The world economy seems to be seriously ill. The problem is not overly high oil prices, but that does not rule out energy as being a major underlying problem.
Two of the symptoms of the economy’s malaise are slow wage growth and increasing wage disparity. Tariffs are being used as solutions to these issues. Radical leaders are increasingly being elected. The Bank for International Settlements and the International Monetary Fund have raised concerns about the world’s aggregate debt levels. The IMF has even suggested that a second Great Depression might be ahead if major banks should fail in the manner that Lehman Brothers did in 2008.
Figure 1. Ratio of Core Debt Growth (non-financial debt including governmental debt) to GDP, based on data of the Bank of International Settlements.
If the economy were a human being, we would send it to a physician for a diagnosis regarding what is wrong. What really is needed is a physician who has a wide overview, and thus can understand the many symptoms. Hopefully, the physician can also provide a reasonable prognosis of what lies ahead.
Individual specialists studying the world’s economic and energy problems tend to look at these problems from narrow points of view. Some examples include:
- Curve fitting and cycle analysis using economic data by country since World War II, as is often performed by economists
- Analysis of oil supply based on technically recoverable reserves or resources
- Analysis of fresh water supply problems
- Analysis of population problems, including rising population relative to arable land, and rising retiree population relative to working population
- Analysis of ocean problems, including rising acidity and depleting fish stocks
- Analysis of the expected impact of CO2 production from fossil fuels on climate
- Analysis of rising debt levels
In fact, we are facing a combined problem, but most analysts/economists are looking at only their own piece of the problem. They assume that the other aspects have little or no influence on their particular result. What we really need is an analysis of the overall economic malady from a broader perspective.
In some ways, the situation is analogous to having no physician with a sufficient overview of where the world economy is headed. Instead, we have a number of specialists (perhaps analogous to a psychiatrist, a urologist, a podiatrist, and a dermatologist), none of whom really understands the underlying problem the patient is facing.
One point of confusion regarding whether today’s oil prices should be of concern is the fact that the maximum affordable oil price seems to decline over time. This happens because workers around the world increasingly cannot afford to buy the goods and services that the world economy produces. Inadequate wage growth within countries, growing globalization and rising interest rates all contribute to this growing affordability problem. To make matters confusing, this growing affordability problem corresponds to “falling demand” in the way economists frame the issues we are facing.
If we believe the technical analysis shown in Figure 2, the maximum affordable West Texas Intermediate oil price has declined from $147 per barrel in July 2008 to $76 per barrel recently. The current price is about $62 per barrel. The chart suggests that downward price resistance might be reached at $55 per barrel, assuming no major event occurs to change the current trend line. Any upward price bounce would appear to leave the price still much lower than oil producers need in order to reinvest sufficiently to allow future oil production to be maintained at current levels.
Figure 2. Down sloping diagonal line at the top of chart gives an estimate of the trend in maximum affordable West Texas Intermediate (WTI) oil prices. The downward trend line starts in July 2008, when oil prices hit a maximum. This high point occurred when the US real estate debt bubble started unwinding. Later maximum points correspond to points when oil prices stopped rising and crude oil reservoirs started refilling. Chart prepared by Amit Noam Tal.
Thus, our concern about adequate future oil supplies should perhaps be focused on keeping oil prices high enough. It takes a growing debt bubble to keep oil demand high; perhaps our concern should be keeping this debt bubble high enough to allow extraction of commodities of all kinds, including oil. Figure 1 seems to show a recent downward trend in Debt to GDP ratios for the Eurozone, the United States and China. This may be part of today’s low price problem for commodities of all types.
Needless to say, climate analyses do not consider the severity of our energy problems, nor do they consider the extent to which there is a connection between energy supply and the ability of the economy to operate as usual. If the real issue is a near-term financial crash that will radically affect future fossil fuel consumption, the climate analysis will certainly miss this event.
The Real Nature of the Limits to Growth Problem
To truly understand the headwinds that the economy is facing, we should be looking at the combined effect of all of the limits that the individual specialists have been studying. We might also include other issues not listed. The 1972 book The Limits to Growth presents an early computer model of how at least some of the limits of a finite world might be expected to play out.
Figure 3. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil” http://www.esf.edu/efb/hall/2009-05Hall0327.pdf
This early approach reflected an engineering view of the problem, considering expected diminishing returns with respect to resources of all types. Other considerations included likely resource needs based on prior economic and population growth trends and efficiency gains. The Base Scenario shown in the 1972 book (Figure 3) showed collapse taking place about now–in other words, in the early part of the 21st century.
In the time since the 1972 Limits to Growth analysis was prepared, there has been a major discovery relating the importance of energy to the economy. Ilya Prigogine tackled the problem of the physics of thermodynamically dynamic open systems, earning a Nobel Prize for his efforts in 1977. When energy flows are available, many structures, called dissipative structures, can grow and change over time. Examples include plants and animals, hurricanes, stars (they expand in size, then collapse at the end of their lives), ecosystems, and economies. These structures are utterly dependent on energy flows. The economy needs energy in almost the same way that humans need food. Without sufficient energy flows, the world economy will collapse.
It is because of the laws of physics and energy flows that markets are able to set price levels. Indirectly, physics sets the maximum affordable price for energy products based upon the total quantity of goods and services individual workers can afford. These maximum affordable prices may be invisible, but they are very real. Economists may talk about “demand” for energy products, but the real issue is affordability: “Will the laws of physics allow prices to stay high enough to provide the commodities the world economy needs?”
It is because of the laws of physics that debt can play a major role in the economy. Debt can provide time-shifting services if an economy does not have sufficient energy supplies to permit the equivalent of bartering of finished goods and services for new capital goods. Debt can allow future goods and services (manufactured with energy products) to serve as payment for capital goods and other goods purchased using debt. Thus, debt acts as a promise of future energy supplies. These future energy supplies may not, in fact, actually be available at prices that consumers can afford. This is why debt bubbles so often collapse and have a devastating impact on economies.
In theory, the new physics discoveries might also be added to the Limits to Growth model. If this were done, I would expect the downslopes in Figure 3 to be much steeper. Also, the date when the population decline starts would likely move forward, relative to other declines. The actual dates of the declines would of course be expected to change as well, because of updated knowledge regarding resources, population, and other factors.
Including the physics aspect of the economy would lead to many periods when sharp changes take place. When these sharp changes take place, there might be wars, collapsing governments, and epidemics, all causing large numbers of deaths. Debt bubbles might pop, causing deflation and widespread banking problems. These types of events are similar to those that economies have experienced in the past. There is no reason to expect that today’s world economy will have unusual lasting power.
Of course, modeling one piece of the economy at a time, as described at the beginning of this post, leaves out such troublesome implications. Economists tell us all we need to worry about is price fluctuations as the economy substitutes one product for another. If a person has blinders on, perhaps this a good description of the world we live in. Otherwise, the model leaves a lot to be desired.
Implication of the Laws of Physics Being in Charge of How the Economy Operates
Politicians would very much like us to believe that they are in charge. They would like us to believe that adding more technology can solve all of our problems. They would like us to believe that citizens can make a significant difference by voluntarily cutting back on their own energy consumption. They would also like us to believe that countries can cut back on their debt levels without the whole Ponzi Scheme unraveling.
Anyone who has watched bread rise in a bowl can see the implications of growth within a finite structure. It doesn’t take very long for the volume growth of bread dough to exceed the space available. Even if the bread maker pushes the dough back down again, the effect is only temporary. The bread dough quickly rises again to overfill the bowl it is in.
One possible implication of the 2008 financial (and oil price) crash is that we are very close to limits, right now. Regulators can try to fine tune how the economy operates by raising and lowering interest rates (sometimes using Quantitative Easing (QE) in the process), but they are, in some sense, playing with fire. Figure 4 shows the dramatic impact that popping the real estate debt bubble seems to have had in 2008. It also shows the impact that adding and removing QE has had.
Figure 4. Figure showing collapsing debt bubble at the time US oil prices peaked. Figure also shows the use of Quantitative Easing (QE) to stimulate the economy, and thus bring oil prices back up again. Ending US QE seems to have had the reverse effect.
By raising interest rates, regulators could easily send part, or all, of the world’s economy to a financial crash that is worse than 2008’s. Or the economy could again reach limits, by itself, with just a little economic growth. In some sense, the world economy is very close to filling the bread bowl, as it was before the 2008 crash pushed it back down.
The World Economy Is Reaching Limits in Many Areas Simultaneously
Many people believe that we are reaching limits in at most a few areas of the economy, such as “running out of oil.” The evidence suggests that because of the networked nature of the economy, we are really reaching limits in many places, simultaneously. The following represent some problem areas:
(1) Too Low a Return on Labor for Workers Whose Jobs Are Easily Exportable. With globalization, workers are indirectly competing with workers around the world regarding who can produce goods and services most cheaply. They are also competing with computers and robots that can easily replicate their functions. The net impact is a world where a large share of the citizens find themselves living at a level not much above the subsistence level. In more developed countries, young people may live with their parents longer and may delay having children almost indefinitely, because wages are not keeping up with living costs. Many studies have shown rising wage disparity. In some ways, the wage disparity now seems to be as bad as in the 1930s.
Figure 5. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.
(2) Interest Rates. Interest rates are the lever that economists like to adjust upward or downward to try to stimulate the economy or push the economy downward. Short term interest rates, up until about the end of 2015, were at the level they were at during the Depression of the 1930s.
Figure 6. Monthly average 3-month term treasury bill rates in chart prepared by FRED. Amounts shown through October 2018. Grey bars indicate recessions.
Raising interest rates is like adding a little more dough to the already over-full bread bowl. With these higher interest rates, borrowers need to pay more for monthly payments, making the strain on their finances even worse than it was previously. Figure 6 shows that raising interest rates very often creates a recession. In fact, the Great Recession of 2008-2009 seems to be the result of an increase in short term interest rates. This time we are being told that the increase will be gentle, but if the bread bowl is already overly full (in the sense that affordability of the output of the economy is already way too low, for many workers), what difference does “gentle” make?
(3) Return on Capital Investment/Added Debt. Falling long-term interest rates between 1981 and 2016 seem to be an indirect reflection of falling long-term return on capital investment. If capital returns had been higher, there would be more demand for debt, forcing interest rates up to levels closer to where they had been when the economy was growing more quickly.
Figure 7. Monthly average 10-year US Treasury interest rates in chart prepared by FRED. Amounts shown through October 2018. Grey bars indicate recessions.
Another way we can look at how productive the addition of debt has been is by comparing the debt increase each year with the GDP increase (including inflation) each year. We use current year GDP as the denominator in both calculations. Figure 8 shows the indications for what the Bank for International Settlements calls “Core Debt” (that is, Total Non-Financial Debt, Including Government Debt).
Figure 8. Dollar Increase in US Core Debt as % of GDP, shown beside GDP dollar increase, as percentage of ending GDP. Amounts based on FRED data.
Comparing the red and blue lines on Figure 8, GDP rose fairly reliably in the pre-1981 period, as the amount of core debt rose. The core debt increases tended to be higher than the GDP increases, but not a great deal higher. Thus, the US ratios on Figure 1 could be close to 1.0 in early years.
Once interest rates started falling after 1981 (see Figures 6 and 7), core debt growth and GDP growth greatly diverged. I expect that quite a bit of this change was related to asset price inflation as interest rates fell. With lower interest rates, assets of all types started becoming more affordable. Thus, a greater number of buyers could be expected, driving up prices of assets of all kinds, including homes, stores, and factories. Owners of these assets could “take the equity out” as prices rose and could use the equity to purchase other goods and services. In theory, these activities might somewhat stimulate the economy. Figure 8 suggests that the benefits of these activities with respect to the “goods and services” portion of the economy (red line) were slight at best, however.
Figure 9. Dollar Increase in US Financial Debt as % of GDP, shown beside GDP dollar increase % of ending GDP. Amounts based on FRED data.
Figure 9 shows Financial Debt amounts corresponding to the Core Debt amounts shown in Figure 8. At first glance, it appears that Financial Debt (blue line ) has provided no benefit whatsoever for the Goods and Services part of the economy (red line). But clearly the bankers who created these financial products benefitted from the income they received from them. So did the low-income home buyers who bought homes that they could not really afford in the early 2000s. Home building was stimulated, and inflation in home prices was stimulated. Banks benefitted by being able to transfer their problem home loans to unsuspecting buyers. Whether this whole arrangement had any net benefit to the economy, other than to create pseudo-solutions for people who could not really afford the homes they were purchasing, is doubtful. But when the economy is near limits, strange solutions to stimulating the economy are attempted.
(4) Commodity Prices. If we have a supply problem with one kind of commodity, we likely have a supply problem with many kinds of commodities at the same time. The reason why this happens is because the prices of many types of commodities tend to move together, in response to general market conditions. This is why the US government talks about inflation in oil and food prices as a separate category of Consumer Price Inflation.
If prices for commodities are generally low, as they have been since 2014, this means that commodity investors have received low rates of return for several years. With low rates of return, producers of many commodities have cut back on reinvestment. With inadequate reinvestment, supply crunches are likely to occur across a broad spectrum of commodities simultaneously. A recent Wall Street Journal article says, Supply Crunch Looms in Commodities Markets. The article mentions copper, zinc, aluminum and nickel. Other articles talk about oil in a similar fashion.
The question becomes, “Can consumers bid up the prices of all of these minerals sufficiently, to encourage enough reinvestment to solve the world’s commodity supply problem?” Food prices would likely need to be bid up as well, because oil is used heavily in the production and transport of food.
It was possible to bid up commodity prices in the 1970s, because the economies of the United States, Europe, Japan, and the Soviet Union were all growing rapidly. Also, women were joining the labor force in large numbers. It was possible to bid up commodity prices in the 2002 to 2008 era, because China and other Asian nations were rapidly ramping up their demand for goods and services of all kinds.
Figure 10. China energy production by fuel plus its total energy consumption, based on BP Statistical Review of World Energy 2018 data. The difference between the production figures shown and the black line consumption total is imports.
Now we are facing a much different situation. China is in much worse shape than most people recognize because its coal supply seems to have passed peak production. This has happened because the cheap-to-extract coal is mostly depleted, making it unprofitable to increase coal production without significantly higher prices. Imported coal and natural gas are expensive options. China also has a serious debt problem.
Because of China’s problems, the country will necessarily need to cut back on manufacturing, road building and home building in the years ahead. (This would happen, with or without Trump’s tariffs!) For some minerals, China currently represents over 50% of the world’s demand. China is the largest oil importer in the world. It is doubtful that China can make major cutbacks in its use of commodities without lowering prices for many commodities worldwide.
Persistence of Outdated Models
We are dealing with a situation where a large number of people suspect, at least vaguely, that the world economy is like bread dough about to outgrow its bowl, but this is not an issue anyone really wants to quantify. Everyone wants solutions; they don’t want a better delineation of the problem. Repeated publication of climate change forecasts is, in a sense, a denial of the possibility that we may be facing resource limits that are close at hand. Such publication is saying, in effect, that the closest limit that citizens need to worry about is the climate limit.
Also, the reliance of researchers on the past work by others in the same field tends to reinforce what are essentially incorrect models. Cross-pollination across fields is difficult, given the technical nature of today’s academic research. Furthermore, it becomes increasingly difficult to properly model a situation that is very complex and depends upon non-linear interactions.
Putting All of These Issues Together
The focuses of today’s narrow research can give a surprisingly distorted overview of where the economy is. A few areas in particular stand out:
(a) The choice of the word “Demand” instead of “Affordable Quantity” makes it sound like the buyer has more control over purchases than he really does. Growing demand seems to depend on continually increasing debt. This is the reason for the debt bubble problem.
(b) Framing the energy problem as “running out of oil” makes it sound like searching for substitutes will be a fruitful area for solution. Because of the affordability issue, this search is futile unless the substitutes are truly cheaper, when all costs are considered. Declining availability of many minerals because of persistently low commodity prices could be an issue as well.
(c) If limits are being reached in many areas simultaneously, incentives for countries to co-operate seem likely to go downhill quickly. Bullies who claim to be able to obtain a bigger share of the shrinking total supply will tend to be elected.
(d) The physics tie between energy and the economy makes major energy consumption cutbacks virtually impossible, without risking economic collapse.
(e) Adding technology isn’t really a solution to the debt problem, because it tends to make the affordability problem worse. The problem is that while adding technology seems to lead to more employment for a few elite workers, it tends to displace lower-wage workers at the same time. The spending of lower-wage workers is really needed if adequate demand for commodities is to be maintained. Additionally, the ownership of the technology-related capital goods tends to be concentrated among the elite; this further shifts wealth from the non-elite to the elite.
The long term prognosis for the world economy seems pretty grim, when all of these issues are put together. Defaulting debt and a resulting collapse in asset prices of all kinds is of particular concern. The default of subprime housing debt was an issue in the US at the time of the Great Recession; the next round of defaults is likely to start elsewhere. Debt defaults could start fairly soon, perhaps in the next 6 to 12 months. The more hostile political situation we have been seeing recently seems to be evidence that limits are close at hand.
1980 — Home Improvement?: US Justice Department moves to drop charges against former Beloved & Respected Comrade Leader FBI Director L. Patrick Gray III for authorizing his agents to break into homes without search warrants. Proves little Gray Men live on earth, probably in Texass.
1978 — US: Gay San Francisco city supervisor Harvey Milk & mayor George Moscone are assassinated by ex-supervisor Dan White. White is later convicted of the lightest charge possible in the infamous “Twinkie defense”; defense argued that White was depressed because of overconsumption of junk food. (Like most the population.)
Europeans are weak. Muslims are strong.
https://i.redd.it/bwzkka2rfv021.jpg
Europeans will catch up after the pension funds default.
We also need a picture of the divorced European husband sitting in a bed-sit…..
I’ll dig out the old dinner jacket then. I wonder if a Leatherman multi-tool counts as a Bond secret weapon?
When the Spanish Civil War broke out, an Englishman living in Malaga did put his best suit on, and stood outside his villa with a silver-topped cane in hand.
Asked why, he replied: ‘To show these chaps they’re dealing with an Englishman!’
I am broadly repulsed by displays of jingoism but if done with style…
Reminds me of Fabrizio Quattrocchi, the Italian hostage executed in Iraq in 2004, who tried to tear off his hood just before he was shot dead (his assassins not having any Leatherman multi-tools to hand) and courageously declared, “Now I’ll show you how an Italian dies!”
Struck me as rather classy.
One can only salute such bravery and, as you say, sheer style. I’m glad that they were short of even rusty knives on that occasion.
Eric Newby’s acoount of when he was on the run as an escaped prisoner of war after a totally bungled SAS-style mission which only blew up a tree, ‘Love and War in the Appenines’, pays tribute to the great bravery and decency of the ordinary Italian peasantry who helped him.
Tesla China sales plunge 70 percent in October: auto industry body
https://www.reuters.com/article/us-tesla-china-idUSKCN1NW0BH
Again, I find myself trying to figure out what this all means. Amazon says e-commerce sales dramatically increased, meaning that suddenly the consumer is spending again, therefore either earning more or borrowing more or both, but how much are the overall bricks and mortar and e-sales combined? Are these sales even bottom line profitable for Amazon in view of the individualized energy-intensive delivery costs? (Even getting USPS subsidies through sweetheart deal reduced rates compared to other “private” companies?)
My initial concern was whether the public is gradually allowing this centralized giant to wrap its tentacles of control over an increasingly lazy /ignorant public.
https://www.zerohedge.com/news/2018-11-27/amazon-says-cyber-monday-sales-surged-20-new-record.
In meantime, watching Community Health Systems (CHS) NYSE: CYH having to unwind, and wonder if this wild expansion may be the harbinger of our health care corporations in the future, the necessary unwinding of the absolutely idiotic acquisition of troubled HMA by CHS.( I was in the heart of the beast when I was practicing as an employed physician there in southern Mississippi, heavily CHS populated not by choice, but due to circumstances forced upon me. )
It seems that Medicare/Medicaid underpins the bulk of the earnings, especially rural hospitals. It is now a question of who crumbles first: Private insurers who gradually get starved out of profitable paying customers while having to cost share or the actual hospital providers who get starved out of shrinking government and private insure reimbursements. Good thing I didn’t get recruited by McKenzie hospital in TN for example (owned by CHS spin-off company Quorum). They closed.
Makes me want to go back and live on a nice deserted island like Pitcairn, which I visited back in 2004 (at the height of the actual sex scandal trials ) Bring my Ham radio and forget the world.
In meantime, question whether to buy 50 BMG, 12 OO Buck , and .308 Match Grade Federal 168 gr BTHP from ammoman, or just stock up on barterables like whiskey, although even though practically a teetotaler, I am afraid I would get more depressed and go Winnie the Pooh on it and drink it all up.
A person wonders what will happen to all of the small hospitals in basically rural areas. There are not enough funds to support them all.
In many cases, women having babies need to go to larger, more distant hospitals to have the services of an obstetrician. I know that as of a few years ago, there were not facilities for women to have babies on The Big Island in Hawaii. They needed to fly to Honolulu, and stay in a hotel of with friends until the time of delivery.
Likewise here on Islay, the ladies have to fly to Glasgow a week or two in advance. The hospital here has no maternity ward and only limited scope for coping with emergencies. The emergency helicopter is quite a common sight.
Aye, but the bracing winds on your island fortress ‘arr varry halesome’, they say. 🙂
GM’s Job Cuts Draw Angry Reaction in Heartland That Backed Trump
https://www.bloomberg.com/news/articles/2018-11-26/gm-s-job-cuts-draw-angry-reaction-in-heartland-that-backed-trump?fbclid=IwAR1nn6qc5mZAsaxvcV3Y11WRdQGivggnnRcrfHRTMfUzPwahwBJMpaF2JWk
Hillary tried to offer them free college so they could get re-trained..But no, they wanted their jobs back..
I don’t blame them. Free college, when there are no jobs at the other end, is not worth anything. Someone needs to support the families during the time the workers are at school.
Although I know that in Spain and Italy, at least, families in financial trouble are sending someone to college in order to live, for a time, off the grant – if the cost of living is low, then the grant – no loans – goes a long way.
Sounds good! People in the US were borrowing money to go back to school in 2008, figuring the loan would give money to live on as well. They no doubt still have the loans. They may even owe more now, than they did then, because interest keeps accruing, if a person misses payments.
“President Donald Trump seemed ready to escalate the trade war with China in an interview with the Wall Street Journal on Monday. Trump said it is “highly unlikely” that an upcoming meeting with Chinese President Xi Jinping at the G20 summit will yield a deal to prevent a forthcoming increase in tariffs. Trump also said he is prepared to hit another $267 billion worth of Chinese goods with tariffs — and he is not afraid to put tariffs on consumer goods like iPhones.”
http://uk.businessinsider.com/trump-china-trade-war-increase-tariffs-iphone-2018-11?r=US&IR=T
“Juiced by US President Donald Trump’s tax cuts, business investment helped deliver a robust US economy in the first half of 2018, but signs have multiplied that the growth driver is faltering. Companies face tariff-related uncertainty, cooling global demand and rising borrowing costs, while plunging oil prices are menacing the energy sector. Meanwhile, the US and China are settling in for a protracted trade war…”
https://www.straitstimes.com/business/economy/capital-spending-slowdown-flashes-warning-for-2019-us-growth
“Cui Tiankai raised the spectre of a repeat of the 2008 global financial crisis… ahead of the high-stakes meeting between US President Donald Trump and Chinese leader Xi Jinping… “Although the current economic situation in the US is good, people cannot rule out the possibility of another – I don’t want to use the word ‘crisis’ – a similar situation to what happened 10 years ago,” Cui said. “But, under the current circumstances, do you think people will still be as ready and open as they were in 2008 to have effective international policy coordination and coordinated stimulus actions? I’m not sure about that.””
https://www.scmp.com/news/china/diplomacy/article/2175151/prolonged-trade-war-could-lead-another-financial-crisis-chinas
“…there are signs that a contraction in global trade is deepening. September data just released by the Netherlands Central Planning Bureau show a clear deceleration in global trade, with Europe and Japan showing the weakest results.”
http://www.atimes.com/article/global-trade-volume-shrinks-amid-us-china-trade-war/
Aye, we’re all doomed I tell you.
Why does one feel like James Bond – tied down, and watching the large circular saw approaching his nether regions at all too fast a pace?
Except that this isn’t a film, I have no Bond-like qualities, and contact is certain……
“I have no Bond-like qualities.”
Nonsense, I’m sure, Xabier. Your posts suggest a suaveness worthy of the spy himself. A few minutes each day practising a quizzically raised eyebrow in the mirror and you’ll be there in no time.
https://img1.looper.com/img/gallery/legendary-james-bond-actor-roger-moore-dies-at-89/intro-1495547239.jpg
“More than a quarter of Britain’s pubs have closed their doors since the turn of the millennium, according to “shocking” official figures that have prompted fresh calls for the government to step in.”
https://www.theguardian.com/business/2018/nov/26/uk-pub-closures-financial-crisis-birmingham-ons-figures
“…how on earth does Theresa May expect to secure the consent of MPs to her Brexit agreement? Through the extraordinary spectacle of a Conservative prime minister precipitating an economic crisis to force through what she wants. George Osborne’s former chief economic adviser, Rupert Harrison, describes the approach as the “Tarp model…
“Tarp (Troubled Asset Relief Progamme) was the term used to refer to the US plan to bail out the banks in 2008 in the midst of the global financial crash. Initially, Congress rejected the plan, causing the markets to tank and financial chaos to ensue. So President Bush brought it back to Congress and it passed on the second attempt three days later.”
https://www.independent.co.uk/voices/theresa-may-brexit-deal-vote-parliament-commons-recession-economy-conservatives-a8652616.html
“Paris was burning. France was in revolt. It was a sharp contrast to the vast popular wave that swept President Emmanuel Macron into office with a stunning 66% of the vote… Even before his proposed reforms, his popularity began to plunge to half its sky-high numbers when he first took office. But since he has undertaken such an agenda, Macron’s popularity has hit a new low — 26%, which is below his predecessors François Hollande (48% ) and Nicolas Sarkozy (29%) at this point in their presidencies. Neither won re-election to a second term.”
https://edition.cnn.com/2018/11/25/opinions/paris-burning-macron-jeopardy-andelman/index.html
“The German economy is cooling down. That is the standout assessment from a key business climate survey, published by the Munich-based Ifo Institute on Monday.
“The Ifo Business Climate Index fell to 102.0 points in November from 102.9 points in October, marking its third consecutive decrease.”
https://www.cnbc.com/2018/11/26/german-business-confidence-dips-again-as-economy-cools.html
“Italy’s government says it will stick to its high-spending budget plans, setting up a potential stand-off with the European Union over its deficit.
“PM Giuseppe Conte, who held talks with deputies Matteo Salvini and Luigi Di Maio on Monday, said the objectives for 2019 had already been fixed.”
https://www.bbc.co.uk/news/world-europe-46343033
“Greece’s asylum system is hamstrung by public sector cuts imposed during the country’s EU bailouts, a UN envoy has said, as campaigners warned of a looming winter crisis for refugees and migrants.
“MEPs blame Europe’s asylum system for humanitarian conditions in Greece, where thousands are stranded in squalid camps that are a danger to physical and mental health.”
https://www.theguardian.com/world/2018/nov/27/immigrants-greece-winter-crisis-public-sector-cuts-un-envoy
ECB tightening not ideal, you’d think, in the context of all the above:
“The European Central Bank is unlikely to go back on its plan to end bond purchases next month and a rate hike sometime next year remains on the cards, ECB board member Sabine Lautenschlaeger told AFP in an interview.”
https://uk.reuters.com/article/ecb-policy-lautenschlaeger/no-going-back-for-ecb-on-decision-to-end-qe-lautenschlaeger-idUKF9N1U5027
I can see that raising taxes on fuel would not make Macron popular.
It is certainly not helping but I think there has also been a worsening, underlying resentment towards Macron that these fuel taxes have helped crystallise – his personal arrogance and lavish spending habits coupled with his austerity drive have earned him the moniker “president of the rich”.
The total number drinking seems to be about the same, though. Also, tap rooms for craft beers have been added, but are not included in the totals shown.
A lot of pubs in Britain are simply very unattractive,and expensive – they deserve the chop.
Huge over-supply of rather mediocre chain restaurants, too.
According to The Guardian, there is a new fashion of going out and drinking only water into which drugs are put, and this can’t help profit margins.
“If you thought the 2008 global financial crisis was a story about excessive debt, today you might be feeling a little nervous. There’s even more debt sloshing around the global economy than there was 10 years ago…
“Overall, however, debt has gone up, due both to huge additional corporate borrowing, particularly in emerging economies, and to post-crash fiscal stimulus in the developed world…
Productivity growth has been disappointingly weak in both developed and emerging economies, suggesting increases in debt have done little to transform people’s living standards…
“And other odd things have been happening in the financial world. Until recently, the US stock market had been racing ahead, increasingly divorced from an economy that, on many measures, was just limping along, and investors have been happy to lend at remarkably low interest rates to countries with chequered financial histories. Lessons from the eurozone crisis have not been learnt.
“…I suspect policymakers are very nervous. Having used up much of their policy ammunition 10 years ago, there’s little left to fight another financial war. And yet the faultlines are there for all to see.”
https://www.standard.co.uk/comment/comment/be-afraid-there-s-serious-debt-piling-up-around-the-globe-again-a4000281.html
“Wage growth in 2017 slowed to its lowest rate since 2008, the year of the financial crisis, despite solid economic growth and falling unemployment in major economies, the International Labour Organization said Monday.”
https://www.business-standard.com/article/jobs/wage-growth-slows-to-worst-rate-since-2008-financial-crisis-un-report-118112600983_1.html
“As monetary tightening reveals the vulnerabilities in the real economy, the collapse of asset-price bubbles will trigger another economic crisis – one that could be even more severe than the last, because we have built up a tolerance to our strongest macroeconomic medications.
“If history is any guide, the consequences of this mistake could extend far beyond the economy. According to Harvard’s Benjamin Friedman, prolonged periods of economic distress have been characterised also by public antipathy toward minority groups or foreign countries – attitudes that can help to fuel unrest, terrorism, or even war…
“Against this background, we must take seriously the possibility that the next economic crisis could lead to a large-scale military confrontation.”
https://www.channelnewsasia.com/news/commentary/next-economic-crisis-and-inequality-to-world-war-iii-10937664
The problem is not that we have built up a tolerance to our strongest macroeconomic medications. It is that we can no longer keep inflating the debt bubble enough to hide the lack of growth in energy consumption per capita.
This is a report on wage growth in 2017. According to the report, wage growth worldwide was 1.8% last year, but only 1.1% outside of China.
I am afraid that 2018 wage growth data will be a whole lot worse, and that this low wage growth is the reason for the low commodity price problem we have today.
The increases are in inflation-adjusted wages. The report can be downloaded at this link: http://www.ilo.org/global/publications/books/WCMS_650553/lang–en/index.htm
And inflation doesn’t necessarily have to be a price increase. As we have seen here in the US, inflation can hide itself in product shrinkage. Sure the price might be only 3 pennies more but you’re getting 25% less for your money so that’s where your inflation hides.
Once upon a time Breyer’s Ice Cream was a half gallon for $2.98 and now it’s 1.5 qts and priced at $3.98, that’s another way how inflation hides itself.
‘Shrinkflation’ is an issue on this side of the pond, too, Rodster:
“As many as 2,529 products have shrunk in size over the past five years, but are being sold for the same price, official figures show.
“The Office for National Statistics (ONS) said it was not just chocolate bars that have been subject to so-called “shrinkflation”.
“It said toilet rolls, coffee and fruit juice were also being sold in smaller packet sizes.”
https://www.bbc.co.uk/news/business-40703866
I get through a lot pf rubber gloves (don’t ask) – same thing.
Oil prices collapse and Russia opens fire on Ukrainian ships. Maybe nothing?
The demography behind the drastic fall in the number of the students at the universities in Slovakia, namely -30 percent between 2017 and 2007:
https://spravy.pravda.sk/domace/clanok/492968-vysoke-skoly-prichadzaju-o-studentov/?utm_source=pravda&utm_medium=hp-box-najcitanejsie&utm_campaign=shp_rightbox
Wow!
Has anyone else here noticed that a certain prolific commenter whose handle goes as FE has ceased commenting? Is he on another long-distance road trip or has he broken his arm in a skiing accident?
trip to Mexico?
perhaps he joined the caravan at the Tijuana border crossing…
He did say he was running out of coal. My have frozen in the arctic cold snap.
he has evolved into another species entirely
Cooling froze him to the ground
He’s moulting. Don’t bother him.
As another New Year approaches he’s probably in a quandary wondering why collapse hasn’t happened yet. Maybe it finally dawned on him things just get steadily worse, but don’t completely fall apart. Or maybe he came to the end of that last vat of whiskey and doesn’t know where to get that manic energy to post a trillion times a day anymore. Whatever the reason is it’s like the clouds parted and rays of sunlight are shining upon this message board.
He’s probably gone trans as a result of an accident and is having the op then shopping for new clothes.
Mrs FE caught him looking up potential ‘harem’ candidates, maybe even interviewing them….
How a Real Class War, Like with Guns, Could Actually Happen
Democrats seem increasingly comfortable with “incivility,” while Republicans are more shameless than ever about helping the rich. Where is this going?
https://www.vice.com/en_us/article/d3qqpk/how-a-real-class-war-like-with-guns-could-actually-happen
Democrats and Republicans both serve their wealthy corporate sponsors. Trump is probably the first prominent politician in a while that isn’t beholden to a corporate sponsor. Perhaps this is why he is so lambasted by every media outlet. That is not to say that Trump can do anything about what must come to pass. Democrats and Republicans are no different the debt still increases, education still sucks, healthcare costs continue to climb, etc, etc, etc….
Goldman expects commodities to rebound next year, says oil and gold prices are ‘extremely attractive’
https://www.cnbc.com/2018/11/26/goldman-sachs-says-oil-and-gold-prices-are-extremely-attractive.html
Statements such as this are what keep investments flowing, no matter how poorly companies are doing.
Google pays $1 billion for offices in biggest Bay Area sale of the year
(so much for moving to “the sticks”)
https://www.sfgate.com/business/article/Google-pays-1-billion-for-offices-in-biggest-Bay-13422825.php?t=7adfd3604d
So, how does expensive Bay energy factor?
perhaps the Google leadership thinks our energy resources are infinite…
Dead: Chevrolet Volt
https://jalopnik.com/general-motors-may-kill-the-chevrolet-volt-1830653844?fbclid=IwAR3yWNK2PgefUtqArFtSzDzXqsbjKoaNa1ahAskN0vOEPxgygLA6Lib8Oe8
Tesla Owner Waits Nine Months On Body Shop
https://www.citynews1130.com/2018/11/23/surrey-tesla-owner-still-waiting-for-repairs-nine-months-after-accident/?fbclid=IwAR3plp8wgxGZ_Rq4hECCbB65Dnl70dtF605dALv61sNSPx-NzrZtZ6ZDBcc
https://media.giphy.com/media/2Y8Iq3xe121Ba3hUAM/giphy.gif
Elon: There’s a 70% change that I will go to Mars.
Trader: There are no angry debt collectors there.
https://m.youtube.com/watch?v=D_8Pma1vHmw
Meanwhile, a update:
https://www.moonofalabama.org/2018/11/russia-blocks-ukrainian-navy-from-militarizing-the-sea-of-azov.html
America Is Poorer Than It Thinks
https://www.bloomberg.com/opinion/articles/2018-11-26/poverty-in-america-greater-than-statistics-indicate
GM just announced its shutting down its Canadian operations resulting in the dismissal of over 2600 workers. Similar shut-downs in the US and Europe are in their plans for 2019. GM claims it is downsizing so it can specialize in electric cars! I’m guessing they are downsizing to be ready for the recession they see in the near future. GM always hated electric cars and only built them as an compliance vehicle to meet their average milage per car requirements. GM received huge bailouts from Canada in 2009 and this time they probably realize if they show up at the trough again they’ll be given the Lehmen Brothers treatment?
“GM To Fire 15% Of Salaried Workers, Close 7 Plants”
https://www.zerohedge.com/news/2018-11-26/gm-expected-close-100-year-old-ontario-plant-car-sales-falters
Late stage capitalism—–
This is just the start.
I agree. Once all the big companies start doing this; it should get interesting. I just wonder how much longer the truck and SUV sales will hold out?
Ford is basically in on all SUV’s and Trucks after 2020 although they say they will counter that with around 20 new EV models.
The round trip efficiency (from the mines to the landfill) of an EV no better than an ICE. And some claim it is worse because converting fossil fuels to electricity is a lossy process. Which I agree.
https://www.reuters.com/article/us-gm-restructuring/gm-to-cut-car-production-in-north-america-halt-some-models-source-idUSKCN1NV1NB
‘GM to slash jobs and production, cancel some car models’
“GM plans to halt production next year at three assembly plants – Lordstown, Ohio, Hamtramck, Michigan, and Oshawa, Ontario. The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse. The Cruze compact car will be discontinued in the U.S. market in 2019.
Plants in Baltimore, Maryland, and Warren, Michigan that assemble powertrain components will have no products assigned to them after 2019 and thus are at risk of closure, the company said. It will also close two factories outside North America, but did not identify them.”
https://finance.yahoo.com/news/official-gm-close-ontario-plant-054923778.html
DETROIT (AP) — General Motors will lay off 14,700 factory and white-collar workers in North America and put five plants up for possible closure as it restructures to cut costs and focus more on autonomous and electric vehicles.
The reduction includes 8,100 white-collar workers, some of whom will take buyouts and others who will be laid off. Most of the affected factories build cars that won’t be sold in the U.S. after next year. They could close or they could get different vehicles to build. They will be part of contract talks with the United Auto Workers union next year.
The salaried reductions amount to 15 percent of GM’s North American workforce out of 54,000. At the factories, 3,000 workers could lose jobs in Canada and another 3,600 in the U.S. Some U.S. workers would transfer to truck and SUV plants where GM is increasing output, the company said.
GM, the largest automaker in the U.S. and includes the Chevrolet, Buick, Cadillac and GMC brands, said the moves will save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5 billion reduction in capital spending.
Those cuts are in addition to $6.5 billion that the company has announced by the end of this year.
GM doesn’t foresee an economic downturn and is making the cuts “to get in front of it while the company is strong and while the economy is strong,” CEO Mary Barra told reporters.
Barra said GM is still hiring people with expertise in software and electric and autonomous vehicles, and many of those who will lose their jobs are now working on conventional cars with internal combustion engines.
Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust with it.
The company, she said, has invested in newer architectures for trucks and SUVs so it can cut capital spending while still raising investment in autonomous and electric vehicles.
Law of diminishing profits…just needs a little modifications…
The US stock market is up 343 points, despite (or perhaps, because of) an article related to this on the front page. The title is, Trump Blasts GM Plans to Cut Jobs and Shutter Plants.
Trump presses GM CEO to stop producing in China and quickly replace Ohio factory tagged for closure
Shares of GM rose more than 5% in midday trading Monday, recently moving at $37.89. The company’s stock price has been stuck in the mid-$30s for much of this year, not much higher than its $33 a share IPO price eight years ago.
Plan C is already being enacted in China:
China’s TERRIFYING Social Credit System
You are correct that collapse/death are preferable.
(In reply to Dan above).
The book 1984 playing out in real life in China. Pavlov’s dogs on steroids.
Humans have more in common with the passenger pigeon than the shark.
But again:
https://www.theguardian.com/world/2018/mar/13/ukraine-far-right-national-militia-takes-law-into-own-hands-neo-nazi-links
Maybe yeast?
Sounds like China’s plan “C” will take a lot of energy to implement and maintain.
Think of all of the jobs Plan C provides. Without growing coal supply, they need some way to keep employment up.
And if the coal price isn’t profitable for producers, it is tough to grow the coal supply that is needed to run the economy that provides the employment. It all seems like such a vicious circle. It is hard to believe things have been able to balance out this long.
Jobs in surveillance?
A new “service,” in China’s growing Service Economy. It should provide even more jobs than “Preventing Terrorism” seems to in this country.
Jobs still take energy and energy is extracted from the ground. That has to be profitable or it will eventually have to stay in the ground. There is not free lunch when it comes to obtaining the energy needed to survive. We have been spoiled rotten by fossil fuels. Lulled into a false sense of what is really possible in the real world when we have to do everything manually. Nobody is going to care about surveillance when it becomes a struggle get the needed energy to survive.
Agreed. It is a service of little real benefit. We have lots of those services.
Fixing GE’s massive debt pile is ‘critical’ to corporate America, analyst says
General Electric Company has watched its share price crater more than 56 percent across 2018. The wider U.S corporate debt market has stretched to more than $9 trillion. How General Electric (GE) resolves its debt problem will be “critical” to the wider Investment Grade (IG) market, an analyst said Monday.
https://www.yahoo.com/news/m/8b690896-c7e3-3961-a86f-db8986c89302/fixing-ge%27s-massive-debt-pile.html
Look out …Bail out coming soon for “Too Big to Fail”, whatever it takes…you gotta love this show
Hmmm, alternative thought.
GE is big in jet engines and locomotives; another company owned by Warren is big into locomotives and Brk knows how to bring companies into the fold. GE is selling for a small multiple of what it is worth,if memory serves me right Brk has close to $1T of cash so the debt of $120B plus minus is manageable especially if payments can be deferred, interest accrued. Ge makes industrial gas turbines some of which are used for electricity generation, Brk has tax credits for renewables, jet turbines are profitable, cash positive, tax credits make it after tax positive. What is not to like? It is a true green sale in all sense of the word. It is almost better than our friend FE burning more coal to avoid a Maunder minimum effect on climate.
Ge has a great deal of institutional knowledge embedded in it, that is a moat which very few people in the world can cross. Those running GE had some issues, it is now on sale and were Brk to purchase GE, the quality of its debt would go up dramatically and it could easily be refinanced and much lower rates. Were a really smart operator to purchase the GE debt at current prices prior to sale of the company, more profit. It is playing the long game. Some need liquidity, liquidity is always expensive.
I look forward to comments, you guys are pretty darn smart.
Dennis L.
Prior to 2008 approximately 5% of corporate debt was rated as junk. Now over 20% of corporate debt is junk. And the investment grade bonds have a disproportionate amount of debt rated as BBB. So it’s not only the federal government, or state governments, or counties, or students, or China, or Japan, or Greece, or Italy or emerging markets that are addicted to debt, rather it’s also US corporations. You know…the really smart finance guys with masters from Wharton and Harvard are also addicted to debt. So if you are personally carrying a lot of debt at least take solace in knowning you’re in good company
Wow!
We hope so!
GM slashing 14,700 jobs in North America; set to close plants Michigan, Ohio, Maryland, Canada
https://www.usatoday.com/story/money/cars/2018/11/26/gm-general-motors-plant-closures-job-cuts/2113275002/?csp=chromepush
GM’s cost-cutting effort will lead to more investments in autonomous and electric vehicles, Barra said. That will include continued hiring at GM Cruise, LLC, the company’s autonomous vehicle development arm based in San Francisco.
“You will see a greater share invested in autonomous and electric vehicles,” Barra said. Those investments will be seen in engineering budgets and in new global products.
“WTF did I just read? More investment in autonomous cars and electric cars in San Francisco? (Shoots himself)
I suppose part of this is due to Trump’s tariffs making GM’s cars and parts built overseas too expensive to import. Which is all well and good since what comes after China? I mean where would the production go for all the big 3 when China’s labor got too expensive? GM can’t just keep making more cars and trucks every year and keep them affordable forever. It has to stop at some point.
if the elders have a plan B then our future looks quite rosy, the odds of a plan B a million to one.
if there is no plan B then we are all doomed , the odds of no plan B one to a million
I think plan “B” was put into play in the early 1970’s with the petro-dollar and agreement with the Saudi’s to price oil in US Dollars. This allowed the US debt to skyrocket while keeping oil for us affordable. We need a plan “C” now which I thought would be zero percent interest rates. That stage seems to be over now as well as the Fed is now raising rates..
Plan C is a 1984 type society, social credit scores, surveillance, a militarized police state, crushing poverty, and solyent green. We have entered the beginnings of it already.
After Plan C it gets worse until it collapses. I believe the reason so many cheer collapse is because many see it as they only way to escape the slavery we live under now. Diminishing resources cannot sustain BAU and the plantation is going to burn.
The “elders” know this and they plan on dealing with it accordingly. With force.
http://cdn.directexpose.com/wp-content/uploads/2015/01/frumforum-com.jpg
(at least these thugs were smart)
“I believe the reason so many cheer collapse is because many see it as they only way to escape the slavery we live under now.”
Good post Dan, which I agree with. People I think want some kind of instant coffee collapse which would be merciful to what is happening and coming.
What is happening and will get much worse is your; “Plan C is a 1984 type society, social credit scores, surveillance, a militarized police state, crushing poverty, and solyent green. We have entered the beginnings of it already.”
It will be degrading, insidious, relentless, and slowly but surely erode our standard of living, but what it won’t be in my opinion is a fast collapse (which you may or may not agree with). The worse kind of situation is one that continues to diminish bit by bit until people are either yelling & screaming from frustration or destitute in a state of lost soul zombie walkabout to the next soylent green soup kitchen handout. People will live in their vehicles much more so that they already are until those vehicles are on their last sputter, then people will start parking areas for dying dead vehicles that constitute the new living arrangements, the new normal.
Energy makes our modern techno-fantasy world possible. In order for this to continue and thus growth to continue, I can think of two things that must happen:
1. The round-trip efficiency of energy consuming processes (from the mines to the landfills) must use less energy.
2. We need to find cheaper sources of energy that are the same or more energy dense than current fossil fuels.
To me this is the bottom line. If industrial society cannot do one of these then we cannot grow the global economy. The economy contracts. Deflation explodes globally. I just don’t see a long drawn out 1984 dystopian, soylent green future.
we need
we must
is wish science I’m afraid
energy is what it is—we cant make more than exists
I agree. It is wish science. Therefore, we must hit a wall where growth stops. And if growth stops everything will unwind. Because we are so far into overshoot (thanks to abundant energies in fossil fuels) things will unwind quickly. There will not be decades of gov’t controlling and monitoring the masses ala 1984.
Meanwhile, Saudi crude oil production hit an all time high 11.1-11.3 million barrels per day (bpd) in November, They need the money and reached the breaking point on production cuts.
https://imgur.com/a/yaDZ98L
Let’s hope somebody helped her with the punctuation:
http://www.unz.com/isteve/michelle-obamas-thesis-unblockaded/
Scientists: ‘Look, One-Third Of The Human Race Has To Die For Civilization To Be Sustainable, So How Do We Want To Do This?’
https://www.theonion.com/scientists-look-one-third-of-the-human-race-has-to-di-1819573235?fbclid=IwAR3vY7x6uRP9TA_UAevO_vBi87AT3c8AcDw0ln5xMCGIhBfEC3H4QhfvnR4
I think it is more like 7/8ths has to perish for humans to be in balance with nature.
And that is optimistic—-
Yes, I strive for optimism LOL.
A much-diminished Nature…..
China claims first genetically modified babies are born
https://apnews.com/4997bb7aa36c45449b488e19ac83e86d?fbclid=IwAR1V0I_3sc_5gADRV1swxexUGAs_-Gb03nL3bg6Rg0_40xdW-ol7tzKVD5A
“U.S. President Donald Trump has boasted that falling crude prices are like a tax cut for the world, however, motorists in much of Asia have yet to pocket substantial savings from the recent rout in oil markets.
“Since its 2018 closing peak of $86.29 a barrel on Oct. 3, Brent crude has tumbled 32 percent to end at $58.50 on Nov. 23… However, the retail price of gasoline in major Asian countries has fallen by significantly smaller margins…
“Asian refiners are already struggling to make any money producing gasoline, with the profit margin, or crack, for making a barrel of 92-octane from Brent crude in Singapore GL92-SIN-CRK at 32 cents on Nov. 23…
“With profits from gasoline currently tenuous, the scope for refiners to lower prices further is likely constrained.
“In some ways it’s a double-edged sword for the region’s refiners, as they can lower gasoline prices and make a loss in the hope of boosting demand in order to remove a surplus of the fuel.”
https://uk.reuters.com/article/column-russell-gasoline-asia/column-asias-motorists-arent-getting-the-full-joy-of-crudes-slump-russell-idUKL4N1Y11TI
‘Like a tax cut’? Hmmm. Trump needs Gail’s ‘Leonardo Sticks’ for Xmas……….
“Overseas bond sales by Indian companies have slumped to the lowest since the global financial crisis a decade ago, illustrating uncomfortable levels of volatility in global rates and currency markets this year.”
https://economictimes.indiatimes.com/markets/stocks/news/overseas-bond-sales-by-indian-companies-at-decade-low/articleshow/66804516.cms
“The Chinese government has intervened heavily in the economy in order to soften the effects of weakening growth and industrial activity.
“Investors are trying to figure out how much of that intervention has been helpful to the economy over the medium term and how much of it simply allowed domestic firms to become more indebted and even less productive or competitive.”
https://www.forbes.com/sites/pedrodacosta/2018/11/25/the-scariest-economic-chart-in-the-world-right-now-may-come-from-china/#64c846873fd2
“Chinese iron ore futures tumbled nearly 6 percent and steel prices dropped to the lowest in almost five months on Monday as worries over weaker steel demand sustained a selloff with raw materials coking coal and coal also down sharply.”
https://www.nasdaq.com/article/china-iron-ore-steel-slump-to-multimonth-lows-as-selloff-extends-20181125-00082
“China’s car market, the world’s largest, is on the brink of its first sales contraction in almost three decades, according to industry data, a signal of wider economic strains that are rattling the country’s leaders in Beijing…
“China has long hoped to spur consumption in these provincial cities as a way of diversifying an economy long reliant on manufacturing. But a slump in consumption spending is already being seen in things like cinema ticket sales, online shopping and smartphones purchases.”
http://news.trust.org//item/20181126055613-sjjv0/
“Domestic debt has long been an issue for the Chinese economy. But one particular corner of the debt market—dollar-denominated debt issued by Chinese companies—looks increasingly in danger of collapse.
“Several factors are contributing to the rising risk of default. Rising interest rates, a declining Chinese currency, the ongoing U.S.–China trade dispute, and fast-approaching maturities are causing experts to sound the alarm.
““We will be talking about a major financial crisis—a dollar debt crisis,” Daiwa Capital Markets’ Kevin Lai told the South China Morning Post. Lai is the securities firm’s chief economist for Asia (excluding Japan).
“There’s $3 trillion in outstanding dollar-denominated debt issued by Chinese companies, Daiwa estimates; most was issued by subsidiaries of Chinese companies in Singapore or Hong Kong…
“Nomura expects more defaults going forward “against a backdrop of weakening domestic demand, rising credit defaults, a depreciating RMB and Fed rate hikes.”
“…refinancing, which is likely the only option for most developers besides defaulting, has become increasingly difficult and costly.
“In past years, property developers were able to tap into funding through the shadow banking industry. But recent crackdowns by Beijing have eliminated most options there.
“Capital market funding costs have gone up in recent issuances. Bloomberg data has shown that yields on Chinese below-investment-grade borrowers have reached 4-year highs. Last week, Times China Holdings Ltd. and Hengda Real Estate Group Co. both priced two-year dollar offerings at an eye-wateringly high rate of 11 percent.”
https://www.theepochtimes.com/chinese-companies-dollar-debts-reach-tipping-point_2723023.html
“Whereas during the primitive stage of capitalist accumulation “political economy considers the proletarian only as a worker,” who only needs to be allotted the indispensable minimum for maintaining his labor power, and never considers him “in his leisure and humanity,” this ruling class perspective is revised as soon as commodity abundance reaches a level that requires an additional collaboration from him. Once his workday is over, the worker is suddenly redeemed from the total contempt toward him that is so clearly implied by every aspect of the organization and surveillance of production, and finds himself seemingly treated like a grownup, with a great show of politeness, in his new role as a consumer. At this point the humanism of the commodity takes charge of the worker’s “leisure and humanity” simply because political economy now can and must dominate those spheres as political economy. The “perfected denial of man” has thus taken charge of all human existence.”
– The Society of the Spectacle, 1967
Translated into collapsospeak, that means: the cost of managing any surplus increases along with it until it ultimately exceeds the surplus’ worth (- Steve from Virginia, unknown date).
Classic Tainter
https://wtf.tw/ref/tainter.pdf
A consumer, exercising ‘choice’: but what I find interesting at the moment is the drive to tie that choice in to a contract whenever possible: $40 here, $70 there, monthly.
‘Choice’ evaporates and the consumer is in a way a bonded worker once more.
The only real choice is to opt out completely,and then, in a way, one is -socially – dead…..
Money is a representation of energy use, especially future energy use. When money was invented, it was used as a “store of wealth”. Wealth is just another form of energy use. When one saved money, he intends to use it to buy goods and service in future. Debt, when it is used on a small scale is fine and in the olden days, the energy that is used to back debts is also low. However, when the gold-peg was released in 1970s, debt went sky high on an exponential basis (it is now vertical). From the 1970s until today, wealth trickled down to the masses. Lifting people out of poverty is just redistribution of energy. It can be said that for most people, the lives in the 21st century is better off financially in the 1950s or 1960s where many people still have problems with food. However, due to debt (which is created out of thin air in USA) and money printing, the demands on the energy usage goes exponential. It is not the top 1% that spends but the top 20% who is now going for holidays, bought new cars, stuff, etc. There is significant number of them having low debts and plenty of savings (i.e. future energy use) and benefited tremendously from the money printing and QE.
The wealth disparity between the top 20% and lower 20% is significant and the way the top 20% spend is also significant. For example in Asia, the rise of budget airlines means that the top 50% has the means to use the “future energy promise” even faster.
It is actually common sense that QE (money printing) cause the usage of energy (including the future) to go up. Think of China. The debts that they create are used to build roads, infrastructure, etc. That something virtual (money printing) controls something physical (oil) is beyond what our brains can fathom. This detachment from reality will only hasten the collapse.
The worst year to be alive
A foreboding cloud of black ash blocks out the sun from Europe to Asia. An outbreak of bubonic plague coincides with a piercing cold snap. Crops fail. Starvation, darkness, and squalor abound.
All of these conditions were pervasive throughout the northern hemisphere in the year 536 A.D. The year was a tipping point in an era of unprecedented devastation. It was so bad that researchers are now labeling that year the worst time to be alive in the history of humankind. Or as Harvard History professor Michael McCormick told Science: “It was the beginning of one of the worst periods to be alive, if not the worst year.”
Although the origins of the black, ashen cloud were previously a mystery, a new paper published in the journal Antiquities indicates that a massive volcanic eruption in Iceland triggered the 18 months of darkness. Two more eruptions in the years 540 and 547 would compound the cloud.
The ash blocked out the sun, ushering forth frigid temperatures that blighted crops, resulting in starvation. Adding to the gloom, an outbreak of bubonic plague spread throughout the Eastern Roman Empire in 542 A.D., killing droves and giving way to an economic downturn that lasted 30 years.
The study-co-authored by McCormick, Nottingham University history professor Christopher Loveluck, and glaciologist Paul Mayewski at the Climate Change Institute of The University of Maine in Orono-measured ice samples in the Swiss Alps for evidence of pollutants and atmospheric change that could potentially shed light on the dark cloud’s origins. While conducting the study, researchers discovered lead pollutants in the ice, created by the surge of volcanic activity.
Ironically, historians believe these pollutants sparked the European economy’s revival, pulling it out of the deep, depressing chasm around 100 years later. Lead was crucial in the production of silver, which eventually spurred an economic resurgence as the sky cleared and the pestilence waned. As Loveluck told CNN: “There is evidence of total economic transformation between 640 and 660.”
So count your blessings. We’ve got nothing approaching that cataclysmic level of abject despair. At least, not yet
https://www.yahoo.com/lifestyle/science-chosen-absolute-worst-history-140000038.html
First, the fact that bubonic plague broke out as a result of this natural disaster is likely an indication that the world economy was already nearing limits, in terms of food production per capita, and energy production (such as cut trees) per capita. The cold snap pushed the economy past its limits. People who were already barely adequately nourished quickly became susceptible to illnesses, such as bubonic plague.
Second, cutting down on the population through the bubonic plague miraculously helped fix the (arable land/population) ratio, and the (amount of firewood/population) ratio. There were suddenly many more jobs open to young people, because so many of the older people had been wiped out. Also, because farming no longer had to use even the most marginal land, a relatively smaller share of the population needed to farm, allowing more people to be merchants and crafts people.
The situation is a much larger version of a hurricane helping the economy of an area. Debt suddenly makes sense, because a person can see that a new business has a good chance of succeeding. The prior collapse no doubt wiped out a lot of old debts.
A sudden rise in ash to block out the suns rays is like any other natural disaster, such as a hurricane.
the plague of the mid 1300s followed the famines of the early 1300s
volcanic eruptions in 1815 gave ”the year without a summer in 1816
On the bright side, it would appear that volcanic activity led to the inspiration for some of Turner’s most beautiful sunsets.
Altogether now: Life of Brian ‘Always look…..’
it was also the inspiration for Mary Shelly’s novel “Frankenstein”, as discussed in the book “Tambora” about the 1815 eruption.
Lots of good-quality second-hand clothes also flooded the market after the Black Death, quite helpful for poorer people.
apart from the fleas
yes
General Motors set to end factory operations in Oshawa and lay off thousands of workers
https://globalnews.ca/news/4697468/general-motors-end-oshawa-operations/?utm_source=notification/
https://twitter.com/axios/status/1066844231132696578
So, the key word:
“was”
Poor guy, he might have to sell one of his five houses in Bell Air..
Ukraine President proposes martial law in country after Russia attacks, seizes three ships
https://www.theglobeandmail.com/world/article-russia-blocks-three-ukrainian-navy-ships-from-entering-sea-of-azov/?intcmp=notifications
and there is our problem two countries russia and ukraine who cannot co-operate only with all countries co-operating have we got a chance at an alternative system succeeding
The Ukraine government would last hours without US support.
https://www.theguardian.com/world/2018/mar/13/ukraine-far-right-national-militia-takes-law-into-own-hands-neo-nazi-links
Not enough for all countries/all workers to have as much as they would like is the problem.
Too much wealth disparity among worker; countries find themselves poor as well.
you’re right there and diminishing returns are the culprit things are not looking good world war 3 is inevitable
ww3 on Friday the 30th…
absolutely guaranteed… (my sources say)…
full money back refund if not completely satisfied…
When it comes to the far right, ridiculous and dangerous aren’t mutually exclusive
antifa is also quite ridiculous and dangerous…
that sums up many humans…
Name one person Antifa has ever killed or injured?
U.S. sees 300 violent attacks inspired by far right every year
https://www.pbs.org/newshour/show/u-s-sees-300-violent-attacks-inspired-far-right-every-year
In terms of the number of violent incidents, there is no equivalency between antifa and alt/far right.
Comparing the left to the right is an apples and oranges sort of situation since the Left is only as old as the industrial revolution.
The Left-wing ideas began things like the French Revolution, (overthrow the existing power structure, that’ll solve all our problems. )
The Civil War (Willingness to use violence to end slavery in the South)
More recently the various manifestations of Communism
Communists have never ever peacefully taken power. Leftists ofen praise Fidel Castro for his healthcare system but ignore everything else.
Left wing people in the media will ignore the violence that the civil rights era unleashed upon the U.S.A. Left wing radicals in the 1960s and 1970s had no problem with using coercion to get their way. One thing that held them back was that their ranks were often made up weak people and civilians. Ghandi said he came to the conclusion of using non-violence because he didn’t have enough people who went through military service on his side.
The other thing that held them back was, that law and order intervened to stop them. Since the civil rights movement, right-wing violence, if you exclude the military, has been on the decline in America but Left wing has risen somewhat. Oftentimes, it is isolated and mentally disturbed individuals using political justification for their activities. Organized groups are monitored and infiltrated , except for Islam jihadists–who are right or left wing depending on how you choose to look at it.
We have no idea how much the state is intervening to keep violent political groups in check in the U.S.A. If the fed were to collapse, we’d find out in a short time and I can’t imagine all the violence would be coming from Conservative Christian men.
far right = Hitl.er
far left = Stalin
Stalin killed far more.
Hittler and Stalin are ideologies?
A thug is a thug, whatever the cause and that’s that: they get high on the idea and practice of violence.
Historically, European Fascism exalted violence as the highest ideal for the (male) individual and society.
Whereas, Anarchism and Communism (and earlier Revolutionary Liberalism) saw violence as morally neutral and a legitimate tool for social transformation to an ideal society.
Both sides can and have unleashed oceans of blood.
Every political ideology except radical pacifism sees violence as a “morally neutral and a legitimate tool for social transformation to an ideal society”. There are ethical distinctions between them nevertheless. Antifa’s advocacy of violence against speech is unacceptable.
“Antifa’s advocacy of violence against speech is unacceptable.”
yes, thank you, absolutely true…
Earlier this year there were a couple of far right extremist in Kansas..Who were going to blow up an apartment complex that rented to immigrants..And then they planned to break into the home of the landlord who owned it..And brutality rape his wife and teenage daughter, so that other landlords would be terrified to rent to any immigrants in the area..
Russia could be about to invade the UK at any moment while they are distracted by Brexit and Irish border issues..
I’ve checked with my source. As most here know, he/she is very reliable and unfailingly accurate. My source agrees that the youngers are now in control and will be able to keep BAU going until 2025 in the core. The periphery will collapse, but their plan c will handle that.
If machines are behind most of the productivity increases in recent decades , how can labour parties…or parties that claim to advocate for labor to be paid as much as possible, demand higher wages if the workers aren’t actually doing most of the work? In many cases, many workers don’t
even buy the machines that make them more productive, their employers do, and the workers learn on the job, so they can’t even say they invested in better tools to do more work.
The evidence shows that workers who invest in their own productivity-increasing tools, especially the computerized sort, have seen wage decreases since the productivity-increasing tools they purchased has made it easier for more people to do what they can do.
Why have most labour parties…or parties that claim to advocate for labor to be paid as much as possible not made the connection between productivity and machines?
From 2007 to 2016, US productivity grew at about 1 percent—a historic low
https://www.bls.gov/opub/ted/2017/labor-productivity-growth-since-the-great-recession.htm
That just tells me that AI, smartphones, drones and cloud computing, have done nothing for productivity.
Just wait until we have the quantum computers. That’ll fix it.
And flying cars.
That is pretty much the way it is.
Think about all of the hours wasted coding information for use by the computer by professionals everywhere. It seems like whoever I talk to, they talk about the burden of all the coding they are being asked to do. Teachers, physicians, dentists, insurance people. People are convinced that more information is helpful, but there are diminishing returns to coding in ever more information.
In comparison, the historic European – Printing Revolution fostered the maximum dissemination of truly useful information, which enhanced productivity and accelerated the spread of highly effective new technologies (for good or ill).
In many ways, we are now being swamped -at work and at home -by the superfluous, and forced to expend a great deal of energy on it.
Added to which, moving everything possible online has eroded resilience in simply frightening ways.
I agree! Having everything on the web means that once electricity (or the web) is lost means that all of this information will be gone.
If we want family photos, we need to print them out and put them in books. If we want spreadsheets, we need to somehow avoid all of this on-line junk that we have today. We will at some point need to go back to adding things together without the benefit of computers or calculators. Abacuses would work. Using fingers and toes will work. At some point, paper and pencil are no longer available. Grocery lists and annual diaries of when to plant crops become unavailable. Memory becomes terribly important, as it was back historically. Those with the best memories may be the ones who succeed.
Coding:
I cannot speak to any industry other than dentistry. In my last eight years of practice I ran a very successful public health dental practice which was virtually paper free. Coding was the core and from the code came the description of the procedure in the chart, prescriptions were done from the code adjusted for dosage and amount and were to be transmitted electronically to pharmacy, billing was from the codes and submitted to Medicaid during the day through a periodic sweep of the clinic database, the payment was deposited electronically each week to the corporate checking account with no paper handling, etc. It must be a total system and designed from the beginning to integrate across platforms and the codes must be well thought out, dentistry and medicine have standard codes which are revised periodically.
Good coding allowed the use of metrics to measure oral health care outcomes and make decisions as to which treatments improved oral heath. The system covered over 12,000 unique patients in an eight year time span with a reduced cost to the state of approximately 20% per encounter secondary to decreases in extractions, restorations, etc. per encounter. Electronic records and associate coding were key to utilizing information effectively.
Amazon is electronic and no one can doubt it works, they are positive cash flow which at the end of the day closely follows profitability. Go through the increasingly automated lines at Sam’s, they are self serve and fast, bar codes are very efficient. Wait behind a person in line writing a personal check and compare that to a cc.
If it has been done, it can be done.
Dennis L.
The problem today is that coding goes far beyond what is truly needed for Medicaid reimbursement.
I have a niece who is a dentist (specialist). She bought a practice that was using software that required coding all kinds of things-exactly which surfaces were affected, precisely which material from which manufacturer was used in all places, condition of the gums, etc. She found that the coding was far beyond what her staff could handle, so she ended up taking it home with her to work on, nights and week-ends.
My brother is a psychiatrist, who was until recently employed by a clinic. The coding requirements were overwhelming for him as well. Rate patient on a 1 to 10 scale at the beginning of the appointment on many different characteristics; also at the end of the appointment. And so on. He decided during the middle of the year to switch to working for a hospital (for lower pay) instead of the clinic, because the coding arrangements were far less onerous. He could spend time with patients, and go home and spend time with his family on nights and weekends.
I believe that my niece has figured out a way out of her problem as well. I will learn more about this when I see her at Christmas time.
Gail,
Thank you very much for the thoughtful replies; your efforts are valued.
As I noted, I only did dentistry, primarily restorative(56K surfaces ), removable prosthetics, routine examinations and oral surgery(11K extractions plus other surgical procedures) over a time period of 8 years of approximately 30-36 working hour weeks. Absolutely no home work, no taking work home. Holidays, continuing education and perhaps 4 weeks vacation were the norm.
Our software had drop down codes as I recall(diagnostic codes were not yet available, but in the works), a macro for routine notes and completion date defaulted to current day. All radiographs were digital as well as photographs. We photographed everything as MA will pay what you submit, but they want verification. We were not paid for photographs, but digital cameras and digital storage make it trivial and quick. There is the MA way and the wrong way. Their data is better than most realize and outcomes are evaluated to statistical norms. Had we continued, we would have used voice recognition software making some things even easier.
Dentists and many professionals want to be artists, they have their own ideas of what works and don’t wish to be confused with the data, this is especially true if those ideas have the greatest profit margin – that is not bad, not sarcastic, it is human.
The clinic would not have worked without electronic records, we had no paper, if it was paper, it was scanned and the original shredded. If narrative records are necessary, voice recognition with AI will soon solve this, voice recognition limited to a few specific people is much easier than a broad population with accents, etc. Signatures were electronic, a Topaz unit the same which I use as a Mayo patient, good enough. Mayo is continuing their digital records and they are excellent and available to the patient. This would have been required of us in the future and it concerned me because although we were on the WI state network, data security is a serious issue.
Digital records allow much better access to patient data in a manner that can determine oral health care outcomes. Some of the answers are not welcome by providers, change is never easy for any of us. For us digital records made for better patient care, ease of evaluating efficacy of various procedures and much less staff time working with records. It was a win for all parties.
Again, many thanks for all you do,
Dennis L.
Errr—
Classic example of alienation of labor.
Marx, 101
Karl Marx embodied someone born into money, who was lazy, and felt entitled to things he didn’t earn.
Marx was lazy?
“The evidence shows that workers who invest in their own productivity-increasing tools, especially the computerized sort, have seen wage decreases since the productivity-increasing tools they purchased has made it easier for more people to do what they can do.”
My understanding is the wage decreases were inevitable but temporarily slowed down in certain sectors by new tech. Also more people is the result of outsourcing production to untapped labour markets to offset industrial entropy, not jobs becoming easier.
^^Someone who can do nothing bur parrot what economists have written. Has Probably doesn’t even understand that world salad he wrote^^
Also, illiterate.
Him—“not jobs becoming easier.”
I: “the productivity-increasing tools they purchased has made it easier for more people to do what they can do.””
*word
But the worker doesn’t own what he or she is producing, doesn’t take it home, just watches it go through him or her.
He or She is alienated from the product they produce.
Comprende?
I know it is basic economics, but in the US we are forced to be ignorant.
The User Value is below the Exchange Value.
The worker makes the user value, while the capitalist makes a profit on the exchange value. The worker is just selling their labor at a lower cost than the Exchange Value.
“The worker makes the user value, while the capitalist makes a profit on the exchange value.”
What about the energy value? There is no point in conserving either user or exchange value – whoever pockets either has to continuously expend and replace them for energy value to remain >0.
The worker only owned what he/she produced when he/she produced for their family in a subsistence-level society. Any other arrangement that is more complex involves management. Managers often own the work. Comprende?
Your remark about people being alienated from work is a Communist talking point that is really useless in this discussion. Slaves didn’t own their own work but benefited the economies that used them. Alienation from work has no bearing on the economy. The economy doesn’t care about the worker’s feelings.
“Has Probably doesn’t even understand that world salad he wrote^^
Also, illiterate.”
Indeed. But the point is that the productivity increasing tools didn’t cause the wage decreases. They *eliminated* certain jobs, as Gail mentions, but that is a different issue.
The jobs technology didn’t eliminate, it caused labor cost decreases because more people could do the work–the supply of labor increased. Think of i.t. personnel after the Internet boom in the 1990s. most of them ever saw the wages they saw during the height of the boom.
I know that computers have replaced a lot of work formerly done by secretaries and clerks of various kinds. They have also allowed self-check out at stores, and self check-in at airports. A lot of the skills of secretaries (spotting mis-spelling, handling the details of layout and typing, taking dictation) are now handled by machines. While the machines may be productivity increasing (viewed at the society level), quite a few people found themselves without the jobs that they had been trained for, as a result.
“We can comprehend this world only by contesting it as a whole …
The root of the prevailing lack of imagination cannot be grasped unless one is able to imagine what is lacking, that is, what is missing, hidden, forbidden, & yet possible, in modern life.”
— Situationist International
Peak diesel took place in 2015. Peak heavy fuels took place in 2007. Peak total refined petroleum fuels took place in 2015.
Peak conventional crude oil took place in 2005 and since then the quality of oil has declined.
https://peakoil.com/consumption/for-whom-is-peak-oil-coming-if-you-own-a-diesel-car-it-is-coming-for-you
This is Ugo Bardi’s translation of a post by Antonio Turiel (who writes only in Spanish), who in turn is writing up the work of Rafael Fernández Díez, who has downloaded JODI data, and is trying to come to conclusions with it. None of them understand the important role of affordability. They are concerned about running out.
JODI data is a collection of voluntarily reported data. I would imagine that the downward hook at the end of all of their charts indicates that the voluntary reports are incomplete for recent data. I have never used the data myself–it seemed somewhat iffy, something a person would have to work with a bit to figure out what exactly the ins and outs are. Which countries are in and which are out, when?
Gail, an interesting plot is the heavy or bunker fuel production trend. It is interpreted as a long steady depletion by refineries to make room for diesel production. I assume the chief markets for heavy fuel is shipping/fishing. What they may have uncovered is a slow demand decrease for international shipping because of economic decline. The oceans are bascially fished out. The refineries would switch to more profitable diesel production, now also in decline that may finally be geologically driven.
I think the issue is more a pollution issue. Government are forcing shippers to use more refined fuels.
I think that some countries may have burned some of the poorer quality oil directly as heating fuel. Once prices for more refined products started to rise, oil companies decided that it made sense to refine the heavier oils to a greater extent than before. This reduced the amount of very heavy products for sale.
Rising prices made asphalt uneconomic for paving roads, at least for a time. I know in the US, quite often roads were switched to concrete, because of the high cost of asphalt.
World middle distillate production according to BP
year total world middle distillates(Thousand barrels daily)
2014 33,809
2015 34,271
2016 34,350
2017 35,307
Ugo Bardi’s presentation might be incorrect.
Good point! I do not trust data bases that are voluntary compilations, using terms that may not really correspond to terms I am used to. I would want to first look at them in a great deal of detail.
Yoshua, are your statements about Peak Diesel, heavy fuels, and total refined petroleum, are about the U.S. or global? Sources?
I have thought that since we power transportation on refined fuels from oil, and use primarily diesel in trucks, etc. for movement of raw materials and finished products, “Pealk Oil” might manifest itself in the output of refined fuels. I don’t know how much refinery distillation can be tweaked towards diesel, but there must be some limits to that. https://www.eia.gov/energyexplained/index.php?page=oil_refining
Barrels of oil produced may continue to increase, but perhaps we still get the first clear visible supply constraints and shortages in heavy fuels/diesel. Liebig’s law of the minimum might then apply…..
See Alice Friedman’s “When Trucks Stop Running: Energy and the Future of Transportation.”
I don’t think analysis of these breakdowns is of a whole lot of interest to most people because it is not an issue of “running out” of certain fuel types. Instead, we are dealing with
(1) Oil products that can be used in many ways. For example, diesel can be used to power trucks and tractors, to power private passenger car autos, to power irrigation equipment, to heat homes, to burn to produce electricity if other cheaper sources are not available, and for a number of other uses. There are other ways of doing many of these same things. For example, electricity from coal or hydroelectric can be used to heat homes, and this is generally cheaper. Private passenger autos can be powered by gasoline or by natural gas, or ethanol, or by electricity, rather than diesel.
(2) At the same time, oil companies and refineries have quite a bit of flexibility regarding which oil products that they choose to make from crude oil. If they are starting with a fairly heavy product (oil sands from Canada, for example), they can use it to make a whole lot of diesel, or they can make asphalt, or they can make other products. If petroleum is quite light, as from shale, then there is less flexibility. They end up with mostly light products in the end.
So oil companies choose to make the oil product mixes they do, based on what there is “demand” for. If oil is really cheap, oil (as asphalt) is used to pave roads. If oil is more expensive, concrete (often a coal product) is used instead. The heavy oil that might have become asphalt is refined to become diesel, or some other range of oil products.
Homeowners have figured out that home heating oil is way too expensive a way to heat homes, if oil is high-priced and if any other alternative is available (natural gas, propane, electricity from coal, etc.). So there has been a whole lot of switching away from diesel oil for home heating, likely bringing total diesel oil demand down.
I wouldn’t read anything into the decrease in diesel production other than that people are no longer using as much diesel to heat their homes. Also, electric power generation is using less diesel in times of extreme temperatures, if there is a shortage of natural gas availability.
Prices differentials tell refineries which products are most in demand. They can adjust the prices that they pay for the inputs they use. They can also decide the extent to which to use “cracking” of hydrocarbon bonds to produce shorter molecules, if these are more in demand.
https://www.cnbc.com/2018/07/13/russia-new-hypersonic-missile-likely-ready-for-war-by-2020.html
Russia’s new hypersonic missile, which can be launched from warplanes, will likely be ready for combat by 2020.
“We don’t have any defense that could deny the employment of such a weapon against us,” Air Force Gen. John Hyten, commander of U.S. Strategic Command, told the Senate Armed Services Committee in March. This means that, as of now, the U.S. has to rely on deterrence against these so-called hypersonic weapons, he said.
“Both Russia and China are aggressively pursuing hypersonic capabilities,” Hyten said. “We’ve watched them test those capabilities.”
Missiles are scary, but:
https://thebaffler.com/
We have Scary Clowns
Disturbing!
https://www.washingtonpost.com/world/asia_pacific/in-south-china-sea-a-display-of-us-navy-strength–and-a-message-to-beijing/2018/11/24/ab97a636-ecd1-11e8-8b47-bd0975fd6199_story.html?utm_term=.82cdd454d3dc
The United States seeks to keep its place as the dominant naval power across East Asia, where Washington and its allies believe that Beijing is trying to reorder international rules and military alliances in place since World War II.
A recent Rand study found the Chinese navy over the past two decades caught up to the United States by modernizing “extraordinarily quickly by any reasonable historical standard.” “In basically every category, China has narrowed the gap [with the U.S.] significantly,” Grossman added.
This situation isn’t going away anytime soon and just how does this play out to the satisfaction of both world powers? This is the juxtaposition; two things being seen or placed close together with contrasting effect. Trump doesn’t seem like the type to back down, as he wins most name calling events, so that leaves China to back down? They’re the new world power on the block, so it doesn’t seem likely they will back off. So that suggests the inevitability of conflict and then the question is conflict on what scale?
China has an alliance with Russia, so the US better hope Putin isn’t sharing their latest nuclear attack missile system with China because we don’t have that system yet. Russia claims to have a nuclear attack missile that will reach Mach 20 in its descent straight down, destroying an entire city with one bomb as the precursor kinetic energy effect is magnified by increased speed. So 1 missile with multiple warheads could take out a large area of the US Eastern or Western Seaboard.
Reminds one of the great naval race between the British Empire – defender of the status quo – and Imperial Germany, eager to grab its ‘fair share’ of the action, pre-1914…..
A person wonders what follow-on effects there would be. Artificially cold weather, for example.
What are the Universal basic laws of our civilization today?
1. All activity requires energy
2. Economic growth, population that can be fed, or prosperity of those peoples, are offshoots of available energy
3. All cheap, easy to get energy resources have been used up. None are left when we hit 2020.
4. An energy contraction is underway on a global level.
5. All populations globally will contract to available energy levels.
6. All nations, or communities, will live with the energy at their disposal, or lie, steal, borrow more energy from neighbours.
7. The transition from a high energy civilization, to a low energy civilization, will change everything about that civilization. Nothing will remain of institutions, technology or culture.
8. Money today is debt. Debt is the promise to service debts and interests in the future. When all economic growth becomes impossible, then debts will crash the global just-in-time economy. No more money. Money will disappear, as will everything that can be bought with money. And therefore everything changes. Overnight.
9. The transition from a high energy civilization to a low energy civilization will be violent, sudden and overnight.
10. Nothing of what a high energy civilization deems “normal”, will remain. Everything will change.
Any other basic laws of our civilization today?
7,8,9, and 10 are just conjectures. We can’t be sure what will happen.
“Any other basic laws of our civilization today?”
There is another basic law of our civilization. It can be summed up by the sentence
“we are all equal.”
It’s not a product of industrial society, many religions and secular humanists in Europe prior to the industrial revolution believed this but their societies didn’t produce a surplus large enough to support that belief.
I don’t think you understand what words mean. Secular humanism and universal egalitarianism are most definitely products of the industrial era.
Equality is hard to define. If everyone is paid the same and must practice the same lifestyles, you get rigidity or stasis. What about, instead, “dynamic inequality?” People could move up and down the ladder, and no one had to be stuck in one position. What would be needed, though, would be to make the bottom of the ladder attractive. There really isn’t any reason why the latter can’t be done. It would require a wabi sabi cultural aesthetics and a high sense of style, even at the lowest rung. A former elite could take time to cool out down at the bottom, and still enjoy a rich cultural life next to a beggar….
You would have to prohibit new or large buildings too, and put all the focus on the bottom..
Perhaps in the sense that all of our lives are no more important than that of a dog or a potato I. The grand scheme of things. If all values are vanity. Even the sun will die, after all.
8. NIRP and printed money.
Regarding “3. All cheap, easy to get energy resources have been used up. None are left when we hit 2020.”
This isn’t true, as long as there are trees standing and dry biomass available to burn. Of course, cutting down all of the trees would be stupid, because we need the trees for other purposes as well.
Regarding “4. An energy contraction is underway on a global level.”
I am doubtful that this is the case. We don’t need a contraction in energy supply to cause a problem. If energy consumption isn’t growing fast enough (so energy consumption per capita shrinks) that is by itself enough to be a huge problem. If population is rising, it is quite possible for energy consumption per capita to be shrinking, without a decrease in total energy consumption. I think that that may be where we are, because of a slowdown in coal consumption.
I think you are right, however, in that we are now at a too low energy point. All we differ on is how to characterize this point.
Regarding “6. All nations, or communities, will live with the energy at their disposal, or lie, steal, borrow more energy from neighbours.”
I expect that war is a big part of this. At first, it could be international war. Later, it could be person to person fighting.
The states that do not function allow mafias, high taxes that are stolen by criminal activities etc., so the war can be going on the intrastate level first.
That would be the true nightmare to experience: the step down to a failing state with the growth of powerful mafias and corrupt police, army, judiciary etc – just like Pakistan for instance. No honesty, bribery and corruption all the way, no security of person or property. The institutions still exist, but they are criminalised and dangerous to the average citizen.