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. Fast Eddy says:

    Auto Production And Sales Plunge In Germany, Brazil

    Following the recent dreadful auto sales numbers out of the United States, both Germany and Brazil have posted extremely weak auto production and sales numbers, prompting more questions about the state of the global economy.

    https://www.zerohedge.com/news/2018-10-04/auto-production-and-sales-plunge-germany-brazil

    September U.S. Auto Sales Plunge, Most OEMs Miss Pessimistic Estimates

    https://www.zerohedge.com/news/2018-10-02/september-us-auto-sales-plunge-most-oems-miss-pessimistic-estimates

  2. adonis says:

    has anyone seen the soaring bond yields 3.19 % on the 10 year my prediction for the collapse still stands it looks certain to be in october maybe the 12th yippee the deflationary death spiral cometh !!!

    • ssincoski says:

      Do you think you could get them to hold off until at least the 22nd? I am scheduled to return from visiting family in the US on the 19th. I would hate to be stuck there when TSHTF.

      • Jason says:

        Don’t worry. We have a few more years left. Keep an eye on total world crude and condensate totals. When it goes negative for a year, look out.

        • ssincoski says:

          I hear you, but I am more worried about near time economic crash as in 1929. When that happens, I could see the airlines cancelling flights because they can’t buy/pay for fuel. It will be a moment when everything kind of freezes-up.

          • Nope, Jason is probably most correct, furthermore it’s completely different situation to 1929, as there is total gov-CBs control nowadays, the system is already on support crutches, everyone of structural importance knows that, and even tries to game that.

            As I predicted and it’s now evidently unfolding the global triage will manifest also in the process of 1.5/2.5/3rd world upper classes moving the money to the core, hence yet another delay effect for the final crash. Even Gail conceded finally, that we have to wait to see how high could be the debt/credit bubble blown..

            Obviously from zoom out macro view it will be intermingled effects of the following key thresholds: resource depletion and its cost of production (ECoE), lack of consumer buying power/appetite, non reversible demographic shifts, and gov-CBs mishandling some crucial crossroad ahead..

            Timing, sequencing, and regional resources (incl. social) will be the most important thing determining the near-mid term profile of the crash per given locale.

            Some regions are absolutely wrongly handicapped. For example, in case of next slightly bigger ~5-15M migrant wave out of food shortage deprived MENA bound to Europe, would be very disruptive for the BAU, another still somewhat medium size wave of ~25-50M would likely mean civil war in Europe, not mentioning even higher yet very probable influxes..

            • ssincoski says:

              It certainly seems like you’ve given this a lot of thought but I’m inclined to think that any control TPTB think they have over events is an illusion. It seems to me that the world has been running purely on momentum for some time now. I don’t doubt that they will try to do triage but it will be like playing whack-a-mole and in many cases may actually make matters worse (for us, maybe not immediately for them). At least we have a front row seat for the time being.

            • Kowalainen says:

              The CB interventions is real. Therefore TPTB is real. MSM is bought and paid for. Therefore TPTB is real. Etc….

              The glewrmingg is a failed hoax to curb the unbound consumerism. This sucker will be run to the ground, hard. FE-style.

              El Trumpo marks the end of collapse:phase-2. The bumpy plateau is starting to slope downwards into phase-3.

              Yes baby, BURN MORE COAL!!!!
              (And natgas)

        • Duncan Idaho says:

          Yep–
          Hopefully a few more years, but not a given.

  3. MG says:

    The half of the general practitioners in the districts of the eastern Slovakia is in the pensioners age. If they decide to retire, the system collapses.

    https://kosice.korzar.sme.sk/c/20925029/v-obvodnych-ambulanciach-ordinuje-polovica-lekarov-v-dochodkovom-veku.html?ref=trz

    • Christiana says:

      Yeah, all the young doctors came to Germany! It is so sad. Slovakia is such a beautiful country.

      • The fun part is when the yoke was just to toil on the “ethnic” German well being, it was nearly bearable, given the novelty of attraction to new consumer trinkets in exchange for a while, despite the WWII connotations of such human condition.

        However, nowadays even the factory floor lowlife very well grasps he is in essence daily supporting the elevated living standards of incoming migrants living of this work transferred through MNCs homeland in Germany and so on. That’s huge part why Poland, Hungary, .. having second thoughts about the EU these days, not only on the most visible plane of refusing to take relocation of even a single migrant as pressed from the suicide hell bent Berlin-Paris-Brussels.

        Similarly, the idea that the top of their higher skilled – salaried expats (e.g. doctors) won’t consider going home given the perceived deteriorating future of their kids is also amusing, returning to home countries is actually growing trend..

        I guess it will be confirmed at Dr. Tim’s numbers eventually, as the per capita prosperity tends to fall faster in the former West..

    • This is a problem. I run into a lot of foreign-born doctors in the US. They tend to be younger.

  4. Fast Eddy says:

    One 23-year-old woman from Wales – who did not wish to be named – said she had been left scarred for life after having BBL surgery in February in Turkey.

    Three months after the procedure, infected holes appeared on her buttocks.

    “I couldn’t walk properly for ages,” she said.

    “To be honest, when the holes came it was better as the fat was leaking out, which made it possible to walk again.”

    She said her buttocks were leaking for three months, “soaking all my clothes”.

    She added: “It smelled. I had to bandage it up every day.

    “I honestly wish I could go back. I was happy with my body before. And now I paid a stupid amount of money to look like this.”

    https://www.bbc.com/news/health-45731191

    • Fast Eddy says:

      Price Hikes Crush Philippine Family Budgets

      As prices of everything from oil to rice soar in the Philippines, Maria De Guzman has scrambled to adjust. Her food bill has jumped 60 percent over the last year and now represents about half of monthly living expenses, prompting her family to scrimp on movies and even drive their car less.

      “We don’t go out anymore,” said De Guzman, a 32-year-old university teacher in Manila. “These are things that we want to do, but we cannot. Even if it’s pay day, you don’t have money. It’s already spent or budgeted.”

      Consumers are cutting back on purchases of non-essential items, switching to cheaper products and changing routines. A consumer sentiment index contracted for the first time in more than two years, a worrying signal in a country where private consumption makes up about 70 percent of gross domestic product.

      https://www.bloomberg.com/news/articles/2018-10-03/inflation-nation-price-hikes-crush-philippine-family-budgets

    • Too much disposable income. There seems to be a need to be different from other women, in a way that strikes me as strange.

  5. Harry McGibbs says:

    “Crude oil prices continue to climb.. Recent price moves bear a strong resemblance to previous price spikes in 2007-2008 and 2010-2012… Prices in Indian rupees are already at the same level that they peaked in 2008 and on the way to the record set in 2013… Only the strength of the dollar against other currencies is masking how high prices have become in oil-consuming countries outside the US…

    “The oil market has become locked in an upward price trend… Hedge funds and other money managers have accumulated bullish long positions betting on a further rise in prices amounting to almost 1.2 billion barrels of oil.”

    https://www.reuters.com/article/oil-prices-kemp/rpt-column-oil-prices-enter-the-danger-zone-for-consumers-kemp-idUSL8N1WK3S6

    • Harry McGibbs says:

      “People are losing patience.” This is footage of a mob in Odisha, India trashing a petrol station in protest at rising prices:

  6. Fast Eddy says:

    From Arctic to Indian Ocean: First shipment of Russian liquefied natural gas arrives in India

    One of Russia’s largest gas producers, Novatek runs the Yamal LNG project. It comprises natural gas production, liquefaction, and shipping. It is a joint venture of Novatek, France’s Total, China’s National Petroleum Corporation, and the Silk Road Fund. The controlling stake in the enterprise belongs to Novatek. Twenty percent each is owned by Total and CNPC, and the remaining 9.9 percent belongs to the Silk Road Fund.

    Since the launch of production at the Yamal LNG plant in the Russian Arctic, Novatek has shipped more than 1 million tons of liquefied gas. A total of four brand new and powerful LNG carriers now shuttle to and from the project’s terminal of Sabetta. Eleven more vessels of the kind are currently under construction.

    The ships have powerful icebreaking capacities and are able to ship along the Northern Sea Route in Russia’s Arctic waters, mostly year-round.

    Novatek plans another large-scale LNG project, called Arctic LNG-2. The project’s capacity will be over 18 million tons of LNG per year. The company also wants to begin construction of the first LNG train in 2022 or 2023.

    https://www.rt.com/business/422482-russia-lng-cargo-india/

  7. Harry McGibbs says:

    “The controversial budget plans of Italy’s populist government are hanging on an economic premise that looks too optimistic. A week after releasing an initial deficit target, the coalition finally unveiled the figures underpinning that aim. It sees growth of 1.5 percent in 2019, followed by 1.6 percent and 1.4 percent in subsequent years. By comparison, the median in Bloomberg’s latest survey is for expansion of no more 1.2 percent.”

    https://www.bloomberg.com/news/articles/2018-10-04/italy-hangs-its-budget-plan-on-an-unrealistic-view-of-economy

  8. Harry McGibbs says:

    “Mounting concern about the inflationary impact of falling US unemployment has sent tremors through global financial markets amid fears that the long post-financial crisis rally in asset prices is nearing its end.

    “The effective interest rate on 10-year benchmark US bonds reached their highest level for seven years after the latest snapshot of the American labour market showed fewer workers claiming jobless benefits.

    “Shares on Wall Street fell sharply as investors predicted that the monthly official payroll report out on Friday would show that the drop in unemployment was leading to pressure for higher wages…

    “Asian markets followed suit on Friday with Tokyo, Hong Kong and Seoul all in the red. Although the US dollar took a pause ahead of the payroll numbers, currencies in Asia Pacific were under pressure again against the greenback. The Australian dollar hit a 32-month low of US70.59c… The Indian rupee fell to an all-time low against the dollar on Thursday morning of 73.77, while in Indonesia – host for next week’s annual meeting of the International Monetary Fund – the rupiah plunged to a 20-year low.

    “The Federal Reserve has already raised interest rates eight times in the past three years in order to head off the threat of higher inflation, but its chairman, Jerome Powell, said on Thursday the economy could expand for “quite some time”.”

    https://www.theguardian.com/business/2018/oct/04/world-markets-rattled-by-us-inflation-concerns

    • Harry McGibbs says:

      “The spread between junk bonds and long-end U.S. Treasuries shrank to the narrowest since 2007 on Wednesday as the government debt sold off sharply, and analysts are closely watching to see if that could signal a coming end to the credit cycle.”

      https://www.reuters.com/article/usa-junkbonds/us-junk-bond-spread-over-treasuries-narrows-to-post-crisis-low-idUSL1N1RX16P

      • Harry McGibbs says:

        “The jump in interest rates on Thursday may be just the beginning, Jim Grant, editor of a closely followed market newsletter, told CNBC… Grant, a frequent critic of the Federal Reserve, blamed central banks for a “huge distortion” of interest rates because they pushed them down for the better part of 10 years. He thinks that will have consequences for the economy because people have borrowed at false prices.”

        https://www.cnbc.com/2018/10/04/interest-rates-may-be-in-early-stages-of-a-persistent-rise-jim-grant.html

        • Harry McGibbs says:

          So, to recap, we have:

          *Continued ratcheting up of interest rates in the US causing other currencies to weaken relative to the $ and forcing other nations to raise their rates

          *Demand-destroyingly high oil prices

          *Unprecedented levels of global debt

          *Stocks and property hopelessly overvalued on the back of ten years’ artificial central bank stimulus

          *Ever-worsening energy and resource constraints; the climatic complications that dare not speak their name; loss of biodiversity; destruction/pollution of the environment etc. all acting as what David Korowicz calls ‘axial stressors’ on the financial system

          *The rise of protectionist trade policies, which are already dragging down global manufacturing and exports

          *Increasingly fractious, polarised and unpredictable internal politics and international relations

          Looks to me like the stage is set for GFC 2.0.

          • ssincoski says:

            I agree but I think GFC 2.0 is going to look more like 1929. There are no more rabbits left in the hat.

          • The sequencing is unknown, it will likely proceed more like as follows:

            – “regular recession”
            – GFC v2.0
            – “recession/stagflation”
            – GFC v3.0
            ..

            There is a lot of ground yet to cover before reaching the trully SHTF ripe times of mid late 2020s – early 2030s..

            • ssincoski says:

              Ok. Thanks for that. Now I can try to relax a bit for the rest of the month and enjoy my vacation. I tend to be a long-decline type of guy, with the caveat that black swans can thrust some locations over the cliff overnight. Location and luck.

            • Actually, the above could be a false hope sorry. I’m only trying to decode reality from the acting shadows of the big players and I could be wrong. But I think I’m not after all..

              As China-Russia (+ few westerners and RoW) are actually just studiously working on long term step by step separation from the legacy system, demonstrably not in any abrupt revolutionary way, although poked quite intentionally every single day into some premature unwise action.

              That speaks volumes to me, that there is lot of steam in the dying system still, perhaps for up to almost two decades of muddling through. Most credible theoreticians settled on mid 2020s and later threshold for the real action, so go figure. Obviously, mild recession, stagflation or another GFC ver_XY might well occur before that, don’t be fueled by such detour – delay, it won’t be the real deal yet..

  9. Third World person says:

    somebody was asking what is most popular song of india in 2017
    here it is

    one thing i am noticed in music of all the world
    the Cultural homogenization of lyrics

    in 90 percent of all music that produce in the world today
    the lyrics revolve around same thing like girls,drugs,booze

    • We seem to have forgotten about how to produce songs about the wonders of nature.

      China has put together government sponsored songs about how wonderful China is. We haven’t been putting together “America the Beautiful” or anything similar for a very long time.

      Now that we believe that humans are in charge of everything (even though they really aren’t), we have developed a very strange, depressed view of the world. For young people, especially, the world is a very depressing place.

      How about this favorite at our family get togethers?

      https://hymnary.org/text/god_is_so_good_god_is_so_good

      • jupiviv says:

        “Now that we believe that humans are in charge of everything (even though they really aren’t), we have developed a very strange, depressed view of the world. For young people, especially, the world is a very depressing place. ”

        That produced some great music for about a decade before we gave up even on that:

        Does anyone else see a connection between 70s peak oil and musical decline?

        • One notable song before the early 1970s is “We Shall Overcome,” which Wikipedia says is a gospel song that became associated with the Civil Rights Movement in 1959. Back when we seemed to have unending energy to share, civil rights views were popular, at least with part of the population.

          Some songs from the 1960s include
          Unchained Melody by the Righteous Brothers and I want to hold your hand by the Beatles.

          Back in the 1970s, songs were still pretty upbeat. You light up my life and Love will keep us together.

          In the 1980s, we started getting Michael Jackson with Beat It.

          It seems like the change may have come when the economy was really hit. That was when interest rates were raised in 1981 to nose-bleed levels, and when energy consumption per capita began to fall. It wasn’t the oil drop per se that caused the problem. It was when it came back to hit the economy through interest rates that squeezed the economy down.

          • jupiviv says:

            In the 60s the feeling was the past and present are bad but the future is a shimmering galaxy waiting to be colonised, so there was a kind of gritty hope which enabled the kick-as music. Our present is a comfortable prison for middle-class-and-up youth. The corporatised, efficient, soulless, vulgar music prevents them from thinking about an increasingly uncertain and scary future.

        • Duncan Idaho says:

          No, but this is obvious:
          “The corporate grip on opinion in the United States is one of the wonders of the Western world [….] No First World country has ever managed to eliminate so entirely from its media all objectivity, much less dissent.”
          — Gore Vidal, A View from the Diner’s Club, 1991

        • ssincoski says:

          That was nice but I prefer the Madison Square Garden version from 1969. Mick Taylor years were the best. Strange that it wasn’t included on the album “Get yer Ya-Ya’s Out”.

        • I checked and “I can’t get no Satisfaction” dates from 1965. I suppose we have two different threads going on simultaneously. Part of it was that the underclass realized that it was possible for things to change. They didn’t have stay the way they were. Lyndon Johnson, with his “Great Society” plans, took office in 1963.

      • Fast Eddy says:

        We have a slightly different version of that song….

        God is so good,
        God is so good,
        God is so good,
        he’s so good to me.

        He plunked me down in the western world
        And I get to enjoy the spoils
        That we realize by torturing and murdering
        Those he put into the third world

        God is so good,
        God is so good,
        God is so good,
        he’s so good to me.

        He gave humans the intelligence
        To enslave and torture the beasts
        And I get to eat veal and foi gras
        At every meal if I so choose

        Yes… good is SO good.
        So Good to ME!

        • I think that the big issue is that the missionaries brought sanitation and a certain amount of basic medicine to Africa/Madagascar. At the same time, they told villagers that the teachings of the Medicine Men should be disregarded. For example, the Medicine Men said that if a woman had twins (or triplets), only the strongest one should be nursed. This should be disregarded, because with modern medicine, it was possible to keep multiple children alive.

          Religious leaders also taught trying to get along with ones’ neighbors. So the much higher population could be tolerated. Trade could also be tolerated.

          The indirect result of all of this “help” was exploding population. With the assistance of the West, the Carrying Capacity of Africa was raised manyfold. I suppose that this had started even before all of the missionaries came. It probably started when the various countries started colonizing Africa, and imposing order (a use of energy) that Africa had never known.

          The West didn’t have the foresight to see that rising African population wasn’t necessarily a good thing.

          The economy as a dissipative structure seems to look for ways to dissipate energy. In Africa, this seems to happen by adding more population, rather than providing a higher standard of living. When my father went back to Madagascar to visit in his later years, he thought that the standard of living had deteriorated.

    • jupiviv says:

      Christ that is a terrible song. Not that I’m culturally insensitive, because I’ve heard Indian classical music which is beautiful. The focus seems to be on “endless melody” rather than modality or counterpoint. Anyway, just as a palliative to that piece of shyt:

    • xabier says:

      I could show you Spanish folk songs going back 500 years all about……girls and wine!

      Oh, and money.

      My favourite Sephardi song is about a bride complaining that her wedding presents aren’t good enough: finally, she is promised ‘a pretty little slave to run alongside you’, and she shuts up!

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