# How the Economy Works as It Reaches Energy Limits — An Introduction for Actuaries and Others

Why have long-term interest rates generally fallen since 1981? Why have asset prices risen? Can these trends be expected to continue? The standard evaluation approach by actuaries and economists seems to be to look at past patterns and assume that they will be repeated.

The catch is that energy consumption growth plays a hugely important role in GDP growth. It also plays an important role in interest rates that businesses and governments can afford to pay. Energy consumption growth has been slowing; it is hard to see how growth in energy consumption can ramp back up materially in the future.

Slowing growth in energy consumption puts the world on track for a future like the 1930s, or even worse. It is hard to see how GDP growth, interest rates, and inflation rates can ramp up in the future. More likely, asset price bubbles will pop, leading to significant financial distress. Derivatives may be affected by rapid changes in prices and currency relativities, as asset bubbles pop.

The article that follows is a partial write-up of a long talk I gave to a group of life and annuity actuaries. (I am a casualty actuary myself, which is a slightly different specialty.) A PDF of my presentation can be found at this link: Reaching Limits of a Finite World

Slide 1

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After the audience had a chance to answer this question (mostly with yes), I gave my answer: “Yes, indeed, it is possible to build a model that gives misleading results, and not understand the situation.” For example, a flat map works as a perfectly adequate model in some situations. But when longer distances are involved, a globe is needed. A two-dimensional model works for some purposes, but not for others.

Slide 5

The model in Slide 5 is the familiar Supply and Demand model used by economists. According to the model, if Demand increases from D1 to D2, then price will increase from P1 to P2. The rising price, in turn, will allow the quantity produced to rise from Q1 to Q2, based on the upward sloping supply curve S. This model is true in some cases, but it is not always true.

Supply and Demand Are Both Affected by Reaching Limits

As the economy approaches energy limits, lack of sufficient growth in energy consumption affects both Supply and Demand. Diminishing returns leads to high costs on the Supply side. Because of this, the cost of producing oil and other energy products tends to rise.

At the same time, businesses find that they cannot pass on these higher costs to their consumers because the wages of consumers don’t rise with rising energy costs. Diminishing returns acts like growing inefficiency; it takes more materials, more labor, more tax dollars, and more debt to produce the world’s overall mix of energy products, leaving a smaller amount of resources for producing end products (such as homes, cars, and bicycles) that consumers really want.

Persistent high energy costs lead businesses to try to find workarounds to reduce total costs. A major target for cost reduction is labor costs. If some labor costs can be replaced by lower-paid labor from overseas, or by robots, the company can perhaps make a reasonable profit, even with higher prices for oil and other energy products. The catch is new lower-cost labor force does not create as much Demand for goods and services as was available before jobs were replaced by robots or sent overseas. Workers in China and India will buy some goods and services, but the quantity will likely be lower than if the jobs remained in the US, Europe, and Japan.

We end up with a tug-of-war between the high prices that the producers of energy products need and the low prices that the many low-wage workers around the world can afford. Energy products are used in making pretty much everything, including food, homes, cars, and computers. As young people need to live with their parents longer, and as demand moves to lower-waged countries overseas, the lack of buying power tends to pull energy prices down below the cost of production. Energy prices below the cost of production are just as much a product of reaching energy limits as high energy prices!

Peak Oil is Another Two-Dimensional Model

Before we go on, I should probably offer some more explanation. Some of you may have thought that I would be talking about the Peak Oil story today. I consider the Peak Oil story to be another two-dimensional model. It gives some insights, but it really does not give a good explanation of what can be expected as we go ahead. Its emphases on oil and on high prices are both wrong, in my opinion.

Geologists coming up with the Peak Oil model relied on the incorrect Supply and Demand model of economists. They did not understand that both Demand and Supply are affected, as energy limits approach. They also never considered what the energy needs of the economy really are–total energy consumption needs to grow, if enough goods and services are to be produced for the growing world population. Rising energy consumption is also needed to keep commodity prices high enough to keep production from collapsing from low prices, due to inadequate Demand.

Many of you have heard the saying, “As you sow [seeds], so shall you reap.” In other words, the effort you put in can be expected to correspond to the end product that is produced. This saying is somewhat true if an economy uses only human labor to produce goods and services. For example, if a person digs a ditch for five hours, the result will correspond to effort put in. Increasing the hours of digging to six can perhaps add 20% to the length of ditch that can be dug. (There is the detail that it even takes energy products to make a shovel. Perhaps the example should be digging a ditch with a stick, and thus using only human labor!)

If a person really wants to dig a ditch quickly, he needs ditch-digging equipment and diesel fuel to operate the equipment. The ditch-digging equipment is made with energy products; it also uses energy products while it is operated. If energy consumption per capita is rising, then businesses, on average, can use increasing amounts of energy to increasingly leverage the labor of the workers they hire. This seems to be what leads to productivity growth.

This is why I talk so much about energy consumption per capita, and the importance of falling prices of energy services (including efficiency gains) to encourage the growth in energy consumption. One example of energy services (whose costs need to fall) would be the cost of heating a 1,000 square meter home (including efficiency gains in furnaces and insulation). Another example would be the cost of transporting 100 kilograms of grain 100 kilometers.

Slide 6

In fact, over time, the cost of energy services has been falling. The fall in costs more than offset the growing quantity of energy consumed. Thus, the cost of energy services is becoming a smaller and smaller share of world GDP. This falling share of energy products as a percentage of the world GDP seems to be necessary, if the remainder of the world economy is to grow. If the cost of energy products starts to rise, it will tend to crowd out some of the discretionary goods and services that the world economy has been able to add, as the world economy has grown.

Higher Energy Prices Are Damaging to the Economy; Lower Energy Prices Encourage GDP Growth

Energy needs to be consumed by the system, whether workers dig ditches with shovels or with ditch-digging equipment. If energy is very expensive, it is likely that all that employers can afford is the equivalent of shovels for workers to work with. If energy becomes less expensive to use (including efficiency gains), then it becomes possible to scale up the use of tools using energy, and the economy can expand. As a result, workers can become more efficient, businesses can make more profits, and the government can collect more taxes. The falling price of energy services seem to be the major force underlying GDP growth.

Conversely, if oil consumption growth is constricted by a spike in oil prices, we know (based on the work of Economist James Hamilton) that the US economy tends to go into recession. Higher prices make it difficult for both businesses and consumers to buy energy products. Falling energy consumption is damaging to the economy, because the creation of goods and services depends on the use of energy products.

High Correlation Between World GDP and Energy Consumption

Slide 7

Energy consumption is not mentioned at all on the economists’ supply and demand model (Slide 5), but it is clear that energy consumption is highly correlated with economic growth. There is a reason for this: it takes energy products to make both goods and services. It even takes energy to heat and light an office for workers, and to make and power computers.

Economists tend to miss the connection between energy and the economy because they tend to perform their analyses on an individual country basis. The connection between GDP growth and energy growth is less clear on a country-by-country basis because individual countries can reduce their energy consumption by shifting some of their manufacturing to less developed countries, confusing the analysis. The International Energy Agency has concluded that higher oil prices can be expected to have an adverse impact on the world economy as a whole.

The Economy Is a Self-Organized System Operated by Energy

Slide 8

The reason for the strange behavior of energy prices near limits is because the system is very interconnected. It is a self-organized system that gradually changes over time. New customers are added over time. These customers are often also wage-earners. They decide what to buy based on their own wages, and based on other considerations, such as the prices of competing products and whether inexpensive financing is available.

Businesses make decisions based on what they think customers might want. They also consider products offered by competitors. Governments play a role as well, both in regulation and taxation.

Physics indirectly helps determine prices, wages, and profits, because the economy uses energy to make goods and services. If a rapidly growing amount of cheap energy is available, it becomes easy for businesses to make a profit and raise wages. As businesses grow, economies of scale tend to increase profits. Higher energy prices tend to reverse these beneficial effects.

Oil Prices Are Now Too Low for Many Oil Producers

Slide 9

If you are not familiar with energy price trends, it probably would be worthwhile to take a minute to look at the strange price pattern shown on Slide 9. If you are coming from a financial background, you will probably be familiar with the financial disruptions of 2008, but not the high oil (and other energy) prices of the same period. The steep drop in prices corresponds to the time of major financial distress.

Most United States infrastructure, such as interstate highways, pipelines, and electricity transmission systems, were built in the pre-1970 period, when the inflation-adjusted price of oil was generally less than \$20 per barrel. Thus, in a sense, most of the oil prices we are seeing in recent years on Slide 9 are high, relative to historical costs. The question becomes, “How high a price can the economy withstand?” It becomes very expensive to replace a worn-out pipeline built with \$20 per barrel oil using \$120 per barrel oil.

On Slide 9, prices required by oil exporting countries (such as Saudi Arabia, Venezuela, and Norway) seem to be well over \$100 per barrel. Such a high price is needed if these countries are to be able to collect enough tax revenue and also have funds for investment in new fields to replace depleting fields.

On the other hand, the economies of the United States, Europe, and Japan do very much better if oil prices are low. They would prefer prices under \$50 per barrel. This is the price mismatch mentioned on Slide 9.

Extended periods of low prices can be expected to lead to two adverse impacts over a period of several years:

1. Falling growth in energy production. Investment in new fields to offset declining production from existing fields is likely to fall. The big drop in oil prices occurred in 2014, and it is now four years later. Many analysts expect growth in oil production to slow in the next few years, because of inadequate investment. Coal, natural gas, and uranium have somewhat similar problems, with falling prices discouraging reinvestment.
2. Collapsing governments of oil exporting nations. Governments of countries that export oil are often very dependent on the high price of oil to collect adequate tax revenue. The central government of the Soviet Union collapsed in 1991, after several years of low oil prices. Lack of adequate tax revenue could cause a similar problem today. Venezuela is particularly at risk, but Saudi Arabia and many other countries could follow.

It is ironic that Venezuela reports the highest oil reserves in the world. These reserves can only be extracted if energy prices are much higher than today. This would seem to require higher wages of non-elite workers around the world. If wages were much higher in countries such as India and Nigeria, they could afford goods such as motorcycles and air conditioning, helping push up world demand for energy products.

Slide 10

It is clear that the growth rate of energy consumption simultaneously affects Supply and Demand.

An important point on Slide 10 is the fact that growing debt acts as a helper for energy consumption. It allows consumers to afford goods and services with their monthly wages, and it allows businesses to pay for new tools for workers over the lifetime of those tools. In a sense, debt is the promise of future goods and services made with energy products.

Money is a type of debt. We can print money, but we can’t print cheap-to-produce energy products. Thus, at some point, there can be a mismatch between promises of future goods and services and the quantity of affordable energy products available to create those goods and services. This is part of what is likely to cause debt defaults.

Slide 11

Slide 11 lists some of the things that seem likely as we reach the limits of cheap-to-produce energy supply. I will describe these issues more, later in this talk.

Slide 12

Slide 12 is an outline of the rest of the talk. This post primarily covers Points 1 and 2. Thus, this article relates primarily to GDP growth, interest rates, and asset prices. Slides are shown for Points 3 and 4 as well.

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In recent years, it has become increasingly apparent that the ability of humans (and pre-humans) to cook part of our food supply has had a major impact on our ability to be different from other animals. We could eat a wider variety of foods, and we could get more energy value from those foods. Our bodies could evolve in a very different way. Our brains could become bigger, and our jaws and gut could be smaller.

Slide 15

Even back in hunter-gatherer days, humans were using more energy than similar animals. Now, in the industrial period, we are using 80 times as much energy (=8000/100) as a human-like animal would use, considering the various types of supplemental energy available to us. Some people have described the situation as having 80 energy-slaves for each person. This makes it possible to do tasks, such as farming and digging ditches, in a more efficient way than using sticks as tools.

Slide 16

Besides the usual tools, we have many related ways of using energy, with the goal of eventually providing more goods and services. Energy can be used to organize data on computers. Energy can be used to provide advanced education on topics helpful to growing the economy. If individuals or businesses are paid wages or interest payments, they can use those proceeds to buy energy products, such as a new car, or an overseas vacation. Thus, energy consumption growth affects every part of the economy.

Slide 17

Growing debt is extremely important in growing the world economy. I describe the situation more fully in this article: What has gone wrong with oil prices, debt, and GDP growth?

Technology is what most people focus on, as being the way to move the world economy forward. However, it takes energy products to make the new machines made possible by technology. Without a steady supply of energy products, we cannot maintain existing roads, or the electric grid, or the internet.

Slide 18

Anyone who has purchased a home knows that interest rates are very important in determining what price of home a particular buyer can afford. Here I show a range of monthly payments, for a 30-year, \$300,000 mortgage at various interest rates. It is clear that a person can afford to buy a great deal more house at a low interest rate than a high interest rate. If interest only loans are available, costs are lower still.

Slide 19

Everyone who works with interest rates is aware of this pattern in 10-year US Treasury interest rates. The peak in interest rates was in 1981, and there has been a downward trend most of the time since that date.

Slide 20

The interest rates that regulators can easily adjust are short-term interest rates. When these interest rates are increased, they tend to induce recession. There may be a lag in timing. The increase in short-term interest rates in the 2004 to 2006 period seems to have been instrumental in popping the subprime debt bubble and bringing on the Great Recession of 2007-2009. This is my article relating to this issue: Oil Supply Limits and the Continuing Financial Crisis

Slide 21

When energy consumption is growing rapidly, and there are productive projects that can be added (interstate highway system, long distance electric grid, interstate pipelines, first-time telephone service for many people, growing number of trucks and airplanes), then it is possible for the economy to grow rapidly.

In this rapidly growing economy, the economy could easily ramp up long term interest rates without damaging the economy because the underlying growth rate was so high. In a sense, the higher interest rates were analogous to inflation affecting food and energy prices. There was so much growth in demand for goods and services that the economy could afford to pay rising interest rates during the period between World War II and 1981.

Slide 22

The period since 1981 is a period when investments have become much less productive, from a point of view of allowing more goods and services to be produced. Instead, growth is coming from selling more services to each other, and sending more manufacturing to lower-cost parts of the world.

Since 1981, we find ourselves with an increasing amount of old infrastructure that needs to be maintained. Fixing this infrastructure doesn’t really improve productivity. New investments simply keep productivity from falling.

One recent innovation has been the internet. It gives us more information, and it relieves us from the burden of having to use the phone book or go to the library. Thus, it makes us more productive. But in many ways, it is not as important as many earlier inventions, such as the internal combustion engine, the light bulb, and the telephone. There is a temptation to computerize all kinds of data and to expect data mining to solve all our problems. A person wonders what the true cost/benefit is.

Innovations in medicine now allow more 85-year-olds to live to be 86-year-olds and allow more cases of cancer to be cured. But the big changes, brought about by antibiotics and better sanitation, occurred before 1981.

Another growth area has been higher education. The payback is often wages that are barely high enough to live on. How are college graduates who cannot find high-paying jobs going to be able to repay their loans and still get married and have a family?

Admittedly, some investments have been productive. This is especially true when new factories, roads, and ports have been installed in emerging markets. But a large share of recent investments have been aimed at making vehicles more fuel efficient. Or trying to reduce CO2 emissions. These do not really have a payback in lower-cost goods and services.

Interest on debt can only be paid if the economy is truly growing, and thus has a sufficient margin to pay interest with. This seems to be less and less possible outside of emerging markets. I would expect that this is why long-term interest rates are persistently low.

Slide 23

The decline in the ten-year interest rates should make homes more affordable. The long-term decline in shorter-interest rates should make vehicles more affordable. In spite of this boost to the economy, US GDP growth rates have persistently fallen. World GDP growth rates have fallen as well.

Slide 24

There is relatively little storage available for commodities of most types, including oil. As a result, even a small change in demand can lead to a major price shift.

I show in Oil Supply Limits and the Continuing Financial Crisis that the peak in oil prices corresponded to the peak in US debt in several categories, including credit cards and home mortgages. Once US debt stopped rising, the demand for oil fell, and prices dropped precipitously.

Quantitative Easing (QE) by the US Federal Reserve began near the end of 2008. It acted to lower interest rates, especially long-term interest rates. These lower interest rates helped get oil prices back up closer to the level required by producers. But once QE stopped in 2014, prices slid back down. As noted earlier, recent oil prices are far too low for most producers. But they do help stimulate the economies of oil importing countries.

Slide 25

If a business adds debt to expand a factory, this may lead to more wages. The chart indicates that growing non-financial debt does not always lead to higher wages. Sometimes it leads to asset bubbles.

Slide 26

Disposable personal income (DPI) is income that individuals receive, including payments such as Social Security and Unemployment Insurance. This amount is netted out for taxes paid. If we divide DPI by population, we get per capita DPI. This amount is not inflation adjusted; it gives us an estimate of how much incomes have been rising, including payments made to compensate for inflation.

Clearly, there have been huge changes in the growth of per capita DPI over time. Prior to 1981, per capita DPI was rising rapidly, as more women joined the workforce, and as companies gave cost of living raises, in an attempt to keep their employees. In several years, per capita DPI was rising at over 10%.

Families with rapidly rising incomes were looking for ways to spend their new-found wealth. This seems to be at least part of the reason for the high inflation rates of this period. Without this rapid run up in DPI, it is hard to see how the oil prices spikes of the 1970s could have occurred.

Now, the economy has slowed greatly. DPI per capita is sputtering along at less than 4% per year. With this low rate of increase in funds available for spending, it seems like the current economy will not be able to support a big spike in oil prices.

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Slide 28

If the economy is not really growing, it is very difficult to pay interest. This is why a person would expect interest rates to roughly follow GDP growth. Back before 1981, GDP growth was significantly greater than 10-year Treasury yields. Since then, 10-year Treasuries have tended to yield a little more than GDP growth (including inflation). Very recently, the pattern seems to have returned to the pre-1981 pattern.

Slide 29

If interest rates are lower, more people can afford to buy a given house, or a piece of land, or shares of stock. The additional demand tends to bid up asset prices.

Slide 30

This should be clear from Slide 29.

Slide 31

Interest rate assumptions often were originally made when interest rates were higher.

Slide 32

Payments to individuals in a particular year act as a way of dividing up goods and services available in that year. If the share of goods and services going to those who are paid interest rises, it will mean fewer goods and services are available for others. History says that it is the non-elite workers that are most likely to be “shorted,” if there are not enough goods and services to go around.

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Even a decline in coal consumption is a problem, if it causes total energy consumption per capita to fall! Wind and solar cannot possibly make up the shortfall. Also, their installed cost is high, if the cost of intermittency workarounds is included.

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My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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### 1,963 Responses to How the Economy Works as It Reaches Energy Limits — An Introduction for Actuaries and Others

1. The US Dow Jones stock price is headed down today. Down -407 at this point.

West Texas Intermediate is shown at \$66.24

Brent oil prices seems to be \$75.11

• Davidin100millionbilliontrillionzillionyears says:

hmmm… interesting…

June 1st in 3 days…

2. lol—i was kidding

marital law and martial law are almost identical—just subtle differences here there—fewer firing squads—tho that might depend which state you live in, and how much you are worth dead

3. Baby Doomer says:

Hey Norm..You asked “What kind of martial law”? I think it will look similar to this movie trailer..

4. Baby Doomer says:

Investment in unconventional and conventional, oil and gas production, Energy Aspects (2018)

https://www.scribd.com/document/380471001/Investment-in-unconventional-and-conventional-oil-and-gas-production-Energy-Aspects-2018

• Baby Doomer says:

2019 project additions are the lowest this decade, just when underlying declines have doubled

5. Baby Doomer says:

Hurricane Maria ‘killed 4,600 in Puerto Rico’- 70 times the official toll, a Harvard University study says

6. Baby Doomer says:

Almost half of Fortune 500 companies were founded by American immigrants or their children

https://www.brookings.edu/blog/the-avenue/2017/12/04/almost-half-of-fortune-500-companies-were-founded-by-american-immigrants-or-their-children/

• JesseJames says:

Not surprising considering that other than American indigenous Indians, all other people in the US fall into the category of immigrants or their children.
We’re you expecting American Indians to have founded half of all Fortune 500 companies?

• Baby Doomer says:

The calculations didn’t go back that far..

Though accounting for less than 14 percent of the population, immigrants found almost a quarter of all new businesses, nearly one-third of venture-backed companies, and half of Silicon Valley high-tech startups..

7. Baby Doomer says:

Billionaire George Soros: ‘The European Union is in an existential crisis’

https://www.marketwatch.com/story/billionaire-george-soros-the-european-union-is-in-an-existential-crisis-2018-05-29

8. CTG says:

If Italy goes down this time, then probably Adonis’ 1st June prediction will be spot on.

• Davidin100millionbilliontrillionzillionyears says:

and now, things are gaining downhill momentum, but no crash is imminent…

June 1st 2019, who knows?

• Slow Paul says:

June 1st 2029 baby! June 2nd 2029 will be a great time to buy in.

• Davidin100millionbilliontrillionzillionyears says:

okay!

we will be all set for the 2030s…

9. The WSJ is also saying, Red Flags Are Suddenly Soaring in Markets
Europe’s deepening troubles and disappointing global growth signals are sparking a rally in haven bonds

Basically, investors are selling Italian bonds (raising yield) and buying German bonds (reducing yield). Investors are also buying US treasuries. The article concludes:

Italian bonds and stocks are just the latest in a string of risk-seeking trades that have run into trouble in 2018. It may be some small relief that haven bonds are now providing an offset. However, it is also a sign that the benign conditions that prevailed for investors until recently are under heavy fire. The market ride is set to get bumpier.

10. I see that the WSJ “Heard on the Street Column” is saying,A Worrying Turn Ahead for Auto Loans
Auto loan delinquencies are too high considering the strong economy

It also says that credit card delinquencies are too high relative to strength of the economy. Growth in both auto loans and credit card debt is still positive, but the rate of growth is slowing.

• Harry Gibbs says:

One crumb of comfort is that the dovish voices within the Fed seem to be getting louder. Perhaps they are paying attention to consumer debt levels, auto-subprime, the emerging markets etc. I have no doubt that we will hit GFC 2.0 if they do go ahead and put up rates three more times this year.

“The U.S. Federal Reserve will have difficulty raising interest rates significantly beyond the settings of its Japanese and European counterparts, which are still pursuing accommodative policy, St. Louis Fed President James Bullard said on Tuesday…

“He said in a speech earlier in the day that U.S. interest rates may have already hit the “neutral” level that neither encourages nor discourages economic activity.

“”It is hard for U.S. rates to get too far out of line with the global rate situation, and obviously both the (Bank of Japan) and the (European Central Bank) are continuing very accommodative policies,” Bullard told reporters.”

https://www.cnbc.com/2018/05/29/feds-bullard-its-difficult-for-the-us-to-raise-rates-far-beyond-other-central-banks.html

• Harry Gibbs says:

“Here’s what [Neel] Kashkari told TheStreet when asked if the fed risks moving too fast to hike rates:

““I think the risk is that we do it too fast unnecessarily and we shorten the economic recovery. One thing I look at is the shape of the yield curve. And the yield curve has been flattening quite a bit. The inverted yield curve is the single best predictor we have of recessions. To me, it’s an indicator of the Fed over-tightening.

““So if we keep raising rates despite the fact the yield curve is flattening, if the long end of the curve does not move up, if inflation does not emerge and we just keep raising rates we could end the expansion by being too aggressive on monetary policy. So it is something I am worried about, and I pay close attention to.”

“If the fed does stay the course on rate increases, Kashkari worries that a recession in 2019 is possible:

““We all say we are data dependent at the federal reserve. If we are in fact not data dependent and we are just committed to raising rates and the data doesn’t support it, then certainly that recession is possible. There are other risks as well. There could be trade outcomes if we were to go into a full-fledged trade war with China and other geopolitical risks. There are other risks out there, and some are very hard to predict.

““But one thing we should understand is the risk of the fed overdoing it, and that’s why we need to remain data dependent.”

“The fed is widely expected to increase rates at its next policy meeting on June 12-13. But markets are betting on a more hawkish fed for the balance of the year, too. Fed fund futures see an 80% chance of a rate hike at the July 31-August 1 policy meeting, and near 50% chances of increases at the last three meetings of 2018.”

https://financialtribune.com/articles/world-economy/87384/fed-could-ruin-us-economy-in-12-months

• Fast Eddy says:

Shorten the recovery… recovery????

• Baby Doomer says:

Considering the strong economy..they don’t even realize their article contradicts itself.. Typical Murdoch media…

• Fast Eddy says:

We are now entering the riple speak zone….

11. Fast Eddy says:

Smite – can you touch base and tell me where I should put the socket for Lastcall to ‘plug in’

I understand you have wide experience with robotic women…. can you send me a diagram of where I should place the socket for optimum access.

12. Harry Gibbs says:

“Five years after the 2013 “taper tantrum”, the world is on the brink of yet another emerging market meltdown whose twin epicentres are now Istanbul’s Bosphorus and the Argentine pampas. I expect another 1980s-style intercontinental default wave in the emerging markets. Entire countries and banking systems will go bankrupt or, as my Chicago futures trading cronies used to put it, belly up. I predict the mother of all debt restructuring.”

13. Harry Gibbs says:

“While the on-again, off-again threat of an all-in trade war continues to grab the headlines, a more subtle shift is pointing to the brakes being applied the global economy. A number of important measures of international trade have suddenly weakened.

“As well, industrial activity as measured by purchasing managers’ index surveys have backed up the idea of the so-called synchronized growth spurt is starting to look like a synchronized slowdown, ABC online reported.”

• That title is great. Describes what is happening.

I notice too, that The Number of Female Chief Executives is Falling

According to the New York Times, the number of female chief executives of Fortune 500 companies declined by 25% this past year.

I wonder whether adding female executives was a fad that could be followed in good times, but not a fad to be followed as the situation gets tighter.

• Fast Eddy says:

Perhaps they realized that working 7 days a week 24 hours on …. despite the nice pay packet… was not all it was cracked up to be…. and they decided they wanted to breed afterall…. and spend some time with their offspring…

14. Harry Gibbs says:

“Britain came within hours of “the breakdown of law and order” on the day the government was forced to bail out RBS at the heart of the 2008 financial crisis, Britain’s chancellor at the time, Alistair Darling told Business Insider.

“Darling, now a member of the House of Lords said that there were genuine concerns prior to the bail out of RBS in October 2008, that the collapse of the bank could lead to violence in Britain’s streets.

“”Gordon [Brown] and I were faced with the imminent collapse of what was then the world’s biggest bank, we were very clear that if RBS had collapsed, it would have brought down the entire system with it,” Darling told Business Insider in an interview.

“Had the government failed to bail RBS out, Darling said, it “would have had to close its doors, switch off the cash machines.”

“That in turn, Darling said, would have caused “complete panic” among the British public.

“”I think you’d have had complete panic with people realising they couldn’t get their money,” he said.

“”If you can’t get your money you can’t buy food, you can’t buy petrol etc. There was a grave risk of going from an economic crisis to a political crisis, where you have a breakdown of law and order. We were that close to the brink…””

‘It sent a tremor down my back’: Alistair Darling reveals how Britain came within hours of the ‘breakdown of law and order’

Will Martin

May 28, 2018, 7:30 AM 3,286
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Alistair Darling
Britain’s Chancellor Alistair Darling leaves the Treasury to go to the House of Commons to deliver his pre-budget report, in central London November 24, 2008. REUTERS/Stephen Hird

Britain came within hours of the breakdown of law and order during the 2008 financial crisis.
That’s according to ex-chancellor Alistair Darling.
Darling told Business Insider that had the government not bailed out RBS, panic would have gripped the country.
“It sent a tremor down my back,” Darling said of a call from RBS’ chairman warning him the bank was on the brink of collapse.
You can read the first part of Business Insider’s interview with Darling — where he warns that cyber attacks could trigger the next crisis — here.

Britain came within hours of “the breakdown of law and order” on the day the government was forced to bail out RBS at the heart of the 2008 financial crisis, Britain’s chancellor at the time, Alistair Darling told Business Insider.

Darling, now a member of the House of Lords said that there were genuine concerns prior to the bail out of RBS in October 2008, that the collapse of the bank could lead to violence in Britain’s streets.

“Gordon [Brown] and I were faced with the imminent collapse of what was then the world’s biggest bank, we were very clear that if RBS had collapsed, it would have brought down the entire system with it,” Darling told Business Insider in an interview.

Had the government failed to bail RBS out, Darling said, it “would have had to close its doors, switch off the cash machines.”

That in turn, Darling said, would have caused “complete panic” among the British public.

“I think you’d have had complete panic with people realising they couldn’t get their money,” he said.

“If you can’t get your money you can’t buy food, you can’t buy petrol etc. There was a grave risk of going from an economic crisis to a political crisis, where you have a breakdown of law and order. We were that close to the brink.”

RBS was the biggest beneficiary of the British government’s near £40 billion bailout programme during the crisis, which sought to stop the UK’s major lenders from going under. Nearly 10 years after the bailout, RBS is still majority owned by the British taxpayer.

“Darling described the morning before the bailout was announced as the “scariest moment” of the crisis, when he received a call from RBS chairman Tom McKillop while attending a meeting of European finance ministers.

“McKillop told Darling that RBS was “haemorrhaging money, and asked what we were going to do about it. I said ‘We’ve got a plan ready to go, how long can you last?'”

“”He said: ‘Until the beginning of the afternoon’ which was about three hours away. That was probably my scariest moment. You think about these things, you game plan them, but when someone rings you up and says its happened, it is scary. It sent a tremor down my back.”

“…”I was sent down to the local supermarket to get the rolls and the papers. My friend noticed they had an FT, so I bought it to see what was going on.”

“While reading the FT, Darling saw “coverage of the fact that a French bank [BNP Paribas] had stopped trading in two of its funds.” BNP froze withdrawals from three investment funds after U.S. subprime mortgage losses caused major market falls.

“”The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” the bank said at the time.”

• Fast Eddy says:

Forward that to chris martenson

• Lastcall says:

Haha I know this is a joke; ‘bought the FT’ to see what was going on?!! WTF

15. Harry Gibbs says:

“Italian bonds have witnessed one of their worst trading weeks since the euro zone sovereign debt crisis, with many traders getting a stark reminder of the volatility that once characterized markets in the region.

“On Friday, two-year Italian bond yields rose 35 basis points in one day — almost equivalent to the entire range of the year for U.S. 10-year Treasurys. This was the weakest session in five years and continued a month that’s seen these yields rise 70 basis points in total.

“Yields move inversely to a bond’s price and a spike higher is seen as investors feeling more concerned about lending to Italy’s government. More specifically, traders usually sell short-maturity paper when there are growing credit risk concerns at a sovereign level…

“Italian bonds have witnessed one of their worst trading weeks since the euro zone sovereign debt crisis, with many traders getting a stark reminder of the volatility that once characterized markets in the region.

“On Friday, two-year Italian bond yields rose 35 basis points in one day — almost equivalent to the entire range of the year for U.S. 10-year Treasurys. This was the weakest session in five years and continued a month that’s seen these yields rise 70 basis points in total.

“Yields move inversely to a bond’s price and a spike higher is seen as investors feeling more concerned about lending to Italy’s government. More specifically, traders usually sell short-maturity paper when there are growing credit risk concerns at a sovereign level.

“The original catalyst for the selling came from the populist parties hoping to take control of Italy after inconclusive elections in March. Lega and the Five Star Movement (M5S) plan to issue short-term bills to finance state activity in their economic policy proposals. Market participants were taken aback and many have interpreted that initiative as laying the foundation for a potential parallel currency in the future, further amplifying the potential new government’s collision course with the rest of Europe.

“But the fear has not been limited to short-dated paper. Ten-year Italian bonds have also came under pressure with yields topping 2.5 percent and are now trading at their widest gap with German paper in over four years.

“There is palpable anxiety in the market as Italy’s political future remains uncertain. Over the weekend, M5S and Lega looked to have failed in their bid to form a government after President Sergio Mattarella rejected their pick for economy minister due to his euroskeptic credentials. This has raised the prospect of a caretaker government to lead the country into yet another round of elections later this year…”

• Harry Gibbs says:

“Spanish prime minister Mariano Rajoy will face a vote of confidence in his leadership on Friday, a showdown that threatens to end six years of centre-right government in Madrid and intensifies the political turmoil in southern Europe.”

https://www.ft.com/content/9d91b30a-6262-11e8-a39d-4df188287fff

• Harry Gibbs says:

“It’s looking more and more likely that Italy is going to have to leave the euro soon, and Italian and eurozone stocks could get clobbered. Italian banks could be hit particularly hard.”

https://seekingalpha.com/article/4177623-yields-creeping-soft-underbelly-europes-axis-debt

• Harry Gibbs says:

“The need to withdraw from lax monetary policies has revived in European institutions a legitimate concern – probably 15 years too late – about the “doom loop” linking governments and banks, both held hostage by excessive debt. Over the past decade, few European governments have cut their debt burden, and with the ECB now tapering off its bond-buying program, commercial banks will now have to write down some of the government bonds held on their books.

“This could pose a real threat to the equity of some large banks. Euro area member states would find themselves in the ironic situation of offering bailouts to credit institutions that made the mistake of trusting their own governments. This devastating vicious circle is why they call it the “doom loop.””

https://www.gisreportsonline.com/the-doom-loop,2567,c.html

• Christiana says:

Never, ever will Italy be allowed to quit the Euro. If so, no more Euro at all.

• Ouch!

• Baby Doomer says:

He can go first…… bye

• Delusions?

• Fast Eddy says:

There was a time when if a CEO made comments like these… he/she would be terminated by the board… and forcibly interned in a nut house

No longer

• MG says:

He needs psychiatric help…

• Fast Eddy says:

I’ve been saying the same thing for a long time… why fly all the way to Mars when we have a desolate uninhabitable option without water or any other life… just a short hop away?

16. Baby Doomer says:

Public’s trust in self-driving cars is plunging – for good reason

http://driving.ca/auto-news/news/publics-trust-in-self-driving-cars-is-plunging-for-good-reason

17. Baby Doomer says:

“The easiest thing of all is to deceive oneself; for we believe whatever we want to believe.”

—DEMOSTHENES

• Davidin100millionbilliontrillionzillionyears says:

for BD believe whatever he want to believe?

18. Baby Doomer says:

Libya in chaos since overthrow of Kadhafi

• I wonder whether higher oil prices would help fix Libya’s problems. With low oil prices, even if production is fixed, there is not enough tax revenue to fix the country back up and keep it operating.

19. People may not pay to see the old and worn out Han Solo, and the drama queen Taylor Swift, but they are paying to watch BTS, a south Korean boy band.

Perhaps they are looking for something new?

Sorry. Those who can pay for things still can pay for it.

https://www.vividseats.com/concerts/bts-bangtan-boys-tickets/bts-bangtan-boys-prudential-center-9-29-2694880.html

Upper level seating is \$425. Americans being tapped out, fat chance.

20. Baby Doomer says:

Nissan to Cut North America Output as Sales Decline, Nikkei Says

https://www.bloomberg.com/news/articles/2018-05-29/nissan-to-cut-north-america-output-as-sales-decline-nikkei-says

21. Baby Doomer says:

Britain was hours from breakdown of law and order during GFC: Ex-chancellor

• Baby Doomer says:

Hank Paulson who was Bush’s treasury secretary wrote a book about the GFC..And he said that at one point things got so bad..He told Bush if he didn’t bail out the banks..The credit markets were going to freeze up..And he would have had to declare Marital Law and there would have been tanks roaming the streets of America to keep law and order…

• depends wat kind of marital law you have in mind

• Fast Eddy says:

Let me correct that…

Paulson informed Bush that the Fed was going to bail out the banks… and that he should get to make-up so at to be ready to appear on the Tee Vee … and relay the message to the people….

And he left out the part where he said — Oh Georgy — a long black with a dash of hot milk… and two brown sugars before you go ….

Yes sir – coming right up!

22. Davidin100millionbilliontrillionzillionyears says:

one more…

“”We are building the first Mars or interplanetary ship right now,” Musk revealed at the South by Southwest conference in March, noting its code name is BFR. The short-term goal he announced was to launch cargo vehicles to Mars by 2022 that would bring basic needs to build an infrastructure for future missions.”

“SpaceX began 2018 the way it ended 2017: Batting a thousand.”

(“batting a thousand” is an obscure reference to the game of baseball and means “performing at 100%”)

this is too good to be true!

I need to find another Roy Bennett quote…

• Davidin100millionbilliontrillionzillionyears says:

“Gratitude builds a bridge to abundance.” – Roy T. Bennett

• jupiviv says:

“I met a traveller from an antique land,

Who said—“Two vast and trunkless legs of stone

Stand in the desert. . . . Near them, on the sand,

Half sunk a shattered visage lies, whose frown,

And wrinkled lip, and sneer of cold command,

Tell that its sculptor well those passions read

Which yet survive, stamped on these lifeless things,

The hand that mocked them, and the heart that fed;

And on the pedestal, these words appear:

My name is Ozymandias, King of Kings;

Look on my Works, ye Mighty, and despair!

Nothing beside remains. Round the decay

Of that colossal Wreck, boundless and bare

The lone and level sands stretch far away.” (Shelley)

Marx was correct and always was, so was Keynes, and Malthus and Ludlum.

• that poem moves me every time i read it

• Fast Eddy says:

And I right now breeding a sheep with a solar panel and will have a sustainable energy solution by 2022. Guaranteed.

• Lastcall says:

How can I invest, and whats the limit?
Will it be green to identify it from the flock?
Where/how will we plug into it?
Can vegetarians take power from these?

• Lastcall says:

Need to get in at the grass roots…..

• doomphd says:

if that fails, you might consider a sheep jacket made of tiny PV panels. the US military was researching solar PV fabric worn by soldiers, which would power communications, GPS and other devices. the GPS would allow you to track your sheep in real time, or send data to your chip-implanted sheep dog(s), which would monitor your flock for you.

on rainy or cloudy days, you guessed it, small wind turbines that resemble pin wheels could be deployed.

• LOL!

23. Davidin100millionbilliontrillionzillionyears says:

more…

“On Thursday… Trump’s directive, where he called for the space agency to “return American astronauts to the moon, followed by human missions to Mars.”

“U.S. astronaut Peggy Whitson… told CNBC in an interview that another journey to the moon was advisable before aiming for Mars. There are lessons that need to be learned before undertaking a farther and riskier journey to the red planet, she said.”

“It means that entrepreneurs like Elon Musk, who boasted in March that SpaceX could be ready to send a rocket to Mars as soon as next year, will still need NASA to set the stage for the eventual exploration and colonization of other planets, Whitson said.”

“Elon says he’s going to get [to Mars] first, and that would be great, but there’s a lot of test” beforehand, she told CNBC. “In the future there will be commercial companies in space…”

eventual exploration and colonization of other planets!

it’s great to be alive!

• Lastcall says:

24. Davidin100millionbilliontrillionzillionyears says:

https://www.cnbc.com/2018/05/15/mining-asteroids-could-be-worth-trillions-of-dollars.html

“Minerals that lie in the belt of asteroids between Mars and Jupiter hold mineral wealth equivalent to about \$100 billion for every individual on Earth.”

prosperity for all…

yes, we live in such exciting times!

• Lastcall says:

We are in the wrong neighbourhood; time to shift this shiftless planet to the richness of the asteroids and away from these opioids!

Otherwise I will put my share up for sale; say at a discount of 99%..?
It can be yours for \$1 billion right now.

• good for a laff on a tuesday morning

25. Davidin100millionbilliontrillionzillionyears says:

May 28th…

US 10 year 2.89 %…

are you okay?

• Davidin100millionbilliontrillionzillionyears says:

Japan 10 year bond continues to be 0.0 %…

26. Yoshua says:

The Mandarin

I was hitchhiking from Vienna to Zurich…in the autumn…long time ago in the last century.

An elderly woman, an aristocrat, in an old Rolls Royce picked me up.

She asked me a few nervous questions. I responded. She placed a newspaper under my shoes, so that I wouldn’t ruin her carpet. And then we sat quietly and just enjoyed the the scenery of the Alps from Vienna to Zürich. No radio…no music…just silence…a few comments now and then. Sometimes it’s just nice to have another person in the room.

It was night time when we arrived to Zürich. I opened my sack and pulled out two mandarins and said:- I bought these mandarins in Venice. These are the nicest tasting mandarins that I have ever tasted. I will give you one of them.

She gave me the most beautiful smile that I have ever seen in my life, almost if I had remembered to conquer Italy for her…or if she was broke and I offered to pay for the petrol. She accepted the gift.

That was the only time that I payed for a ride.

• Slow Paul says:

Thanks for the lovely anecdote.

• Fast Eddy says:

Then what happened….?

27. Baby Doomer says:
• Davidin100millionbilliontrillionzillionyears says:

99% of millennials don’t have a clue about surplus energy and the FF basis of their prosperous lives:

http://www.cluelessmillennials.com

• Davidin100millionbilliontrillionzillionyears says:

I wonder who Haggler is…

• Davidin100millionbilliontrillionzillionyears says:

“Over one-fifth of U.S. millennials have not or are not sure if they have heard of the Holocaust.”

• Fast Eddy says:

Something positive out of the FB Generation

28. Baby Doomer says:

Many Americans are on the financial edge

https://finance.yahoo.com/news/many-americans-financial-edge-160823783.html

29. Baby Doomer says:

Inside billionaires’ bunkers where richest plan to sit out apocalypse in luxurious ‘doomsday’ dugouts – with swimming pools, cinemas and wine vaults

https://www.mirror.co.uk/news/world-news/inside-billionaires-bunkers-worlds-most-12612431

• Fast Eddy says:

Like being in a luxury prison… until death…

My suggestion to such people would be the take a different FE Challenge … before committing to this …

Try living in one of these things for a week…. completely cut off from all communication…. simulate the post BAU scenario…. I bet they would wish they were dead….

Oh… the boredom….

30. Third World person says:

India says it only follows U.N. sanctions, not U.S. sanctions on Iran

India said on Monday it abided by sanctions imposed by the United Nations but not those imposed by any other country, such as those announced by the United States against Iran.
U.S. President Donald Trump this month withdrew the United States from the Iran nuclear deal and ordered the reimposition of U.S. sanctions suspended under the 2015 accord.

Indian foreign minister Sushma Swaraj said New Delhi’s position was independent of any other country.
“India follows only U.N. sanctions, and not unilateral sanctions by any country,” she said at a news conference.
India and Iran have long-standing political and economic ties, with Iran one of India’s top oil suppliers.

Swaraj on Monday met Iranian Foreign Minister Javad Zarif, in New Delhi to build support against the U.S. rejection of the nuclear accord.

“Zarif briefed about the discussions that Iran has undertaken with parties to the Joint Comprehensive Plan of Action following the U.S. decision to withdraw from the Agreement,” said an Indian government statement, without elaborating.
https://www.reuters.com/article/us-india-iran/india-says-it-only-follows-u-n-sanctions-not-unilateral-us-sanctions-on-iran-idUSKCN1IT0WJ

hahaha india is saying screw usa if they harm our oil cheap imports from iran
btw India has dealt with American sanctions in the past. They were one of the largest buyers of Iranian oil during the last period of sanctions. They won’t buy oil directly but use exim bank which is immune to the sanctions

• I don’t blame India. If I were in charge of India, I would want the best price I could get for oil.

31. Nope.avi says:

One of the main events that is used as evidence for gerbil w arming is rising sea levels.
Rising sea level is used as proof that lice sheets are melting into the sea.
Is there another reason why sea levels are rising in coastal area ?

https://www.economist.com/finance-and-economics/2017/03/30/an-improbable-global-shortage-sand
“. Beaches in Morocco and the Caribbean have been stripped of sand, lowering their capacity to absorb stormy weather.”

• didnt that us senator admit it was his fault because he had been skimming stones into the sea?

• doomphd says:

ice sheets floating on the ocean are isostatically compensated, so their melting does not cause sea level rise. sea levels can rise because the coastal area is subsiding, due to loading. it takes a lot of study to work out a global sea level change.

• Fast Eddy says:

KKKLllmiate ccchhhaaannngge is REAL.

It has been happening since the beginning of time.

Is man impacting it …. about as much as me taking a pi ss into Lake Wakatipu changes the temperature of the water….

Lets check in on Kim and Lizzy:

Kim DotCom reveals tech millionaires’ NZ hideout

Silicon Valley millionaires are increasingly buying up land in Queenstown to prepare for a doomsday event, New Zealand’s own resident web mogul says.

But whether that could boost the country’s technology industry is yet to be determined.

Controversial multimillionaire Kim Dotcom recently set up home in the resort, making the move from Auckland with new wife Liz.

In his first interview since the shift, he said he was not the only one moving in.

He knew “about a dozen people from Silicon Valley that have homes in Queenstown that haven’t even been on the radar, not been in the media, and that number is just increasing”.

They saw Queenstown as a bolt-hole to escape to if things became dire elsewhere.

http://www.newstalkzb.co.nz/news/national/kim-dotcom-reveals-tech-millionaires-nz-hideout/

When the heat pump stops pumping… these fellas are going to quickly realize that Queenstown is not a very good choice for a bolt hole….

I see it more as a very pretty coffin….

• Fast Eddy says:

OH MY F78KING GOD!

Coronet Peak will hold a pre-season open day on Saturday to match rival ski field Cardrona.

Competition is heating up between the ski fields near Queenstown and Wanaka but it is the cold temperatures and early snow that has encouraged them to hold one-off openings on the weekend, ahead of the scheduled June 16 official openings.

On Monday Cardrona announced its pre-season teaser, a limited opening on Saturday and Sunday.

‘early snow and cold temperatures’
‘early snow and cold temperatures’
‘early snow and cold temperatures’
‘early snow and cold temperatures’
‘early snow and cold temperatures’
‘early snow and cold temperatures’

Yesterday the Chimney Man came by for a sweep … and he was telling us he was incredibly busy (12 hour days)…. because this is a really really cold winter so far….

Actually technically I believe winter starts on June 1… so it’s not even winter…

Yet we’ve been well below 0 on many nights this month….

I look out my office window and a I see a mountain covered in a thick layer of snow….

Can someone ring Al Gore and ask him WTF is going on?

32. Baby Doomer says:

‘Solo: A Star Wars Story’ Bombs With \$150M Global Debut

https://www.forbes.com/sites/scottmendelson/2018/05/27/box-office-solo-a-star-wars-story-bombs-with-148m-global-weekend/#3387343c221f

Taylor Swift’s concert’s bombed, and now Star Wars..The consumer is tapped out..

• Fast Eddy says:

X-Men 3 and Pirates 3 both set Memorial Day records

33. Yoshua says:

The oil price is falling and EM currencies are stabilizing.

The Argentinean peso has stabilized…and so has the Brazilian real…and the Turkish lira.

Oil is the master.

• Sungr says:

“The Argentinean peso has stabilized…and so has the Brazilian real…and the Turkish lira.”

Gack! You can’t really believe this.

These currencies are unstable for a long list of reasons.

• Harry Gibbs says:

Brazil is a major oil producer. You would think the Real would at best be ambivalent about lower prices.

• Yoshua says:

I believe the problem in Brazil is that the cost of oil production is just too high and that the fuel price on the market is just too high.

The government gave in to the strikers and decided to cut fuel prices.

• My take: Brazil was trying out marketing pricing for diesel because the country needs a fairly high price for its oil, so that its oil company, Petrobras, can get enough revenue. It sounds like government of Brazil is subsidizing diesel prices, so that the price Petrobras obtains is high enough, and at the same time the price is not too unaffordable for truckers.

Brazil cuts diesel prices, truck strike ending: Update

Brazilian president Michel Temer agreed to a 60-day diesel price cut in the latest concession to striking truckers that have blocked highways and snarled food and fuel distribution nationwide since 21 May.

The price reduction of R0.46/l (\$0.12/l) to R1.64/l is a fresh sign that Brasilia is backing away, at least temporarily, from a policy of market-based fuel pricing that was implemented by state-controlled Petrobras in 2016 in the wake of a debilitating corruption scandal.

The new price cut equates to an elimination of federal fuel taxes PIS/ Cofins, a key demand of the truckers. After the first 60-day freeze, diesel prices will be reviewed monthly, Temer said. The government’s proposal, which also includes an increase in minimum freight costs and a toll road exemption, is expected to cost around R10bn through the end of the year.

Sensitive to the perception of foreign investors, Temer said last night that the price freeze will not hurt Petrobras. . .

Fuel supply should begin to normalize this week. But a threat by refinery workers to carry out a 72-hour strike starting on 30 May is creating further uncertainty. Echoing the demands of the truckers, the refinery workers oppose Petrobras’ market pricing policy, which they blame for a flood of fuel imports that have contributed to sagging refinery throughput. The workers are also leading calls to replace Petrobras chief executive Pedro Parente.

Petrobras said it is evaluating the government’s new price cut.

Utilization rates at Petrobras’ 13 domestic refineries averaged around 76pc in first quarter 2018, down from 82pc in the same period of 2017. The company’s diesel production in that period averaged 622,656 b/d, down by 9.2pc year on year. Diesel sales in Brazil averaged 914,382 b/d in the first three months of 2018, a 1.8pc increase. The gap was filled by imports, which increased by almost 30pc year-on-year to around 258,795 b/d in the first quarter.

The import trend raises industry questions about how the government’s diesel subsidy will work in practice.

Today, finance minister Eduardo Guardia announced that the diesel subsidy of around R0.30/l would be extended to diesel importers, and that an import tax would be levied when international diesel prices fall below the reference price in Brazil. Guardia said the import tax is fundamental to the success of the subsidy plan.

• Fast Eddy says:

Maybe the CBs stepped up behind the scenes and funded the subsidy….

• Fast Eddy says:

When M Fast buys stuff at

They sometimes give her a coupon that gets us 30 cents off a litre of fuel….

All Brazil needs to do is invite Pak and Save into the country … and their truckers strike would be over very quickly

• Yoshua says:

Temporarily they have stabilized. Relax for a moment. More chaos is ahead.

The point was that markets are ruled by oil…or…energy.

• At some point, the subsidies become too expensive.

• Aubrey Enoch says:

We’ve been seeing these charts of falling oil discoveries and rising production costs and peak oil but that is just a smoke screen for the biggest oil field on Earth. Afghanistan has got to have more oil than Saudi Arabia and Iran combined.
Why else would the U.S. occupy the country for sixteen years other than to control their oil interests?
The Taliban is trying to hang on to their land and doing a pretty good job considering….
“The Defense Department’s special inspector general for Afghanistan said in January that Afghan government control or influence has declined and Taliban control or influence has increase since the U.S. watchdog began reporting this type of data in January 2016. It said in a follow-up report last month that as of October 2017, about 20.9 million Afghans, or 64 percent of the total population of 32.5 million, lived in areas where the government has control or influence. The rest of the population was in areas under Taliban control or influence, or deemed “contested” by both sides.” – from today’s Chicago Tribune.
There must be a bunch of oil in Afghanistan for all this fighting. We’ve got about 15,000 troops over there now keeping that oil land safe. Looks like we might need to send more.
BAU is looking good.

• I am afraid I don’t really know. I have seen a couple of resource-related issues mentioned.

Even if a country doesn’t have oil, the ability to transport oil and gas through a country are very important.

What’s behind the intervention into Afghanistan and Pakistan?

Afghanistan is one of the places called, “Pipelineistan.”

Another issue is possible future extraction of mineral resources. https://whowhatwhy.org/2012/09/10/the-real-reason-for-the-afghan-war/

Or perhaps it is just a place to carry on wars, to show America’s dominate to the rest of the world, and to provide jobs for soldiers in need of battles to fights.

• Garry says:

And think of this: What American soldier would fight anywhere without the promise of Morphine in case he was injured. Without Morphine men die of even minor injuries. I fell off a ladder once and had several fractures, ribs included, without the poppy life would have been grim indeed. As it was, the worst I had to fear was inhaling a fly:)
Oil may be the master resource but Opium is the master ‘war resource’.

• Slow Paul says:

Afghanistan grows a lot of opium…

• Fast Eddy says:

Bingo!

The CBs want that opium … because they plan to distribute family sized jugs of death to put us all out of our misery when BAU goes down…

Thank you CBs…. such a pleasant way to end it all

• Harry Gibbs says:

“While oil traders focus on whether OPEC/Russia will offset outages in Venezuela and Iran, there are cracks forming in the economies of emerging markets, which could threaten to derail the oil market, and do more to drag down oil prices than production increases from the OPEC+ coalition.”

https://oilprice.com/Energy/Energy-General/Emerging-Market-Meltdown-Could-Undermine-Oil-Rally.html

34. Baby Doomer says:
35. Baby Doomer says:

parents put in movies to “zombify” their kids..Sorta like opiates in the visual form..

https://i.redd.it/khpk97en1f011.png

36. Davidin100millionbilliontrillionzillionyears says:

USA predicted to rock on until late 2020:

I mean, really, Garthwaite is an “expert”…

we can believe him, right?

• Fast Eddy says:

Here’s the way it works if you are in finance…

Every so often you drop a hint that the market might collapse shortly ….

Every so often you drop a hint that the bubble could grow a lot bigger…

Then when the market does crash – you point to your prediction about collapse…

And if the market charges higher – you point to your prediction…

Cover all bases. Invent yourself as a genius.

• Sungr says:

This only impresses morons…………….

• xabier says:

And they are not in short supply.

37. Baby Doomer says:

With gas prices soaring…

• Except that gas prices are coming back down. The price of WTI seems to be \$66.74 this morning. The price of Brent is down to \$75.29.

• If you want more “capital goods,” you need more debt. If you want more government spending so everyone has jobs, you need more debt.

If your goal is to have everyone homeless and jobless, you don’t need debt at all!

38. Davidin100millionbilliontrillionzillionyears says:

oil prices are spiking tonight!

WTI at \$65 and Brent at \$74…

oh, pardon me, so sorry…

oil prices are plunging tonight!

• Davidin100millionbilliontrillionzillionyears says:

US 10 year at 2.93%…

it’s total chaos out there!

• Fast Eddy says:

Goldilocks interest rates and oil prices….

Fast Eddy exposes the real hidden hand… the one that manipulates all markets … from gold … to property .. to oil … to interest rates… to stocks… to bonds…

The hand is there… doing whatever it takes… to keep BAU alive (and no doubt always has been… because without that hand … capitalism would have eaten itself alive long ago)

39. Baby Doomer says:

‘’Biggest Ever Change’’ In Oil Markets Could Send Prices Higher

The stricter regulation on the fuels used by the shipping industry will result in booming demand for middle distillates that would boost crude oil demand by additional 1.5 million bpd, potentially sending oil prices to as high as \$90 a barrel in 2020, Morgan Stanley said last week.

“This is going to be the most disruptive change to hit the refining industry in its history,” Chris Midgley, global head of Platts Analytics, said. “Unlike other specification changes seen by the industry, this isn’t a little bit of tweaking.”

https://oilprice.com/Energy/Energy-General/Biggest-Ever-Change-In-Oil-Markets-Could-Send-Prices-Higher.html

• Reducing the maximum sulfur content of oil could, according to one line of thinking, send prices higher. I am doubtful that this will happen.

Making this change basically makes the world economy less efficient. We are buying a service that we didn’t have before: air less polluted by sulfur. But doing this uses existing energy supplies to clear out sulfur from the fuel before it is burned. So the world as a whole has less energy supplies for other purposes. It is just that the cost of these energy supplies in higher.

“Higher cost” does not equate to “higher price,” however. Higher cost and less efficiency tends to push the world economy toward recession.

40. Baby Doomer says:

Just wait till this happens globally in a few years…Mark my words…This world will burn!

• Davidin100millionbilliontrillionzillionyears says:

“Do not let the memories of your past limit the potential of your future. There are no limits to what you can achieve on your journey through life, except in your mind.”
― Roy T. Bennett

• Slow Paul says:

We can comfort ourselves in that each day we are able to post our musings on doomer blogs, the world has not collapsed for us. Brazil should get more doomer blogs.

41. Harry Gibbs says:

Italy still without a government; credit rating agencies unimpressed:

• Davidin100millionbilliontrillionzillionyears says:

“Ratings agency Moody’s warned that it might downgrade Italy’s sovereign debt rating to “Baa3″ – one notch above the junk rating.”

also, there are reports that there will be protests/riots on Monday…

Italy is quickly becoming a bigger version of Greece…

• Ouch! Population of Italy = 59 million; population of Greece = 11 million.

So Italy is between 5 and 6 times as big as Greece in population.

42. Baby Doomer says:

Permian Producers Are Struggling To Make Money

https://www.forbes.com/sites/rrapier/2018/05/27/permian-producers-struggle-to-make-money/#da3697ec5698

No one in the Permian is making any money…FAIL..

• The title doesn’t entirely describe the article. Robert Rapier concludes:

In conclusion, I will note that most oil companies are moving in the right direction, even if some aren’t doing so quickly enough. My screen of the Top 80 U.S. and Canadian oil and gas companies showed cumulative cash flow from the group at -\$669 million for Q1 2018. A year ago, that number was -\$6.9 billion.

Regarding the Permian he says,

The lack of cash flow among Permian producers can be partially attributed to logistical constraints in the Permian that won’t likely be relieved until 2019. But it’s also a function of companies investing heavily into the Permian in anticipation of future production.

Companies file audited financial statements. Apparently, the companies operating in the Permian have been able to convince their auditors that it makes sense to spend money in advance of getting the benefit of this spending. I expect that they have put together some kinds of models, showing how most of the spending can eventually result in earnings for the company.

• Fast Eddy says:

Or maybe the Fed has informed that auditors that they are to treat these companies differently… because they are strategic … and TBTF….

And as the powerful entity on the planet — when the Fed tells you to jump … you ask … how high… and if the Fed says keep this under your hat… you keep it under your hat… you ask no questions … why is not a word…

• Fast Eddy says:

Never have… never will… never were meant to…

We will never get that story in the MSM

43. Fast Eddy says:

Let’s try this again:

H,,,,,o ax takes it too far….

I would question 1. the total numbers involved… and 2. if total ge,,,,nocide was the primary goal why did they not just queue these people up – men women and children — and exter,,,,minate them immediately — why did they maintain these camps — house them – feed them (a little)… and so on…. from what I understand they were standard concent,,,ration camps – with a difference – if you could not work – you were kil,le,d.

Keep in mind NOT only J,,,,,e ws lived in these camps — many sla,,,,vs worked and were gassed…

Anti-S,,,lavism, also known as Slavophobia, a form of ra,,,cism, refers to various negative attitudes towards Sla,,vic peoples, the most common manifestation being claims of infer,,,iority of Sl,,avic nations with respect to other ethnic groups. Its opposite is Sl,,avophilia. Anti-Sla,,vism reached its highest peak during World War II, when N,azi G,ermany declared Sl,avs, especially neighboring Poles to be su,,,bhuman and planned to extermin,,,ate the majority of Slav,,ic people.[1]

https://en.wikipedia.org/wiki/Anti-Sl,,,avic_sentiment

Seems to me the J,,,,,, e w,,,, s simply had better PR …. and an agenda … they have been riding this for nearly a century now…

You know what?

Is rael operates off the premise that ‘might is right’ … they st,eal land and water… they sho,,,ot babies and children in the he,ad – and laugh (one of my good friends is a former UN observer who has been in between I,,,,,s raeli soldiers trying to stop such atro,,cities – and been told to f7,89 off)….

Recall how that American girl was run over by a bulldozer some years ago trying to stop atr,ocities in Pal,,estine?

So regardless of the veracity of Ste,ven Spe,,,,wberg’s films….

I really do not give a f,,789…. live by the swo,rd – die by the swo,rd….

If 6M were ki,,led…. well Steven Sp…. as the saying goes… f7,,89 off. I am not interested (I have never watched his movie btw)

Is r,,,ael has its reasons for doing what it does… Germa,,ny/H,,,i tler had his reasons.

Does not matter if we think they are valid….

It su,,,,cks to be weak. Simple as that.

• Fast Eddy says:

Yes.

The meek (weak) shall inherit jack sh it.

And the strong are the purveyors of this message because it convinces the mweak to give up without a fight….

• futhark says:

Mr Austrian had made Germany very weak by 1945. Strength must be combined with intelligence, you see, which meant NOT getting into a war with three world powers: USA, the Soviet Union, and the British Empire. In the 1960s, French author Francois Mauriac said that he liked Germany so much, he was glad there were two of them. 😉 Strength, that was NOT!

• Fast Eddy says:

Germany was already falling to pieces when Mr H showed up…. it was Somalified by the CBs after WW1 … this is a superb book on the topic https://www.amazon.com/Lords-Finance-Bankers-Broke-World/dp/0143116800

Ultimately Mr H did lose…. he was the weaker…. but you can’t blame him for putting up a fight….

Should an antelope just lie down and be eaten … should the small dog when faced with starvation … not fight for the last bone….

• Aubrey Enoch says:

Big problem for world leaders today is the FTC epidemic. FTC (Failure To Cower) is reaching pandemic proportions. Bill Gates expects to have a vaccine soon.
The Induced Impairment campaign is definitely producing some bizarre behaviors but as of yet they haven’t discovered a method to get these humanoids to lay down and die in the numbers needed to rectify the energy per capita equation.
Good old fire and steel works but it can be messy.

• jupiviv says:

Israel =\= Jews.

• Fast Eddy says:

I prefer Zi on ists….

From the PRO-to-calls:

‘Sacrifice people (including Je….ws sometimes) when necessary’

BTW – when you search for the P of E of Z…. you again get page after page of ‘ho ax’ – ‘myth’ – ‘fake’ ‘dangerous lie’ ‘antisem….’ ‘notorious’ ‘hate’ …. on and on and on….

This was without question a plan of action .. that was leaked. And as Henry Ford stated – from what he observed – everything was going to plan….

• Tim Groves says:
44. Ann says:

Video and article from Reuters:

China’s high rise hog hotels.

https://af.reuters.com/article/oddlyEnoughNews/idAFKBN1IB362

All I have to say is: “Where are we going and why are we in this handbasket?”

• Fast Eddy says:

Excellent – China has found a productive use for all those ghost town highrise buildings

• I hope that China doesn’t have problems with electrical outages. It sounds like they are using an electrical system to manage the air circulation in the building.

• Tim Groves says:

This is yet another example of increasing complexity in the service of boosting efficiency and cutting costs. I share Ann’s misgivings about this particular example of progress. For the porcine residents of those “hotels”, and more generally for all of us, It’s only a matter of time before the hogwash hits the air conditioning.

• Tim Groves says:

The Chinese will doubtless also be requiring some of these.

https://youtu.be/DyL5mAqFJds

45. Fast Eddy says:

Gas stations are empty. People are stealing gas from one another. Flights are grounded. Surgeries are cancelled. Supermarket shelves are barren. All because truck drivers have gone on strike.

Diesel prices have been rocketing sky high in Brazil lately, and truckers aren’t happy. According to Brasil de Fato, the current increase is a direct result of a pricing policy. Petrobras, Brazil’s state oil company, doesn’t regulate prices to control inflation anymore. It hasn’t been a great move for the company itself, but it’s also pretty awful for anyone who depends on using gas to, y’know, go places.

Truckers understandably got fed up, since those massive increases are cutting into their wages. So on Monday, May 21, they just stopped driving. They parked their vehicles right there on the roads and left. A deal was announced between the government and transportation unions on Thursday, where the unions agreed to suspend the strike for fifteen days so everyone could figure out a decent solution to a problem that’s kind of messing up the whole country.

But the strike continued on until Friday, and now the very unpopular President Michel Temer announced that the army is getting involved. He didn’t actually give any specifics, instead just saying armed forces are getting involved, but that’s still a pretty ominous threat.

Truckers have felt ignored since last year, when their complaints about gas prices then were going ignored. The strike seemed like the only way to actually be heard.

The only downside is that now hospitals are running out of supplies. Grocery stores are emptying out pretty quick. And now the army is coming to escort the parked trucks from the roads so that, y’know, you don’t have to keep trying to siphon gas off of your neighbors.