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.
This entry was posted in Financial Implications, Introductory Post and tagged , , , , . Bookmark the permalink.

1,499 Responses to The World’s Fragile Economic Condition – Part 1

  1. This article seems to indicate the reason for the broad sell-off, starting October 1.

    http://www.atimes.com/article/has-the-derivatives-volcano-already-begun-to-erupt/

    Has the derivatives volcano already begun to erupt?
    The risk remains that dollar credit will seize up globally, with disastrous consequences for countries that have to borrow dollars to cover deficits

    According to the article:

    Germany and Japan have negative real interest rates, so their investors buy American bonds at positive real interest rates. But Germans and Japanese have to pay out Euros and yen, not dollars. They go to their banks to swap dollar income into local-currency income. The banks borrow dollars in the United States, sell them in the forward market and receive Euros and yen.

    European banks are running out of borrowing capacity. After five years of negative short-term rates, their profitability is low, their stock prices are falling and their credit is deteriorating. They can no longer borrow the dollars required to construct the hedges that local investors need.

    Later, the article says:

    As the credit of European banks deteriorates, US regulators require American banks who lend to them to put up more reserves against their exposure. That raises the cost of refinancing the $12 trillion or so of European bank borrowings from American banks, and it probably has led to a reduction in credit lines. European banks, in return, have to charge exorbitant rates to customers for hedging.

    The crunch hit at the end of the third quarter, when European banks’ short-term credit line in US dollars had to be renewed. Data for the volume of interbank lending aren’t available yet, but the cross-currency “basis swap” between Euros and US dollars – the spread that banks charge their customers for expanding their balance sheets to provide foreign exchange hedges – suddenly widened.

    The 0.3%, or 30 basis points, shift in the so-called basis swap was big enough to wipe out any advantage that European investors might obtain from buying US dollar securities and swapping the cash flows back into euro.

    The article then explains that the same issue has arisen for Japanese investors.

    If overseas investors can’t recycle the half-trillion-dollar US current account deficit into dollar-based securities because the banking system can’t provide the foreign exchange hedges, US yields will rise, perhaps sharply.

    • Rodster says:

      Many of the so-called financial experts have been saying that when you include derivative’s which is according to some in the $1.5 quadrillion range it will expose the financial system for the massive frauds it actually is.

      Yesterday I was watching a 12 minute video made by UK’s Sky News and the title of the video was is another financial crisis on the way 10 years later? The TV presenter would have made you proud Gail. In his illustration he stacked around 100 boxes, 20 stacks high and 5 wide. On top were the boxes labeled AAA and below that were the AA Boxes. Below those were Boxes marked BB and finally the bottom two rows were Boxes labeled B. The news presenter wanted to illustrate what happened in 2008 during the crisis was that all the great and really good loans were Boxes marked AAA and AA. The suspect loans were the BB and finally B.

      So to do his impersonation of Gail’s Leonardo Stick toy, he reached for the next to the bottom row of Boxes labeled B and pulled out that one box, When he did all 100 boxes piled high came crashing down, literally. He wanted to illustrate, what took down the financial system were all the suspect and weak loans that everyone knew about that wasn’t being paid back and never will.

      The derivative’s is what those 100 boxes were in that illustration. When people begin to realize the debt bubble that has been blown up and that debt will never get to be repaid, those holding on to that debt will quickly find out that 1000 other individuals will come claiming the exact same debt as the first person. They will quickly learn the meaning of “Rehypothecation”.

      • Yorchichan says:

        20 stacks high by 5 wide? Must’ve been a remake.

        • Rodster says:

          Yup that was it and thanks for posting the link! I went on their website looking for it but could not find it. I saw that yesterday on my Apple TV SkyNews app. Boy was I way off on the 20×5 stack. See what happens when you try and memorize something. 😛

        • CTG says:

          Cart before the horse…. crisis happened because the government did not bailed Lehman out…. the is why humans are screwed.

      • Dan says:

        You mean like the 21 trillion dollars of US debt and growing that will never be paid back? I wonder what he calls that box. In fact lets put all the worlds debts in some boxes and lets guess which ones will be paid back.

    • i1 says:

      30 year US treasury bond yield @ 3.55% with $60,000,000,000,000.00 global government debt and $80 oil should about do it.

    • Yoshua says:

      So European banks are selling currency hedges and then hedging against those hedges by borrowing dollars and placing them in the FX futures market?

      Now European banks owe American banks 12 trillion USD that they can’t pay back since they have sold them for euros (that no one wants) and they can’t borrow more dollars to refinance their dollar debt since they are basically bankrupt?

      I think that Europe will be the epicenter of GFC 2:0…but will it stay in Europe?

      • If the problem is as bad as it sounds, it seems like it shouldn’t take very long before we start seeing some defaults flow through the system. The big shifts in interest rates and in exchange rates are likely putting some strains on the system.

        I

      • Fast Eddy says:

        As long as they pay the interest…

  2. jupiviv says:

    New article from Lord Steve of Undertow!

    “Finance Crisis => Political Crisis”
    https://www.economic-undertow.com/2018/10/06/finance-crisis-political-crisis/

    Posted Oct 6 so somewhat prescient maybe?

    “…autocracy is a fashion, the Orwellian totalitarian police states were one-time innovations that took place because of massive energy- petroleum surpluses of the twentieth century; these surpluses plus expanding industrialization offered the illusion of advantage, of one nation over the others. The appeal of these enterprises is fetishistic, pregnant with symbolic violence. At the same time, autocracies are impractical, they tend toward irrelevancy like water downhill – not because of humanity’s provident nature – but due instead to the vanishing resource surpluses needed to keep them afloat. Autocracies are expensive: we don’t have enough experience with them to understand why. Because neither liberals nor autocrats can create resources; any promise of increased access to them is false; those making the promises are promoting Ponzi schemes.

    What we’re left with, a diminished menu of false promises and desperate gambles where the ‘house’ always wins. The better idea for success would be for everyone to consume less, for all of us to live within means, within the solar energy budget like all other life forms on Planet Earth. That means a rethinking of our precious toys, fashions and entertainments. Economists positively refuse to understand credit, money, ‘wealth’ are simply derivative claims against purchasing power which itself is a claim against capital: capital being non-renewable resources which are the basis of all production. As capital is cannibalized by the toys, so is purchasing power, the process is self-limiting, there is always less, at some point not enough to go around.”

    • DJ says:

      We learnt 2015 that what producers need doesn’t matter. Maybe we will learn 2019 that what customers can afford doesn’t matter either.

    • Fast Eddy says:

      The better idea for success would be for everyone to consume less

      NO! NO NO NO NO NO!

  3. Harry McGibbs says:

    “OPEC cut its forecast of global demand growth for oil next year for a third straight month on Thursday, citing headwinds facing the broader economy, and key consuming countries in particular, from trade disputes and volatile emerging markets.”

    https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKCN1ML1KR

    • OPEC’s estimate of crude oil supply for the Middle East increased a little, but not a lot, during September. Total production was reported at 32,761,000 for September, compared to 32,629,000 in August, an increase of 132,000 barrels per day.

      The big swing producer since Iran’s production started dropping in July seems to have been Libya.

      Iran
      July 2018 3,747,000
      August – 3,597,000
      September – 3,447,000

      Libya
      July 673,000
      Aug 950,000
      Sept 1,050,000

      Saudi Arabia has done much less.
      July 10,363,000
      Aug 10,404,000
      Sept. 10,512,000

      • Lastcall says:

        I wonder how of this energy is available for the world economy after the ‘w.a.r’ economy has taken its cut. The military cost of this oil seems to be going up all the time. I think ‘peak peace oil’ is well behind us and so per capita available oil is going down notwithstanding greater volumes being extracted.

  4. adonis says:

    it is a tad coincidental that all this is happening in 2018 could it just be that a plan B is in the works and the finite worlders have missed it what a grand deception it would be as i have said the elites may have been planning this for many decades, how will it unfold i believe a more equitable system will unfold it is not a fair system when the wealthy consume more than the poor

    • DJ says:

      What would the plan be that proved the world is infinite?

    • Yorchichan says:

      i believe a more equitable system will unfold

      Correct, death is a great leveller.

    • Indeed, the third world remains and enlarges:
      as today’s 2-2.5th world turns into third world and first world turns into 1.5-2.5th like condition.. and worse to come in next steps and sub cycles..

      Curiously, today was watching interesting scene, seemingly nothing to it, but..
      Was staring out of the window from upper floor down on the inner bloc, on the dark ground level packed full of usual technopunk scene like huge piping for aircon ducts from sub floors and so on. There was a guy in that little tiny alley down there slowly buy meticulously pre sorting trash for the usual colored wheeled bins for recycling. And just few steps beside him hidden in there parked gargantuan Benz, likely owner’s of that city bloc or the VIP tenant.

      I was wondering, how does it work so delicately like this, there is an employee standing and working few dozen inches besides a thing, which is 100-1000x larger then his net-worth. No urge to ventilate subjugation, or rage-aggressiveness, .. on that shiny symbolic thing, no nothing, yet.. That was not a high rise so I could hear his chatter with a kitchen girl from restaurant, both having different accents, perhaps immigrants from a real war torn hell hole, so at calm and peace for now, having completely different thoughts vs my selfishly focused doomero field studies at that point.

      Funnily enough, that all inner space was in upper floors guarded tightly by anti pigeon nets. Now, if you ever liked to have experienced cinematic “prison planet” feeling, that was the place..

  5. Hubbs says:

    Seeing Amazon’s recent $15 “minimum wage” just in time to keep workers from fleeing to other retailers during the Christmas shopping season, or to tide things over until robotics can replace them? The business model of Amazon based on warehousing and delivery is non-profitable. My understanding is that Amazon makes “profit” by its Cloud service “arrangements” with Google and NSA, and through financialization of higher stock prices and other financial gimmickry.

    Having said that, it appears that Amazon’s fleet of delivery trucks and the energy/gas that they require makes this a veritable EROI dead end strategy once honest money and accounting return. So what is Bezos thinking? I can only conclude that it is about control. Capture the distribution centers and delivery systems first, and then from there work backward to take over the suppliers, producers, and manufacturers, most importantly the farmers.

    Farming is being corporatized and increasingly run by machines. Only the “pickers” (Amazon term which alludes to slaves on the cotton fields)- the migrant farm workers who handle the food that can’t be harvested/planted by machines, are left, and against this background, and for increasing the democratic vote of additional unskilled workers, I can see the reason why they are being welcomed into the country as illegal aliens by the Globalists.

    OK, I’ll put down my bong now.

    • Hubbs says:

      I am not sure if Bezos has gotten into pharmaceuticals yet, but if he ever gets into energy supply and distribution, then that will confirm my worst fears.

    • Any references with respect to

      My understanding is that Amazon makes “profit” by its Cloud service “arrangements” with Google and NSA, and through financialization of higher stock prices and other financial gimmickry.

      Also, if Amazon is into financial gimmickry, what is its exposure to rapid run-ups in interest rates or rapid run-downs in stock market prices? Is Amazon’s life limited because of these kinds of issues?

    • These are the guys who are not aware of the fact that the laws of physics lead to the need for energy consumption, if the economy is to operate. Each area lives in its own silo.

      • Sven Røgeberg says:

        Nordhaus:
        «Sustainabilty presupposes a constant and continuous improvement of technology, i.e. to find new ways to substitute resources we have little of with resources we have much of»
        The word is flat and indefinite, so we don’t run into diminishing returns?

        • I wonder if technology will provide for a cheap technology that provides fresh drinking water. We have figured out how to desalinate water. We have also figured out that we need to add the right minerals back in, if we are going to drink this water, without adverse health impacts. But the cost of doing this is way too high to be economic. If we have to desalinate sea water, and then transport it (pump it uphill) to where it is needed, we especially have a problem. How do these folks expect to work around this difficulty?

          We can find many other examples, with minerals of all kinds.

  6. Baby Doomer says:

    Look at energy, not money.

    The financial system will be manipulated until energy shortages hit..

    • Low energy consumption really looks like a shortage of jobs that pay well. This is likely to result in a glut of oil, and oil prices that are likely to be very low.

      More demand than supply comes from an excess of jobs that pay well, around the world. For example, this is what happened in 1979, when the Soviet Union, Europe, and Japan were all ramping up their economies, and the US lagged behind. We are not likely to encounter this problem again. The US is sort of ramping up its economy, but everyone else is running into big obstacles. Also, most of the US jobs don’t pay well.

  7. Chrome Mags says:

    Dow tanked again, so where’s the plunge protection FE?

    https://www.google.com/search?source=hp&ei=u6y_W5q0Lsq0zwKK7aWYDw&q=dow&btnK=Google+Search&oq=dow&gs_l=psy-ab.3..35i39j0i131i67j0i20i263i264j0i131i67l3j0i67l2j0i131j0i67.1453.2770..3922…0.0..0.286.815.0j3j1……0….1..gws-wiz…..0..0.QSLF-5gCxIU

    • Fast Eddy says:

      Two suggestions:

      1. The PPTs are active — but pushing on a string now

      2. The Fed wants to step the markets back from massive bubbles….

      I suspect it’s 2 because the Fed has unlimited firepower — if they want the markets to go up — they will go up… until at some point they push on a string…. hopefully that is not where were are now

  8. 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!

    • name says:

      That’s the final nail to the coffin of W G ! You solved this multidecade topic by bringing the final evidence – it is snowing somewhere in the world! Please contact IPC C and tell it to them.

    • Tim Groves says:

      No, this is not from The Onion, but it’s close; a memorable piece by Charles Onians, published in The Independent in March 2000 to scare the snowflakes of the time and then so soundly ridiculed for years afterwards that in 2015 it was removed from their website in an effort to minimize the embarrassment.

Comments are closed.