The World’s Fragile Economic Condition – Part 1

Where is the world economy heading? In my opinion, a large portion of the story that we usually hear about how the world economy operates and the role energy plays is not really correct. In this post (to be continued in Part 2 in the near future), I explain how some of the major elements of the world economy seem to function. I also point out some relationships that tend to make the world’s economic condition more fragile.

Trying to explain the situation a bit further, the economy is a networked system. It doesn’t behave the way nearly everyone expects it to behave. Many people believe that any energy problem will be signaled by high prices. A look at history shows that this is not really the case: fighting and conflict are also likely outcomes. In fact, rising tariffs are a sign of energy problems.

The underlying energy problem represents a conflict between supply and demand, but not in the way most people expect. The world needs rising demand to support the rising cost of energy products, but this rising demand is, in fact, very difficult to produce. The way that this rising demand is normally produced is by adding increasing amounts of debt, at ever-lower interest rates. At some point, the debt bubble created to provide the necessary demand becomes overstretched. Now, we seem to be reaching a situation where the debt bubble may pop, at least in some parts of the world. This is a very concerning situation.

Context. The presentation discussed in this post was given to the Casualty Actuaries of the Southeast. (I am a casualty actuary myself, living in the Southeast.) The attendees tended to be quite young, and they tended not to be very aware of energy issues. I was trying to “bring them up to speed.” This is a link to the presentation: The World’s Fragile Economic Condition.

Slide 1

Slide 2

This post covers only Items 1, 2, and 3 from the Outline in Slide 2. I will save Items 3 through 6 for a post called “The World’s Fragile Economic Condition-Part 2.”

Slide 3

Slide 4

The audience was able to guess that the situation for humans and the economy are parallel. Energy in some sense powers the economy, in a way similar to how food powers humans.

Slide 5

On Slide 5, I am pointing out that changes in the red line, denoting energy consumption growth, tend to come before the corresponding changes in the blue line. This is one way of confirming that energy consumption causes GDP growth, rather than vice versa.

In recent years, countries have found ways of creating GDP growth, without adding true value. This may explain why GDP growth is higher than Energy growth since 2013 on Slide 5. As an example of GDP growth with overstated value, a large share of young people are now being encouraged to purchase advanced education, at considerable cost. This would make sense, if there were suitable high-paying jobs for all of those graduating. It is questionable whether this is the case.

Slide 6

Of course, the issue is not only energy consumption, just as our health is influenced by more than simply what food we eat.

Slide 7

At one time, the emphasis in physics was on systems that are “closed” from an energy point of view. Such systems never grow; they simply decline toward “heat death.”

The real world is made up of many structures that grow and change over time. This growth and ability to change is possible because the energy system we live in is thermodynamically “open,” thanks to flows of energy from the sun, and thanks to fossil fuel energy, which represents stored solar energy from long ago.

Slide 8

The answers to the questions on Slide 8 are easy to guess.

Slide 9

The economy adds new businesses, as citizens see new needs and set up companies to meet those needs. Customers make choices regarding which goods and services to buy, based on their income (primarily wages) and the prices of available goods and services. Governments gradually add new laws, including changes to the way taxes are assessed. The system gradually grows and changes, as the population grows, and as the quantity of goods and services created to meet the needs of that population increases.

One thing to note is that the goods and services produced by the system will eventually be divided among the various players in the system. If one group gets more (say, those receiving interest income), then other groups will necessarily receive less.

Another important point to note is that as new products are added, old ones disappear. For example, once cars came into use, we lost the ability to go back to horses and buggies. There are no longer enough horses; there are no longer facilities to “park” the horses in downtown areas, while at work or shopping; and there are no longer services to clean up after the mess that the horses make.

Without being able to go backward, the system is quite brittle. It would appear that under sufficiently adverse conditions, the entire system could collapse. In fact, we know that many ancient civilizations did collapse, when conditions weren’t right.

Slide 10

The strange interconnections of a networked system make the world economy behave in a different way than we might initially expect. Later in this presentation (in Part 2 of the write-up), I will show some examples of inadequate energy supplies leading to very different results than high prices.

Slide 11

The model of The Limits to Growth looked at how long resources might last, before the growth of the world economy came to a halt from a variety of problems, including a lack of easy-to-extract resources. In some ways, the model was quite simple. For example, the model did not include a financial system or debt. In the single most likely scenario, the base run, the world economy hit limits about now, in the 2015 to 2025 time period. The authors have said that, once limits are hit, the forecast on the right-hand side of the chart cannot be relied upon; the model is too simple to forecast how the down slope might actually occur.

Slide 12

Slide 13

The pattern of world energy consumption seems to be one of rapid growth, especially in the period since World War II.

Slide 14

Energy consumption growth is particularly high in the period covered by the red box. In other words, energy consumption growth is particularly high from the 1940s through the 1970s. If the economy relies on energy, we would expect this to be a particularly booming period for the economy.

Slide 15

We can break energy consumption growth down into two components: (1) the portion to cover higher population, and (2) the portion to cover improved standards of living. Looking at this chart, it is clear that “higher population” takes the majority of the increase, except when increases are very large.

Slide 16

I have labelled the three big bumps with my view of what seems to have led to them. The first is early electrification, when street cars were added and when the early mechanization of farming was implemented. The second is the postwar boom and the third is the recent period of globalization, led by China’s major ramp up in coal production.

Slide 17

China’s energy consumption grew rapidly after it joined the World Trade Organization in 2001. The thing that most people don’t realize is that China is reaching limits on its coal extraction. Its coal production seems to have peaked about 2013. Its comparatively tiny amount of wind and solar (shown in orange on the chart) is not making up the shortfall. Instead, China is being forced to rely more on imported energy. Imported energy tends to be higher in cost, and may be limited in supply. For all these reasons, we cannot rely on China to continue to power future world economic growth.

Slide 18

It is not just China that gets only a small share of its energy production from wind and solar. This is also true of the world as a whole.

Slide 19

Slide 20

Boxes 1 through 4 show a different model of how the world economy works than that shown earlier (in Slide 9). In Slide 20, the Economy (in Box 3) acts like a giant factory. It uses Resources of various kinds (a few of which are listed in Box 2) to make Goods and Services (a few of which are listed in Box 4). If the Economy is getting to be more and more efficient, Box 4 will expand much more rapidly than Box 2, producing a great abundance of goods and services. If this happens, all of the Resource Providers in Box 1 (plus some I have failed to list) can be rewarded more than adequately for their services, with Goods and Services produced by the economy. The transfer of these Goods and Services occurs through the use of money.

Slide 21

Everyone can get rich at once!

Slide 22

The top line is GDP growth including inflation; the bottom line is GDP growth excluding inflation. Before the dotted line, both GDP growth rates and inflation rates are high; after the dotted line (when energy growth was lower), they tend to be lower.

Slide 23

Interest rates were raised to try to damp down oil and other energy prices. We will see in a later section that reducing interest rates helped hide the fact that energy growth was slower after 1980.

Slide 24

The wages shown on Slide 24 have already been inflation adjusted. Thus, in the period before 1968, wages for both the lower 90% of workers and for the top 10% of workers were rising rapidly, even considering the impact of inflation. Many families were able to afford a car for the first time. After 1980, the wages of the top 10% rose much more quickly than the wages of the bottom 90%.

Slide 25

In 1930, wage disparity seems to have been at about today’s level. Early mechanization had replaced many jobs, both on the farm and elsewhere. Farmers who could not afford the new technology found that they could not produce food cheaply enough to compete with the low prices made possible by the new technology. The growing wage disparity meant that a large share of the population could not afford more than the basic necessities of life. The many people with low wages kept demand for most goods and services low. Oil prices were low, and there was a glut of oil, not unlike what recent markets have experienced. New tariffs were added, and immigration was restricted.

Slide 26

The period before the mid-1970s is when a great deal of the United States’ infrastructure was built. The Eisenhower Interstate Highway System dates from this time period. Many of the oil and gas pipelines and electricity transmission systems in use today were also built in this period.

Once the price of oil and other energy products started rising, it became much more expensive to add or replace this type of infrastructure. Once oil prices rose, more debt at lower interest rates seemed to be needed to keep the economy growing, as I will explain in Part 2 of this write-up.

Slide 27

The least expensive to extract oil supply–US oil supply in the contiguous 48 states that could be extracted by conventional means–was developed first. Alaska production was added when it was clear that the early supply was starting to deplete. It was more expensive, as was North Sea oil, which was also added after early US oil began to deplete.

Once oil prices rose in the 2005-2008 period, companies became interested in developing oil from shale formations (sometimes called tight oil). This oil seems to be much more expensive. It is doubtful that this oil is profitable at today’s prices.

Slide 28

Many people believe that oil prices will rise, indefinitely, with the cost of production. The thing that they don’t realize is that high oil prices tend to lead to recession. When this happens, employment drops, and the average buying power of the population no longer rises–it tends to remain flat or falls. As a result, high oil prices do not “stick.”

Slide 29

We are today in a situation where oil prices have been too low for years. For a while, this situation can be hidden, but eventually low investment can be expected to lead to lower production of energy products. It is even possible that some governments of oil exporters may collapse from lack of adequate tax revenue. Governments of oil exporters often obtain over half of their total tax revenue from taxes on oil production. Adequate tax revenue for these governments requires a high selling price for oil.

The situation with food prices tends to parallel oil prices. This occurs partly because oil is used in growing and transporting food, and partly because of substitution issues. For example, corn can be used to make either ethanol for vehicles or food for people.

Slide 30

M. King Hubbert was one of the early scientists who talked about what appeared to be a problem of running out of oil and other fossil fuels. While I call him a geologist, he really was a geophysicist. The catch was that the physics thinking of the day was mostly about “thermodynamically closed systems.” If closed systems were the problem, then running out of fossil fuels that could be extracted using current techniques was the major issue.

Hubbert and others did not realize that energy supply is part of a larger economic system, which also functions under the laws of physics. The economic system is part of a thermodynamically open system, not a closed system. It gets energy both directly from the sun and from fossil fuels, which provide solar energy stored as fossil fuels.

The issue is how this larger economic system behaves: does it allow the oil prices to rise to a high enough level to extract all of the oil and other fossil fuels that seem to be available? I don’t think it does. But under the “right” conditions (lots of debt growth), the economic system does allow energy prices to rise somewhat. This is what we have seen since the 1970s.

It is extremely difficult to figure out what true costs and true benefits are in a networked system. The standard approach for evaluating the benefit of wind and solar considers only a small part of the system. If the proposed devices do not directly burn fossil fuels and if not too much fossil fuel is used in their production, the usual practice is to assume that the devices must be helpful to the overall system, because they seem to be “low carbon.” This approach leaves out many important costs.

The problem is that wind and solar are not now, and never can be, standalone devices. When all costs are considered, they are simply very inefficient add-ons to the fossil fuel system. These costs include buffering services (using batteries or other storage), the cost of capital, the cost of leases, and wages and taxes. A very high-cost electricity generating system is not likely to be helpful to the economy because such a system is very inefficient. It can be expected to affect the economy as adversely as high-priced oil does.

Slide 31

An economy operates best when energy costs are very low because goods and services made with this low-cost energy tend to be low-cost as well. Oil is used in producing and transporting food. Thus, low-cost oil tends to produce inexpensive food.

If energy costs begin to rise in a country, it tends to make that country less competitive in the world marketplace. It also tends to push the country toward recession, because the higher costs are difficult to recover from customers whose wages don’t rise to cover the higher costs.

Slide 32

Many people believe that the amount of fossil fuel that will ultimately be extracted depends on a combination of (a) the amount of resources in the ground, and (b) the technology developed for extraction. While these are indeed eventual limits, I think that a maximum affordable price limit comes much sooner. This depends on how high a debt bubble the economy can sustain. The role of debt will be discussed in Part 2.

Slide 33

One thing that is confusing is the familiar supply and demand curve for energy. Many people believe that “of course” prices must rise if energy is scarce. The catch is that energy consumption affects all parts of the economy. It takes energy to create jobs, just as it takes energy to produce goods and services. Because both supply and demand are affected by a shortage of energy, our intuition regarding how prices should move can be totally wrong.

The word “Demand” is confusing, also, because most energy use is difficult to see. Most energy use is not found in the gasoline we buy at the pump or the electricity we purchase. Instead, energy is used in creating the streets that we drive on, and in building the schools that our children attend. Building new homes and manufacturing cars also takes huge amounts of energy. If energy costs rise very much, the problem is that many people can no longer afford homes or cars. Instead, young people live in their parents’ basements indefinitely. Governments may decide to stop paving some roads, because repaving is too expensive to afford. Reduced demand for oil might be better described as reduced purchases of goods and services of all kinds, because certain groups of would-be buyers find prices too high to afford.

[To be continued in “The World’s Fragile Economic Condition – Part 2”]

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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1,500 Responses to The World’s Fragile Economic Condition – Part 1

  1. Artleads says:

    There seem to be some issues of how drilling is done, and that could affect public support for it.

    https://www.planetizen.com/news/2018/10/101048-west-texas-drilling-boom-bodes-ill-residents-planet

  2. Fast Eddy says:

    Raw vs Cooked https://www.healthline.com/nutrition/raw-food-vs-cooked-food#section1

    It seems that some foods are better taken raw….

    Just thinking… what the harnessing of fire – and cooking did… was release vast amounts of calories into the human population …

    For instance… without cooking wild grains and many vegetables were useless… try chewing a mouthful of raw wheat for instance… or gnaw on a raw turnip, potato, cassava or beetroot….

  3. Artleads says:

    Either this was going to take a very long time to open, or my computer couldn’t process it. I don’t know if it would show various energy mining sites (rather than only houses). It could help with safety planning if it did.

    https://www.nytimes.com/interactive/2018/10/12/us/map-of-every-building-in-the-united-states.html?smid=tw-share&mtrref=t.co

  4. Ed – I am interested in energy issues.
    Ed says:

    How long will we have to wait until affordable energy is in clear decline? Will the general mob ever see over shoot as a harm to their own well being?

  5. Fast Eddy says:

    Look at how easy that was… I did a google search … and I found the original article….

    And then I copy and pasted parts of it onto FW….

    If I can do this …. why can’t the MSM?

    Why can’t the Green Groopie R e tard sites do what I have done?

    They could – they could!!!!

    But they won’t – they won’t

    Because most people with some level intelligence would read that entire article… and they’d realize they’d been played…. that man-caused G W …. is a LIE… a ho ax… a pile of steaming do sh it…

    The MSM does not want this to happen…. because the hopium narrative is right up there with the jesus, holy spirit, god narrative…. solar energy EVs and G W….. you need all 3 to create a whole… to create hopium….

    Don Draper is a clever man

    As I have said before – if Al Gore came out and admitted this is a huge ho ax…. and that he volunteered to be the front man…. you clowns would call him a villain and accuse him of being paid by the coal companies…

    That is …. the definition of … profound stu pidity

  6. Fast Eddy says:

    To all the du mb f789s in the world….

    Who travel in and out of FW….

    I dedicate this post….

    To all the du mb f789s in the world

    KKKlimate scientists versus KKKKlimate data

    by John Bates

    In the following sections, I provide the details of how Mr. Karl failed to disclose critical information to NO..AA, Science Magazine, and Chairman Smith regarding the datasets used in K15. I have extensive documentation that provides independent verification of the story below. I also provide my suggestions for how we might keep such a flagrant manipulation of scientific integrity guidelines and scientific publication standards from happening in the future. Finally, I provide some links to examples of what well documented CDRs look like that readers might contrast and compare with what Mr. Karl has provided.

    https://judithcurry.com/2017/02/04/c limate-scientists-versus-c limate-data/

    • Fast Eddy says:

      I read with great irony recently that scientists are “frantically copying U.S. kklimate data, fearing it might vanish under Trump” (e.g., Washington Post 13 December 2016). As a kklimate scientist formerly responsible for NOAA’s kklimate archive, the most critical issue in archival of kklimate data is actually scientists who are unwilling to formally archive and document their data. I spent the last decade cajoling kklimate scientists to archive their data and fully document the datasets. I established a kklimate data records program that was awarded a U.S. Department of Commerce Gold Medal in 2014 for visionary work in the acquisition, production, and preservation of kklimate data records (CDRs), which accurately describe the Earth’s changing environment.

      The most serious example of a kklimate scientist not archiving or documenting a critical kklimate dataset was the study of Tom Karl et al. 2015 (hereafter referred to as the Karl study or K15), purporting to show no ‘hiatus’ in g lobal w arming in the 2000s (Federal scientists say there never was any g lobal w arming “pause”).

      The study drew criticism from other kkklimate scientists, who disagreed with K15’s conclusion about the ‘hiatus.’ (Making sense of the early-2000s w arming slowdown). The paper also drew the attention of the Chairman of the House Science Committee, Representative Lamar Smith, who questioned the timing of the report, which was issued just prior to the Obama Administration’s Clean Power Plan submission to the Paris kkklimate Conference in 2015.

  7. Duncan Idaho says:

    “All ch-ti-an-i was written from the perspective of small, bronze age tribes, all economics has been written from the perspective of a civilization with an ever growing supply of cheap and benign energy.”

  8. soft targets says:

    America’s Original Sin

    I wonder why there hasn’t been a social justice movement two send all non-Native Americans back to “Where they came from” since Progressive women and POC knowingly continue to occupy territory that used to belong to Native Americans?

    • Dan says:

      Check yourself – On the contrary I say americans showed alot of constraint and excercised alot of compassion to a conquered people. Yes we conquered them.
      Go ask the Alaska natives who were more benvolent americans or russians. Go ask the amazon tribes how the portugese and now brazilians honor their claims. Ask the now mexico and central america natives how their experience with the spanish fared.
      Peddle your guilt tirades elsewhere or learn your fning history first before you do.

      • aaaa says:

        Whatever concept of conquerer’s mercy that USA has over anybody else is only because America came about after the inquisition went out of fashion. Isn’t it convenient how all the urbanized, sand-based religions basically deemed everybody else to be inhuman, subhuman, evil worshipers of false idols and Satan?

    • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
      doomphd says:

      “America’s Original Sin”

      Is this trotted out every Columbus Day these days? Name any benighn colonialists. It’ll be a short list.

      • Fast Eddy says:

        If anyone is uncomfortable with benefitting from the plundering of aboriginal peoples in their backyards… they are most welcome to donate half their income to the various agencies that provide assistance to said peoples.

        Did I mention a friend of mine back in Canada has his native status card — he was forever accepting grants from one of these associations for free school + room and board … not attending school … and dropping out when the money ran out … then rinsing and repeating…

        Did I mention my brother who is an architect and has worked for First Nations on various projects — he regales me with stories of massive corruption….

        In celebration of Genocide Day — let’s all give generously!

    • well usa modern sin

      is that they can not accept that they have lost war against bunch of goat farmers
      for 18 years

      https://youtu.be/svitJvVeiLU

      • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
        doomphd says:

        we’re staying there longer so we can beat all the previous empire’s attempts at conquest of the unconquerable goat herders.

  9. soft targets says:

    Given all the Intersectionalist racism hysteria in the U.S….here is a real case of racism and it is against the most vulnerable minority and least visible minority in America.

    https://www.splcenter.org/fighting-hate/intelligence-report/2007/violence-against-american-indians-pervasive-problem

    It makes since that bona fide white supremacists would go for a soft target, a group of people literally walled off from the rest of American society and do not have lobbyists in Washington D.C. fighting for “representation” because they are somewhat seperatists.

    • Dan says:

      I know for a fact Native America tribes have lobbyists. If you are going to spew bs and lies please find a more suitable site.

  10. Fast Eddy says:

    Facts? Well these are the facts:

    The kkkkkkkkklimate change debate went nuclear Sunday over a whistleblower’s explosive allegation that the National Oceanic and Atmospheric Association manipulated data to advance a political agenda by hiding the g lob al wa rm ing “pause.”

    In an article on the C limate Etc. blog, John Bates, who retired last year as principal scientist of the National Climatic Data Center, accused the lead author of the 2015 NOAA “pausebuster” report of trying to “discredit” the hiatus through “flagrant manipulation of scientific integrity guidelines and scientific publication standards.”

    https://www.washingtontimes.com/news/2017/feb/5/c

    limate-change-whistleblower-alleges-noaa-manipula/

    How anyone can possible believe in this bull shi t after reading this … is beyond me

    The stoooopidity is just… epic

    • JesseJames says:

      Snow is hitting the northern agricultural areas of the US and Canada early this year, destroying agricultural crops and preventing harvest. This is what we expect with a Little Ice Age weather that reduces the growing season significantly. Expect higher food prices.

      • 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.
        Gail Tverberg says:

        Perhaps food prices that are still too low for farmers whose crops have been destroyed, however.

        Food is a another type of energy where there is no price that works. A price that is high enough for producers becomes too high for consumers.

      • 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.
        Gail Tverberg says:

        The issue is that there is essentially nothing, from a fuel point of view, that we can do about climate change.

        There is little true evidence that wind and solar are at all beneficial in the whole scheme of things, because EROEI calculations are misleading.

        Efficiency changes don’t really help. Making air conditioners more efficient, for example, will make it possible for more people to afford air conditioners and worsen the problem (unless doing so drives up the cost so much that it makes air conditioners less affordable). The IEA has been forecasting huge demand growth from air conditioners in India and Africa.

        Using more biological renewables, such as burning plant remains after harvest for fuel for homes and businesses are basically ridiculous. They would damage agricultural lands, because the plant remains would not get back to the soil. We are already overusing our forests, so using more of them is not a solution either.

        Things that theoretically might be done that would help the problem:

        1. Move up the date of collapse.
        2. Reduce population growth in Africa, the Middle East, and other areas with growing population. Somehow, women need to derive their value from something other than having lots of children. Without fossil fuels, the tendency is for more of this belief, rather than less.
        3. Change eating patterns to a more vegetable and whole grain basis, with much less meat and dairy. Food should be locally grown as well.
        4. Use some engineering approach to reduce energy gain from the sun, such as painting large areas white (or something else–but there is a major chance that this will add to the problem in unforeseen ways.

        • Duncan Idaho says:

          “All christianity was written from the perspective of small, bronze age tribes, all economics has been written from the perspective of a civilization with an ever growing supply of cheap and benign energy.”

          • duncan i hope fast eddy

            does not thinking that international space station
            is also fake

          • 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.
            Gail Tverberg says:

            We live in a world with self-organizing systems. Religions are indeed self-organizing system, powered by energy, just as all other systems are.

            Our problem now is that we have “thrown the baby out with the bathwater.” One thing that religions gave us was a sense of awe–a sense that we are ultimately not in charge; something else outside us is in charge. This literal Higher Power has somehow created a system that could go on for billions of years.

            Another thing that religions gave us was a way of passing down wisdom on how to work together in the context of the current (energy) situation. If each of us were only individuals, with enough energy available to act on our own, we could completely disregard everyone else. In fact, today’s society comes pretty close to this. This is a major reason why religion has in recent years mostly been disregarded. Each person can afford his/her own apartment, and walk around with his or her phone, playing endless games to amuse himself.

            If each of us is dependent on the group for survival, then religions give us some understanding of how to get along within that group. Some form of sharing is optimal. So is some form of looking out for the needs of other. “Sin” has to do with looking out only for our own needs, when the survival of our group depends on some level of cooperation. “Thy kingdom come on earth as it is in heaven” is a request for harmony on earth, as it is in heaven. It says nothing about what happens after death.

            Now, we are faced with having to go back from endless energy for ourselves (making us fat besides video-game obsessed), to a situation where there is clearly not enough to go around. We should at least understand the nature of the predicament we are in. We have convinced ourselves that we humans can solve all of our problems, when this is almost certainly not the case.

        • «Global energy demand from air conditioners is expected to triple by 2050, requiring new electricity capacity the equivalent to the combined electricity capacity of the United States, the EU and Japan today.
          Global energy demand from air conditioners is expected to triple by 2050, requiring new electricity capacity the equivalent to the combined electricity capacity of the United States, the EU and Japan today.»
          https://www.iea.org/newsroom/news/2018/may/air-conditioning-use-emerges-as-one-of-the-key-drivers-of-global-electricity-dema.html

          • 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.
            Gail Tverberg says:

            Sounds like a very useful way to spend our fossil fuels!

    • lracine
      lracine says:

      Your link is dead… maybe because it is well over a year old… Bates’ accusation is a bit more nuanced than you portray… here is a direct quote in his own words

      “The issue here is not an issue of tampering with data, but rather really of timing of a release of a paper that had not properly disclosed everything it was,” he said.

      With regards to your last sentence perhaps you should take a good hard look in the mirror….. just saying

      https://www.eenews.net/stories/1060049630

      • Fast Eddy says:

        Nothing wrong with the link … to prevent it from not being posted I cut it in half….

        Now since you are operating off of an IQ lower than the temperature here in Queenstown today… I will … help you

        1. Copy the url into your browser
        2. Put your cursor after the letter c and delete the space
        3. Click enter
        4. Ask your mother to read the article to you and explain it … as one would to a 3 year old… ask her to talk in baby talk.

        https://www.washingtontimes.com/news/2017/feb/5/c
        limate-change-whistleblower-alleges-noaa-manipula/

  11. Jason says:

    Is this the future of mankind? Lay down like sheep and quietly exit the night? A lot of people here expect chaos, violence, and brutal survival at all costs. I’m not so sure. What does it take to push people to this level? Starvation weakens even the most hardened resolve.

    • humans have a large variety of personalities…

      for example, just read through these comments…

      I think a minority of humans are the aggressive type A…

      perhaps they will fight for every last minute of survival…

      most humans are not type A…

      interesting fact:

      all types of humans will soon enter the nothingness of eternal death…

      so…

      make sure to fight for every last minute of survival, before that nothingness…

      it’s very important…

      ha ha…

      • Fast Eddy says:

        I reckon every rat when cornered … will bare teeth…. and it’s the same with humans…

        • I am a student of boxing. The ring is a truth machine – it shows you a man’s character. Some fighters are pitbulls that just keep coming; some are like cats – only fiery when cornered; some are front-running bullies, who impress until confronted with true adversity.

          Muhammad Ali was a very rare breed. The men he fought and the manner in which he fought them – his courage was bottomless. It was easy to overlook what a *dragon* he was because he was so handsome and personable.

          Most of us, of course, don’t belong in the ring at all. My point is that though starvation and desperation may bring out our animal natures, there will still be a multitude of variables when it comes to how people will act and what they will be prepared or able to accomplish.

      • Dan says:

        The only things you need are a 9mm with a couple clips, a bottle of champagne, and 2 glasses – You’ll be fine

    • Fast Eddy says:

      Initially extreme violence… as panic hits… then starvation – disease – radiation – and … extinction

      • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
        doomphd says:

        for most, it will be over in a few weeks. there will of course be stragglers, pockets of isolated tribes.

  12. Jason says:

    Serious question. What is keeping the Venezuelan population from tearing their government apart?
    When did people become so passive?

  13. Baby Doomer says:

    $100 a barrel? Will Iran sanctions and Venezuela crisis bring oil price spike?

    https://www.theguardian.com/business/2018/oct/12/oil-price-barrel-markets-iran-sanctions

  14. three hours remain for this day October 12…

    exciting!

    • 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.
      Gail Tverberg says:

      More proof that energy prices (coal in this case) don’t rise, even when diminishing returns hits.

      https://gailtheactuary.files.wordpress.com/2018/10/us-coal-production-consumption-and-imports-to-2017.png

  15. Duncan Idaho says:

    A CNN correspondent just tweeted this:

    Alexander Marquardt @MarquardtA – 16:44 utc – 11 Oct 2018
    Erdogan spox: “At the request of Saudi Arabia, a joint working group will be established to uncover the events surrounding Jamal Khashoggi.”

    Translation:

    Erdogan spox: “Our Sultan received a sufficient down payment to start negotiating about the burial of the case.”

    Prediction:

    Erdogan will use the ‘joint working group’ to squeeze as much as he can out of the Saudis. (A deal may even include a political settlement of the Saudi blockade of Erdogan’s sponsor Qatar.)

  16. Fast Eddy says:

    China’s auto sales see biggest drop in almost 7 years

    China’s car sales plunged 11.6% in September, making for the biggest drop in almost seven years.

    http://uk.businessinsider.com/chinas-auto-sales-see-biggest-drop-in-almost-7-years-2018-10/?r=AU&IR=T

    • Fast Eddy says:

      “It’s very alarming and is even causing panic among some automakers and suppliers. That’s because the market has been growing non-stop every year for more than twenty years, and those companies make plans based on growth,” he said.

      “They don’t know what to do and worry about survival.”

    • kschleunes
      Kurt says:

      Kunstler is always wrong. Always. He is the Gartman of political commentary.

      • 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.
        Gail Tverberg says:

        I don’t follow politics enough to know who is who. So I am not a good judge of these things.

      • Rodster says:

        Curious in what way is he always wrong? He seems to be spot on in his commentary of social life here in America as well as where we are headed if we continue on our current path.

  17. Fast Eddy says:

    And in spite of the above …. the GGG WWW Grooopies will dig in hard…. because people are so invested in the myth… that they are embarrassed to stand up and say ‘I WAS WRONG’

    Well… I stood up and said it … and it feels so GOOD! It’s like unloading a 50kg sack from your shoulders… it’s like breathing pure clean oxygen from the alps…. drinking ice cold water….

    Rejoice — unburden yourself — say it … I Was Wrong!!!

    And guess what – if you have kids — they aren’t going to broil — so get out there and burn more coal…. it does not f789ing matter!

    • Duncan Idaho says:

      Philip Klotzbach
      ‏Verified account @philklotzbach
      5h5 hours ago

      The continental U.S. has now had three Cat. 4 #hurricane landfalls in the past 2 hurricane seasons: #Harvey, #Irma and #Michael. This is the first time on record that the continental US has had 3 Cat. 4 landfalls in two years. HT

      • Fast Eddy says:

        What about all those years where there were no hurricanes hitting?

        How to explain that?

        • Duncan Idaho says:

          Just giving you the facts.

          • Duncan Idaho says:

            (Atlantic hurricane records go back to 1851)

            • aaaa says:

              I live in North Carolina. Matthew and Florence are unprecedented for the area, and they were 2 years apart. They were megastorms that dropped lake mead levels of rain on us. Just prior to that, South Carolina had a major flood as well. I think that ‘climate chaos’ is real, and AGW is the main driver. I also don’t think that humans can do much about it. As Guy McPherson, right or wrong, said, the only ‘solution’ for AGW is global economic collapse. Hopefully the extrapolations are wrong and AGW won’t become an all-out ocean-rise catastrophe, but I do think that we could be in a new normal.

          • Fast Eddy says:

            Selective… therefore irrelevant.

            Just like the fact that it was -2 here in Otago last night…. irrelevant.

            The KKKKlimate is ALWAYS changing – everywhere

      • Fast Eddy says:

        Like I said… in spite of the fraud being exposed…

        The Thick Skulled Ones…. dig in deeper

        Marvelous!

    • Duncan Idaho says:

      Warmest years
      Rank Year Anomaly °F
      1 2016 1.69
      2 2015 1.62
      3 2017 1.51
      4 2014 1.33

      • Fast Eddy says:

        You seem to have missed the fact that the scientists have been caught out lying… ie. faking the numbers…

        So quoting fake numbers is rather… shall we say….

        Pointless.

        • Duncan Idaho says:

          Really?
          Did Ted Cruz fill you in?

          • Fast Eddy says:

            Well there is that… but then one of their own turned on them and exposed them… somewhat damning to have that happen – no?

            The kkkkkkkkklimate change debate went nuclear Sunday over a whistleblower’s explosive allegation that the National Oceanic and Atmospheric Association manipulated data to advance a political agenda by hiding the g lob al wa rm ing “pause.”

            In an article on the C limate Etc. blog, John Bates, who retired last year as principal scientist of the National Climatic Data Center, accused the lead author of the 2015 NOAA “pausebuster” report of trying to “discredit” the hiatus through “flagrant manipulation of scientific integrity guidelines and scientific publication standards.”

            https://www.washingtontimes.com/news/2017/feb/5/c

            limate-change-whistleblower-alleges-noaa-manipula/

  18. Fast Eddy says:

    The audit has exposed the dishonesty in this entire scheme and it appears to be directed at the goal of reducing the population. Anomalies it has identified include at St Kitts in the Caribbean, the average temperature for December 1981 was zero degrees, normally it’s 26C. For three months in 1978, one place in Colombia reported an 82 degrees Celsius average – hotter than the hottest day on Earth. Then in Romania, one September the average temperature was reported as minus 46°C, which has never happened.

    The data showed that supposedly ships would report ocean temperatures from places up to 100km inland. The paper also points out that the most serious flaws identified was the shortage of data. For the first two years, from 1850 onwards, the only land-based reporting station in the Southern Hemisphere was in Indonesia. Then there were ship observations at the time but Australian records had not started until 1855 in Melbourne, behind Auckland which started in 1853.

    This data appears to have been just made up.

  19. Fast Eddy says:

    And look at what we have here….

    Independent Audit Exposes The Fraud In Global Warming Data

    An independent audit of the key temperature dataset that is being used by climate models has exposed more than 70 problems with the data which render it “unfit for global studies.” Problems include zero degree temperatures in the Caribbean, 82 degree C temperatures in Colombia and ship-based recordings taken 100km inland. The audit has concluded that the studies are deliberately exaggerating temperatures to support a theory of global warming utilizing global averages that are far less certain than what is being forecast.

    The audit has revealed that “that climate models have been tuned to match incorrect data, which would render incorrect their predictions of future temperatures and estimates of the human influence of temperatures.” Furthermore, the Paris Climate Agreement adopted 1850-1899 averages as “indicative” of pre-industrial temperatures is “fatally flawed.” The entire Paris Climate Agreement has an agenda to eliminate effectively the advancement of society and attempt to reset the clock to the pre-Industrial Revolution. This entire theory that before the Industrial Revolution, our planet’s atmosphere was somehow pristine and uncontaminated by human-made pollutants has been also proven to be completely bogus.

    https://www.armstrongeconomics.com/world-news/climate/independent-audit-exposes-the-fraud-in-global-warming-data/

    This just confirms what we already knew:

    https://www.washingtontimes.com/news/2017/feb/5/climate-change-whistleblower-alleges-noaa-manipula/

    • MG says:

      I watched this documentary about Claude Lorius this week on the Slovak state TV: it is full of nice lies similar to “we should return to nature”, “the science is saving us”, “our Earth is like a living organism”, “we need to preserve it for our children”, “we need to live in harmony with nature” etc.

      https://www.youtube.com/watch?v=og3kdPnz8xw

      Although the levels of CO2 are surely rising with the consumption of fossil fuels, when we stop using more energy, the population of the human species will become helpless against those grandiose, fantastic forces of the nice nature that loves human species. There is no loving nature for the human species. It is a myth. The nature is rutheless, The energy that created and creates human species works against the nature.

      The human species does not control the energy, it just ignites what is accumulated, or tries to concentrate and regulate the streams of energy available in its surroundings. Thus the solar panels or wind turbines are “energy concentrating devices”. The water reservoirs with dams are “energy storing devices”.

      The carbon dioxide is a kind of dam that keeps the heat from escaping from the Earth and secures the steady temperatures:

      “Despite being closer to the sun, Mercury is not the hottest planet in the solar system as the planet Venus holds this title.” … “Venus is the second planet from the sun and the hottest in the solar system. Its temperatures can reach 464ºC. The high temperatures are due to a dense atmosphere with a thick cloud cover. Carbon dioxide makes up the bulk of the planet’s atmospheric gasses thus acting as a blanket that keeps heat from escaping the planet. The temperatures are regular throughout the year with slightly negligible variations. In contrast to other planets, its small elliptical tilt of 3º does not affect temperatures, allowing them to remain steady.”

      https://www.worldatlas.com/articles/the-hottest-and-coldest-planets-of-our-solar-system.html

      If you have heat, you have energy. Lets think about the heat as something positive and how heat can be used e.g. for growing food in colder areas where the soil is not depleted and how these areas can become the next living environment of the human species. Why stick to the areas that are already depleted?

    • jupiviv
      jupiviv says:

      Looks like the ‘audit’ itself, if it actually exists, is pay to play. The quotations from it are obviously partisan. Plus, the implications that 1000s of studies are using only one data series, or that data on temp can ever be free of error, are laughably ridiculous as well.

      • Fast Eddy says:

        And this?

        The kkkkkkkkklimate change debate went nuclear Sunday over a whistleblower’s explosive allegation that the National Oceanic and Atmospheric Association manipulated data to advance a political agenda by hiding the g lob al wa rm ing “pause.”

        In an article on the C limate Etc. blog, John Bates, who retired last year as principal scientist of the National Climatic Data Center, accused the lead author of the 2015 NOAA “pausebuster” report of trying to “discredit” the hiatus through “flagrant manipulation of scientific integrity guidelines and scientific publication standards.”

        https://www.washingtontimes.com/news/2017/feb/5/c

        limate-change-whistleblower-alleges-noaa-manipula/

        • jupiviv
          jupiviv says:

          Try reading things once in a while. Firstly, the article isn’t available (lol…update your anti-gw link archive FFS). Secondly Bates doesn’t say anything remotely “explosive” about gw or that paper. Again, READ for yourself:

          https://www.eenews.net/stories/1060049630

          • Fast Eddy says:

            Another day… another du mb fu ck…

            KKKlimate scientists versus KKKKlimate data

            by John Bates

            In the following sections, I provide the details of how Mr. Karl failed to disclose critical information to NOAA, Science Magazine, and Chairman Smith regarding the datasets used in K15. I have extensive documentation that provides independent verification of the story below. I also provide my suggestions for how we might keep such a flagrant manipulation of scientific integrity guidelines and scientific publication standards from happening in the future. Finally, I provide some links to examples of what well documented CDRs look like that readers might contrast and compare with what Mr. Karl has provided.

            https://judithcurry.com/2017/02/04/c limate-scientists-versus-c limate-data/

        • jupiviv
          jupiviv says:

          Try reading things once in a while. Firstly, the article isn’t available (lol…update your anti g_w link archive). Secondly Bates doesn’t say anything remotely “explosive” about g_w or that paper. Again, READ for yourself:

          https://www.eenews.net/stories/1060049630

          • 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.
            Gail Tverberg says:

            What Al Bates said at the conference I was at with him this summer is “Most of the scenarios evaluated by the IPCC are totally unrealistic.” They do not consider how much energy is really needed to keep the economy operating, for the number of people in the world.

            We cannot believe the scenarios (other than perhaps the lowest one, with few people), because they are themselves impossible.

            Of course, you are talking about John Bates, and what he said about climate. (I read the comment, without seeing the view that showed the prior comments in the string.) My comment about what Al Bates said may still be relevant.

  20. Fast Eddy says:

    World’s Largest Car Market Faces Historic Drop

    China’s car market has been one of the most reliable engines of global growth for decades. Now that all might be coming to an end.

    Purchases of passenger vehicles by dealerships plunged for a third straight month, an industry group said Friday. With trade ties with the U.S. worsening by the day and car sales barely up for the year already, the industry is now facing the prospect of its first contraction since at least the 1990s.

    https://www.bloomberg.com/news/articles/2018-10-12/largest-car-market-faces-historic-drop-as-chinese-shoppers-waver?srnd=premium-asia

  21. Duncan Idaho says:

    “Empires are short-lived structures created and kept together by the availability of mineral resources, fossil fuels in our times. They tend to decline and fall with the decline of the resources that created them, and that’s the destiny of the current World Empire: the American one. Will new empires be possible with the gradual disappearance of the abundant mineral resources of the past? Maybe not, and Donald Trump could be the last world emperor in history.”

    Lets hope so?

    • worldofhanumanotg
      worldofhanumanotg says:

      In terms of pop living standard the US Empire crumbled decades ago already, many countries are ahead. Now in terms of being the host nominal entity for the global fin/debt order that function is still somewhat at play. And increasingly only because of lack of viable alternative for so many diverse players out there, not because of mil strength or anything like that. Both China, Russia and few others (incl Gulfies) voiced their concern not ready to turn into some other petro currency regime for now..

      So likely some sort of disorderly reshuffle will come to fruition before ~2030..

  22. UK high street retail having its worst year on record:

    “The ongoing decline in homeware sales and big ticket items reflects the nervousness of the UK consumer, especially as uncertainty around Brexit lingers.

    “Footfall on the high street has been dropping at an increasing pace, which will be of serious concern as retailers enter the crucial Christmas season.

    “Somehow that decline in footfall needs to be reversed.”

    https://www.dailymail.co.uk/money/news/article-6268797/The-High-Street-enduring-torrid-year-store-sales-decline-eight-months-row.html

    • 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.
      Gail Tverberg says:

      “Footfall” is what we in the US would call “pedestrian traffic,” I expect. Without shoppers, it is hard to sell very much.

  23. 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.
    Gail Tverberg says:

    From WSJ: China’s Auto Sales Face First Annual Decline in Decades Sales fell for the third straight month in September, as fragile consumer confidence in the face of a falling stock market and U.S.-China trade tensions led to weak sales for most auto makers.

    Auto sales in China fell for the third straight month in September, as the country’s auto sector confronts what looks likely to be its first yearly decline in passenger-car sales in almost three decades.

    Fragile consumer confidence in the face of a falling stock market and U.S.-China trade tensions led to weak sales for most auto makers, as Chinese vehicle sales fell 11.6% year over year to 2.39 million in September, the government-backed China Association of Automobile Manufacturers said Friday.

    That followed declines of 4% and 3.8% in July and August, respectively. Overall, sales increased 1.5% in the first nine months of the year, compared with the same period last year, thanks to a strong performance in the first half.

    If China’s auto sales decline for the year, I wonder how world auto sales will do for the year. There are an awfully lot of countries facing declines.

  24. look another week of bau has ending

    this call for celebration with great song
    https://youtu.be/m8OlDPqYBLw

    • 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.
      Gail Tverberg says:

      What surprised me was the short list of countries whose oil production has declined since 2005, noted at the bottom of the list on the right hand side of the chart. Except for Norway, pretty much all of those countries are in the “doing poorly economically” group. Norway tried not to spend all it had coming in, so it is doing less badly. But I do wonder about all of the debt that individual citizens took on.

      In 2005, few of the peak oilers were looking at the wide range of countries that could increase production, if prices were high enough. There are no doubt a lot who could still increase production, if prices could magically increase to $300 per barrel.

      • jupiviv
        jupiviv says:

        I’m surprised that China apparently produces more than Venezuela, but I could be messing up all the colors.

        • 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.
          Gail Tverberg says:

          One detail that may make a little difference in this case is the fact that Matt is showing “crude oil.” Venezuela’s heavy oil is not considered “crude oil” in some classifications.

          In general, China is a much bigger producer of oil than Venezuela. If I look at BP statistical review of world energy data (which is more inclusive than just crude oil–it should include all of Venezuela’s production), it says that China’s oil production in 2017 was 3.846 million barrels per day in 2017, while Venezuela’s production was 2.110 million barrels per day. Production has dropped substantially in both countries since 2015, using BP numbers:

          Venezuela 2.631 (2015) while 2.110 (2017)
          China 4.309 (2015) while 3.846 (2017)

          China was the largest energy consumer in the world in 2017, with about 36% more energy consumption than the US. With its big “appetite,” it is easy for China to use all of the oil that it produces, plus import oil more than the US does.

  25. Fast Eddy says:

    Anyone notice how quickly the current problems have struck…. one day we are bumping along … little volatility…

    Then — WHAM!

    A property market stutters here…. another one stumbles there… the stock markets catch fire….

    And guess what happens if the fires cannot be put out.

    BAM – Thank you MAM!

    BAU goes up … in a puff of smoke.

    • after bau is collopse

      homo sapiens become again un-civilized

      https://youtu.be/uLeSNVKSpnY

    • kschleunes
      Kurt says:

      UHHHH. It’s just a market correction. These things happen occasionally. Overall, things are mostly OK. Summer of 2020, that’s when it will happen.

      • aaaa says:

        don’t you mean 2070?

        • 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.
          Gail Tverberg says:

          We can hope!

  26. Fast Eddy says:

    AMBROSE EVANS-PRITCHARD regarding the Fed’s policy of increasing interest rates :

    The contagion from a global crisis would push the eurozone into recession and shift the calculus on debt sustainability. The ECB would have no monetary ammunition left to combat the shock since interest rates are currently minus 0.4pc and its QE balance sheet is already 43pc of GDP.

    Only a massive fiscal response could rescue Europe but this is expressly prohibited by the ‘Ordoliberal’ Stability Pact, and would in any case be impossible for the Club Med bloc without an EU fiscal guarantee.

    If it reached this point, the eurozone would crash into deflation, leading to a string of sovereign bankruptcies and the devastation of Europe’s banks and financial system. Monetary union would shatter. Radical national movements of the Salvini stripe would sweep into power. It would the end of the post-War European order as we have known it.

    Yes, the ‘blowback’ into the US economy from an enveloping global recession would cause the Fed to change course. But how soon? The moment of danger is the interregnum when the furies are let loose across the world, while Washington is still in its own political and economic universe.

    The benign scenario is that US inflation ebbs in the nick of time. The Powell Fed takes the global pulse, dials down its rhetoric, and abandons tightening altogether. China gains another two years to engineer a soft-landing.

    Let us hope so. My working assumption is that the Fed will continue on its set course until something breaks: the world economy.

    • 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.
      Gail Tverberg says:

      One big issue is the delay in feedbacks. By the time Powell and the rest of the Federal Reserve figure out that there is something wrong with their strategy, it may be too late to mitigate the damages.

      • worldofhanumanotg
        worldofhanumanotg says:

        The idea that FED doesn’t have the models and global risk priorities sorted at least (or better) than Pentagon seems very unrealistic. And Pentagon knows PeakOil and does it practice religiously at the minimum in terms of denying access to “competitors” to the prize. And that has been taking place for decades already..

        Now tight in FEDs (and partnering CBs) expertise on oil money re-circulation, debt bubbles and so on.. Again, I guess there is some theoretical possibility that FED goes completely blind or (on wrong models) but the probability is minuscule, almost zero.

        They are simply tasked with prolonging the ownership behind the core hubs of Industrial Civilization, perhaps we are now at the serious crossroads where some further ricocheting could not be can kicked easily anymore, hence what we get for the near mid term might be some sort of fractured yet limping industrial civilization distributed among some hanging on hubs and several emerging black holes, which did not make it, leave breathing space for others. Obviously, we should focus on the former.

        • jupiviv
          jupiviv says:

          “And Pentagon knows PeakOil and does it practice religiously at the minimum in terms of denying access to “competitors” to the prize. And that has been taking place for decades already..”

          That’s not really proof of anything other than BAU (of human nature + civilisation). The VOC didn’t know peak oil when it was trying to deny competitors (Spain in this instance) access to the East Indies during the 80 yrs war. Scattered awareness of the issue especially at the middle to lower levels doesn’t lead to earnest institutional strategies based on same.

      • Fast Eddy says:

        Perhaps the strategy is the correct one … perhaps the Fed saw that if they did not hit the brakes a little — BAU implodes due to cascading asset bubbles blowing up immediately….

        Perhaps this strategy gets us a few more month of life?

        We will never know – because we see only the iceberg’s tip

  27. Fast Eddy says:

    One of my hockey buddies left for the jungles of Ecuador a week or so ago… he sold everything … and went with a back-pack only … completely unplugged for 3 months…(or who knows…)

    DPers…. perhaps you should follow….

    • worldofhanumanotg
      worldofhanumanotg says:

      This style of “oh my god I’m so trendy” last moment “bucket listing” aka as getting the most tropical diseases and other injuries in shortest possible time span or similar in other parts of the world is mostly silly and vanity based.. The best time for such activities was decades ago at best, when you actually could see some nature or human cultures.
      Not so much these days..

    • 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.
      Gail Tverberg says:

      Ecuador is not far from Venezuela. According to one report, more than half a million Venezuelans fled to Ecuador this year. Ecuador’s population before the migration was only 16.9 million.

      https://www.theguardian.com/world/2018/aug/10/more-than-half-a-million-venezuelans-fled-to-ecuador-this-year-un-says

      Like Venezuela, Ecuador is an oil exporter. Its oil production has been fairly flat in recent years. Actually, it seems to be down slightly.

      Maybe Ecuador can keep things together longer than other countries with its oil export revenue. Or maybe not.

      • houtskool says:

        http://peakoilbarrel.com/wp-content/uploads/2018/10/Ecuador-768×415.jpg

        Here’s the rest of Opec through september. Monthly Opec updates on peakoilbarrel are interesting to read.

        • 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.
          Gail Tverberg says:

          Thanks! This is a link to the post from which the exhibit comes.
          http://peakoilbarrel.com/opec-september-production-data/#more-20692

          The post shows that the OPEC Big 5 are sort of moving in an upward direction

          http://peakoilbarrel.com/wp-content/uploads/2018/10/OPEC-Big-5.jpg

          While the OPEC Other 10 are moving down:

          http://peakoilbarrel.com/wp-content/uploads/2018/10/OPEC-Other10.jpg

          • houtskool says:

            Conclusion from the august Opec update:

            “Conclusion: I believe Saudi Arabia can keep producing at, or close to, current levels for a few more years. That is if more infill drilling in their old offshore fields can compensate for declining production in their old onshore fields. But don’t look for increased production from them if demand and prices increase in the future. They will, very likely, only try to keep production level, as long as they possibly can.”

            So your very quick remark about Big 5 vs the others is spot on Gail.

      • Fast Eddy says:

        He’s in the middle of the Amazon somewhere…. with the hunter gatherers

        • 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.
          Gail Tverberg says:

          Perhaps not too far from the drug trade of Columbia.

  28. Fast Eddy says:

    Diesel in Qtown today $199 per litre … I think I saw 2.50 for petrol…. yikes.

    • Lastcall says:

      Diesel at $1.39 near Taupo.(Gull)
      I leave Q’town for the Touro-ists; I say fleece them good and hard.
      Q’town has a strange ‘Theme-park like’ feeling to it, and none of them care about Diesel. Too busy on the p.ss when Off Piste.

  29. Fast Eddy says:

    Can anyone recall a bubble being slowly deflated…. I only recall them exploding…

  30. Fast Eddy says:

    Suddenly, there’s a tinge of fear among sellers in Hong Kong’s property market

    A recent wave of price discounting for both residential and commercial properties indicates a softening in sentiment

    Signs of a deepening slowdown are beginning to emerge in Hong Kong’s property market, with anecdotal evidence showing more homeowners and office space owners are slashing prices in a bid to exit the market, even as there’s few signs of a broad based downtrend.

    https://www.scmp.com/business/article/2168190/suddenly-theres-tinge-fear-among-sellers-hong-kongs-property-market

    Oh but hang on … there are a billion Chinese across the border who all want a part of the ‘HK riviera’ … so prices will only go up….

    I’ve been saying since 2008 that the market is 100% about QE/ZIRP…. and that when it stopped…
    so too would the bubble…..nobody was listening …

    Sure one could have headed for the exits in recent months (two people I know did exactly that – one made a whopping USD3M on a property purchased in 2002 during SARS) …. and wait for the crash then re-enter….

    But my recommendation would be to spend the cash ASAP … because when the next crash comes… it is likely to be the final crash…. and property will go to ZERO … and stay there

    Not so great living in a high rise — with no working lifts….

    • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
      doomphd says:

      …and uninhabitable when the water pressure goes to zero.

      • Lastcall says:

        The modern version of a long drop could be bad for lower floor values

      • Artleads says:

        Gail once made a point that you can pump water with intermittent energy like wind. It isn’t impossible to collect water in a high rise by pumping it from the ground level. I have wondered in the case of 100 stories sort of thing, whether a relay pumping system could work. In any case, the major problem with any of this is lying media and general normalcy bias.

        But getting to such change would not be the kind of thing to do after collapse, since collapse would entail too complex a catastrophe to react to. Using coal strategically might prevent collapse of industrial society altogether, but maybe only in marginal countries (in the unpromising event they saw the need before it was too late) that could figure out how to do it.

        The trouble with using coal so far is its being used along with deforestation and an entire lack of innovation as to how to deal with coal emissions. Coal mining is also incredibly unhealthy for miners and land. But it might be less so if workers were better equipped and mining could be radically restricted due to strategy to make less coal do more. Coal would harm land less if design and fail safe planning were as thorough as, say, planning for a space mission. Coal is currently produced in a very primitive way. A sort of dumb culture perhaps. Heaven knows. Design might not be everything, but it matters a heck of a lot more than we think.

        • Fast Eddy says:

          Why are you posting this nonsense?

        • Artleads says:

          I understand as much as the average person about energy economics. Which isn’t saying much. There are billions of people in this position. Because we know so little we can’t explain much to anyone else. So a little summary for the many is needed. Here’s a try:

          Coal is the most natural and simple fossil fuel to produce. What it lacks in density it makes up for in bulk. You just dig it out of the ground and take it to where they can burn it for energy. Unless it spills directly onto the ground, it doesn’t emit harmful emissions in transit.

          Our energy economy is now so complex that all sources of energy are networked and influence one another. People who depend on EROEI don’t have a proper system of measurement, since they don’t know how to measure the effects of the combination of these energy sources.

          Coal’s simplicity and abundance makes it a good support pillar for the production of all other sources of energy, but it has such a bad rap that no one interested in future planning will consider including it in such planning. They instead spend their resources on renewable energy and NG, which cannot hold up on their own, and are not as stable as coal.

          Coal is exceeding filthy to work with, as are its emissions into the atmosphere. It would help if it were seen for its benefits and harms, and planned for accordingly. It should be handled with no less care than materials which give off radiation. This is not done because of gross ignorance. But unless it’s done, along withe explanation of the energy world it fits within, ordinary people will use all the means of influence to take coal out of production. Which will not be helpful to the continuation of “BAU.”

    • worldofhanumanotg
      worldofhanumanotg says:

      Define the kind of property which is likely fall the most.. ?

      For example, in protracted crisis people would tend to flock into cities not the other way around, as expecting to be closer to the aid distribution hub spots, hence some sort of floor set for specific segments of the real estate as well, while the other end of the spectrum might be indeed ripe for gigantic revaluation, typically malls and various industrial/service etc.

      That’s what happens most of the time anyway during recession/deflation/stagflation, the final fatal GFC-verXY might come at any turn of the story, but not necessarily in this very inning of it..

  31. Fast Eddy says:

    Part 2

    It’s no secret that Australia is experiencing a downturn in the property market. But for Aussies who own their own home or have a mortgage, there’s worse news. Many believe calling it a downturn is foolishly optimistic – the slump we are in is more like falling off a cliff. On 60 MINUTES, Tom Steinfort speaks with real estate and finance experts who predict property prices could slide by as much as 40 per cent in the next year. And if they’re right and numbers like that eventuate, there’s only one certainty: our entire economy faces catastrophe.

    https://youtu.be/BbFvwYVfwq0

    • 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.
      Gail Tverberg says:

      “property prices could slide by as much as 40 per cent”

      We don’t need much of this to pop debt bubbles!

    • 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.
      Gail Tverberg says:

      The video says that Australia is more dependent on housing to support the economy than any other country in the Western world.

      I couldn’t help but think about China, and its huge housing bubble. Not to mention Hong Kong. They aren’t in the “Western World,” but they are very much part of the housing bubble phenomenon.

    • Dan says:

      What a joke. Bring rates down and let inflation run amok. The Fed is in a catch 22.
      As for Trump he owns it by taking credit for it while before criticizing it as a bubble. Oh well I guess that comes with the bipolarity of having the worlds largest ego.

  32. Fast Eddy says:

    And following yesterday’s collapse (and today’s follow-through), Krishna Guha, the head of central bank strategy at Evercore ISI, warns that it will take a correction of at least 10 percent to get the Fed’s attention and even that probably won’t be enough to derail expected interest-rate increases..

    “It would likely take a much larger 15 percent to 20 percent correction to force a more far-reaching revision to the Fed’s policy plans,” he wrote in a report, adding that… “policy makers are also likely to consider volatility in the exchange rate and credit spreads. The idea that policy makers would ease monetary conditions in times of sharp declines is known as the ‘Fed put’.

    https://www.zerohedge.com/news/2018-10-11/dont-hold-your-breath-powell-put-protect-market-plunge

  33. Fast Eddy says:

    And here we have Koombayism on display

    https://www.scmp.com/news/hong-kong/society/article/2168128/carrie-lam-urged-end-institutional-slavery-hong-kong-acting

    Did you know… that an entry level nursing position in the Philippines pays…. hold onto your hats… under USD200 per month …. housing not included … food not included… medical care not included

    A helper in HK makes USD500+ per month … housing food and medical also paid for by the employer… when families go on vacation some of them bring the helper … many families treat their helpers as an employee… with respect … and are not slave drivers

    Ya it can be a sh itty job .. because some employers are pr icks…. but when you have no education or marketable job skills… and you are not hot enough to peddle a ss…. it’s an awesome job… better than the grinding poverty of the slum….

    Loads of helpers return to the Peens after 10 or 20 years in HK — to a decent house… and a comfortable retirement

    And btw — really good helpers earn over USD1000 per month in HK…

    • 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.
      Gail Tverberg says:

      I remember hearing that when my grandmother came over from Norway in her teens, she took a job as a maid (live-in I think). I doubt she got paid much of anything, but she was able to start learning English.

    • zenny says:

      Yea not sure if you know I am from PI got my start in HK… Lived at the Marco Polo for 3 years In the days before tank man.

  34. Rodster says:

    “The banana is dying. The race is on to reinvent it before it’s too late”

    https://www.wired.co.uk/article/cavendish-banana-extinction-gene-editing

  35. i1 says:

    Rateomania 23. Donald the Debtor vs. Five Percent Powell. Someone’s getting a haircut.

  36. adonis says:

    Fast Eddie what about that 800 point drop that happened yesterday Dow Jones slides more than 800 points in worst day for eight months
    Sharp declines in tech stocks see Dow fall 831 points
    Amazon loses 6.2% and Netflix gives back 8.4%

    • Fast Eddy says:

      What about it?

      Like I said … when the circuit breakers kick in due to massive uncontrollable drops… and trading is halted…

      That’s when I will consider only buying ripe bananas…

      And btw – I was holding off on buying a ride on mower because we have a hectare of grass to cut .. waiting till the very last minute in case BAU ended .. it’s being delivered this afternoon…. even though it is snowing….

      • worldofhanumanotg
        worldofhanumanotg says:

        Have not you been advised that per hectare sized area it might be reasonable to rather start looking at small agri machinery instead of ride on mower style POS.. which is absolutely useless single task capable device (as possible implements are joke)..

        But I could be wrong if the goal is to be mowing some sort of tennis court style yuppie “garden” only.. 🙂

        • xabier says:

          FE could get an Austrian scythe – he might drive Mrs FE wild with desire once more, and be uber-trendy at the same time……

          • worldofhanumanotg
            worldofhanumanotg says:

            I doubt it since original .at made scythe would be in terms of budget almost on par with some Asian ride on mower POS kiddy vehicles.. And these US/AUS/NZ guys are all about gazzzing da throttle 🙂

        • Fast Eddy says:

          agri? That infers growing food …. pulling weeds… irrigating … etc….

          Why the f789 would I do that?

          What we have here is a 25 tree orchard (inherited) and a large manicured lawn… kinda like a mini Buckingham Palace grounds….

          If I were to use a lawnmower by the time I finish I’d need to start again

  37. Fast Eddy says:

    Oh and btw … a single digit drop in the market… is nothing ….

    When it hits double digits per day — and the markets are shuttered to stop the bleeding … then you should be concerned

  38. adonis says:

    preparing with food is a good idea as I dont know how long supermarkets will not have food or if supply chains will be permanently out of action for our food supply, Food may be rationed out by the military wouldn’t you rather have a few months supply of food in your possession already instead of waiting in a line with masses of angry crowds. As for silver you may be able to be one of the few remaining middle class once the middle class nearly ceases to exist. Think about it there probably is just over a billion people who are the middle class imagine that is reduced to 10 million people after the Currency Reset.That is why I have been stacking silver.

    • worldofhanumanotg
      worldofhanumanotg says:

      Your general aim is reasonable, timelines – sequencing not so much.
      The provided example of global middle class contracting from ~1B into 10M style is mostly incorrect if meant as proceeding in just one single swing, it will be likely something more like ~3x steps, i.e. more likely low hundred millions eliminated per given step in a decade or slightly faster..

  39. shall we check oil today?

    Brent $80.34…

    that price could be on the down elevator…

    time will tell…

    then there’s VIX at 25.00…

    it’s doubled this week…

    nothing to see here, please move along…

  40. adonis says:

    I hope I am wrong on the date which I deciphered from the front cover of the ‘economist magazine/ of 1988 but whatever day or month it is the year is correct 2018. But don’t fret Tom Plan B will be providing for everyone on this planet in terms of food and shelter its all in their plans you have nothing to worry about.

    • hey good old friend adonis…

      unfortunately, that’s the wrong magazine…

      the real secret date is found on the cover of a 1988 Mad Magazine…

      it’s October 29, 2018…

      guaranteed 😉

    • Lastcall says:

      If there is nothing to worry about then why do you see the need to warn us?
      I enjoy the warnings tho, so don’t stop.

      • Fast Eddy says:

        Apparently inside one crack jack’s box is a paper with the date of the collapse

      • adonis says:

        I feel the need to warn you that by getting some silver and food ready that you may have a chance to stay in the middle class instead of being in the new class that will be created once the Old World Order is replaced by the New World Order.

    • Lastcall says:

      Its because 2+0+1+8 + 11. Google 11 and begin your journey into wonderland….

      …but I guess it depends on which Calendar you use…maybe I will/can change my date to the year of Ford as per Orwell and avoid this?
      Me, I think you are too US/Euro centric; collapse and a new system has already occured in many many countries and unfortunately for them, there is no gaurantee of food and/or shelter. Update your passport and go lookie.

  41. Baby Doomer says:

    Electricity distributors warn excess solar power in network could cause blackouts, damage infrastructure

    http://www.abc.net.au/news/2018-10-11/electricity-distributors-warn-excess-solar-could-damage-grid/10365622

  42. adonis says:

    october the 12th 2018 is D Day for the planned financial system take down that will usher in the New World Order where a more equitable financial system is brought in this may be your last chance to prepare with purchases of silver and food I am giving you this advise as Our Finite World was instrumental in helping me to arrive at this deduction. The financial system will continue albeit under new parameters instead of growing it will be contracting.

    • Tom says:

      Holy sh-it that’s tomorrow. What if I don’t have enough silver and food? Am I screwed? Inquiring minds want to know.

      • relax, Tom… 😉

        it’s actually far far away…

        adonis is always too early… 😉

        it’s:

        Monday, October 29… 😉

        • Tim Groves – Japan
          Tim Groves says:

          The end was supposed to be on October 4. What happened to that?

          I went down to my self-contained subterranean bunker with all my guns, ammo, canned dog food and complete DVD series of Mission Impossible, The Man from Uncle, and Lost in Space, got into my sleeping bag and waited for the end.

          Then on October 5, I was feeling peckish and found that I’d forgotten to bring a can opener, so I unbolted the hatch, came up to the kitchen, looked out the window, and found life was going on pretty much as normal. They were still arguing on TV about whether or not to vote on the Kavauaugh Supreme Court nomination.

          • Lastcall says:

            Same same! Been on a bender, settling scores, booking up debts, counting on the ‘end of ENDS’.
            Then, sober up and same old same old. I think you must be getting your crystal ball from the dollar shop.
            Need more rigour in your D-day predictions ….or …hold it…you must be an ECONOMIST!!!
            You can explain a hundred ways to xmas why your previous prediction didn’t pan out

            Never mind, keep them coming I say! You will get it ‘about right’ one day!

  43. Rodster says:

    Direct to you from the Fast Eddy Newscenter:

    “Homeless America, By Chris Hedges” http://www.informationclearinghouse.info/50404.htm

  44. Fast Eddy says:

    G W Update:

    And this morning … I am looking at snow falling … perhaps G W has reversed the seasons…. is it sunny and boiling hot up there in Minnesota?

    Oh hang on no… my brother is in Northern Ontario and he was saying it was already close to zero … very early in the season for that

    Perhaps burning all this coal is causing …. FREEZING???????? Oh My GOD!

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