/_47276262_008622224-1.jpg
Oil supply will be able to meet oil demand in the next two years, but a lack of investment could lead to a global supply crunch after 2020 the International Energy Agency (IEA) has warned.
There is a concern that another shock in the form of an oil supply crunch could be on the horizon and that due to a lack of sufficient spare capacity because of a failure to recover from the 2014 price crash the industry could struggle to ride this shock effectively.
This could lead to longer-term issues for the oil industry as a whole.
US oil in storage has been going sideways, or even increasing. Total oil in storage (including products) is now where it was the week ended January 19, which is a 6 week plateau. Crude oil in storage is now 14.3 million barrels of oil higher than it was at its low point, which was the week ended January 19. Its amount is now a bit higher than at yearend (based on weekly data).
It looks to me as if even at the prices we had in December and January, production is up. Consumption may be slightly down. We are already back to filling up storage.
https://www.bloomberg.com/energy
Yes, in fact, WTI was running in the mid-60’s but just in the past few days has dropped to (at the moment of this posting) $60.83
The peak in price was January 25 for Brent (71.05) and January 26 for WTI (66.27). Storage amounts are announced the Wednesday after the “as of” date. Let’s figure out what information would have been available then.
The first time there would have been an announcement that US crude oil stocks were filling would be the Wednesday after January 26 (January 16 plus seven days), which would be January 31. But price signaled a peak, even before traders would have been able to see the first sign that crude oil supply was again filling.
Interesting!
The classic run up in oil prices predicted by peak oil may have already happened in the 2007 run up to $147.00 per barrel. It is looking more and more like that was the moment of peak oil price followed by job loss, waning demand, skyrocketing debt and oil price collapse. We may be at the point now where the economy just continues to fall apart, reducing demand for oil. It is tempting to predict shortages, but, shortages may not occur again. Instead, more countries and more people will fall off the oil consumption wagon. Depressing oil prices and demand. That is not to say we wouldn’t use more if we could. It will just be unaffordable due to low wages, debt and job loss.
We seem to have already hit peak prices for this round, at $71.05 for Brent on January 25 and $66.27 for WTI on January 26. See my comment to JH Wyoming.
Certainly seems plausible. Oil prices Just can’t seem to rebound much before falling back again. Rising interest rates won’t help with oil prices either. IMO, I don’t think we will ever see prices over $100.00 again. Everybody is becoming too poor to buy the things that burn oil.
Oil discoveries in 2017 hit all-time low –Houston Chronicle
https://www.chron.com/business/energy/article/Oil-discoveries-in-2017-hit-all-time-low-12447212.php
IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead
https://www.wsj.com/articles/saudi-minister-sees-end-of-oil-price-slump-1476870790
Saudi Aramco CEO sees oil supply shortage coming as investments, discoveries drop
https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR
UAE warns of world oil shortages ahead by 2020 due to industry spending cuts
http://www.arabianindustry.com/oil-gas/news/2016/nov/6/more-spending-cuts-as-uae-predicts-oil-shortages-5531344/
Halliburton CEO says oil will spike due to oil shortages by 2020 after Industry Cuts
https://www.bloomberg.com/news/articles/2017-07-12/halliburton-sees-2020-oil-spike-after-industry-cuts-2-trillion
2020s To Be A Decade of Disorder For Oil
https://oilprice.com/Energy/Energy-General/2020s-To-Be-A-Decade-of-Disorder-For-Oil.html
If one reads those (which I have many times over) I agree – it looks like shortages. But, what if the financial system collapses faster or at the same pace as the rate of inventory draw downs and production declines? I don’t claim to know the answer or believe that is what will happen. But, I think it is a possibility as well. There are probably 100’s of paths that could lead to collapse of our complex society without having oil shortages. It is just one of many headwinds we face.
Even if what happens is oil shortages, the symptoms are likely to be very different: low prices, war, lack of international trade. Talking incessantly about the possibility of oil shortages has confused the matter. Electricity will probably be a problem sooner than oil.
German Military (leaked) Peak Oil study: oil is used in the production of 95% of all industrial goods, so a shortage of oil would collapse the world economy & world governments
http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf
So would a shrinkage of coal.
The new law for personal bankruptcies in Slovakia brings massive increase in their use. Furthemore, the numbers show a shift into the younger age group, as regards largest amount of the personal bankruptcies, when the age group of the males between 30 and 39 years old takes over the lead in February 2018.
Only 4.99 % of males and 5.13 % of females from those, who used this law, have university education.
https://spravy.pravda.sk/ekonomika/clanok/461448-vo-februari-bolo-najviac-osobnych-bankrotov-v-historii-az-930/
If the law is changed to make bankruptcies more helpful or easier to get, I would expect that a big increase could take place. We have a lot of former students who need them, but can’t get them because student debt is excluded.
Silvio Berlusconi Backs Leader Of Euroskeptic Party To Form Italy’s Next Government
https://www.zerohedge.com/news/2018-03-07/silvio-berlusconi-backs-leader-euroskeptic-party-form-italys-next-government
One of the commenters:
Hold on am I missing something.
Berlusconi was in favour of dumping the Euro and then I believe he was maneuvered out by Brussels for his view and Renzi was parachuted in as their stoo.ge without election. Is this right?
If so, Berlusconi will be looking for pay back to the EU for their interference and I am sure he could offer Matteo Salvini some big carrots.
As Gerald Celente says; paybacks a bit.ch.
FE…. how?
An unusual combination of jobs, but when you know that the population decline is going on and the specialized manual workforce is more and more scarce, it is completely in line with the reality: the woman who is both plumber and model.
https://www.deutsche-handwerks-zeitung.de/ich-gebe-meinen-kollegen-beim-modeln-schon-mal-reparatur-tipps/150/4562/363026
Model Sandra Hunke: Morgens Toiletten reparieren, nachmittags auf den Laufsteg
https://www.stern.de/lifestyle/mode/marie-von-den-benken/model-sandra-hunke–morgens-toiletten-reparieren–nachmittags-auf-den-laufsteg-7641972.html
The jobs that pay well seem to be for men. A woman who has spent years training to teach music to elementary children may not be willing to look into new training where job opportunities are more abundant and pay better.
We now face a potential economic catastrophe as the long period of very low interest rates comes to an end.
https://www.cnbc.com/2018/03/05/rising-interest-rates-will-be-devastating-to-the-us-economy-for-one-big-reason.html?__source=sharebar|facebook&par=sharebar
Good points, looking only at US Debt, and cost of debt service.
Big Oil CEOs ‘Not Losing Any Sleep’ Over Peak Oil Demand
https://finance.yahoo.com/news/big-oil-ceos-not-losing-220000595.html?utm_content=buffere3182&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
https://i.pinimg.com/736x/8a/4d/c8/8a4dc84c002d91671d70c02d5b8efc7d.jpg
“Still Photography”…the only thing moving seems to be the steam!
Chapin Mine Pumping Engine – used to pump water out of coal mines
https://upload.wikimedia.org/wikipedia/commons/a/a0/Chapin_Mine_Pump_1891.png
http://landmarkhunter.com/photos/56/32/563234-M.jpg
Not a microchip in sight! Perfect.
The dream is very hazy.
I’m in a vehicle with only the sense that it has other passengers shrouded off to the side
I become aware that the vehicle is running on tracks, but the wheels don’t grip the rails the way you’d expect. They really aren’t quite touching the ground.
Oh, so the vehicle may be out of control. But then it WAS going along quite safely before the issue of control came to my attention. It was like waking up from a dream within a dream. So now I’ve taken some control for its trajectory.
I step on the brakes, The break pedal goes all the way to the floor, so that couldn’t have been what stopped the vehicle just before it ran into the one showing up ahead.
The tracks curve left, but the “train” is heading straight beyond where the tracks bend, so I turn the steering wheel. Remarkably, the vehicle responds and goes left, only conditionally connected to the tracks.
Since I have no idea where it’s going, and what are the issues for safety, I force myself to wake up, leaving the matter unsettled.
“There are two kinds of horror stories about Airbnb. When the home-sharing platform first appeared, the initial cautionary tales tended to emphasize extreme guest (and occasionally host) misbehavior. But as the now decade-old service matured and the number of rental properties proliferated dramatically, a second genre emerged, one that focused on what the service was doing to the larger community: Airbnb was raising rents and taking housing off the rental market. It was supercharging gentrification while discriminating against guests and hosts of color. And as commercial operators took over, it was transforming from a way to help homeowners occasionally rent out an extra room into a purveyor of creepy, makeshift hotels.”
https://www.citylab.com/equity/2018/03/what-airbnb-did-to-new-york-city/552749/
Queenstown – and many other cities — is trying to tackle these problems by changing the rules…
The battle begins in the next few months as the changes are tabled with the local Council….
Word is that Airbnb is going to fund a challenge… and no doubt if they lose will appeal appeal appeal…
Airbnb has deep pockets….
It is hard to think through these consequences in advance. More evidence of how a self-organized system really works.
Are we due for a pandemic? (or overdue)
https://www.zerohedge.com/news/2018-03-07/china-reports-outbreak-highly-contagious-bird-flu
I lived through SARS panic in HK… it was fantastic!
There were excellent deals on flights .. and empty planes… I recall luxuriating lying across 4 seats during flights.
More SARS please…
Probably. The economy has to be fairly able to handle disruption, even things like bird flu. An outbreak would seem to hurt the GDP of an area.
David Bell does present many interesting ideas…
“Meanwhile, Pinker fails to acknowledge how very closely his own radical optimism echoes some of the wilder—and more misguided—pronouncements about the human future from the Enlightenment itself.”
again, there is a giant missing idea within the scope of Pinker’s writing…
FF is the basis of most of the progress since The Enlightenment…
missing this “dot”, he thus cannot connect the dots, which explains his “radical optimism”.
Waiting for Steven Pinker’s enlightenment.
https://www.thenation.com/article/waiting-for-steven-pinkers-enlightenment/
Just started to listen to Taleb’s Skin in the Game while driving earlier… and I nearly had a head on collision with a semi truck laughing so hard over this comment:
“Seeing the psychologist Steven Pinker making pronouncements about things intellectual has a similar effect to encountering a drive-in Burger King while hiking in the middle of a national park ”
https://www.nytimes.com/2018/03/07/us/politics/tax-cut-offers-working-class.html
No surprise there.
Half of U.S. Companies Are Losing Money
http://blog.knowledgeleaderscapital.com/?p=13969
The chart the author shows is an interesting one. Using standard accounting methods, a large share of companies are not making profits. The percentage not making profits is rising over the long term. This is concerning. It doesn’t particularly rise with share oil prices, either.
Non GAAP = Fake Numbers
The rules of accounting .. are the rules of accounting — or GAAP… yet suddenly the MSM publishes non GAAP…
No surprise there — the MSM is a tool of the el ders… the el ders – for good reasons – do NOT want the masses to see that half of all companies are losing money…
That would destroy their recovery narrative… create anxiety — and anxious rats don’t spend….
Surely rats are much cuter ;3
Here’s an average rat:
https://upload.wikimedia.org/wikipedia/commons/thumb/6/66/Longtailedrat.jpg/390px-Longtailedrat.jpg
Here’s an average civilized human:
https://i.ytimg.com/vi/xyTtM4Q1LAM/maxresdefault.jpg
Also love the excuse that the author made about the “mostly intangible” investments, AKA money blown on hot air.
Rats need a PR agent… people see them as filthy nasty beasts.. some species of rats are quite attractive and would make good pets… and if you avoid sewer and garbage dump rats … and focus on the grain fed field rat…. I expect they could be made into a nutritious meal…..
As long as it was sanitary, I would give cooked rattie a shot. I’ve also had one as a pet.
If the “American-way-of-life” continues on its present course then, this might well be the Average American of the future. God. What a mess we have made of ourselves. In such a short time we have wrecked our genome and simultaneously strengthened that of germs through the overuse and misuse of antibiotics. This just won’t end well for us.
“The fast increase in loss reporting portrayed by the figure above is thus mainly due to the increasing proliferation of new-age firms (high tech, science-based, telecom, media, etc.) whose investments are mostly intangible, and their reported earnings seriously misstated by GAAP-based financial reports.”
I could interpret this to mean that these losing companies are those that don’t really make anything worthwhile… (Tesla, anyone?)…
I would really be worried if such losing companies were involved in the production and distribution of food, and also FF…
though companies involved with shale oil do come to mind.
https://srsroccoreport.com/end-of-the-u-s-major-oil-industry-era-big-trouble-at-exxonmobil/
https://wolfstreet.com/2018/02/26/after-its-10-billion-loss-in-q4-ge-restates-earnings-for-2017-and-2016/
https://wolfstreet.com/2018/02/05/whats-the-chance-of-iconic-ge-going-bankrupt/
https://globalnews.ca/news/3305733/oil-sector-will-still-lose-money-in-2017-conference-board-of-canada-report/
or could it be that as we approach Creeping Collapse…
more and more, all companies not involved in food production and distribution head towards losses?
if the (declining FF) economy can’t keep all current businesses afloat…
won’t these businesses die off one by one?
just wondering…
Perhaps, rather than food producers in general being assumed to have a better chance of staying afloat, only those producing staple foods at low cost with minimal or no fossil fuel or imported inputs will be the last businesses standing?
Oh, and the ones that produce alcohol and other drugs.
What is the value of money? Check out Amazon
https://www.forbes.com/sites/jonmarkman/2017/05/23/the-amazon-era-no-profits-no-problem/#e043ba4437ad
Problems in European electric grid. Frequency is too low. Since mid January 113 G Wh is missing because of this. Also clocks synchronized with electric frequency are delayed.
https://tinyurl.com/yagjgba5
I found this article from Reuters. https://www.reuters.com/article/serbia-kosovo-energy/serbia-kosovo-power-grid-row-delays-european-clocks-idUSL5N1QP2FF
It describes the problem as follows:
I am not sure I would want to be sharing a grid with countries who were not taking adequate care of it.
The map seems to indicate that the grid even goes to Russia, Turkey, and the UK.
Too true, Gail.
The folly of EU/US -expansionist politics: Serbia and Kosovo are apparently ‘European’ now.
I wonder what the next grid problem will be. Also, how the grid will operate if important countries start leaving/ having severe financial problems, such as Italy and Greece.
Army study: US strategy to ‘dethrone’ Putin for oil pipelines might provoke WW3
https://medium.com/insurge-intelligence/army-study-us-strategy-to-dethrone-putin-for-oil-pipelines-might-provoke-ww3-9b1d9dbe6be9
“Simultaneously, the document admits that far from the US being some innocently hapless victim of Russian interference, the US has at various times run covert “information, economic and diplomatic” campaigns to either “dethrone Putin”, or at least undermine his rule.”
at various times? does that mean like, you know, during the Obama years?
perhaps the USA should stop meddling with Russia.
It means through Bush II and Obama’s reigns.
thank you for that confirmation…
perhaps the USA should stop meddling with Russia.
Pioneering oilman Mark Papa warns that US shale oil forecasts are too optimistic
https://www.cnbc.com/2018/03/07/pioneering-oilman-mark-papa-says-us-shale-oil-forecasts-too-optimistic.html
In Oklahoma you can make more money working at a gas station than as a teacher
https://www.cnbc.com/2018/03/07/many-oklahoma-teachers-earn-less-than-gas-station-workers.html?__source=twitter%7Cmain
Police: Russian ex-spy poisoned with nerve agent
https://apnews.com/86cb68598d504f34af87446e6866c00a?utm_campaign=SocialFlow&utm_source=Twitter&utm_medium=AP
Putin needs to be dragged to The Hague and put on trial for his crimes.
U.S. Trade Deficit Widened in January to Post-2008 High
Deficit hit its largest monthly level in more than nine years, as exports weakened
https://www.wsj.com/articles/u-s-trade-deficit-widened-again-in-january-1520429682?mod=e2twe
Cons gonna do what Cons gonna do….
https://imgur.com/a/zpba3
It might be better to say rising oil prices lead to greater deficits, falling oil prices help eliminate the deficit.
The price recently has been higher, so more of a deficit.
Wolf Richter has a good article on the subject: Oops, Extra-Gloomy Numbers on the US Trade Deficit in Goods & Services for January.
https://wolfstreet.com/wp-content/uploads/2018/03/US-trade-balance-2018-01_goods.png
What really matters is country’s current accout balance.
A person seems to get information regarding this from the Census bureau.
https://www.census.gov/foreign-trade/data/index.html
Dumping U.S. debt, a possible weapon in global trade war
https://www.reuters.com/article/us-usa-trade-treasuries-analysis/dumping-u-s-debt-a-possible-weapon-in-global-trade-war-idUSKCN1GE2ZS
So all the US debt is sold; for what? Where does the money go, who purchases? If you were given a million dollars and wanted to invest it, what would you purchase that has value tomorrow? Think modestly, you only want half your money back, how is that done?
All good questions, Dennis, which I’m hoping someone has the answers to.
there’s still trillions in cash money floating around the global economic system, held by people with a certainty of cornucopian foreverness, also certainty that cash will retain its value irrespective of energy availabilty
though Gail can explain this more lucidly than I can
they want a ‘return’ on that money, and one of the places they can get it is on the ‘promise’ of the us treasury–so they buy us debt, convinced they will be repaid in due time,
Just like any family having to borrow money to repay debt, money goes on living essentials (ie energy, food and fuel)
And just like that family, infinite borrowing eventually leads to 100% interest on the accrued loans.
It wont get to that of course—but as income squeezes up towards that, there’s less and less money available to keep the system itself functioning—hence you get 44m on food aid, and other services falling apart
when the system crashes– the musical debt chairs will stop, and everyone will be left holding an empty parcel
I’ve drank enough LSD to float Noah’s ark,… and that was well put Norm 🙂
Having billions vs millions makes all the difference. With just one million you are limited. With billions to invest you can finance the manufacturing of XXX and influence politicians to make policy that uses XXX. If had had a million to “invest” (I say invest loosely because I believe such a thing can’t be done anymore in a conventional sense) what would I do? I would think investing it into the local community in some way would be the best course. Local food growing, healthcare, housing. I would try to improve my local community and be visible doing it. So, if things start to fall apart maybe the community would be a bit more resilient. Try to get people cooperating again. That is the only way forward. This virtual world of FB, Twitter and Bitcoin is not physical and does not give our communities a sense of cohesion.
I would invest the cash in Living Large Now. Doing anything else… would be a waste of $1,000,000
I have a few investment schemes i can let you in on Eddt
Norman
I am torn between a space elevator an monorail
wasnt that an old indian way of killing people?
1. The dots aren’t connecting up. FB is being used to baby sit and distract, although it could just as easily serve to unify and cohere. The result is tantamount to fire in a theatre and everyone trampling each other to get out. In contrast to forming a queue. Concerted effort is prevented through entrenched individualism and wage slavery. You propose some project on FB and now and then some promising presence follows. Then the poster disappears. Ergo, no concerted effort, no queue.And MSM reinforces this pattern.
2. “Economic pragmatism” might not necessarily be all local, since there are too many products that depend on scale that we can’t do without. But we don’t need most of what the global economy produces. So try getting people to grow some food and collect some water. It won’t replace (by any means ) the food and water systems we have now, and it only makes sense if it becomes a part of BAU culture and everybody does it. But people won’t do it for much the same reason as for 1. No harm in a few souls trying it though. It could catch on the way many seemingly unlikely trends have done over time.
3. Half measures are rarely tried. So there is a proposal for UBIs, even for those who don’t need it. But what if UBI’s were a half measure–subsidize employment in fields we can’t do without? Oil, nuclear, food, maintenance, etc.? The worker gets a benefit, as does the employer. That benefit ought to encourage the employer to employ more and to declare income, and so be easier to track for taxes.
But I totally agree with focusing on the local community, for what it’s worth. It is helpful in many ways, but does not replace a variety of larger scales. If local communities are better off they can better help to promote those larger scales in a pragmatic fashion.
My view is that the use of military interventions to protect the reserve currency is becoming a negative-sum game. Trade protectionism is a response to this (irrational perhaps but, what to do).
There has only been ‘free-trade’ if you ignore the benefits the US enjoys (exorbitant privilege) of issuing the reserve currency. This privilege (might is right) has been enjoyed by various regimes through time.
We will probably not see true free trade except in the absence of trade agreements, not because of them; therefore only in the absence of Governments. Perhaps in small neighbourhood transactions it exists?
I think you are probably right. The US had gone about as far as it could go, and beyond, in the area of military interventions.
Are the el ders beginning to flail?
All empires end…
They’ll be pleased that the end of this empire = extinction … because what awaits them will make the German Experience… a tea party by comparison…
All one has to do is browse the Zero Hedge comments to see the intense hatred for the tribe… all it would take is a spark from a demagogue… and the fire will rage…
Fast Eddy – “All one has to do is browse the Zero Hedge comments to see the intense hatred for the tribe… all it would take is a spark from a demagogue… and the fire will rage…“:
To that extent, one feels “the intense hatred for the tribe [and the extremely strong invitations into Collapse]” is actually a well invested-in and orchestrated operation run by same FE’s el ders.
The web is not a playground for anybody, mind you. If Gail is single-handedly trying to organise comments on OFW, others employ armies of comments writers over all geographies and time zones on full time bases to keep the space well orientated, only one-direction-going and immensely fenced.
What “ZH comments to see the intense hatred….“? Comments on the web is now THE big business shaping the perception of all of us, as you might have felt long ago!
Now why would they want negative comments about the tribe — when they go to great lengths to stop all negative comments across the MSM?
Did I mentioned a business I am involved in was threatened with shutdown by a tribe member who was a top guy at Disney in Asia – simply for posting the award winning documentary Palestine 101
There is no such thing as “true free trade”. Someone always has power controlling the market since power voids are always filled. If the government doesn’t maintain control via tariffs, etc. then companies seize hold via monopoly/oligopoly/etc. The trade market is also controlled inherently by whoever is issuing the currency, which is currently the Federal Reserve principally.
djerek – “There is no such thing as ‘true free trade’”:
This brings us to Maxwell’s demon in physics where the demon itself remains subject to wear-and-tear (Entropy).
When the “no-true-free-trade” has actually ‘fixed’ the price of FF supplies since the Rockefellers worldwide, what it has done, in fact, is it suspended humans’ ability to sense a profound natural input essential for their survival: feeling the real value of Energy measured and compared to human’s mechanical capacity and efforts. This has distorted everything even civilisation at large and at core, since the silly decision by Rockefeller to be smart, play and mess with truth.
This far, the enterprise that controls the no-free-trade became itself confused of what it’s doing, being impacted by Entropy that’s always faster than its calculations and sensory (see Gail’s critically-brilliant comment “Hubbert’s curve [deceptively] lets us think we have more time than we really have”).
Truth is a property of Physics. No matter how an amount of Energy and time expended by an individual or group flipping it, Physics forcefully brings it back to its real set up!
One of the first people/caucus were distorted by the ‘Rockefellers’ energy-fixed-price was Turing et al: If a machine intended to match human’s mind, more energy to be expanded and more time will be taken in making it than the total energy put earlier in designing and bringing man to this level of features and abilities.
AI et al can enjoy the investment “no-true-free-trade” is putting in them, but they never add any real value to solving the world’s real energy problems – being parasitic (as touched on in Nicholas Georgescu-Roegen’s 1971 thesis).
Fossil Fuels have now come and gone but is not this very sad 100-year long story and its drawbacks worth to be historically called from now on Man’s Fossil Fuels Grand-Curse?
Saudi Aramco’s CEO sounds VERY comfortable and inviting to any Shale oil increased production: “demand is always there” (note growth consumption figures he mentions, on the contrary to many news reports).
To my humble understanding, he stopped shy saying Aramco is actually run by US Halliburton et al.
If the gentleman reads OFW, he will start saying from next interview with the press: “Crude required for Civilisation’s massive heat-engine repairs will keep growing higher and higher indefinitely – by Physics“.
Maybe the crude oil will be required, but the system will start falling apart.
I see China’s rejection of trash (recycling) from the US and Europe as the “canary in the coal mine.” If boats now need to come back to China empty, instead of carrying goods, they either lose money or they need to charge more to the folks selling goods.
We lose the shipping of low-valued items first, because it no longer makes sense. Not enough wage dollars can come from the recycling.
It’s hard to believe that America doesn’t have enough of a foothold in Africa to do some good for itself and the continent as well. It has many military bases and alliances there. If those aren’t working well enough, they might try a better plan.
‘and the continent as well’
https://nataliaantonova.files.wordpress.com/2013/12/cannot-handle-the-hysterical-laughter.gif
The plan is LET CHINA DEAL WITH THEM. I have worked on the dark side and want nothing to do with the continent.
I’m not entirely opposed to that idea. I would recommend working (if one is so motivated) somewhere else, allowing the continent (if it so desires) to come to me. I won’t go to it.
42% of Americans are at risk of retiring broke
https://www.cnbc.com/2018/03/06/42-percent-of-americans-are-at-risk-of-retiring-broke.html
100% of Americans are at risk of losing pension plans and social security, besides their bank account balances.
Agreed with an exception, Amish who do not have SS.
In my years of treating them, I con’t recall treating an elderly Amish, it is a closed culture, where are the elderly Amish? Does anyone know? The elderly must depend upon their children, they have many, how does it work? Again, does anyone know?
The Amish depend on the same financial system that we do. They use a lot of products that come through the fossil fuel system, such as tools, shoes, clothing, phones, horse shoes for their horse. They cannot use only old fashioned ways for producing food, or they would not be able to support themselves. I expect that they will have problems, just as everyone else does, when the system collapses.
I remember some had problems with the government seizing their operations for selling unpasteurized milk.
How dare they, that is worse than selling cocaine. /s
The Amish have this problem as well
http://www.powermag.com/wp-content/uploads/2008/11/520004db496fe-110108_NuclearMap.jpg
Westerly winds and ocean currents… bring death….
https://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/07/Japan_nuclear_plants_1_0.jpg
Thank you for including Canada the one in PQ I shut down they hope to have it decommissioned in 50 years at a cost of 1.8 billion so 18 billion.
https://en.wikipedia.org/wiki/Gentilly_Nuclear_Generating_Station
In Amish communities there are death panels. When you hit a certain age, you are expected to wait for the next snowstorm then go to sleep in a bank of snow – and never wake up.
It’s kinda like being a member of https://en.wikipedia.org/wiki/Menudo_(band) They put band members to death on their 14th birthday….
‘I’m going for a walk, and may be gone for some time’. Indeed you will, brother Moses……
Not so bad a death: you’d want to have a good meal and lots to drink, and then let hypothermia set in – probably a warm glow and then sweet dreams?
Before taking the walk… drink a really great bottle of red wine… along with the meal… take another to the snow bank… to wash down a few Oxycontin tablets…
yamama…. Yamaha…. YAMAHA!!!!!
I agree! All of us are at risk of either loosing retirement plans or not having enough to retire on. The more things contract the more precarious retirement becomes. BTW retiring broke is an oxymoron no?: Can’t retire if one is broke eh?
The unspoken assumption is that SS is going to provide a floor for retirement standard of living even for those who are “broke”.
UBI will save us (sarc).
I am in Canada so pardon my ignorance I thought some jobs are exempt from SS.
In Canada everyone pays about 10 percent of the first 50k they make.
But what abut deposit insurance??????? (sarc)
with the ongoing discussions about EVs and batteries, this BBC4 radio prog is worth a listen
https://www.bbc.co.uk/programmes/b09tdr0r
Claire Grey on the Big Battery Challenge
“For the last twenty years she has sought to understand the precise chemistry of the rechargeable lithium ion battery.”
It was first commercialized in the early 1990’s. It has been a while, and the major bottleneck of our “EV” vision.
I’m still waiting. It has been a while campers—–
Until 1763–1775, it took James Watt 50 years to improve on 1812 Thomas Newcomen’s first-generation steam engine.
All what Watt has done is making steam condensation external to the expansion chamber and that’s it!
If one considers Watt an electro-mechanical robot, the total energies were expended in mining for materials constructing and programming Watt and sustaining his continuity in food, shelter, research, experiments, prototyping, well-being, travel, consumables, communications – should all be added to the ratio between energies expended in making any replica of his steam engine to the useful energy produced by the replica.
Not only that but the total energies put earlier by Newcomens to make the seed design, and all earlier knowledge that enabled Newcomens achieves his primitive engine.
To assess the value from Claire Grey’s research and thousands and thousands of other researchers and technicians like her, why not starting from the gap 1824 Sadi Carnot has left us all with: Identifying the total Energy expended in making an energy-producing device to the energy ever produced by the device?
If you have a large uncertainty in energy (ΔE), the lifetime (Δt) of the particle(s) created must be very short. (Derek B. Leinweber).
And, this is no less than ‘Entropy Internal to Matter’, we all call ‘wear and tear’, also originally expressed by the thesis of Nicholas Georgescu-Roegen, yet described on Wekipedia as being false, but recently resurfacing again in ‘One-way entanglement between isolated energies’ thesis.
God bless Fossil Fuels that enabled Claire Grey trying, trying and trying….
every inventor stands on the shoulders of others
that is never in dispute
Thanks Norman! She is a cutie! I’ve approach Tesla sales people with battery (replacement) cost questions and they don’t want to talk about the toothbrush/shaver/fell phone syndrome that one day it’s over for the pack.
But of course other have pointed out more fundamental issues such as manufacturing costs/emissions, and the very challenging issues that it can be more efficient to burn the fuel in the car than some place far away and then store it in a battery. In short, the EV is keeping the dream of mobility alive for some people.
Unfortunately we also drive on oil. It’s pretty amazing because we’re in 2018 and no one really buys these cars. We would need the penetration to be close to 100% now for them to make a difference.
the focus of our current system seems to be the ongoing consumption of energy
whereas our real problem is obtaining supplies of cheap energy in the first place.
eg—as long as we can go on driving around, flying, tapping on keyboards, all will be well with the world, because somehow we have come to make that ”productivity”
but it isnt production—it’s consumption. If Musk gets that, he certainly isnt saying so.
The bitcoin thing is following the same pattern, but in a slightly different way, they burn fuel to provide an illusion of wealth—which is what we do with cars and planes if you think about it.
that is now our twisted commercial logic, driven by the forces of infinite debt (we have no choice now but to power on to the bitter end
Norman Pagett – “the focus of our current system seems to be the ongoing consumption of energy” to deplete easy FF as soon and rapidly as possible without any technologically-working safety-net to be left behind for the masses – one may safely think?
I don’t think that there can be a technologically-working safety net.
as Gail points out…there is no technological safety net—there can’t be, because ‘technology’, in the context of the way we exist, can only be a product of energy systems–ie oil coal an gas.
our danger lies in the fact that the vast majority of people are totally convinced that it works the other way round, that ‘technology’ will keep our energy dense system going, even when there’s no energy going in.—”they” are bound to come up with something.
remove oil coal and gas, and the only technology we have is that of the blacksmiths forge, the farmcart and the sailing ship.—there may be other things—suggestions welcome.
that ‘majority’ are going to get seriously annoyed when’they’ dont deliver that tech-myth, because living conditions will drop below zero.they are going to fight to survive, and that’s when things will start to get very unpleasant.—for everyone
Norman and Gail – I would say, free fossil fuels from price-fixing and looting sachems and humans will come up with viable technological solutions that make what has left of FF reserves last for another 3000 years.
No magic humans can use to cheat Physics, but energy scarcity will motivate them to come up with the best of energy-management processes. Planting a trillion tree a year is one of them (instead of cutting hundreds of thousands trees every day).
https://www.theguardian.com/environment/2017/dec/14/eu-must-not-burn-the-worlds-forests-for-renewable-energy
https://www.theguardian.com/environment/datablog/ng-interactive/2018/mar/06/land-clearing-in-australia-see-how-cleared-areas-compare-with-your-home-town?utm_source=esp&utm_medium=Email&utm_campaign=GU+Today+AUS+v1+-+AUS+morning+mail+callout&utm_term=266486&subid=25047978&CMP=ema_632
No. The physics of the situation says that it is energy per capita that matters. It needs to keep increasing. There are too many dissipative structures that need to keep being fed energy products and also needing to be replaced. Not to mention the problem with all of the debt outstanding.
Energy2
as ive said before–our entire industrial infrastructure is dependent on converting explosive force into rotary motion. I will explain as clearly as I can
it’s important to consider just how radical that is—even if it is mine own observation–, you read it on OFW first, so pause and consider it for a moment
therefore—if we can accept that as an immutable state of affairs (and I’m willing to be proved wrong–but so far not)–then whatever ”technology” man comes up with, must replicate that –ie, the provision of the forces we need to sustain ourselves. (moving stuff from a to b basically)
we now have the ‘technology’ to recognise that the physical forces that govern our lives are prevalent throughout the universe—everything functions on the same laws, everywhere. Planets, stars etc. The same elements are out there. Kryptonite doesnt exist. We know that.
Technology functions through use of physical materials. We know all the elements that are in existence
there are no ”new” technologies out there to provide our utopia, everything is governed by what acts upon us. essentially gravity, wind resistance, entropy and so on—these are permanent and cannot be overcome other than by energy input. The more we want to lift free of gravity–the more energy (explosive force) we have to feed into the system.
fossil fuels fix their own price, by the ease by which they can be extracted balanced by the rate at which we can burn it—it really is that simple.
back in the 30s, there was so much oil we didn’t know what to do with it,
https://www.economist.com/news/business-and-finance/21637484-too-much-oil-flooded-world-early-1930s-contributing-deflation-oil-gluts-great
excess oil crashed the price
having unlimited oil did not ease the great depression, because we did not posses sufficient means to burn it. You ease depressions by consuming energy=creating employment=paying wages in an endless circle—–break the circle and the ‘economy’ falls apart.
burning it in WW2 ended the 30s depression–how? by forcing us to build millions of fuel burning wartoys, and provide jobs for everyone in building them—and then exploding them
planting a trn trees a year will use up living space. Our forbears harvested trees to do what oil did later–making charcoal to make iron
as a final thought—our industrial civilisation might have 20/30 years momentum in it. perhaps less. That means that any ‘new’ technology can only be derived through the industry that exists ‘now’
but that ‘new technology’ isnt even in the desgn phase yet, let alone being built. So far no one has even thought of anything beyond what I have outlined above
(and I havent gone into the debt factor outlined by Gail)
wish science I’m afraid. I seriously wish it wasn’t
Our oil glut problem in the 1930s arose from wage disparity (and too many without jobs) as far as I can see. We again have the wage disparity problem now.
as i see it, we didnt have enough ‘machines’ in the 30s to burn the oil we were producing
all our employment is derived from operating machinery and getting paid to do that.
we spend our wages on goods and services produced by still more people who operate machines and receive wages.
this makes us prosperous and well fed, so we have more babies, who also operate machines and get paid,
you see where this is going?
I looked at life expectancies. They were rising rapidly between 1900 and 1930. Families had a lot of children back in these days. Many more of them survived to maturity. Families with many children were in some sense poorer, since the output of a frm still would need to support the family, no matter how large. This contributed to the problems of the era as well. It is hard to keep resources per capita up, when the capita part is rising too fast.
i agree with your line of thinking up to a point
my gparents had 9 kids–the boys went into coalmining, extracting energy
most of the girls went into ‘service’—basically skivvies in big houses. they were acting as ‘machines’ consuming energy— because there were no labour saving devices–only human labour.
as more and more gadgets came on the market, more and more people were required to make them—my mother eventually made shoes in a shoe factory—but that could never make her a cobbler—she operated machines that required an industrial system to make them
that was in the 20s/30s
My main point was that machines begat machines in all directions.
The cobbler making 1 shoe at a time couldnt afford to buy much other that basic sustenance. Somebody making 000s of shoes began to see a bit of surplus in wages—this primed the economic pump for all of us, and ”machines” became gradually cheaper in real terms
but machines consume fuel—so the more machines, the more fuel we had to find.—forever
Right. Back in the 1930s, the amount of energy supplies that people around the world could afford to buy was pretty low. Part of this had to do with coal peaking in the UK. I believe Germany was having some difficulties as well. Coal was available, but it cost more to extract than people could afford to pay for goods made with it.
Without coal pulling the economy along, it became difficult to use as much oil. I don’t know about relative costs back then. I know that now coal has been used to “average down” the cost of energy products. Citizens cannot afford too expensive a “mix” of energy products. This is why China could do so much better than the US and Europe when oil prices soared. Greece, with all of its tourism and oil fired electricity (for islands) was especially hurt by high oil prices.
Norman – “..there is no technological safety net—there can’t be…” is another extreme.
Free FF from price-fixing and looting schemes and you’ll see how humans manage and live up adapting very well with scarcity. Then what’s left of FF reserves now can be a huge energy catalyst to carry on prosperity for another 1000 year.
“..our entire industrial infrastructure is dependent on converting explosive force into rotary motion..” – Again, Free FF from price-fixing and looting schemes leaving FF resources traded on abundance or scarcity basis and our entire infrastructure will immediately self-adapt intelligently.
FF don’t have to make us so unintelligent we cannot change an infrastructure but only destroying it to ground-zero by the agency of Collapse.
In a self-organized networked system, scarcity produces wage disparity. It doesn’t necessarily produce high prices. Scarcity also tends to lead to complexity (high tech solutions and globalization). This too leads to wage disparity. It is the inability of governments to collect enough taxes from the many low-wage workers that brings the system down, in many cases. There are many related things that could bring the system down as well.
You have listened to Peak Oilers too much.
Gail – “scarcity produces wage disparity…: Wage disparity is better than collapse. Today, the media systemically traumatising the world that most of the wealth is given to 1%. Is this the wage parity we fear to lose?
Thinking of solutions to the energy predicament doesn’t mean we need to keep everything ‘as is’ and that is the safety-net mind set that many are pathologically resisting it, tooth and nail, favoring what is called ‘Collapse’!
If this is true, no wonder the world has done nothing since 1865’s Jevons but waiting for the Collapse to come.
Wage disparity causes collapse. We are following the path of the 1930s. There are other outcomes, admittedly–war, lasting Depression.
Given the way the system is put together, collapse seems the likely outcome. But war is another possibility, before collapse.
I’m partial to WW3 which would last about as long as it takes for the giant flocks of nuclear missiles to crash around the world… then collapse…
The incineration effect would save us a whole lot of suffering.
And oh what a way to go out … the most ruinous, vindictive species the planet has ever known… gone in a blaze of glory taking everything but the cockroaches with us…
Not that Mother will notice… she’ll be back in business in a few thousand years… introducing new life forms
The cost of driving a Tesla. Here are some inventory numbers.
Year . Model . Mileage . Price
2015 Model S. 51K. 26300
2013 Model S Base. 51K. 36995
2013 Model S 85 110K 39899
2013 Model S 85 73K 42995
2014 Model S Perf. 13K 57900
2015 Model S P85D 12K 81955
2017 Model S 90D 109000
I don’t care how much you saved on “gas”. Oh, and most bought on credit, so add to this the interest you paid each year. Yeah baby. This is one of the most expensive car to own and drive. Period.
A sobering perspective:
“…The lesson of history is clear: Trade wars have no winners. And they are certainly not good. They tend to damage the economies of all countries involved, raising tensions and increasing the risk of international conflict.
“The last full-blown global trade war was sparked by the infamous Smoot-Hawley tariff of 1930. As the U.S. slid into the Great Depression, two members of Congress introduced a bill whose goal was to protect struggling American farmers by raising tariffs on agricultural imports. As the bill moved through Congress, the limited farm protection bill snowballed into a protectionist behemoth, raising nearly 900 tariff lines covering 20,000 agricultural and manufactured products. Over the objections of economists, trade advisors, and foreign governments, President Herbert Hoover signed the bill into law.
“The reaction from around the world was swift and punitive. Canada, America’s leading trade partner at the time, imposed retaliatory tariffs that cut U.S. exports to Canada by half. Several other European countries enacted protectionist policies in retaliation to the new U.S. tariff. A trade war had begun.
“Who won this war? As the tragedy of the interwar period makes clear, everyone lost. In the U.S., the Great Depression worsened, and economists agree that trade protection not only deepened the country’s economic collapse but prolonged it. Global trade almost completely collapsed and the tariff was likely responsible for about half of the free fall. U.S. exports fell by about 40% over the course of the next year, crushing American industries.
“U.S. imports fell by nearly the same amount, devastating the economies of our trading partners. These dire economic straits around the world increased antagonisms between countries, led to nationalist economic policies designed to impoverish other nations, facilitated the rise of fascist strongmen promising to restore economic growth by any means necessary, and contributed to the outbreak of World War II…”
http://fortune.com/2018/03/06/trump-trade-war-smoot-hawley-steel-aluminum-tariffs/
A trade war has been in progress for 20-30 yrs. Who are you kidding?
The nature of the trade ware has substantially changed, however.
In the 1990s and early 2000s, we very rapidly ramped up trade, under the excuse that we were trying to cut carbon emissions (locally). Of course, world carbon emissions increased, as coal burning increased in China, India, and other countries.
Now we are reaching a problem of increased wage disparity in Advanced Countries, thanks partly to competition for low wage jobs. Governments are under pressure to cut taxes, because companies that actually make anything physical have difficulty making an adequate profit. The US has actually made tax cuts; some European countries are looking at tax cuts. Japan has not had adequate taxes for years.
Facing a different set of problems, one view is that tariffs can be helpful. Under this view, local jobs should increase. It should be possible to pay local workers more. The tariffs will, in theory, help offset the loss of other tax revenue. Of course, we are dealing with a self-organized system. The outcome is more complex than this.
The problem, ultimately, is that there is not enough to go around. This is what causes resource wars. Trade wars are a different version of resource wars. They seem cheaper to fight than “hot” wars.
https://imgur.com/a/Wcqhu
According to Wikipedia, https://en.wikipedia.org/wiki/Frédéric_Bastiat
I doubt that Roman legions went out to conquer other lands because someone was unwilling to trade with them. They went out to conquer and pillage resources.
Carl Marx Loved free trade because it created tension between workers and capitalists. Free trade sacrifices labor in favor of global capital. It’s modern form is nothing but labor and net energy arbitrage. That being said there is no magic solution under which everything works out – we live in a finite world and consequences will obtain.
“That being said there is no magic solution under which everything works out ” – that is the predicament. More cheap energy would be a short term “solution”. Inevitably though more cheap energy would mean an even larger population and a much higher place from where to fall when the cheap energy runs out. Infinite cheap energy would cook us for sure….literally. So, I guess there really is no magic solution at all.
Good points. It is labor that loses out under free trade. Capitalists win for a while, especially when they have control of investments in low cost (labor and energy) areas.
In 2009 at the London summit the G20 leaders issued a statement:
“We will not repeat the historic mistakes of protectionism of previous eras. To this end:
“We reaffirm the commitment made in Washington: to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO) inconsistent measures to stimulate exports. In addition we will rectify promptly any such measures. We extend this pledge to the end of 2010;
“We will minimise any negative impact on trade and investment of our domestic policy actions including fiscal policy and action in support of the financial sector. We will not retreat into financial protectionism, particularly measures that constrain worldwide capital flows, especially to developing countries;
“We will notify promptly the WTO of any such measures and we call on the WTO, together with other international bodies, within their respective mandates, to monitor and report publicly on our adherence to these undertakings on a quarterly basis;
“We will take, at the same time, whatever steps we can to promote and facilitate trade and investment.
And now here we are less than ten years on:
“The director-general of the World Trade Organisation (WTO) is urging President Donald Trump not impose steep tariffs on aluminium and steel exports, saying that doing so could lead the world into a “deep recession”.
“”An eye for an eye will leave us all blind, and the world in deep recession,” Director-General Roberto Azevedo told members of his organisation Monday. We “must make every effort to avoid the fall of the first dominoes.””
http://www.independent.co.uk/news/world/americas/us-politics/trump-tariffs-recession-us-imports-aluminium-steel-world-trade-organization-warning-a8240941.html
Most eu and Asian countrie sd have tariffs and major protectionism. It’s high time the us a protected it’s manufacturing. We should stop trading with non-democracy countries and countries who’s work er rs earn less than equivalent 5 dollars per hour.
I don’t know where to begin … so I just won’t
Remember Bush’s 2002 steel tariffs? His chief of staff warns Trump not to do the same.
https://www.myajc.com/news/remember-bush-2002-steel-tariffs-his-chief-staff-warns-trump-not-the-same/06X8tTk2YGF23bNVKnEJ1L/
When there is not enough energy products to go around, then protectionism “makes sense,” especially from those adversely affected by wage disparity. Wage disparity becomes too much of a problem.
Free trade is a luxury from the time when energy per capita was rising sufficiently to keep the world economy growing. Now the world economy is fighting collapse, although it is not understood that way. Cutting taxes is a sign that local economies are becoming too poor to support their governments. Even China going to a ruler for life looks like an energy saving approach. We are approaching the time when the world economic system seizes up.
“Now the world economy is fighting collapse, although it is not understood that way.”
QE, cutting taxes, worldwide debt load massively increasing, trade war initiated, more and more people just barely making the bills, oh yeah, I’d say fighting collapse is apt.
Looks like Canada is going to join Australia in chickening out of a hike in interest rates:
“Investors have been paring back the odds of rate hikes in recent weeks on the back of a run of soft economic data, global market turmoil and growing geopolitical concerns that are expected to heighten Poloz’s already-elevated levels of caution with tightening monetary policy further.”
http://business.financialpost.com/news/economy/trump-trade-threats-will-likely-amplify-polozs-caution-on-rates
Australia has some sense. Of course, if there are too many debt securities dumped onto the international marketplace, it is possible that all interest rates will rise, whether or not Australia wants that outcome.
“As if a brewing trade war wasn’t enough to worry about, investors also need to be alert to the threat of a major currency conflict.
“BOJ Governor Haruhiko Kuroda can deny it, but the central bank has every interest in seeking a weak yen. Japanese corporate earnings are highly cyclical: On a market-weighted basis, companies on the Topix index derive more than 37 percent of their revenue from abroad, data compiled by Gadfly show. A strengthening yen can cause stocks to plunge, depressing consumption and tipping the economy back into deflation.
“With the Topix down more than 10 percent from its January high, that’s no idle threat. CPI ex-food, the BOJ’s inflation metric, was 0.9 percent in January, still nowhere near the 2 percent target that was last breached in 2015. Kuroda’s domestic toolbox, meanwhile, is starting to look empty. With a record 40 percent of government bonds already in its hands, the central bank is running out of assets to buy.
“Desperate times call for desperate measures… ”
https://www.bloomberg.com/gadfly/articles/2018-03-07/a-currency-war-is-coming
Of course, if Japan gets what it is looking for, namely a yen that is much lower, it will be much more difficult for citizens afford the goods they buy from outside.
Right and as a major energy importer you’d imagine a weak Yen would be a net negative.
“Bursting property bubbles, when they happen, hit banks hard. With rates starting to rise around the world, artificially inflated property prices may be running out of excuses to remain bubbly.”
https://seekingalpha.com/article/4154023-will-rising-rates-pop-worlds-housing-bubbles
Excellent point. False high housing prices are more to blame for economic problems in usa than oil prices. The Fed should just keep prime rate at 5% and stop messing with it.
My last family member that lived in Vancouver has sold for 2 million bucks and moved although not a dump. It is what I call a tired house…no granite counter tops 1950 ish cupboards and the like.
The company that bought it is keeping it vacant.
They love the house and cant understand why someone is not living in it.
Honestly who can afford 100k a year mortgage.
Toronto housing market deflating quite dramatically:
“The number of sales in Toronto and its surrounding areas fell 34.9% year-over-year to 5,175 in February, while the average sales price dropped to C$767,818 (US$595,051), a 12.4% decline from the same period in 2017.”
https://www.mansionglobal.com/articles/90571-toronto-home-sales-slump-35
The issue sounds like mostly a higher interest rate issue. Given the prices of the properties, they seem like they are probably high relative to incomes as well.
From dogs fighting to….
The entire video…
https://sofrep.com/100433/breaking-footage-of-isis-ambushing-u-s-special-forces-in-niger/
Djibouti wants to kick the US military out in favor of China’s military.
US General: ‘China has totally outspent us, they are actually investing in Africa and its people, building shopping malls, bridges, football stadiums, we can never match that’
https://www.nytimes.com/reuters/2018/03/06/world/africa/06reuters-usa-china-djibouti.html
Exactly how the British expanded their Empire in the 18th century:
‘Lovely place you’ve got here! We’ve just come to do business, and here are some gifts’.
A little later:
‘Hmm, security’s a bit of a problem isn’t it? We’ll just bring in some troops, just to be on the safe side. What helps us, helps you ‘.
Even later:
‘Custody is for your own good. it was all a little bit too much for you wasn’t it? We’ll take care of everything’.
Of course, China isn’t imperialistic, it’s all a new model of international brotherly co-operation…….
+++++++++++++
The old saying: “You catch more flies with honey than you do with vinegar” seems to apply here. Watch out the US is spreading democracy again.
If the dense population in China and resources are now remotely controlled, directed and utilised to devastate the Middle East (who else?) and others for FF resources, like how Moscow has been summoned to send its troops to Kabul in 1980 (claimed the US Engineering Corps has patched the massive road network from the border to the capital, shortly before the invasion) and then to Syria after 2011 – this is very conscious method of conserving energy waging War.
If we are in an open market system, according to the common perception, and all resources, including FF, are sold freely, why China needs to waste energy and take Djibouti for itself?
How the Guardian’s report reconciles with the fact that when you purchase a piece of machinery from a Chinese factory today (in fact, since the 1970s), you fill the bank-order for the transfer to go to a New York bank, and the factory’s name just as an associate?
If you really ask the population of the Middle East, Djibouti included, to give up peacefully everything the War aims to take from them forcefully, they will submit – they do NOT have anything National left in their possession or service!
The risk is that all this choreography might be coming from a plan that is wasting very precious FF energies kicking and kicking a dead carcass, time, time and time again.
Me and the dawg are watching videos… she didn’t care much for the Carlin channel … but she was enthralled with any videos involving dogs barking and growling….
This was like a suspenseful movie for her…. she was on the edge of her seat