Introduction to the “World’s Fragile Economic Condition”

I will be giving a presentation to a group of casualty actuaries on September 17 called “The World’s Fragile Economic Condition.” I plan to write up the presentation in two posts, one covering the first three of the six sections of the presentation, and the second one covering the second three sections, so that it is easier to read online.

I am putting up a link now to the presentation, to allow those who want to look at the presentation now, a chance to do so.

The World’s Fragile Economic Condition

This presentation pulls together quite a few things I have been talking about. It also adds a new model of how our self-organizing economy works.

This is the outline of what I discuss in the presentation:

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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560 Responses to Introduction to the “World’s Fragile Economic Condition”

  1. Garth says:

    I’ve added a comment, on my own shiny new blog, to my recent review of Gail’s blog. In it, I discuss the enfant terrible of her comment pages. Guess who?

    https://baudoom.wordpress.com/2018/09/15/blog-review-gail-tverbergs-our-finite-world-not-a-peak-oil-blog/comment-page-1/#comment-14

    • Rodster says:

      Wow, now Fast Eddy is really famous. 😀

      • Garth says:

        Not really. He would only have been famous if I’d written and published a one thousand word blog post about him, but I published a measly 988 word comment instead. 😉

      • Fast Eddy says:

        Mildly amusing….

        However — it is a bright sunny day — and we had 60cm of snow the other day …. and the mountain beckons….

  2. MG says:

    When we are going northwards (i.e.to colder areas), as the pope Francis these days:

    1. Lithuania – a catholic country
    2. Latvia – a protestant country
    3. Estonia – an atheist country

  3. Fast Eddy says:

    Can we compromise? Would the pope approve of this?

    • Garth says:

      No sin of actual bodily lust where plastic is concerned, but these girls can’t produce babies to increase the Catholic flock.

      • Tim Groves says:

        When it comes to partying, no doll can hold a candle to the real thing!

        • Rodster says:

          What’s the word i’m looking for?”…………………Oh I know, SKANK !

          I hope someone has the guts to show that photo when she appears to testify this week.

          • Tim Groves says:

            Well, we must keep an open mind on this photo. It looks too good to be true. It might not be her. After all, it was supposed to be 36 years ago. And blonde high-school girls look very much alike to the average congressional committee member. And like the honorable judge, she may have had a double….. Or a triple…. But for those of us without a dog in this race, the “stop Kavanaugh affair” is the most interesting media circus in some time.

        • Country Joe says:

          Obviously photoshopped by Russian hackers!!!!! Female Classmate come forward and state your case. It’s all a low class reality TV show. God help our grandkids.

    • MG says:

      If it is your private doll, who knows and cares? The public dolls surely bring hygienic issues with themselves.

      The tradition of the dolls is deeply rooted within the catholic religion, like the statues of Jesus Christ or Holly Mary, which are also the fetishes like the dolls in the pictures above.

    • Garth says:

      English writer Ian McEwan published a set of short stories in the 1970s, entitled “In Between the Sheets”. I enjoyed one story in particular.

      From Wikipedia:
      “Dead As They Come” tells of a wealthy businessman’s bizarre obsession with a fashion mannequin, which he purchases and takes home with him.

      ——————————————————————————

      It was a hilarious story of a deranged man. I laughed out loud at parts of it.

    • Third World person says:

      well pope approved priests to abused children

      i do not think he will have any problem with this

    • xabier says:

      The Catholic Church approves of brothels as they are ‘channels for lust’, thereby saving virgins and married women from the attentions of men.

      A doll would also be a kind of safety valve, without any sin being incurred by a live woman.

      No contraception is required in order to avoid conception.

      In fact, the perfect Catholic solution: the Vatican’s bankers should invest!

  4. adonis says:

    hello finite worlders i have been extremely busy conducting research on when the financial system will go into GFC 2 mode and the burning question of whether their is a conspiracy to halt BAU in order to bring in a sustainable world by the group known as the United Nations and now i am 100% convinced there is, Their plan to do this already caused GFC 1 and they clearly do not understand the link between economic growth and diminishing returns that Gail has clearly explained and that is why when they pull the plug on the life support system that is keeping the Financial System in an induced coma we will have GFC 2. I have provided an excerpt from one of their documents of what they were planning to do it was written in 1989 and it clearly shows what they were planning back then and what they did not know about the implications of their plans.The sentence showing their lack of understanding is located at point 6 under the heading Chapter 4 Changing Consumption Patterns.The date that I believe GFC 2 will occur is October the 2nd 2018,

    rio declaration | agenda 21 | previous | next
    Agenda 21

    Chapter 4
    Changing Consumption Patterns

    1. This chapter contains the following programme areas:
    a. Focusing on unsustainable patterns of production and consumption;
    b. Developing national policies and strategies to encourage changes in unsustainable consumption patterns.
    2. Since the issue of changing consumption patterns is very broad, it is addressed in several parts of Agenda 21, notably those dealing with energy, transportation and wastes, and in the chapters on economic instruments and the transfer of technology. The present chapter should also be read in conjunction with chapter 5 (Demographic dynamics and sustainability).
    Programme Areas
    A. Focusing on unsustainable patterns of production and consumption
    Basis for action
    3. Poverty and environmental degradation are closely interrelated. While poverty results in certain kinds of environmental stress, the major cause of the continued deterioration of the global environment is the unsustainable pattern of consumption and production, particularly in industrialized countries, which is a matter of grave concern, aggravating poverty and imbalances.
    4. Measures to be undertaken at the international level for the protection and enhancement of the environment must take fully into account the current imbalances in the global patterns of consumption and production.
    5. Special attention should be paid to the demand for natural resources generated by unsustainable consumption and to the efficient use of those resources consistent with the goal of minimizing depletion and reducing pollution. Although consumption patterns are very high in certain parts of the world, the basic consumer needs of a large section of humanity are not being met. This results in excessive demands and unsustainable lifestyles among the richer segments, which place immense stress on the environment. The poorer segments, meanwhile, are unable to meet food, health care, shelter and educational needs. Changing consumption patterns will require a multipronged strategy focusing on demand, meeting the basic needs of the poor, and reducing wastage and the use of finite resources in the production process.
    6. Growing recognition of the importance of addressing consumption has also not yet been matched by an understanding of its implications. Some economists are questioning traditional concepts of economic growth and underlining the importance of pursuing economic objectives that take account of the full value of natural resource capital. More needs to be known about the role of consumption in relation to economic growth and population dynamics in order to formulate coherent international and national policies.
    Objectives
    7. Action is needed to meet the following broad objectives:
    a. To promote patterns of consumption and production that reduce environmental stress and will meet the basic needs of humanity;
    b. To develop a better understanding of the role of consumption and how to bring about more sustainable consumption patterns.
    Activities
    (a) Management-related activities
    Adopting an international approach to achieving sustainable consumption patterns
    8. In principle, countries should be guided by the following basic objectives in their efforts to address consumption and lifestyles in the context of environment and development:
    a. All countries should strive to promote sustainable consumption patterns;
    b. Developed countries should take the lead in achieving sustainable consumption patterns;
    c. Developing countries should seek to achieve sustainable consumption patterns in their development process, guaranteeing the provision of basic needs for the poor, while avoiding those unsustainable patterns, particularly in industrialized countries, generally recognized as unduly hazardous to the environment, inefficient and wasteful, in their development processes. This requires enhanced technological and other assistance from industrialized countries.
    9. In the follow-up of the implementation of Agenda 21 the review of progress made in achieving sustainable consumption patterns should be given high priority.
    (b) Data and information
    Undertaking research on consumption
    10. In order to support this broad strategy, Governments, and/or private research and policy institutes, with the assistance of regional and international economic and environmental organizations, should make a concerted effort to:
    a. Expand or promote databases on production and consumption and develop methodologies for analysing them;
    b. Assess the relationship between production and consumption, environment, technological adaptation and innovation, economic growth and development, and demographic factors;
    c. Examine the impact of ongoing changes in the structure of modern industrial economies away from material-intensive economic growth;
    d. Consider how economies can grow and prosper while reducing the use of energy and materials and the production of harmful materials;
    e. Identify balanced patterns of consumption worldwide which the Earth can support in the long term.

    • Brendon Crook says:

      The date that I believe GFC 2 will occur is October the 2nd 2018,

      I have an Optometrist appointment on the 1st of October………..may as well cancel that now

      • Fast Eddy says:

        Sh…it…. I just wasted time and money tossing 12 month release fertilizer on the ‘grass’… because it’s N deficient and going to clover…. and I knew I should have bought the ripe bananas

    • Aubrey Enoch says:

      It’s simple. The important figure is resources per capita. Reduce the capita number and there is more for those that are remaining. Is it possible that the billionaires have already thought of that?

      • Tim Groves says:

        I agree with you about resources per capita being very important. Isaac Asimov touched on this point in his writing, and in an interview with Bill Moyers in 1988:

        Moyers: What do you see happening to the idea of dignity to human species if this population growth continues at its present rate?

        Asimov: It’s going to destroy it all. I use what I call my bathroom metaphor. If two people live in an apartment, and there are two bathrooms, then both have what I call freedom of the bathroom, go to the bathroom any time you want, and stay as long as you want to for whatever you need. And this to my way is ideal. And everyone believes in the freedom of the bathroom. It should be right there in the Constitution. But if you have 20 people in the apartment and two bathrooms, no matter how much every person believes in freedom of the bathroom, there is no such thing. You have to set up, you have to set up times for each person, you have to bang at the door, aren’t you through yet, and so on. And in the same way, democracy cannot survive overpopulation. Human dignity cannot survive it. Convenience and decency cannot survive it. As you put more and more people onto the world, the value of life not only declines, but it disappears. It doesn’t matter if someone dies.

        However, the OFW perspective seems to be that if the population goes down, so does the demand for lots of things, leading to the mother of all deflations, bankrupting pension, social security and life insurance funds, crashing land and stock prices, and slashing income all round, making it difficult to continue to secure the levels of fossil fuel extraction required to sustain BAU.

  5. kesar0 says:

    https://oilprice.com/Energy/Energy-General/Why-Peak-Oil-Demand-Doesnt-Matter.html

    Robert Napier goes optimistic. Suddenly.

    The report-based conclusions, especially the part of geopolitical risks are interesting.
    https://trello-attachments.s3.amazonaws.com/5ab514ea32ae788cad956f9a/5b4cb5542e664970f9c635ea/ae33912e9bd2ddd34806a3507e9b9454/IHSRivalryReport.pdf
    These guys do not consider price hikes as a general issue. Interesting really. Let’s party, then. BAU rules 2050s easy :), FE

    …just joking.

    • It is Robert Rapier you mean in your introduction. He does not understand the broader context of what is going on, so comes to a lot of incorrect conclusions. He mostly comes from a peak oil—MSM point of view. So more seems to him to fix the problem.

  6. sven rogeberg says:

    “Something has been going wrong on many college campuses in the last few years. Speakers are shouted down. Students and professors say they are walking on eggshells and are afraid to speak honestly. Rates of anxiety, depression, and suicide are rising—on campus as well as nationally. How did this happen?

    First Amendment expert Greg Lukianoff and social psychologist Jonathan Haidt show how the new problems on campus have their origins in three terrible ideas that have become increasingly woven into American childhood and education: What doesn’t kill you makes you weaker; always trust your feelings; and life is a battle between good people and evil people. These three Great Untruths contradict basic psychological principles about well-being and ancient wisdom from many cultures. Embracing these untruths—and the resulting culture of safetyism—interferes with young people’s social, emotional, and intellectual development. It makes it harder for them to become autonomous adults who are able to navigate the bumpy road of life.

    Lukianoff and Haidt investigate the many social trends that have intersected to promote the spread of these untruths. They explore changes in childhood such as the rise of fearful parenting, the decline of unsupervised, child-directed play, and the new world of social media that has engulfed teenagers in the last decade. They examine changes on campus, including the corporatization of universities and the emergence of new ideas about identity and justice. They situate the conflicts on campus within the context of America’s rapidly rising political polarization and dysfunction.

    This is a book for anyone who is confused by what is happening on college campuses today, or has children, or is concerned about the growing inability of Americans to live, work, and cooperate across party lines.” https://www.amazon.com/Coddling-American-Mind-Intentions-Generation/dp/0735224897/ref=pd_lutyp_cxhsh_1_1?_encoding=UTF8&pd_rd_i=0735224897&pd_rd_r=2bf6a61e-6da7-4445-98c0-49df7913de70&pd_rd_w=uBAih&pd_rd_wg=QxT99&psc=1&refRID=DQGN96SBPP6BPNQ0K6F5

    • doomphd says:

      it may be more subtle than all the reasons stated. on OFW, anyone promoting a BAU (or better) future out 20-30 years would be considered a wild optimist to borderline delusional, maybe over the border. college is about the future, specifically the future careers and livelyhoods of the students in attendance. they will not welcome a short-term future for BAU of only a few months-to-years or even a single decade.

      the administration is there to cater to their wants, needs and aspirations. they have convinced themselves that all is OK, which makes their job easier. ditto the faculty, especially the younger, tenure-seeking or recently tenured ones. older faculty may know of a more pessimistic view, but have to be careful exposing this view or they risk ostrasation or even worse treatment, like dismissal or a forced early retirement.

      it is a case of the Emperor has no clothes. at some point, all will realize the true state of things, and the students will feel betrayed. i would expect similar, violent demonstrations to those of the late 1960s, another period when the Emperor was exposed as being quite naked.

    • Fast Eddy says:

      Children today are mostly pampered re-tard-ed fukkkwits….

      Little Johnny can’t go outside on his own — he might get raped or kidnapped…. or he might step in front of a car … or on a blade of grass and trip and scrape his knee…. so let’s put Johnny in front of the teevee or a gaming screen…. that is a safe space… and heaven forbid Johnny get anything but a B or higher even if he hands in sh it….

      No wonder we have ended up like this….

      And BTW – we have two kids from the Philippines here… pulled from a fairly grim situation …. they are very well taken care of … they are independent.. they can cook proper food for themselves (since they were 12ish)… M Fast has taught them to clean a house until it is spotless… they are now 15 and 16… and we will leave them on their own for 10 days when we head to China later this week… we have absolutely no concerns that they will be fine (although we have made a neigbhour aware…)…. they are more responsible than most adults

      Yet M Fast was speaking to a relative of the kids about all of this recently and we were accused of ‘making slaves’ of the kids…. and that we should be reported to some child abuse org in the Philippines….

      I just about spit my spleen out …. so we are paying big school fees… we bought them all new snow board gear….feed them properly (they were slightly malnourished when we brought them over) … teach them to be confident and capable…. we bought memberships at the ski hill… we drive them up there if we don’t go … and pick them up …

      BUT then they have to do a general cleaning of the house (maybe 2 hours work) when they return…. and they clean up after dinner….. and they help around the yard (they are very adept at filling empty wine boxes with coal without spilling any on the ground!) and we are slave driving!!!

      Nope – kids cannot do any work — they need to be coddled…. keep them in cocoons…. never expose them to anything tough … do NOT give them responsibility….. treat them like pets!

      Fortunately the two kids do not think this way — they are appreciative… and they understand that having high expectations raises the bar…. it makes them better….

      They don’t have teevee…. is that child abuse????

      And they wonder why little Johnny ends up delivering pizzas for a living …..

      • Slow Paul says:

        Sounds like great parenting to me. Kids learn a lot from doing chores, practical skills, work ethics, independent thinking, self esteem etc. To not give children chores or tasks and stick a iThing in their lap is more like child abuse if you ask me.

    • I agree that safety-ism is a pretty bizarre focus that the world has gotten its focus into. Perhaps it is partly a need to justify new service jobs aimed at protecting the youth. After all, such jobs don’t require much energy consumption or training. They are simply an excuse for more minimum wage jobs.

      At one point, close to 50 years ago, there was somewhat a view that if a child was lost to an accident, it was unfortunate, but it could be worked around. The mother could have another child, and fix the deficit. Now, few enough children per family are born that the loss of one child is a momentous event. The mother likely has her own job, and cannot take off time to have another child.

      So the self-organized system seems to have filled in a need for a huge amount of safety around each child.

  7. Fast Eddy says:

    Replacing Russian gas with American LNG would be ‘absolutely ridiculous’ – expert to RT

    https://www.rt.com/business/439154-us-lng-germany-russia-gas/

    • There are three big problems with sending US natural gas to Europe as LNG

      (1) It is not clear that the US has enough. It might have enough, if the price are a whole lot higher (say $6 or $7 per Mcf, instead of less than $3).

      (2) The delivered price to Germany would have to be very high. If we are talking $6 or $7 per Mcf + shipping, we are probably talking $10 or $11 per Mcf. This is getting up close to the price of oil! Multiply price by 6 to get oil per barrel equivalent price.

      (3) LNG transported by ship allows a significant amount of methane to escape, as it burns off. Its impact as a global warming gas is up with coal.

      • milan says:

        Working for a Natural Gas Company there is a huge affordability issue constantly present and the price of oil has to be at a minimum $50.00 and higher to make any kind of a go of it. What America is thinking and trying to do is perplexing. The geo-politics is surely worrisome which the saker.is blog is constantly trying to analyse and get to the bottom of.

      • Yoshua says:

        Natgas prices in Europe were about $9-$11 per Mcf when the eurocrisis started.

        Natgas are rising again to those levels. Things are different now though since we just print the money. Although the ECB is talking about ending QE at the end of this year.

  8. Yoshua says:

    A hard Brexit would cause chaos in the derivatives market.

    https://wolfstreet.com/2018/09/20/times-running-out-disorderly-brexit-would-trigger-mayhem-in-derivatives-market-and-insurance-industry/

    How do we undo complexity? Which sticks can we remove without collapsing the complex structure?

    • We have a lot of people making their living off of complexity. It is hard to undo.

      • Duncan Idaho says:

        Tainter?
        Just a bit of reading would fill in some blanks.
        (just saying)

        • Tainter gives the example of getting rid of an army to reduce complexity, as I recall. Fewer taxes were therefore needed, at least temporarily alleviating the pressure on the system.

          In general, going in the direction of less complexity is difficult. Complexity was added to solve problems. It often includes more technology. We can’t go back to punch cards for our computers easily, or to dail up internet services. There tend to be other pieces of the system that are missing.

    • It is all about how high the debt bubble can be blown. If commodity prices are high, it tends to slow down the rest of the economy.

      • Karl W Hubbard says:

        This guy Vic Sperandeo of http://www.theepochtimes.com and the “Gamboni”- interesting:

        If the FED can offload its treasuries to commercial banks who: don’t have to mark to market these “assets”, who can “buy” the treasuries without even having to “pay” for them, who are guaranteed 3% return even if interest rates go up, who have no capital requirements to buy, etc., does it not follow that these same commercial banks can turn around and pledge these assets as collateral to prop up the stock market purchases from their back door trading desks and at the same time making loans to these companies?? No wonder the repeal of Glass-Steagall! Its repeal unlocks the key to this scheme.(Not just the ESF or the missing trillions just from the Depts of HUD and the Defense as posited by Mark Skidmore, PhD Michigan State and Catherine Austin Fitts former of HUD paying for the FED’s unloading of its assets. ) IEven if interest rates rise, corporations will continue to borrow against convention wisdom of interest rates rising to the level of being too high for Corporations to service. If corporations can get a ready supply of money from these CBs no matter how high interest rates go, because these commercial banks themselves take no risk in acquiring these USTs, then the shell game continues.

        This, theory, if true, is huge because it explains why the FED can taper, even as foreign governments/Central Banks are selling treasuries, US Debt increases, and yet the stock market remains elevated and the long-term US Treasury rates barely budge. Meanwhile, the stock market money trough keeps getting filled- or possibly these same banks continue to make loans to these companies to enable continued stock buybacks. CEOs and insiders continue to have a ready supply of high priced share stock from which to cash in, effecting a continuation of a huge wealth transfer and ownership of stock of corporations to the wealthy elite insiders of both the companies and the banks.

        • I don’t really know whether this theory will work. I am not quite knowledgeable enough about the ins and outs of banking. It is the possibility of workarounds like this that leaves at least the possibility that collapse can be at least put off for a while, for part of the world.

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