Why is it so difficult to make accurate long-term economic forecasts for the world economy? There are many separate countries involved, each with a self-organizing economy made up of businesses, consumers, governments, and laws. These individual economies together create a single world economy, which again is self-organizing.
Self-organizing economies don’t work in a convenient linear pattern–in other words, in a way that makes it possible to make valid straight line predictions from the past. Instead, they work in ways that don’t match up well with standard projection techniques.
How do we forecast what lies ahead? Today, some economists believe that the economy of the United States is in danger of overheating. Others believe that Italy and the United Kingdom are facing dire problems, and that these problems could adversely affect the world economy. The world economy should be our highest concern because each country is dependent on a combination of imported and exported goods. The forecasting question becomes, “How will divergent economic results affect the world’s economy?”
I am not an economist; I am a retired actuary. I have spent years making forecasts within the insurance industry. These forecasts were financial in nature, so I have had hands-on experience with how various parts of the financial system work. I was one of the people who correctly forecast the Great Recession. I also wrote the frequently cited academic article, Oil Supply Limits and the Continuing Financial Crisis, which points out the connection between the Great Recession and oil limits.
Today’s indications seem to suggest that an even more major recession than the Great Recession may strike in the not too distant future. Why should this be the case? Am I imagining problems where none exist?
The next ten sections provide an introduction to how the world’s self-organizing economy seems to operate.
[1] The economy is one of many self-organized systems that grow. All are governed by the laws of physics. All use energy in their operation.
There are many other self-organizing systems that grow. One such system is the sun. Some forecasts indicate that it will keep expanding in size and brightness for about the next five billion years. Eventually, it is expected to collapse under its own weight.
Hurricanes are a type of self-organizing system that grows. Hurricanes grow over warm ocean waters. If they travel over land for a short time, they can sometimes shrink back a bit and grow again once they have an adequate source of heat-energy from warm water. Eventually, they collapse.
Plants and animals also represent self-organizing systems that grow. Some plants grow throughout their lifetimes; others stabilize in size after reaching maturity. Animals continue to require food (a form of energy) even after they stabilize at their mature size.
We can’t use the typical patterns of these other growing self-organized systems to conclude much about the future path of the world’s economic growth because individual patterns are quite different. However, we notice that cutting off the energy supply used by any of these systems (for example, moving a hurricane permanently over land or starving a human) will lead to the demise of that system.
We also know that lack of food is not the only reason why humans die. Based on this observation, it is a reasonable conclusion that having enough energy available is not a sufficient condition to guarantee that the world economy will continue to operate as in the past. For example, a blocked shipping channel, such as at the Strait of Hormuz, could pose a significant problem for the world economy. This would be analogous to a blocked artery in a human.
[2] The use of energy products is hidden deeply within the economy. As a result, many people overlook their significance. They are also difficult for researchers to measure.
It is easy to see that gasoline provides the energy supply needed for our cars, and that electricity provides the power needed to clean our clothes. What is missing? The answer seems to be, “Everything that makes humans different from wild animals is something that was made possible by the use of supplemental energy in addition to the energy from food.”
All goods and services require the use of energy. While some of this energy use is easy to see, other portions are well hidden. Energy used in manufacturing and transport is most visible; energy used in services tends to be hidden.
Governments are major users of energy, both for their own programs and for directing energy use to others. Retirees get the benefit of goods and services made with energy products through pension checks issued by governments; researchers get the benefit of goods and services made with energy products through research grants they receive. Wars require energy.
Medical treatments are possible because of the availability of medicines and equipment made with energy products. Schools and books, as well as free time to study in schools (rather than working in the field), are possible because of energy consumption. Jobs of all kinds require the use of energy.
One thing we don’t often consider is that if energy supplies are growing sufficiently, they permit an expanding population. In fact, expanding population seems to be the single largest use of growth in energy consumption (Figure 1). Growing energy consumption also seems to be associated with prosperity.
Figure 1. World energy consumption growth for ten-year periods (ended at dates shown) divided between population growth (based on Angus Maddison estimates) and total energy consumption growth, based on the author’s review of BP Statistical Review of World Energy 2011 data and estimates from Energy Transitions: History, Requirements and Prospects by Vaclav Smil.
[3] Prices of energy services need to be low relative to overall costs of the economy. Falling energy costs relative to overall GDP tend to encourage economic growth.
Most economists expect energy prices to represent a large share of GDP costs, if energy is truly important. The statement above says the opposite. There are at least two reasons why low energy prices, and energy prices that are truly falling when inflation and productivity changes are considered, are helpful.
First, tools (broadly defined) used to leverage the labor of human workers often require considerable energy to manufacture and operate. Examples of such tools include computers, machines used in manufacturing, vehicles, and roads for these vehicles to drive on. The lower the cost to purchase and operate these tools, relative to the benefit of the tools, the more likely employers are to purchase them. If energy costs tend to fall over time, it becomes progressively easier to add more tools to leverage the labor of employees. Thus, employees become increasingly productive over time, raising the economy’s output of goods and services. For a similar reason, rising energy costs, if not offset by efficiency gains, present a barrier to economic growth.
Second, if the cost of energy production is low, it is easy to tax energy producers and thereby capture some of the benefit of their energy for the rest of the economy. If there is truly a “net energy” benefit to the economy, this is one way it gets transferred to the rest of the economy.
[4] There is indeed an energy problem, but it is not quite the same one that Peak Oilers have been concerned about.
The energy problem that Peak Oilers write about is the possibility that as easy-to-extract oil supplies deplete, oil production will reach a peak in production and begin to decline. Once decline sets in, they expect that oil prices will rise, partly because of the higher cost of production and partly because of scarcity. With these higher prices, they expect that producers will be able to extract at least a portion of the remaining oil resources. They also expect that higher prices will allow portions of the remaining natural gas and coal resources to be extracted. With higher prices, expanded use of renewable energy is expected to become feasible. All of these energy sources are expected to keep the economy operating at some level.
There are several problems with this story. First, it tends to encourage people to look for high oil prices as a sign of an oil shortage. This is not the correct indication to look for. Prior to 1970, oil prices averaged less than $20 per barrel. Comparing pre-1970 prices to today’s oil prices, current prices are already very high, at $75 per barrel. The idea that oil prices can keep rising indefinitely assumes that there is no affordability limit. Furthermore, a loss of energy consumption can be expected to reduce demand (because of its impact on jobs, productivity, and wages) at the same time that it reduces supply. If both supply and demand are affected, we don’t know which way prices will move.
Second, my analysis suggests that part of the story is that total energy consumption is very important, including oil, coal, natural gas, nuclear, and various forms of electricity. All of the attention given to oil has drawn attention away from the economy’s need for a range of energy types to keep devices of all types operating. Deciding to reduce coal usage because of pollution issues, or deciding to shut down nuclear because it is aging, has an equally adverse impact on the economy as reducing oil supply, unless the shortfall can be made up with other energy products of precisely the type needed by current devices.
Third, my analysis suggests that energy consumption per capita needs to rise for the economy to function in the way that we expect it to function. If world energy consumption per capita is too flat, we can expect to see many of the symptoms that the world has been experiencing recently: more radical leaders, less cooperation among leaders, slowing economic growth and increasing debt problems. In fact, wars are possible, as are collapses of governments (as with the Soviet Union central government in 1991). The current situation seems to be more parallel to the 1920 to 1940 flat period than it does to the 1980 to 2000 flat period.
Finally, with low energy prices rather than high quite possibly being much of the problem, there is a significant chance that oil and other production will decline because producers do not make enough profit for reinvestment and because oil exporting countries cannot collect enough taxes to fund the many subsidies that citizens expect. This makes for a steeper energy decline than forecast by Peak Oilers; it also reduces the possibility that high-priced renewables will be helpful.
[5] Part of the world’s energy problem is a distribution problem; the world becomes divided into haves and have-nots in many ways. It is this distribution problem that tends to push the world economy toward collapse.
There are many parts to this distribution problem. One is the distribution of goods and services (created using energy) by country. Over time, this tends to change, especially as commodity prices change. Oil exporters are favored when oil prices are high; oil importers are favored when oil prices are low. The relative values of currencies can change quickly, as commodity prices change.
Another part of this distribution problem is growing wage and wealth disparity, as more technology is added. If there is too much wage disparity, low-paid workers often cannot afford adequate food, homes, and transportation for their families. Their lack of demand for goods made with energy products (because of their low wages) tends to work through the system as low commodity prices. This happens because (a) there are so many of these workers and (b) these workers tend to purchase a disproportionate share of goods and services that are highly energy-dependent.
[6] Debt-like promises play a major role in making the economy operate.
Taking out a loan allows an individual or business to purchase goods without saving for the purchase in advance. To some extent, taking out a loan moves up the timing of purchases. At times, it even permits purchases that otherwise would not be possible. For example, if a young person tries to decide between (a) working at a low wage until he has saved up enough to afford to go to college and (b) taking out a loan and going to school now, so his wages would be higher in future years, his optimal choice will often be scenario (b). The time would likely never come when the low-paid individual could save up enough wages to afford to go to college. If the young person strongly desires high wages, his optimal strategy would be to take the loan and hope that his future wages will be high enough to repay it.
If the goal of the economy is to produce an ever-increasing amount of goods and services, growing debt can very much help this growth. This happens because with more debt, more individuals and businesses can afford* to buy the goods and services that they want now. In a sense, debt acts like a promise of the future energy needed to make future goods and services with which the loan can be repaid. Thus, adding debt acts somewhat like adding energy to the economy.
Because of the way debt works, the economy behaves much like a bicycle, with growing debt pulling the system forward. If the economy is growing too slowly, the tendency is to add more debt. This solution works if a rapidly growing supply of cheap-to-produce energy is available; the additional debt can be used to create a growing supply of affordable goods and services. If energy costs are high, the goods and services produced tend to be unaffordable.
Figure 2. The author’s view of the analogy of a speeding upright bicycle and a speeding economy.
A bicycle needs to operate at a fast enough speed (about 7.5 feet per second), or it will fall over. Similarly, the world economy needs to grow fast enough, or it will not be able to meet its obligations, including repayment of debt with interest. If the economy grows too slowly, debt defaults are likely to grow, pulling the economy down.
[7] It looks like it should be possible to work around energy problems with improved technology, but experience suggests that this approach represents only a temporary “fix.”
There are two issues that make improved technology less of a solution than it appears to be. The first is diminishing returns. For example, if a business faces a choice between (a) paying a worker to perform a process and (b) adding a machine that can perform the same process, the business will tend to make the changes that seem to provide the largest cost savings first. At some point, as more technology is added, capital costs can be expected to become excessive relative to the human labor that might be saved. The issue of the diminishing returns to added complexity (which includes growing technology) was pointed out by Joseph Tainter in The Collapse of Complex Societies.
The second reason why added technology tends to be only a temporary solution is because it tends to lead to wage disparity. Wage disparity has a tendency to grow because of the greater specialization and larger organizations needed to coordinate the ever-larger projects. The reduced purchasing power of those at the bottom of the hierarchy can eventually bring an economy down because it can lead to commodity prices that are below the level needed to maintain the extraction of fossil fuels. Fossil fuels are required to maintain today’s economy.
[8] Renewable energy has been vastly oversold as a solution. What is needed is an ever-increasing quantity of inexpensive energy in forms that match the energy needs of current devices.
The wind and solar story is far different from the story presented in the press. Essentially, wind and solar are extensions of today’s fossil fuel system. The evidence that they are truly beneficial to the economy is shaky at best. We know that if energy sources are truly transferring significant “net energy” to the system, they generally can afford to pay high taxes. The fact that wind and solar require subsidies raises questions regarding whether standard calculations are providing accurate guidance. The press rarely mentions the high tax revenue that high oil prices make possible, worldwide. Tax revenues largely support many oil exporting countries.
Furthermore, the share of the world’s energy supply that wind and solar provide is very low: 1.9% and 0.7%, respectively. They are shown in the almost invisible blue and orange lines at the very top of Figure 3. Fossil fuels contributed 85% of total energy supply in 2017.
Figure 3. World energy consumption divided between fossil fuels and non-fossil fuel energy sources, based on data from BP Statistical Review of World Energy 2018.
[9] The world economy becomes very fragile as energy limits approach.
Energy limits seem to be affordable energy limits. Oil prices need to be high enough for exporting countries to obtain adequate tax revenue. In addition, oil producers need prices that are high enough so that they can make the necessary reinvestment, as fields deplete. At the same time, energy prices need to be low enough for consumers to afford goods and services made with energy products.
Much of developed world’s infrastructure was built when oil prices were less than $20 per barrel, in inflation-adjusted terms. A rising price of oil will lead to a higher cost of replacing roads and pipelines. If these were built using $20 per barrel oil, even a current price of $40 per barrel would represent a significant cost increase. The world has experienced high oil prices for sufficiently long that we have collectively forgotten how low oil prices were between 1900 and 1970.
Most people know that the earth holds a huge quantity of energy resources. The problem is extracting these resources in a way that is both affordable to consumers and sufficiently high-priced for producers. Falling long-term interest rates between 1981 and 2002 allowed the world economy to tolerate somewhat higher oil and other energy prices than it otherwise could because these falling interest rates permitted ever-lower monthly payments for a given loan amount. For example, if interest rates on a $300,000 mortgage would fall from 5% to 4% on a 25-year mortgage, monthly payments would decrease from $1,753 to $1,584. The lower interest rates would allow more people to buy homes with a given size of mortgage. Indirectly, the lower mortgage rates would permit additional new homes to be built and would allow more inflation in home prices. These benefits would at least partially offset the adverse impact of high energy prices.
Since the natural decline in long term interest rates stopped in 2002, the world economy has become increasingly fragile; the Great Recession took place in 2007-2009, when oil prices spiked and long-term interest rates were already low by historical standards. It was only when the United States’ program of quantitative easing (QE) was put in place that long-term interest rates could fall to even lower levels, helping the economy hide the problem of high energy prices a little longer.
The artificially low interest rates made possible by QE have problems of their own. They tend to inflate asset prices, including both real estate prices and stock market prices. Thus, they tend to create bubbles, which are prone to collapse if interest rates rise. Artificially low interest rates also tend to encourage investment in schemes with very low profit potential. Artificially low interest rates also encourage cross-border investments to try to take advantage of interest rate differences. If interest rate relativities change, the money that quickly would enter a country can almost as quickly leave the country, causing major fluctuations in currency relativities.
Regulators do not understand the role that physics plays in making the economy operate as it does. They assume that they, alone, have the power to make the economy behave as it does. They do not understand how important falling interest rates are in creating growing demand for goods and services. The economy, since 1981, has spent most of its time with falling interest rates; the most recent part of this decline in long-term interest rates has been made possible by QE. These falling interest rates have played a major role in disguising the world’s long-term problem of rising energy costs. These rising energy costs are taking place primarily because the cheapest-to-extract resources were produced first; the resources that are left have higher costs associated with them, for a variety of reasons, such as being farther away from the user, deeper, or needing more advanced extraction techniques. These issues have not been sufficiently offset by improved technology to keep extraction costs low.
US regulators now want to raise interest rates by raising short term interest rates and by selling QE securities. They don’t understand that they are playing with fire. If they can raise interest rates now, they will have the flexibility to lower them later if the economy should later slow excessively. They think that the higher rates will give them more control over the economy. They don’t understand how much of the world’s economy may really be a bubble, created by the decline in interest rates since 1981.
[10] The adverse economic outcome we should be concerned about is collapse, as encountered by prior civilizations when their economies hit limits.
The stories in the press have been so focused on oil “running out” and finding alternatives to oil that few have stopped to ask whether this is really the correct story. Instead of creating a new story, it might have been better to look more closely at history. Based on the historical record, collapse seems to have been associated with situations where populations have outgrown their resource bases. In other words, collapse can be considered an energy consumption per capita problem. The oil problem (and other fuel problems) we are facing today can be viewed as an energy consumption per capita problem, as well.
We know from research that has been done by Peter Turchin, Joseph Tainter, and others how collapse has played out in the past. The situation is different this time, however, because the world economy is very interconnected. Oil consumption depends on electricity consumption, and vice versa. Our financial system is also extraordinarily important. For these reasons, a collapse may occur more quickly than in the past.
Differences Between My View and the Standard View
One of the big differences between the way I see the economy and the standard view of the economy is the answer to the question of “Who is in charge?” The standard view is that politicians and economists are in charge. They have all of the answers. The dire collapse outcomes that afflicted early civilizations could not possibly affect us. We are too smart. We know how to adjust interest rates correctly. We can even make QE available to lower long-term interest rates. We can also add more technology and other complexity than has ever been added in the past.
The answer I see to the question, “Who is in charge?” is, “The laws of physics are in charge.” Politicians play a fairly minor role in directing the fate of economies. If there is not enough energy available of the type needed (inexpensive and matching the current infrastructure), the economy may very well collapse. It is nature and the laws of physics that call most of the shots.
Another big difference between my view and the standard view is the observation that a decrease in oil supply (or total energy supply) affects both the supply and demand of energy. Because both supply and demand are affected, we don’t know which direction oil and other energy prices will move. They may move erratically, as interest rates are adjusted by regulators. A more complex model is needed.
Climate change becomes less of an issue in my view of the future, for several reasons. First, humans don’t really have very much control over the direction of the economy, so talking about anthropogenic climate change doesn’t make a whole lot of sense. The laws of physics that allowed human population to rise are also allowing climate change to happen. Second, we seem to be limited in our ability to use renewables to fix the situation. Furthermore, the possibility of collapse in the near future makes the various scenarios that hypothesize the use of large amounts of fossil fuels over many years in the future seem very unrealistic. Perhaps efforts to fix climate change should be focused in new directions, such as planting trees.
Help from Others
The subject matter of this post requires the knowledge of information from a wide range of academic areas. I could not have figured out all of this information on my own. I have been fortunate to have been able to learn from of a wide range of experts. Quite a number of academic groups have seen my articles, and invited me to speak at their conferences. In particular, I have had a long-term involvement with the BioPhysical Economics organization and have spoken at many of their conferences. I have learned much from Dr. Charles Hall, although at times I don’t 100% agree with him.
I have also learned from the many commenters on OurFiniteWorld.com. They form a self-organizing system of people from a wide range of backgrounds. Earlier, my involvement at TheOilDrum.com as “Gail the Actuary” allowed me to get acquainted with a range of researchers, looking at different aspect of the energy problem.
In future posts, I intend to expand further on the ideas presented in this post.
*Here I am using the term afford loosely. What borrowers can actually afford is the current required monthly payments.
New Richard Heinberg Peer Reviewed Scholarly Paper, July 2018
Energy Decline and Authoritarianism
https://rdcu.be/3bYO
It is worse than Heinberg makes out. Read “Against the Grain”. Early farming communities were slave economies. The owning class bought humans to be shackled and used as farm animals to produce easy to store and transport cereals for personal enrichment. There is no reason to believe that as 99.9% of humans die that human nature will change. The commute to the city will change to the commute to the field for a day of punishing labor followed by the days two liters of fermented barley beer/mash.
It is interesting how the MSM, scholars, etc… generally tend not to focus on the fact that throughout history slavery was ubiquitous …. most people believe it was a phenomenon unique to the Americas…
Slave labour was the oil and coal of past civilizations.
I guess it’s ignored because that would be too much for the masses brains to handle… we don’t like to be reminded of our true nature
I understand that there were not different words for “slave” and “servant” in New Testament times. There were lots of slaves.
https://jwa.org/encyclopedia/article/white-slavery
Henry Kissinger thinks that we are now in a very grave period.
He thinks that Trump is the end of an era. He sees the future ruled by fascism.
He thinks that Nato misjudged Russia when it tried to expand into Ukraine. The Transatlantic alliance is now instead falling apart. Europe will be ruled by Eurasia in the future.
The era of Western democracy and dominance is coming to an end.
why this bastard> Henry Kissinger has not die
Totally agree.
What a piece of trash.
“why this bastard> Henry Kissinger has not die”
Wealth and Privilege = Longevity
Queen Elizabeth II (92), George H.W. Bush (94), George Soros (87) etc. If you have wealth or privilege you’ll get the best medical care money can or cannot buy just to keep you alive that much longer.
I used to work at a Hotel and the owner was local multi millionaire..And he got cancer and he just flew to the Mayo clinic in Minnesota..And got the best care money could buy and came back a few months later and was fine..
For how long?
For how long what?
How long did the cure last? Cancer seems to come back quickly.
Not sure..He was gone for a few months and then came back acting fine..He wore a
Toupée as well..He was already in his upper 70’s though..I ended up leaving the hotel about a year or so afterwards..I think he died recently..This was all about 15 years ago..
What type of cancer?
Lot’s of very wealthy people get cancer… and die.
No problem– my grandmothers on both sides of the family lived to be 99.
I’m 70, and all brothers and sisters are alive.
But point well taken,
Kissinger should know he raised China to where it is today. Or has he forgotten with his extreme aging.
Did he do this single- handedly?
No, republican president Nixon and all of the congress helped and maybe the Federal Reserve Bank.
IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
LONDON—Global oil discoveries fell to a record low in 2016, the International Energy Agency says, raising fresh concerns about the potential for a petroleum-supply shortage as soon as 2020.
Don’t expect output from U.S. shale producers to fill the void, the IEA said. American shale production is expected to grow by 2.3 million barrels a day or more over the next five years, but that isn’t enough to make up for declining output elsewhere.
The IEA also doesn’t expect global oil demand to stop growing any time soon, potentially turning the current glut of oil into a dearth.
The Organization of the Petroleum Exporting Countries has also sounded the alarm over the potential for a looming supply gap in the long term. Saudi energy minister Khalid al-Falih told a London energy conference last year that “there will be a period of shortage of supply.”
Shale “is not enough by itself,” the IEA’s Mr. Birol said.
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
“This means that each £1 of reported growth has been accompanied by £5.20 in new borrowing. It also means that, against current growth expectations of about 1.4%, the UK typically borrows 5.7% of GDP each year.”
Wow, that is both incredible and depressing. I knew that the growth to borrowing ratio was on a worsening trend but that is pretty terrifying.
That must give Mr. Carney fits about raising interest rates. Does he;
a) raise interest rates, kill the consumer living on credit and collapse the economy; or
b) keep interests where they are, causing the pound to decline, inflation to rise and collapse the economy?
My take is that he won’t act until inflation really starts to bite due to severe pound weakness against the dollar and euro. But by that time it’ll be too late and the rate hikes he needs to stabilise the pound won’t be incremental amounts of 0.25% but rapid fire bursts of 10% – 15% thus crucifying anyone who has large amounts of debt to repay.
https://surplusenergyeconomics.wordpress.com/2018/07/20/131-not-about-brexit/
That must give Mr. Carney fits about raising interest rates. Does he;
a) raise interest rates, kill the consumer living on credit and collapse the economy; or
b) keep interests where they are, causing the pound to decline, inflation to rise and collapse the economy?
That article is a shocking piece of analysis…
Hanging from a thread is the UK….
It sounds like Mr. Carney is between a rock and a hard place.
I noticed that when it came to the Bank of England’s previous decision on rates, Andy Haldane, their influential Chief Economist, suddenly swapped from a hawk to a dove and voted *for* a rise. He was outvoted – but the fact that he was apparently keen on putting up rates served to bolster the £ somewhat. Clearly there are limits to the amount of ways they can vacillate creatively moving forwards though.
Andy H has a reputation as a free-thinker and recently announced that the BoE was looking to “speak to more members of the public to tap into their “folk wisdom” to help inform its economic policy and “help bridge the “great divide” between public institutions and the public”.
In a moment of giddy spontaneity, I asked him to ‘link in’ with me – which he did – and set about composing a note… But I couldn’t find the words. How do you go about telling someone in such a senior position that their understanding of the very subject on which their seniority rests is fundamentally flawed? And how do you explain this revolutionary worldview succinctly and persuasively in a brief email? It was beyond me.
As far as he is concerned the primary drivers for economic growth are “physical capital (such as plant and machinery); human capital (such as skills and expertise); social capital (such as cooperation and trust); intellectual capital (such as ideas and technologies); and infrastructural capital (such as transport networks and legal systems).” Growth, he says, results from the cumulative accretion of these multiple sources of capital.
Not a single mention of the vast throughput of energy from fossil fuels, which is the sine qua non of modern civilisation!
And, let’s face it, even if I could somehow persuade him to study one of Gail’s graphs of world GDP versus energy consumption and the penny dropped, what could the Bank of England really do differently, given the bind they are already in?
Haldane swapped from a dove to a hawk, I should have said.
Seriously? You think that the commanders are not aware of the relationship between energy and GDP? Do you think the Marx brothers and Abbot and Costello are in charge?
Scholarly articles for gdp and energy consumption relationship
Energy consumption and GDP: causality relationship in … – Soytas – Cited by 1157
… relationship between energy consumption and GDP … – Oh – Cited by 625
The relationship between energy consumption, energy … – Asafu-Adjaye – Cited by 1315
Search Results
The relationship between energy consumption and GDP in emerging …
https://www.emeraldinsight.com/doi/full/10.1108/IJESM-04-2013-0006
by U Al-mulali – 2015 – Cited by 6 – Related articles
– The results revealed that GDP by sector and energy consumption by type are cointegrated. Moreover, the Granger causality concluded a bi-directional causal relationship between oil, natural gas and renewable energy consumption and the value of the manufacturing, industrial and services sector.
Exploring the relationship between energy consumption and GDP …
https://www.sciencedirect.com/science/article/pii/S0301421513002528
by D Borozan – 2013 – Cited by 36 – Related articles
If causality exists and runs from energy consumption to real gross domestic product (GDP), an economy will grow if policy makers increase the amount of energy consumption in a country. This also means that a shortage of energy may negatively affect economic growth, and consequently employment and income.
There are endless pages of results on this topic….
It must be difficult to sleep at night….. when one can see the entire iceberg…..
Chairman Goldman Sachs International
https://imgur.com/a/lw4arzw
Oil prices could top $120 before year-end
https://www.marketwatch.com/story/oil-prices-could-top-120-before-year-end-2018-07-20
Let us hope they don’t. A nice, flat trajectory, continuing around the $70 mark with no nasty geopolitical scares or other black swans, no major financial problems and evenly matched supply and demand for as long as possible please!
Investing in hopium…Big pension funds losing out bigtime
https://www.stuff.co.nz/business/105638663/nz-super-down-at-least-57m-on-second-green-tech-investment
https://imgur.com/a/UMw75Pg
It bodes very ill for the future.
Almost true from a den ist — it bodes very ill for the present.
The energy decline to date is not the sole reason for the USA’s current troubles. To put this in another way. The USA currently is in a much bigger mess than it should be, given that it still has a relatively high energy consumption per capita. This is true compared to other countries and also to earlier eras in the USA (for example the 1950s and 1960s). Yet, the USA is decaying rapidly now on what are still relatively high energy consumption rates.
Somehow, the USA is failing to economize properly, to organize its economy properly and to react logically to its problems. I am saying it is an easy and incomplete explanation to blame energy decline at this juncture. At a later stage of worse energy decline the USA might have reason to be disintegrating rapidly but currently the USA does not have sufficient energy reasons for its rapid collapse.
We need to look elsewhere for the causes of USA’s current problems. The main ones are inequality, waste, over-militarization and lack of investment in infrastructure, health, welfare and education. I know I will get flamed for this statement on this blog. But the fact of the matter is the USA should not be at this level of decline at this early stage. It bodes very ill for the future.
I wonder if anyone on this blog would want to venture some reasons why the USA’s decline is more rapid than energy decline alone would explain? I’ll give you a hint, rising inequality.
An economy organizes in a particular way. It cannot go backward. Any shrinkage, even from a high base, is a problem. World energy consumption per capita needs to rise. The US is using all of the energy it has. People cannot move to smaller houses or give up their cars. They have to keep on with the current infrastructure.
Charlie Hall and his followers don’t understand how the economy works as a networked system. They seem to think that we can get along without art, . . . That isn’t really the way the system works.
In fact, the world energy problem plays out as too much wage disparity. One problem is governments that fail because they cannot collect enough taxes. Another is financial system problems.
I disagree with a number of those statements. A self-organizing system can shrink to a degree. A leaner economy with less waste could survive longer on a partial power down. An enormous amount (possibly 50%) of energy use in a modern capitalist economy is wasteful over-consumption which achieves nothing of lasting value for our survival. Indeed, much of it is counter-productive and is collapsing us more quickly.
It’s extraordinary to me that people think all this wasteful over-consumption is absolutely necessary. People could live with less squares of space per person. People could give up their cars if we built mass transit systems and rode bicycles for short trips. People could give up luxuries, holidays, condos, air travel and so on.
When you say “An economy organizes in a particular way. It cannot go backward,” you should be saying “A capitalist economy organizes in a particular way. It cannot go backward.” That statement certainly is true for a capitalist economy. Capitalism is indeed predicated on endless growth. It is not the case that there could not be a steady state, sustainable economy. It is simply the case that capitalism can never be a steady state, sustainable economy. It is necessary to think outside the capitalist paradigm.
You state the current global system is unsustainable. You are correct. Capitalism is unsustainable. It does not follow automatically that another type of system would be unsustainable. It might follow but doing analyses only upon extant capitalism, as if it’s the only possible system, does not prove the case.
However, I agree that capitalism already has been permitted to go too far, waste too many resources and do too much damage. First capitalism must collapse. Then we can see if some other form of economics can rescue the remnants of civilization from the huge damage done by capitalism.
Certainly, no system can escape thermodynamic laws. Some systems grossly exceed sustainable thermodynamic realities for a while and then collapse. Other systems remain within sustainable thermodynamic realities. With modern scientific knowledge it is not impossible that we could construct such a system if we were prepared to live far more frugally. I grant that it is unlikely now. Too much damage has been done and the superpowers are too intent on great power competition.
‘With modern scientific knowledge it is not impossible that we could construct such a system if we were prepared to live far more frugally’
And here is the problem. Science discounts that which it can’t undersatnd or measure. No path to hell is straighter than the one designed by experts/consultants/advisors/scientists meant to save us from ourselves. Nuclear power, antibiotics, GM are all half-r-sed attempts at trying to beat nature. The costs of technology will prove to be greater than the benefits is my bet.
Accountancy as a profession is a perfect example of this problem. We pretend that we can capture all the costs and benefits and then call it a balance sheet. Seriously!
A belief in science today is no different to a belief in deities in days gone by. Elon Musket is the high pre-ist of misguided technophiles.
Great rant
With wind and solar, a major problem is treating the difficult to measure portion of the costs as zero. This makes it look like they might be inexpensive. In fact, intermittency is so bad that even year to year variability is a big problem. It is impossible to add enough batteries to fix all of the variability. At best, all an economy can hope to do is greatly overbuild, and then use only a small portion of the energy produced. But this is not a discipline we can easily handle. Also, the cost over the overbuilding becomes prohibitively high.
Of course we can’t solve intermittency by overbuilding. Three times zero is still nothing.
Stationary wind power (not sails) has been around since at least the Dutch in the 1400s. Adding turbines is not great new technology, kinda obvious actually. The Germans invented turbines in the early 20th century.
If you really want to make a useful conceptual breakthrough, try making a better energy storage platform than the battery, around as Pb-acid since about the mid-1800s. There’s even some sketchy evidence that the ancient Egyptians had this technology.
“A belief in science today is no different to a belief in deities in days gone by. Elon Musket is the high pre-ist of misguided technophiles.’
You need to investigate the difference between pure science and applied science before you utter such nonsense.
Applied science is the propagation or application of pure scientific principles to make targeted products or services which may be used by all kinds of unsavory individuals or organizations ie nuclear weapons. So these applied scientists and engineers are working for organizations with a practical agenda ie the Pentagon or big pharma.
And where doe pure science come from? The lab, the laptop? And what does pure science require; under standard conditions. So exclude the real world, conduct your experiment, write your useless report, and then get peer reviewed by others from the ivory towers.
The worst outcome is that Economics has modelled itself on the ‘scientific method’; those theories are working great huh. Treat energy as just another input and quantify everything so the equations can rule. Hows that working for ya?
Oh I did a science degree, I have seen the potemkin village from the inside.Science is now there for sale to the highest bidder.
I have far more time for those who deal in applied science, and for the great scientists of the past; Humboldt et al. Go read some history on science, and the science that dealt with understanding whole systems, not dead tissues under laboratory conditions; its now ego driven. Remember not so long ago 90% of all DNA was considered junk DNA. The “G.od Particle has not be isolated but inferred from all the effort/cost of CERN. . Pretty arrogant huh. Sounds like your MO?
The Tao of Physics was a far better exploration of the world at a fraction of the cost IMHO.
Let me fix that last sentence: “…humans are too intent on great power competition.”
People do not want to settle for less unless they are forced to. There used to be a thing called environmentalism where a few people went against the stream and settled for less. But this was hijacked by economic powers and replaced with so called “green capitalism”, EVs, PVs, windmills etc. Same idea (build stuff so we can dissipate resources), different wrapping.
I would advice you to read more about human psychology/biology and how humans really work, before you come up with a practical solution for this mess.
You need to look more closely at how a self-organizing economy operates. Simply reading the many published works of academic authors is likely to give you a wrong idea of how the economy operates.
Who are the best authors on the self-organizing economy, in your opinion?
I agree that conventional economists have a very poor idea of how an economy operates. I read one economist who said energy was not very important because energy costs were only a small part of the total costs of any economy! He was talking money costs of course.
This would be like me saying my food costs are only 5% of my total household budget costs, therefore food isn’t very important. Of course, if I don’t spend on those food costs I die and everything else I do in my household and life stops. Most conventional economists have no idea (or they forget) that energy drives everything.
It’s almost the case, in an advanced economy, that the most important stuff costs the least (food, water) and the least important stuff costs the most. But this type of economy is a house of cards, of course, kept up by cheap energy.
At the same time, I think an economy could accept higher energy costs if (big IF) the EROEI and the final absolute amount of energy were enough to run some sort of complex civilization. I think a big concern would be that our big cities, especially mega-cities the size of the greater Tokyo metropolis (37 million), or even New York for that matter, are never going to be sustainable on lower energy levels.
In 1666, the year of the Great Fire in London, the population of London was about 500,000. It was a mega city of that era, although a very small city by today’s standards. I suspect after our collapse, that would again be about the largest city viable.
I believe that we live in a system of systems that are all organically interrelated. I doubt that you can just impose some “rational” rules to fix all of this. For one thing, such “rules derive from a paradigm that is a system of systems of some sort too.
” An enormous amount (possibly 50%) of energy use in a modern capitalist economy is wasteful over-consumption which achieves nothing of lasting value for our survival. ” – I used to think that way too – I don’t anymore. What is wasteful consumption to you is a job for someone else. We cannot switch from cars to mass transportation. Too many jobs would be lost in that sector (mechanics, auto parts, fuel jobs, auto dealers, auto manufacturing etc).
the current system will collapse into a deflationary death spiral will humanity re-organize into a new system i don’t think so enjoy these last days with a passion perhaps it is a good idea to secretly hide some long-life food to keep you going during the coming dark ages make sure there is plenty of hard liquor handy for that ‘end of days’ party
Seems to me that the way some of your wise suggestions are best attempted would be through a globally-envisioned network of small local groupings, one grouping at a time, working without the slightest expectation of “success,” working from the bottom up and the inside out. But that is immensely dependent on hard-to-find leadership. Other commenters seem to be giving more reasons for why the top down approach won’t work. Not sure if I’m quite on board with (or properly understand) all of it.
What one person considers wasteful, another considers essential. What do we do with all the unemployed if non-essential jobs are ended for the sake of sustainability? How would the suppliers to their businesses be affected?
Could survive in a vacuum NO. Let us not forget the US is not a capitalist economy…They just use it to trick the sheep.
Do you have a better plan for the west than the road they are on…Cus people are dying to get in. Russia is near the top of people that want in legally in my area.
“Governments that fail because they can’t collect enough taxes” only applies to non monetary sovereign entities, not to federal sovereign governments. They don’t use taxes to pay for anything.so taxes do not form any limit on spending. The real limit is the availability of real resources for sale. Deficit spending creates the currency;
https://medium.com/@richardbmcgee/the-great-deficit-scam-9fedb8987485
Venezuela is a sovereign entity. It can issue more currency, but it can’t get anyone to accept it for much of anything. They have the largest oil resources in the world–of course, not economic at current prices.
We can find many other countries with lots of resources that seem to be failing now. Turkey is a sovereign entity. It can issue more currency. So can Argentina and Brazil.
The low wages of the majority of the citizens puts a limit on how much a government can appropriate in resources.
“We can find many other countries with lots of resources that seem to be failing”
We should be careful to define terms. There are nations with “lots of resources” and out of control populations that can not provide for the massive number of humans. This is failing, failing to control the number of humans.
The question on a nation by nation basis is how many humans can this land support using indigenous long term, say 400 years, materials. Who will step up first to controlled human breeding? Japan has been there and may? do so again? Please person who lives in Japan comment.
That is correct. It doesn’t detract from the principle that the money is spent into existence, but the limit is available resources. MMT recognises that.
«Charlie Hall and his followers don’t understand how the economy works as a networked system. They seem to think that we can get along without art, . . . «
Art?
He thinks art is a non-essential. I would assume that he would think that novels are nonessential. At one time, he could see no point in the financial system. I think he may have changed his mind on that, but there are academic papers calculating energy needs as if the FIRE system is a non-essential piece of the economy.
It seems problematic to put borders around the economic system (or parts of it) and say what is essential and what isn’t. These artificial boundaries, much like intra continental boundaries don”t respect important flows like watersheds, or the flows that allow for pollination by birds an insects. Art, for instance, is involved in the design of every industrial product. It’s silly to try to exclude it a a subject of significance.
I agree. This was not my idea. Excluding the financial system is pretty silly as well.
The group has come up with ideas that I don’t agree with.
Yes art like the stuff found on cave walls and also in Rome.
We can probably do away with handwriting as well, now that computers do all of our printing.
https://imgur.com/a/LmY4BJN
around 1986 China took a different path than the ROW. What happened?
That’s what the End of More looks like…..
I’m thinking mixing in Fentanyl …. is a display of great compassion…. ending the misery…
Once your hooked on these drugs they will most likely kill you. Amazing that so many have kids.
i was think if Eve Of Destruction was released today
https://youtu.be/qfZVu0alU0
Barry McGuire would be called snowflake and traitor for
opposing USA army invasion in Syria /Afghanistan/Libya
That’s a good observation. “People getting burned up on TV” is not normal.
Great clip—-
I only saw Hendrix perform once, but he was in a category by himself.
Indeed, this is one of the best. I was just a child at the time.
https://ok.ru/video/279477357105
“When Arthur Andersen collapsed after becoming entangled in the Enron scandal in 2002, the US accounting firm was written off by many in the audit profession as an outlier… But a steady stream of damaging news involving the accounting giant KPMG over the past 12 months has regulators, competitors and clients once again posing hard questions about the strength of one of the world’s biggest audit firms.”
https://www.ft.com/content/f660b6a2-8b75-11e8-bf9e-8771d5404543
If a person divides up KPMG, does that make the situation any better?
“”You’re probably looking at 30 days.” That’s how long it would take before production “grinds to a halt” at automotive assembly plants, parts manufacturers, and other industry businesses on both sides of the [Canda/US] border if U.S. President Donald Trump’s proposed 25 per cent tariffs on all imported vehicles comes to be.”
https://www.cbc.ca/news/canada/windsor/auto-tariffs-bad-for-both-sides-says-auto-expert-1.4753098
It is hard to see that many cars with a 25% tariff on them would be sold. There aren’t any cars, I suspect, that have no imported parts or and no imported steel.
Of course, if there is a need to offset the big tax cuts, Trump may be looking at tariffs as a way of adding some governmental revenue.
That would more than offset the savings from offshoring manufacturing to mexico
Under the WTO treaty all member states are allowed to impose as high a tariff as is needed to balance trade. This is what they ALL agreed to and signed. So, SUCK IT UP and stop whining China, etc..
“In the second quarter emerging markets currencies had their worst fall in seven years. July started better, but the downward pressure is back on a steady course of interest rate tightening in the US. This attracts capital to the dollar. Equity investors have been pulling money out of emerging markets for 10 weeks straight. So have bond investors…”
https://www.ft.com/content/0081b722-8b3e-11e8-bf9e-8771d5404543
“Nicaragua’s economy is tanking as the violent chaos engulfing the nation paralyzes business activity. Police and pro-government paramilitary forces fired on government opponents hiding behind barricades and on university campuses this week, and besieged protesters who’d taken refuge in a church, as the clashes showed no sign of waning after three months.”
https://www.bloomberg.com/news/articles/2018-07-19/nicaraguan-economy-in-free-fall-as-hundreds-killed-in-protests
“Brazil’s oil regulator ANP said on Thursday it would not establish a minimum frequency for fuel price adjustments, after a nationwide truckers’ protest over rising diesel prices in May cast a spotlight on the issue… The crisis renewed a national debate over whether fuel prices should reflect rising international oil costs and shore up the finances of state-run oil giant Petrobras or protect Brazilians still hurting from the worst economic crisis in a generation.”
https://www.reuters.com/article/us-brazil-fuel-prices/brazil-oil-regulator-rules-out-norms-for-fuel-pricing-frequency-idUSKBN1K9347
“Tansu Çiller, a former prime minister of Turkey, warned of a crisis in the corporate sector after some large companies began talks with banks to restructure their loans. “I see a very serious expectation of a crisis in the private sector,” Çiller said , according to Turkish columnist Abdulkadir Selvi.”
https://ahvalnews.com/turkey-economy/former-turkish-prime-minister-warns-serious-crisis-risk
Yes, that’s an interesting loop.
When dark clouds of recession start to move, bubble piercing threshold or what have you, through the sky the global cattle herd moves from EM_currencies to USD in an instant. This won’t change unless the US/NA is demonstratively out of own resources or control over the global and regional ones, and this won’t change unless further military campaign failures of profound implication materialize, e.g. botched naval blockade in Asia/ME etc.
So, in summary these gigantic forces need time, so it’s all BAU extension mode as usual, probably for next decade or two at the minimum.
I’m not sure how you extrapolate that timeframe, WoH.
We’re only a year or two away from oil-supply constraints stemming from the recent dearth of E&P investment in conventional crude forcing a price-spike on our unprecedentedly debt-saturated global economy, which to me is a backstop guarantor of GFC 2.0 in the unlikely event that the trade war or problems in the EU or Fed and other central bank tightening do not trigger one first.
The con-fidence game rulez supreme.
Simply, most of the world believes (or is over invested to their detriment into arrangements) that the US might be bruised and not in such perfect condition, but still remaining the best horse out there, hence the above scenario when then next stop GFC 2.0, 3.0, .. would be just followed with bumpy plateaus again, delaying the final neck braking event to lets say early mid 2020s or bit later when all the dominoes start to be visible in plain sight.
The thirst for rapid growth is not there any more, incl. Asia. Only the African demographics suggest some, but little to no investments should be bound there. Hence the oligopolies of CBs pull together for another post GFC liftathlon action: US, EU, their ring of tax heavens, China, Russia, India, ..
—
In parallel I also run other decent probability scenarios such as yours, that we are really in stagnation or even per capita prosperity decay of past ~20yrs (inside OECD) already and the very next GFC will reveal that all as show stopper.
Another scenario could be energy-techno fix coming out of nowhere etc.
–
Plus lets consider various lesser or smaller sub variant of these scenarios. In total I’d choose 4x major ones with ~24% probability, and the miraculous outlier one obviously less.
Thank you for your thoughts, HoW. Oh, for a crystal ball! The global economy is damnably hard to second guess. 😀
Re my probability scenario, I wouldn’t say that we have been in stagnation per se, but we’ve needed some very creative central banking, lavish equity issuance, an orgy of stock buy-backs, unsustainable expansion of debt to offset the physically diminishing returns Gail writes about. In so doing we have created a precarious, geographically uneven and increasingly inequitable pseudo-growth, the flimsiness of which will be laid bare as the central banks continue to withdraw the stimulus that facilitated it.
I don’t discount the possibility that those same central banks could once again pull us back from the brink as they did in 2008 and instigate another plateau (which would necessarily be bumpier than the one we’ve just experienced, as the noose of diminishing returns tightens further and the political sphere turns increasingly fractious). I think GFC 2.0 will be pretty terrifying and people will *want* to believe in them. Whether they will have the practical ammunition and the personalities to *allow* people to, only time will tell. My suspicion is that they won’t.
‘They’ will save us. As if ‘they’ are all powerful….
It was suggested to me by someone when I suggested the next GFC will be apocalyptic… do you really think that ‘they’ will allow such a situation to happen? Why would ‘they’ ….
It is inconceivable… unthinkable … that anything really bad could happen….
There are going to be the physically obstacles post BAU (starvation, disease, violence, ponds…) but we should not discount the psychological impacts…
First off… when ‘they’ do not save the day …. how does that affect people?
And then we have the DDPs (doomsday preppers) — who are ill-prepared for any of this because they did not take the FE Challenge.
When the washing machine stops working and they have the endure endless hours of grueling work just to clean clothes…. And when there is no petrol for the chain saw and they have to cut trees with an axe and haul them (increasing distances) to their homes…. what impact will that have on people having been completely plugged into BAU for their entire lives?
Suicide will no doubt be one of the leading causes of death post BAU.
When people realize that ‘they’ are not going to reset the system…. when they realize that ‘life’ consists of endless drudgery… and is nasty and brutish (and short)….
When they realize they cannot even get a cup of coffee….. most of them are just going to throw in the towel…..
But that will take a bit of time…. during the period that they believe ‘they’ will step in to sort things out and rescue them…. all hell is going to break out as 7.8 fight to survive until the lifeboats arrive.
“We’re only a year or two away from oil-supply constraints”
Bingo!
6 months a strong possibility.
Or perhaps oil demand constraints, coming at close to the same time.
The USA would have no problems next year with energy if the three largest importers (India, China & EU) only import 1/2 of the energy that they imported last year as prices would fall with the glut of energy on the market.
The problem is, how to make that happen?
Recession. Debt defaults.
And that would result in the collapse of oil producing nations…. I suspect that would be a bad thing….
Although there are those who believe this would kick off a Grand Adventure….
BahamasEd, a man after my own heart. Yes, how to make that happen. Go Trump?
No wonder Trump is complaining about the interest rate hikes. They add hugely to world instability, besides making autos more expensive to purchase, even apart from tariffs.
Go Trump, indeed, lol. I’m not convinced he’s that bothered about instability outside the US though, as he seems to regard nation states as akin to corporations in competition with each other as opposed to interdependent, localised expressions of a global whole.
I’m not convinced he’s that bothered about instability outside the US
For him, I don’t think he knows, or cares, if it is plus or minus. This is a ex tv host who has been bankrupt four times.
He is there to entertain … amuse…. nothing more
https://upload.wikimedia.org/wikipedia/commons/thumb/d/d4/Court_jester_stockholm.jpg/736px-Court_jester_stockholm.jpg
Alternatively he is the chosen one to front for the serious ones… who are attempting to throw the El ders under a bus
There is certainly warfare among the elites. But I have no visibility to the players, the teams, the goals.
“U.S. President Donald Trump on Thursday criticized Federal Reserve policy even though most economists believe the highest inflation in seven years and lowest unemployment in 40 years justify recent interest rate rises and a strong U.S. dollar. Trump said he was concerned about the potential impact on the U.S. economy and American corporate competitiveness from rising rates and a stronger dollar.”
https://www.theglobeandmail.com/business/article-trump-not-thrilled-about-fed-decision-to-hike-interest-rates/
“The current bull market in stocks is a month or so away from becoming the longest in history. If it happens, then what? …a growing number of experts are questioning whether the stock market’s run will keep going through 2019 and beyond. The big threat now is the potential for a punishing trade war, as the United States squabbles with allies and rivals alike on tariffs. That could squeeze earnings and economic growth around the world. Beyond that, several firmer warning signals for the market are flashing yellow.”
https://business.financialpost.com/pmn/business-pmn/warning-signs-rise-for-stock-markets-record-setting-run
“Hedge funds enjoyed their worst first half performance since 2000, according to a new report.”
http://www.funds-europe.com/news/hedge-funds-record-weakest-h1-performance-for-18-years
Go Trump!
gail did your read whole article
trump also said that But at the same time I’m letting them do what they feel is best
means he is not touching fed any time soon
Sorry, I should have read the whole article. Maybe they will listen anyhow!
https://www.reuters.com/article/us-usa-trump-fed/trump-ratchets-up-criticism-of-fed-interest-rate-rises-idUSKBN1KA1SG
Trump ratchets up criticism of Fed interest rate rises
I recall that there are already significant divisions within the Federal Reserve as to whether or not they should plough on with two further rate rises this year. Hopefully Trump’s interventions will tip the scales in ‘ favour of the ‘doves’.
https://www.bloomberg.com/news/articles/2017-11-02/trump-hated-low-interest-rates-then-he-became-president
“Trump Hated Low Interest Rates. Then He Became President”
I recalled that during the campaign Trump railed against Yellen over low interest rates saying the only reason she was doing it was to help Obama, so I did a Google search and found this article, which is the opposite position he now has. I don’t post very often anymore but this was too hard to resist. It may even have been Trump’s public criticism of Yellen that influenced the Fed’s increase in interest rates. Now wouldn’t that be karmic.
“Donald Trump the presidential candidate denounced the Federal Reserve’s promotion of low interest rates as feeding a risky economic bubble. Now in the White House, regularly celebrating the stock market’s advances, he’s had a change of heart.”
“I do like a low-interest-rate policy, I must be honest with you,” Trump told the Wall Street Journal in April, less than three months after taking office.
Interesting!
Hah – well, situational morality is to be expected in such an individual.
Funny…. you would have thought that POTUS and the representatives of the people … would be the ones wagging the tail… not the other way around…
Oh please Fed… don’t raise the rates… pretty please… we are begging you …
I have a good mate who worked in senior management for a global corporation … they merged with a big US outfit… he was retained as senior management …. he spoke out dissenting on something at a meeting that involved the top boys…. and the honcho chided him like a little boy saying ‘thank you for your input’ and completely ignored him….. he said he felt rather embarrassed and never spoke out of turn again ….
This reminds me of that.
It’s simply to help stop politicians manipulating the economy to generate booms just before elections and allowing the busts to appear immediately after the vote. Something the Tory party are masters at.
You barbarians are so cute, “he spoke out dissenting”.
https://www.amazon.com/Organization-Man-William-H-Whyte/dp/0812218191
LMAO, “he spoke out”, if only I had a copy of FE’s video of man with wiggling legs and arms.
And the Fed ignored him…. even though they encourage him to criticize them because it gives the appearance that the elected reps of the people are in control….
Nice overview of recent developments:
“Officials gathering for Group of 20 meetings in Buenos Aires this weekend will have plenty more crisis fodder than Lionel Messi’s World Cup performance to gab about.
“We heard growing fears this week that a downturn might be brewing from various corners of the global economy, while central bankers find their place in the policy tightening cycle and trade battles rage on…”
https://www.bloombergquint.com/global-economics/2018/07/19/global-economy-lives-on-the-edge-as-crisis-veterans-sound-alarms
Given the quiet 4% down sizing that was recently done by the large corporations in the U..S. it sure does look like rough sailing ahead for the economy.
“Sudan’s inflation rose to 63.87 percent year-on-year in June, from 60.93 percent in May, the state statistics agency said on Thursday, as the dollar-starved country grapples with an economic crisis.”
https://www.reuters.com/article/us-sudan-inflation/as-sudan-currency-continues-descent-inflation-hits-64-percent-in-june-idUSKBN1K920W?il=0
“South Sudan and Sudan have deployed a joint military force along their border to protect oil fields and pipelines from criminal activity, South Sudan’s Minister of Petroleum Ezekiel Lol Gatkuoth was quoted as saying on Thursday.
“South Sudan broke from Sudan in 2011 and took with it around 350,000 bpd in oil production. After South Sudan’s secession from Sudan, the two countries have been mutually dependent on oil revenues, because the south has 75 percent of the oil reserves, while the north has the only current transport route for the oil to international markets.
“But then civil war in South Sudan broke out in 2013 that further complicated oil production. And the oil price crash the following year additionally affected oil income for the ravaged economies of both countries.”
https://oilprice.com/Latest-Energy-News/World-News/Sudan-South-Sudan-Deploy-Joint-Forces-To-Protect-Oil-Fields.html
Global Population Growth Ceased in 1988…Population Has Only Grown Older Since
https://econimica.blogspot.com/2018/07/global-population-growth-ceased-in.html
…one more blog from Chris Hamilton
If we take into account, that soon afterwards, the Japan asset prices collapsed, then, really, this was the time when the population ceased growing. What was confirmed by 2008 crash.
I miss one important factor in energy consumption charts – the human resources energy. Although the energy consumption of various external energy types rises, the energy provided by the human resources goes down, when the population is getting older. Only the total of supplementary energy and human energy shows the real picture.
Based on the blogs of Chris Hamilton, what about distinguishing between the human resources producing regions and the human resources consuming regions?
Africa is now the only human resources producing region, as it is easy to ship food and medication to Africa and sustain the population growth there, without the need for other energy needs like heating or fight against jungle.
Thus, Africa is the last low cost human resources producing region in the world.
You mean it gets a lot of aid to allow the population to grow? And what does the fight against jungle mean?
Fight against jungle means that too wet conditions in tropical areas are not so much suitable for population increase, as there is too much water, causing landslides, floods, the human activity outside is limited by the rains etc., i.e. these places can no serve as the permanent environment for large numbers of humans.
Not “a lot”. But vaccinations and antibiotics is really cheap, and it is relatively cheap to ship food when there is a famine somewhere, while not long ago they would just die and no one would know until afterwards.
Some basic sanitation helps a lot as well. Keeping human waste products out of the water supply help greatly.
Crop failure in Sweden this year. 100 years ago that would mean famine, now most will not even think about it, avocados and toast comes from the supermarket.
How did the number of births in Africa more than triple between the 1950-1955 time period and the 2010 – 2015 time period? I had thought that more babies living to maturity were part of the population explosion in Africa, but this big increase in the number of babies is amazing.
I looked at one of the UN population charts Chris uses in his analysis and figured out the answer: There has been a huge increase in the total population of Africa. According to UN estimates, the population of Africa in 1950 was 229 million people. It increased to 1.194 billion people in 2015. Thus, its population grew by a factor of 5.2.
The UN report doesn’t have a Middle Eastern grouping. If it did, I am sure it would show pretty amazing results as well. These are some population figures (country, 1950 population 2015 population, 2015/1950 population):
Iraq 4.4 million, 36 million, 8.2 times as much
Saudi Arabia 3.1 million, 31 million, 10 times
Yemen 4.4 million, 30 million, 6.8 times
Africa with 250 million people would be a very nice place.
Not really–
The annual increase in the number of living humans peaked at 88.0 million in 1989, then slowly declined to 73.9 million in 2003, after which it rose again to 75.2 million in 2006. In 2017, the human population increased by 83 million.
Maybe the papers authors were looking at the data upside down?
Whenever I am forced into a discussion of recycling EVs solar wind or any other re tar ded issue related to sustainability…
My fall back is — ya well every year we add another Philippines worth of new humans to the planet… who all want to eat and buy stuff and drive cars and live in houses…. so this is all moot – no?
That usually brings the discussion to an end… in a most elegant manner
FE, it is not the end of a discussion it is the beginning of the real discussion. When and how will we control the number of humans? If not us who? If not now when? I do not mean unilateral disarmament, that is having zero children I mean active means to limit a nations humans numbers below a target value, and also above a lower bound target.
In poor nations vasectomies and tubal ligation after zero, one, two, or three children depending on whatever algorithm the nation chooses works fine. In richer nations all done by record keeping and fines, jails, and sterilization of any children beyond the prescribed number per couple based of whatever algorithm the nation chooses.
When humans were required for the army this approach had issues but now with a fully automated army population control is a requirement of a strong nation, a strong economy, and hence a strong army. As a matter of nation defense we must have population control this is the one and only line that sells in the U.S..
Population growth is necessary — otherwise BAU dies.
I am not being critical when I mention the nearly 100m new mouths …. I am simply pointing out the futility of green grooopiness….
The population growth is important, but the oversupply of humans is not desired. Finally, there is nothing to fight or compete about, as we will not have energy to extract resources or recycle them so that we can adapt the world to our needs.
Also the extermination of some part of the human population has no meaning, as the cheap resources are already consumed and our problem is the costly resources that consume a lot of, also human, energy.
The problem is that some people can not understand it and think that increasing the activity (including increasing the population via stimulating its growth) can change the fate of the human species. The fight for resources surely reduces the quality of life, as it consumes a lot of additional energy.
One of my friends told me that our former university schoolmate, a woman who joined a catholic religious community and took vow of celibacy was the best phisically preserved person at the meeting of the university schoolmates after 15 years afger their graduation. She simply decided not to fight for resources to have family and children, which allowed her to live the life in line with the reality of the human race.
He writes about births peaking. Obviously an plateau since 701M new consumers in 2010-15 compared to 700M new 1985-90.
I guess it’s all inter-connected. Economy worsens and people have less babies. In Africa economy has expanded (albeit from a very low level) and people keep having lots of babies. More humans drives up demand.
Maybe in the future we will get some sort of comeback for the slave ships. Young and strong people needed to do physical labor when the machines fall apart.
Where in the world do you have so many war conflicts as in Africa? Africa is in the state of collapse due to its steeply increased populations.
Iran becoming like Venezuela?
https://www.theguardian.com/world/2018/jul/20/desperate-to-find-a-way-out-iran-edges-towards-precipice
Very cheap kind of msm propaganda, the article cherry picks and mixed everything together. Basically what’s going on in reality is that the country now being at extra ordinary level of ADDITIONAL stress thanks to the heat wave, apart from the sanction regime despite Iran sticking to agreements (vehicle to hamper earned petro dollars for recycling into their economy), and obviously some dragging effect of domestic mismanagement, overpop forcing, youth unemployment etc.
So, in essence one *faction in the west decided, uhm what a lovely opportunity, lets push them against the wall some more.. If the plan is to provoke them to mount oil shipment blockade into Hormuz, it’s not certain US and allies can easily counter react without revealing some serious hardware deficiency. But it definitively means higher stress in the EU, as when the oil stops flowing e.g. Italy’s import unbalance goes crazy, further ricocheting in further instability.
*as we know e.g. Kerry already out of office (other gang-faction) was flying like crazy around the region recently trying to calm Iran and encourage EU to sidestep the US sanctions..
Container imports at the ports of Los Angeles and Long Beach, the largest ports in the US, rose 8.4% year-over-year in June. Typically, about 70% of their container imports are from China. Container imports at the Port of Oakland, which also gets a large portion of its imports from China, jumped 8.7% in June.
https://wolfstreet.com/2018/07/19/how-long-can-this-euphoria-in-trucking-and-rail-last/
Econimica site is up again, but sadly-strangly with deleted archive..
https://econimica.blogspot.com/
Start preparing for the next financial crisis now
We need measures to limit the likelihood of disorderly market processes in the next downturn
Global monetary policy has been “ultra-easy” for many years. Yet it is becoming clear it is now caught in a debt trap of its own making.
Continuing on the current monetary path is ineffective and increasingly dangerous. But any reversal also involves great risks. It follows that the odds of another crisis blowing up continue to rise.
It is to be hoped that the preparations being made by policymakers to manage such a situation are evolving at the same pace. Simply crossing your fingers and praying that “it might never happen” would seem imprudent, to say the least.
Carrying on with current monetary policy brings with it the threat of inflation. And given economists’ lack of understanding of either the level of “potential” or the inflationary process itself, it could easily get out of hand.
However, inflation is not the only danger. First, debt ratios have been allowed to rise for decades, even after the crisis began. Moreover, whereas before the crisis this was primarily a problem of the advanced economies, it has since gone global. Second, tolerance of risk-taking threatens future financial stability, as does the narrowing of the profit margins for many traditional financial institutions. Third, the misallocation of real resources by banks and other financial institutions is encouraged by this monetary environment. With markets unable to allocate resources properly, due to the actions of central banks, the likelihood that rising debt commitments will not be honoured has risen sharply.
Unfortunately, normalising monetary policy also carries significant risks. Clearly, a strengthening global economy is preferable to a faltering one. Yet, in such a situation, rising inflationary pressures would likely lead to a monetary tightening that could have destabilising effects.
An unintended consequence of regulatory reforms has been to reduce market liquidity. Even in the absence of inflationary pressures, financial markets themselves might react in a disorderly way to signals of stronger growth. Sovereign bond yields in advanced countries are at historically low levels and are ripe for a reversal. If they do start heading in the opposite direction, this could have important implications for the over-extended prices of many other assets.
What action should prudent policymakers take to prepare, in advance, for such an outcome? National governments and central banks, in association with international organisations, should be negotiating memorandums of understanding about who does what in a crisis. “War games” would be a useful adjunct to this. And measures to ensure that adequate levels of liquidity can be provided to stabilise markets and the financial system are also crucial. As things stand, in the US for example, many provisions of the Dodd-Frank act, passed in the wake of the financial crisis, would hinder the Federal Reserve in attempts to provide both domestic and international liquidity.
Perhaps most important is the need for governments and international forums to revisit bankruptcy procedures. Debt that cannot be serviced will not be serviced. Governments must enact legislation to ensure this can happen in as orderly a way as possible. Unfortunately, recent work at the OECD indicates that bankruptcy procedures for private agents fall some way short of best practice in many countries. Nor, despite great efforts, have we adequately improved our legal capacity to deal in an orderly way with banks that are no longer viable, but are still “too big to fail”. Procedures for the restructuring of sovereign debt are inadequate too.
It is essential we take measures now to limit the likelihood of disorder in markets in the next downturn. Early action to help resolve the debt overhang problem might even serve to reduce the likelihood of that downturn occurring. This need for preparatory action is amplified, given our scope for reacting with counter-cyclical macroeconomic policies is now limited. These policies might spark the disorder we wish to avoid. Far better then to prepare for the worst, even as we hope for the best.
The writer is chairman of the economic and development review committee at the OECD
https://www.ft.com/content/e1dc1286-0ccb-11e8-bacb-2958fde95e5e
Looks like a Ponzi scheme’: China’s debt mountain is growing
“China’s economic growth was largely driven by debt and its corporate debt looks like a Ponzi scheme,”
https://www.smh.com.au/business/markets/looks-like-a-ponzi-scheme-china-s-debt-mountain-is-growing-20180719-p4zsdh.html
He looked at me like….
A Doomie Prepper does when I tell him that the hordes are going to kill his animals, raid his garden, and rapse his wife…
Just before the spent fuel ponds burn
Or better still…
He looked at me just like most people do when I tell them that Tesla cars are powered by coal generated electricity….
Or even better … he looked at me like green grooopies do when I tell them that GG WWWW is a ho ax… and that global temperatures have been falling for two years now…. and that temperatures have always fluctuated often very dramatically over short periods — long before we started to burn FF….
Declining profitability of the general economy
Despite increasing global integration of regional economies, there doesn’t seem to be a lot of good
investments available. Of all the sectors in the economy, I feel that real estate is invested in the
most. Education gets an honorable mention. Even now, the discussion among decision makers abouttalk about raising investment, revolves around building
more luxury housing and “going to college”, Investment in other sectors of the economy have been
disappointing. The sector that everyone likes to talk about, information technology, has many large
prestigious companies that are barely earning a profit. The large prestigious companies that I refer to are companies like Twitter, Facebook, and Amazon These companies behave like healthy companies, they hire workers at high wages, work them hard. and they are constantly expanding, but there is almost no return on investment on some of them. I’m reading something about declining profitability in the U.S. economy since the 1970s, and the conclusion seems to be that roi is declining in all sectors and no one ever mentions it. It is mentioned a lot less than even limits to growth.It is also a better summary of the predicament we are facing.Profit, under any economic system is important. There has to be a net benefit to individuals or society for many activities.
FE, I am loving the audio book “Against the Grain” Do you have anymore recommendations.
“Against the Grain”
https://player.fm/series/kpfa-against-the-grain
A podcast that has been around for quite a while, but a bit high cognitive for most ‘Merikins.
(Where, I’m sure, the add on’s are infringing)
https://www.audible.com/pd/Nonfiction/The-Rise-and-Fall-of-American-Growth-Audiobook/B01ITPUZ0W?ref=a_a_library_c4_libItem_8_B01ITPUZ0W&pf_rd_p=ae76b2bb-e63d-4a67-b357-dab3dee05ca1&pf_rd_r=R6XQ8VGXA0DXK500ZNRD&
https://www.audible.com/pd/History/The-Fate-of-Rome-Audiobook/B076TCCB4T?ref=a_a_library_c4_libItem_13_B076TCCB4T&pf_rd_p=ae76b2bb-e63d-4a67-b357-dab3dee05ca1&pf_rd_r=R6XQ8VGXA0DXK500ZNRD&
https://www.audible.com/pd/History/The-Origins-of-Political-Order-From-Prehuman-Times-to-the-French-Revolution-Audiobook/B006P482NC?ref=a_a_library_c4_libItem_16_B006P482NC&pf_rd_p=ae76b2bb-e63d-4a67-b357-dab3dee05ca1&pf_rd_r=R6XQ8VGXA0DXK500ZNRD&
Please not the second book about the downfall of Rome…. contains many references to dramatic kkkkkllllimate CCCChhhhange over very short periods of time ….
The references are not made with the intention of denying kkkk cccccchhh… rather they are mentioned because they resulted in the failure of crops and caused the spread of plagues and diseases.
Please note there were no ICE vehicles nor coal burning electricity plans during the Roman Empire
This information can result in the head of a DelusiSTANI exploding…. well maybe not…. because DelusisTANIS are so f789ing stooooopid they won’t be able to connect the dots
I can also recommend the Fate of Rome, I purchased on FE’s recommendation, I hope he is on commission? Rome’s financial ‘adventurism’ (to quote Dr Morgan) the introduction of fiat and then back to gold was also very interesting. As were the climate issues and floods due to the removal of large hill side forests and the destruction of soils. The Roman Climate Optimum, perhaps that is what we have been going through and hence our advancement? It was their cooling (which is heading our way, see current sun spot activity cycles at Nasa) that was part of their downfall.
https://solarscience.msfc.nasa.gov/SunspotCycle.shtml
Then the slave (energy) issues. Talk about history rhyming.
I will be looking at ‘Against the Grain’ this weekend. Perhaps OFW, needs a book list?
Thanks for the latest article Gail.
If I recall Grains gets into the slavery (energy) issue….
One of the primary reasons for fighting wars was to acquire slaves (energy)….
And for over a century we have fought wars over fossil fuels (energy)….
Humans have always been lazy … always looking for someone or something else… to do the work….
Also, grinding grain is a whole lot of work. (Rice doesn’t make as good bread, so it isn’t/wasn’t as often ground, I expect.)
Bread is a convenient carry-along food.
SPQR: A History of Ancient Rome
https://www.amazon.com/SPQR-History-Ancient-Mary-Beard/dp/1631492225
New York Times Bestseller • National Book Critics Circle Finalist • Wall Street Journal Best Books of 2015 • Kirkus Reviews Best Books of 2015 • Economist Books of the Year 2015 • New York Times Book Review 100 Notable Books of 2015
Even with these MSM endorsements I was impressed.
Thanks I will order that one too.
Well… the Ministry of Truth knows G W is a ho ax… and they know that 99.99999% are so f789ing stuuuupid that even if they read this book — replete with endless examples of g w pre- fossil fuel burning … they still won’t get it…. so they are happy to recommend it….
The author could have chosen the title – how G W ended the Roman Empire…. and rolled out the facts as he does.. and still…. like I said… there is no cure for stuuuuupid…
This is also excellent and relevant to the shrinking pie world we are experiencing… https://www.amazon.co.uk/This-London-Life-Death-World/dp/1447274792
Food-Stamp Use Is Still at Recession-Era Levels Despite Job Gains
https://www.bloomberg.com/news/articles/2018-07-19/food-stamp-use-still-above-recession-era-despite-u-s-job-gains
this is perfect example of complexity of bau as showing in this video
https://youtu.be/jEo-ykjmHgg
At more than 430 miles long, the Mauritania Railway has been transporting iron ore across the blistering heat of the Sahara Desert since 1963.
That’s a very, very nice piece of film.
Beautifully shot, the atmospheric music put me in mind of Brian Eno or Autechre, while the shots of the desert had me waiting for Peter O’Toole to make an appearance as Lawrence.
Stunning.
had me waiting for Peter O’Toole to make an appearance as Lawrence.
While a bit raciest and sexist, they don’t make movies like they used to.
too bad they can’t make those films in Heat-O-Vision(TM). maybe work with a theater owner on the AC?
Lovely. Thanks. Didn’t even know about tit.
You should learn more because they are awesome
https://twitter.com/i/moments/1019922120787333120
It would be great to see Issa go— he sums up greed and incompetence.
But, while different on micro issues, the macro issues are the same.
So comrades, ready for less rights and more control? It is what our state controlled by corporations has in store.
I haven’t gotten a penny of that money.
https://getyarn.io/yarn-clip/1e14e252-3639-43af-be7d-b74e592146ae
Little treasure from FE/TM’s home video library vault:
I was surprised how well Hiroshima seemed to be doing after the bomb dropped there. They were able to rebuild surprisingly quickly. I saw the memorial, but I don’t remember the details.
the radiation amounts or dose received at Hiroshima and Nagasaki were very low compared with Fukushima. the Japanese were in effect doubing or more down on fission nuclear power to help them offset their fossil fuel dependence, aiming at one time for 50% of ther power production. reactor cores contain much more radioactive material than the modest-sized atomic bombs like those dropped on them. they forgot or severely underestimated the risk the country has to large earthquakes and tsunamis. the result is now history.
the memorial at Hiroshima was the only place and time that I felt strangely unwelcome when visiting Japan. the surviving families still take it rather hard.
U.K. watchdog, EU tell banks to prepare for hard Brexit
https://www.theglobeandmail.com/business/article-uk-watchdog-eu-tell-banks-to-prepare-for-hard-brexit/?cmpid=rss&utm_source=dlvr.it&utm_medium=twitter
“Weird ‘wind drought’ means Britain’s turbines are at a standstill
“… The price of natural gas, which is being burned more to compensate for the lack of wind, has ticked up slightly.
“Ireland is facing similar problems with a lack of wind while falling water levels in rivers have also curtailed hydroelectric power generation in July.”
https://www.newscientist.com/article/2174262-weird-wind-drought-means-britains-turbines-are-at-a-standstill/
I’m still wondering: where’s an AC power grid which gets nearly even half its energy from IRE (intermittent renewable energy)?
Without fossil fuels, could there even BE a power grid, etc.?
Turned out nice again.
I imagine that with weeks on end of cloudless long days of sunlight, thanks to the high pressure that won’t budge, the UKs solar panels will be working much more efficiently than is normal.
Of more immediate concern is that with no sign of rain on the way, we’re looking at a poor harvest this summer. Hosepipe bans and water restrictions are already on the agenda.
I don’t think that there could be a power grid without fossil fuels. There also couldn’t be roads without fossil fuels. There couldn’t be international trade at anywhere near the level we have today without fossil fuels. We would be depending on wind-powered ships that could be blown off course. They would likely take a month or more to cross the Atlantic.
The Insanity of Endless Growth (Hayden 2018)
https://www.scribd.com/document/384214485/The-Insanity-of-Endless-Growth-Hayden-2018
Humanity has a key failing – we tend to deny our problems. Humanity denies some things because they force us to ‘confront change’, others because they are just too painful, or make us afraid..
“Tumbling out of the European Union without a deal in hand could cost the pound dearly. Sterling could slump as much as 8 percent against the dollar if the UK doesn’t clinch a deal with the EU by March 29, when the nation is slated to leave the bloc, according to a survey of analysts.”
https://www.arabianbusiness.com/currencies/401083-uk-pound-may-slump-again-in-the-event-of-no-deal-brexit
“The cost of filling up a typical family car [in the UK] with 55 litres of unleaded rose by £6.98 to £70.40 between June last year and June this year. The cost of filling up with diesel jumped by £8.14 to £72.66.”
http://www.dailymail.co.uk/news/article-5968575/Fuel-prices-soar-highest-level-nearly-four-years.html
“The crisis engulfing Britain’s high streets will deepen on Wednesday when Gaucho, the steak restaurant chain, crashes into administration after its lenders opted not to pursue a rescue deal.”
https://news.sky.com/story/1500-jobs-at-risk-as-gaucho-collapse-deepens-high-street-crisis-11440486
“Demand for retail space in London has dived as woes around high street closures grow, according to a highly-regarded survey out today. Roughly 68 per cent more chartered surveyors in London’s retail sector noted a quarterly fall, rather than a rise, in demand for space in the capital, reaching levels not seen since 2008.”
http://www.cityam.com/289397/demand-london-retail-space-slumps-closures-mount-up
dove
“dove” = murican
“has dived” = ole english
I think either is acceptable
I thought Ed was referring to central bank ‘doves’ as opposed to ‘hawks’ but couldn’t quite work out what had prompted the reference. 😀
This goes to the heart of what Gail has been writing about for years. Case in point I use about 28 liters (7 US gallons) of unleaded gasoline / day to just go back and forth to work where after taxes / insurance / social security / and a 10% contribution to my retirement plan my take home pay is about $3500 / month. With rising inflation and rising fuel prices it is getting to the point to where it would be more profitable to not work.
Someday this war is gonna end.
Daily commuting round trip burning 28L, i.e 14L one way.. ??
Did you consider other options, because translated into midsized diesel car, such huge amount of fuel demand would get you ~500km. Do you really commute daily 500km round trip ?!?
Otherwise something is really “wrong” there,
e.g. let me guess, >3ton vehicle with 4.0L displacement “1970s” engine etc.
–
note: and in some countries like Japan (small displacement Kei carz) or Asian/Southern EU maxi_scooter culture (all weather), that would be perhaps ~700km for the same amount of fuel.
Texas – Currently I drive 65 miles one way (130 miles a day). The flip side is my wife’s commute is about 5 miles total a day. My car 2008 Ford Escape gets about 23 mpg. The house is paid for at least. As for vehicles I really wouldn’t want anything smaller while competing on the road with everyone else in their monster trucks, yuge SUVs, and 18-wheelers.
My wife just got a job in the town I lived in when we met and still work. My house from my bachelor days was also paid for and I sold it when we got married. We are in the process of buying a new house (our “dream home”) with a hefty down payment from the sale of my old house that I’ve been sitting on. We’ll be selling our current house once moved in and that’ll be a big chunk to add to our emergency fund. My commute will drop to about 40 miles a day and hers will be about 30 (she drives a mazda and gets about 25 mpg).
We are both 47 and I don’t speak much about the issues discussed here and on other similar forums, but she knows I was a bit of a prepper when we met. I’ve tamped it down over the past couple years. We rode out Hurricane Harvey with no problem. We haven’t had any debt in years so I’m a bit freaked taking on a mortgage knowing what I know. My justification is that when SHTF and it will is that it won’t matter. I’ve worked every single day of my live since I was 15. I truly believe it won’t matter.
~210km per day is indeed a lot to travel, but if you are planning to relocate closer..
Yes the path dependency is what makes better mpg in most of the US impossible,
it will never happen as complete national fleet overhaul takes decades. You are right when facing other tanks one should not drive less than 2t (new) carz..
Some of the spec configuration shows me even 7.7mpg highway for the 2008 Escape.
This is crazy, people would drive for month/s on that fuel tank elsewhere in the world.
‘My justification is that when SHTF and it will is that it won’t matter.’
I mentioned this concept to a friend who is finance… he said you do know that if your bank goes down the mortgage paper will not vapourize… it will be picked up by another bank….
But … I said… there won’t be another bank… they are all going down
He looked at my like my dog looks at me when I ask her what the weather is going to be like tomorrow.
I’ve pulled out an old BMW motorcycle this summer. Parks free (v.s. 150 a month) and gets 40-50 mpg. ins optional. Wife on a Vespa. Even better.
That’s why I suggest to him maxi-scooters, BMW or Honda ~4L per 100km, all weather (ABS, heating, ..), large fairing, at highway speeds..
However, the paradox is that these bikes (as all of them) have shorter service time and overall durability in comparison to carz. And the price is rather insane (almost same as for econobox diesel car). So car is still a better option for those long distances per year and unsafe highway areas.
The best efficiency by several factors is obviously commuter train + ebike, but only few advanced societies offer this to their wider population.
if involved in an accident, not even your fault, you and the wife lose.
Yep, that’s why I wrote about the path dependence, there are very few serious accidents in streets full of light scooters (e.g. Asia), where it sort of organically evolved since motoring and fuel was expensive, low incomes. In contrast you can’t introduce this to already pre-existing situation of saturated transportation network full of heavy (over weighted actually) carz and trucks. So, you can only wait for energy consumption level reset, which might not come in positive way as imagines and or relocate to region where for different initial conditions the situation allows for low energy mobility in the first place..
“As Donald Trump continues to escalate his slap-happy approach to tariffs on Chinese goods, China is running out of US goods on which to to levy duties in retaliation. But if China wants to keep going tit-for-tat, it has other options.
“Unlike the US government, the People’s Bank of China—China’s government-run central bank—directly manages the value of its currency. The Chinese government let the yuan weaken around 4% against the US dollar in the last month, among the sharpest one-month drops in value in its history. The yuan’s slide has sparked fears that China could “turn a trade war into a currency war,” as Brad Setser, economist at the Council on Foreign Relations, phrased it.”
“If antagonizing Trump is the goal, depreciation has double-whammy appeal. Since it makes China’s exports cheaper—and therefore more competitive against US manufacturers—allowing the yuan to weaken will soften the blow of Trump’s tariffs on the Chinese economy, all other things being equal, and possibly eliminate the impact altogether. Conversely, it will also make the American products China buys more expensive, reinforcing the effects of China’s tariffs on US-made goods.”
https://qz.com/1329777/the-us-china-trade-war-could-turn-into-a-currency-war-next/
“China’s currency hit lows not seen since last July [Wednesday], and the gap between onshore and offshore rates widened, suggesting greater pessimism among foreign traders.”
https://www.wsj.com/articles/chinas-yuan-hits-one-year-low-1531987043
“China this month recorded one of its biggest corporate-debt defaults yet, with the downfall of a coal miner that had ridden the country’s wave of credit until policy makers changed the game with their deleveraging campaign…. How the borrower ran up a 72.2 billion yuan ($10.8 billion) tab that it now can’t make good on illustrates why this year will be China’s worst yet for corporate defaults. And with a potential lifeline from state-owned banks unveiled Wednesday, it could also emerge as an example of China’s unwillingness to allow unbridled corporate failures.”
https://www.bloomberg.com/news/articles/2018-07-18/a-china-borrower-s-11-billion-debt-mountain-comes-crashing-down
I noticed this WSJ article as well. Asian Junk Bonds Are Being Treated Like Trash
A rising dollar, China’s debt pileup and trade troubles rattle Asia’s $138 billion high-yield market
A chart shows that as the beginning of 2018, rates for Asian junk bonds were about 6%. Junk bond rates in general have rising in the past few months, so that they would be around 7% now. Asian junk bond rates are more like 9%, so that they have risen by 3% since the beginning of the year.
Doesn’t it also increase their price of oil?
referring to their currency depreciation.
Jason, good point – I’m sure it must do.
A falling yuan also makes debt denominated in US$ harder to repay.
Luckily they have $1.3 Trillion sitting in the Fed. Also having a large export surplus means more dollars for Yuan. and if their dollars are dearer they will undercut tariffs and not lose sales. Their local debts will be all in Yuan. I think they could battle the dollar for some time without feeling a pinch, maybe longer than could the USA.
Somehow I don’t see these decisions as being made by Trump … nor would they be ‘slap happy’
“Deaths from liver disease have risen in the US since the financial crisis, with a particularly sharp rise in alcohol-related cirrhosis among young people. Analysing a database of US death certificates from 2009 to 2016, Elliot Tapper at the University of Michigan and Neehar D Parikh of the Ann Arbor Healthcare System found a 65 per cent increase in deaths caused directly by cirrhosis, as well as a doubling of deaths from liver cancer, which is often linked to cirrhosis.”
https://www.newscientist.com/article/2174487-deaths-from-liver-disease-have-been-rising-since-the-financial-crisis/
I am here to help….
This is for the DelusiSTANIs…. you can self-diagnose which type of disorder you have… then if you scroll down the page you will find excellent options for medications and therapies….
I have been trying this approach on you… particularly with respect to GGGGGG wWWWWWWW…. but clearly this is not helping….
‘Delusions are false beliefs that don’t go away after even after they’ve been shown to be false.’
FYI:
Psychotic disorders are a group of serious illnesses that affect the mind. They make it hard for someone to think clearly, make good judgments, respond emotionally, communicate effectively, understand reality, and behave appropriately.
Delusional disorder : The key symptom is having a delusion (a false, fixed belief) involving a real-life situation that could be true but isn’t, such as being followed, being plotted against, or having a disease. The delusion lasts for at least 1 month.
Delusions are false beliefs that don’t go away after even after they’ve been shown to be false.
Treatment
Most psychotic disorders are treated with a combination of medications and psychotherapy, which is a type of counseling:
https://www.webmd.com/schizophrenia/guide/mental-health-psychotic-disorders#1
If all fails….we can expand the Transgender Zoo… adding a DelusisTANI wing….
Lock you in cages… and charge big money selling pointy sticks to school children who will be allowed to poke you ….. for an extra 20 bucks we could sell them buckets of ice cold water to toss through the bars….
http://darkroom-cdn.s3.amazonaws.com/2013/05/AFP_Getty-520105787.jpg
we have a 3.5 mo. old border collie living in similar cages at night and when particularly naughty. he likes to chew on practially everything.
someday he will herd delusistanis on our organic farm.
The border collie is a nice dog. One of my friends has got some puppies now. The people who live in apartments and have children come to him and “hire” his dogs (i.e. provide them food and care) for weekends, a few days or trips. Not only cars can be hired and shared, but also friendly smart dogs.
I’m no dog expert but I read that border collies require ton’s of physical activity as well as emotional stimulation or they go nuts. They are great dogs though, high intelligence, kind and very playful. I had a customer who owned a border collie and when I showed up, the dog would run up to me, circle around, nudge my leg pickup a ball, drop at my feet and bark, then he took off running as he expected me to throw him the ball. Really cool dogs.
All true. But these dogs have little/no ability to protect owners from human or animal predators.
I found this link after I posted my comment, hope this helps. http://www.lovelybordercollie.com/training/border-collie
thank you, that is a helpful link.
We’ve had three Border Collies. Get them fixed as soon as possible. They will be much easier to train and less hyperactive. Great dogs. Very intelligent.
The rush for higher education made the two ministers of the current government in the Czech Republic to leave their posts, as it was found out that they copied parts of their graduation theses.
Czech Government Loses Second Minister in Month Over Plagiarism
https://www.bloomberg.com/news/articles/2018-07-17/czech-government-loses-second-minister-in-month-over-plagiarism
https://www.youtube.com/watch?v=scOJqyiYVtk
Takes a while to get going, but shows why demonising is so effective, even in the absence of facts, and has been part and parcel of us vs them.
Gail might be on to something with self organization.
https://www.youtube.com/watch?v=Qa4JkgKDaR0
“Against the Grain” is a very good read, worth the time. Not everything develops as we believe, even our deep history.
Dennis L.
It is the antidote to the drivel published by Scott Nearing …
Scott Nearing is symbolic of the turning point from sustainability … to the monstrosity that we know as BAU…
Organic farmers have been at war with hunter gatherers for thousands of years – and they have won – they have committed mass genocide… and next up … all humans….
They are also the reason that I am not being all that I can be… I could have been running nake through the bush ….spearing animals… catching fish… eating berries…. living free…
Instead I am behind this f789ing computer… tapping away….
I sincerely hope Nearing is roasting in hell.
When BAU goes down… make sure to hang an organic farmer from a tree …. leave the bankers alone… if not for the farmers there would be no bankers…
Filthy running pig dogs… scum…. murderers….
https://i.pinimg.com/736x/21/b4/dd/21b4dd6079619fdee7a090c3882e26d6.jpg
Oh what’s that in his hand???? A saw… from a factory in China….
http://bluemoonacres.com/wp-content/uploads/2014/07/Nearings.jpg
“They are also the reason that I am not being all that I can be… I could have been running nake through the bush ….spearing animals… catching fish… eating berries…. living free… ”
…….dying at 29………a mouth full of broken teeth……..dealing with cannibals……..agonizing death during childbirth…….total ignorance of moon & stars…..no way to tell which water sources contain deadly microbes…….witch doctors are your only hope in a medical emergency.
and now we die of cancers /diabetes/ Opium/air pollution at age of 70
and you say mouth full of broken teeth but now mouth is full of Microplastices
then you say total ignorance of moon & stars but how many 7.6 billion homo sapiens know how many moon are circle Jupiter
but i agree other things you have saying
No disrespect to 3rd world folks.
No disrespect to 3rd world folks
those also belong to this planet just like 1st world folks
And let’s not forget …
http://cdn-media-2.lifehack.org/wp-content/files/2014/08/Facebook-Zombies.jpg
vs
http://i.dailymail.co.uk/i/pix/2015/03/01/26338E6400000578-2974168-image-a-1_1425200437965.jpg
It’s really hard to believe that this …
https://www.motherearthnews.com/-/media/Images/MEN/Editorial/Articles/Magazine-Articles/2003/10-01/Nearing-Enough-Simple-Living-Lessons/scott-nearing-working-in-organic-garden.jpg
Lead to the mass genocide of hunter gatherers….
It’s all downhill after the 20s. As an about-to-be 27 year old I am very slowly coming to that realisation (the only way one can).
… Without never ever listened to J.S. Bach’s Magnificat or Mozart’s keyboard concerto n. 23 … Of course, to produce these very fine pieces of work it required a Roman empire, A Catholic Church, a Holy Roman German Empire.
Catholic Church is on my short list of ignoramuses.
Find a different church!
You probably missed my point, I probably did not expressed myself clearly. I meant that it takes a complex society to produce fine art, what I would qualified as very sophisticated expressions of beauty. I cited Catholic Church as a political power, as a continuation of the Roman Empire. A complex society (without large energy surplus) also means wars, slavery, and brutal exploitation. You can’t have Bach or Mozart without a complex society (And Mozart was an employee of a Bishop, a Prince of his time).
I dunno about that…
https://www.gobabis.net/images/tours/bewild/kalahari-bushmen03.jpg
https://insearchofsimplicitytoday.files.wordpress.com/2009/01/dancers-at-the-png-irian-jaya-border.jpg
Yowza!!!!
https://insearchofsimplicitytoday.files.wordpress.com/2009/01/trobriand-island-young-woman.jpg
I am a bit of an adrenaline junky… I get bored very easily…. not knowing what is around the next corner…. is exciting….
https://www.ancient-origins.net/news-evolution-human-origins/life-expectancy-myth-and-why-many-ancient-humans-lived-long-077889
And here’s the thing… I live a very healthy lifestyle… I exercise almost every day … I eat no rubbish… drink minimally … do not smoke… most people my age are falling to bits with big fat guts and all sorts of diseases creeping in …. I weigh what I weighed in high school… so I am an anomaly…
You look at the average 53 year old and you see a sack of fat and bones… riddled with the onset of heart disease… diabetes ready to pounce….
Yep they can stay alive for another 20 or 30 years by popping pills and having surgery… allowing them to continue to shovel donuts and KFC through their 0-holes… and lay on the sofa watching the footie and american idol.
Compare that life to the average primitive man….
Of course if you are lazy fat f789ish pc of sh it with Dominos on the speed dial…. who can’t touch your toes… well ya… I can see how the life of a primitive man might not appeal….
I notice that Psalm 90:10 (NIV) says
One guess was that Psalm 90 dates to 489 BCE. https://www.blueletterbible.org/study/parallel/paral18.cfm
Not balancing energy in with energy out is indeed a big problem today, made worse by our food manufacturers and our sedentary lifestyles.
Wait a moment, how can you be a right-wing nutcase *and* a hippie? I guess you can if you’re Crazy Eddy, so… forget I said anything.
Seems to suggest following your star.
EU Electric-Car Sale Growth Sputters on Battery, Charging Limits
https://www.bloomberg.com/news/articles/2018-07-17/eu-electric-car-sale-growth-sputters-on-battery-charging-limits
Hubbert Curve’s Halfway Point May Be Imminent For Conventional Crude
The world has produced as much conventional crude oil cumulatively, as we have currently in proven reserves. Based on Hubbert curve theory, it is an indication of peak oil.
Unconventional resources have helped and will continue to help avoid severe oil scarcity, but it cannot make up for a potential permanent decline in conventional oil production.
If there is one factor which in my view stands above all in regards to why the peak oil theory supporters got it wrong, it has to do with human nature and currently prevailing culture. They felt it was a very important topic in regards to the future of humanity, which they correctly sensed that it had to have imminent implications if it was to gain social relevance. For this reason they ignored other factors such as the effects that price can have on ultimate recovery from fields, as well as to what extent it could support the production of relatively vast unconventional reserves, such as oil sands or shale. Because they could not accept that such factors could greatly change the outlook for global oil supply they had the timing way off, in the process leading to what I consider to be a temporary, rather than permanent defeat of the theory in the eyes of the public. The reason why I believe that it is a temporary defeat, is because we are still dealing with a finite resource, which at the moment we still have a growing appetite for, which makes dismissing this theory absurd.
As far as new discoveries are concerned, for the past four years in a row, it has been significantly under 5 billion barrels, meaning that less than 10 billion barrels of oil in place per year have been discovered. Current conventional crude oil production is about 27 billion barrels per year.
I think we may perhaps be reaching the point where given the prevailing average price of the past years of around $80/barrel, we are once again reaching the point of peak maximum potential conventional oil production, in the absence increasing recovery rates.
Unconventional cannot make up for potential conventional production losses.
https://seekingalpha.com/article/4187991-hubbert-curves-halfway-point-may-imminent-conventional-crude
Now you see it, now you don’t.
Economic Collapse Will Be the Least of the United States’ Problems
This conflict might best be described as another American Civil War.
It doesn’t need sophisticated weapons. As the U.S. economic collapse gathers momentum, the new civil war will aggravate situations that have already started.
Social breakdown is already happening, but the financial markets have masked the ever-growing risk of economic collapse.
Trump did not set the U.S. economy on its current destructive path. Yet, indirectly, the president has hastened the process of economic collapse.
Economic collapse will be a mere symptom of a bigger catastrophe.
http://www.talkmarkets.com/content/economics–politics/economic-collapse-will-be-the-least-of-the-united-states-problems?post=183374
Baby D., I really do not see it. If 150 million dispicables live lives of fear, want and hunger that is no bog deal. Life will go on in the U.S.
Trump’s Trade War May Spark a Chinese Debt Crisis
A tighter dollar will make the bursting of the credit bubble an inevitability.
https://www.bloomberg.com/view/articles/2018-07-17/trump-s-trade-war-may-spark-a-chinese-debt-crisis
Well China blew the bubble in the absence of a trade war and it was beginning to burst on its own. Of course the US will have several bubbles burst as well. I agree with Mr. Han, it’s all a ponzi scheme and I agree with Gail that it is all interconnected. Now granted 12 billion is a drop in the bucket when their bond market is 12 trillion (12,000 billion), but if a coal company can’t make money with what people can afford what do you think an apartment in a ghost city or companies that produce plastic gadgets are worth?
For the continued existence of BAU I vote that we ignore the numbers and add more 0’s.
A China Borrower’s $11 Billion Debt Pile Comes Crashing Down
Bloomberg News
10 hrs ago
China this month recorded one of its biggest corporate-debt defaults yet, with the downfall of a coal miner that had ridden the country’s wave of credit until policy makers changed the game with their deleveraging campaign.
For investors in Wintime Energy Co., it’s been far from a winning time now that the company from northern Shanxi province is proving incapable of rolling over debt that quadrupled in less than five years. How the borrower ran up a 72.2 billion yuan ($10.8 billion) tab that it now can’t make good on illustrates why this year will be China’s worst yet for corporate defaults. And with a potential lifeline from state-owned banks unveiled Wednesday, it could also emerge as an example of China’s unwillingness to allow unbridled corporate failures.
Wintime’s original plan was to borrow to fund acquisitions and expand into areas including finance and logistics. As borrowing costs tumbled from 2014, funding was easy to get and the miner took full advantage of creditors’ largesse. Things started changing in 2016, when President Xi Jinping began putting emphasis on reining in financial risks.
Environment Changed
Now, Wintime has the unfortunate distinction of being the largest defaulter in China so far in 2018, delinquent on 11.4 billion yuan of securities after it failed to pay a local bond this month.
China’s changing environment for financing has had quite a big impact on the company, an officer with Wintime’s information disclosure department said by phone, declining to be identified by name. The firm is trying to raise new debt to repay existing obligations and is selling assets, he said, declining to comment on Wintime’s past run-up in debt.
That run-up came amid a near-doubling in size of China’s domestic bond market, now roughly $12 trillion and the world’s third largest. The government had encouraged companies to use bonds for financing as they embraced financial innovation to make the economy less dependent on state-owned banks.
The trouble was that local buyers had little experience in doing credit research, and the local debt-rating agencies lacked the kind of differentiation among borrowers found overseas. There was little need for due diligence until China began allowing defaults in 2014.
Some investors are finding refuge in municipal bonds — read about that here.
“China’s economic growth was largely driven by debt and its corporate debt looks like a Ponzi scheme,” said Qin Han, chief fixed income analyst at Guotai Junan Securities Co. “More firms may give up on repaying debt if they encounter financing difficulties.”
Thanks! This is a coal company that collapsed. If coal prices were very high, I expect that the company would have been able to repay its debt with interest.
A lot of coal companies have been shut down in China because, with diminishing returns, they were not profitable.
Peak coal comes because of many coal companies shutting down because of inadequate prices.
But … but….. how will they ever power their Teslas if all the coal mines shut??????
US ‘especially vulnerable’ in trade war, says IMF chief
https://www.businesstimes.com.sg/government-economy/us-especially-vulnerable-in-trade-war-says-imf-chief
Christine Lagarde “clutches pearls”
That claim is nonsense. All nations are vulnerable to a trade war but some more so than others. The USA is actually less vulnerable to a trade war than any other nation. That is to say, the USA is closer to autarkic self-sufficiency than any other nation. If the USA really tightens its belt it can, for some time to come, survive. It would have enough power, enough food, enough manufacturing and technical capacity, enough labour and enough consumers to run its own system from resources on its own territory.
Europe is severely deficient in power and dependent on imports as are India, China and Japan. Russia is deficient in manufacturing capacity, consumer power and economic organization.
Australia, where I live, is heavily dependent on Chinese trade. We have no oil production worth talking about. It comes through Singapore from the Mid East I guess. We have plenty of natural gas but we would have to re-engineer all our transport systems to run on natural gas. We have plenty of coal. We have plenty of food production for our small population (25 million). We have no heavy manufacturing worth talking about so we can’t make anything better than light industrial goods and we can’t make white goods or electronics goods (with a very few minor exceptions).
But really, the USA has to start the trade wars now. Wait any longer and China just gets stronger. However, long term China collapses before the USA anyway, unless the USA really messes up.
There are likely thresholds, in terms of China I mentioned several of them, incl. the ongoing build up of airstrips on the artificial reefs around Spratleys, which would deter US and other fleets mounting a naval blockade.
With regard to Russia there are several of them as well, apart from the energy / extractive industries, they prioritize for example the return of their famous hidden ballistic/cruise missile silo inside shipping containers on vast civilian rail-network. As this was very much feared by the west as sat un-traceable in late 1980s (Gorbi-Yeltsin dismantled it)..
If the USA became truly self-sufficient its role as the world’s credit provider will end. That would, in turn, render a lot of manufacturing and resource/oil extraction activity unprofitable and thus useless. As a non-murrrican I think it should happen, but there is a price to be paid for everyone involved.
Ikonoclast, agreed. I looked at immigrating to New Zealand awhile back, only to find they have no electronics industry. I say electrical engineer they say great we had an earthquake and need electricians to build and/or repair many houses and offices. Not exactly novel materials for neuromorphic AI hardware.