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.
Hi Gail, Thanks again. You touch on a really difficult problem to get across to people. That’s even aside from their attention span being limited to deciding whether to buy or to sell.
I’ll merely point out that the LTG graphs suggest that an inflexion of the productivity per capita would be expected to be the leading indicator of those variables that were modelled.
The financial would is almost divorced from these realities, though there has to be a linkage there somewhere.
There is. I am trying to write about it now.
Hmmmm … demographics meet slumping demand …
You might want to look at the generalised form of the Kalecki Profit equation.
Then eliminate all the big numbers, which leaves ….
Profits = Govenment deficit spending …… sssssh
Despite a forecast of brutal, record-breaking cold on Thursday in New York City, the show – Macy’s Thanksgiving Day parade – will go on.
How cold will it be? Try temperatures in the low 20s with wind chills in single digits or teens, according to AccuWeather. This will be a level of cold that’s more typical of mid-January, weather.us meteorologist Ryan Maue said. Records that have stood for 140 years could be shattered, he said.
https://www.usatoday.com/story/news/nation/2018/11/20/macys-thanksgiving-day-parade-ready-bitterly-cold-winds-blow/2068377002/
Al Gore???? Al Gore?????? Can you please comment on this. Can you make a documentary on this?????? Where are you Al???? Oh right… you are on a private jet headed to Hawaii for a break from the cold 🙂
One side effect of a warmung arcctic is a lower temperrrature diffferential between the pole and the equator. That in turns has led to waivier jet streams. The has led to an increase in blizzards which also speeds up the warmuung so it actually feeds on itself. Sometimes described as leaving the freezer door open. Hope this helps understaaanding what’s goooin oooonnnnn.
And it causes record cold temperatures…
I get it!!!
You are using the same logic that investors use…. if a company loses billions year after year (e.g. Uber – Tesla) … that is a GOOD thing… these are thriving businesses…. they are awesome…
If this logic is applied to the word ‘up’ … then it becomes up is not up — it’s down….
And down becomes sideways…
In becomes out…
Black becomes white…
Seriously … stuuuupidity really does know no limits… you are… you truly are… a f789ing MOre on….
The fact that I even bother to respond to your utter f789ing id i ocy …. makes me question my sanity… (or maybe I am just bored)
Mega ++++++ !!!
Flashback 2000: ‘Snowfalls are now just a thing of the past’ – ‘Children just aren’t going to know what snow is’ – UK Independent
https://junkscience.com/wp-content/uploads/2013/03/screen-shot-2013-03-24-at-9-53-36-am.gif
https://nataliaantonova.files.wordpress.com/2013/12/cannot-handle-the-hysterical-laughter.gif
We’re supposed to have had peak oil in 2005 but we seem to keep finding more oil *everywhere*!
Infinite prosperity becomes some faux-nihilistic wet dream.
October 2018: Earth’s 2nd Warmest October on Record
https://www.wunderground.com/cat6/October-2018-Earths-2nd-Warmest-October-Record
and yet there were many years that were warmer than 2018, right?
you know, before temperatures were “on record”?
The only cure for Klimie More on ism is…
https://i0.wp.com/fusion.net/wp-content/uploads/2015/07/newsletter-2015-03-31-image.jpg
I am starting a crowd funding initiative to provide free doses for all Klimies… and a second initiative to pay for forced sterilization of all Klimies
You do realise there were years when the world had more resources than in 2018? But do tell me more about this ‘collapse of industrial civ’ you and your hippie friends like so much.
about the year 2030…
Why isn’t it the1st warmest? If your theology that holds see-oh-two the main driver, and we are assured that see-ho-two has gone up yet again this year, then surely 2nd warmest is an epic fail.
The thing is…
The KK Klowns have been caught FAKING data… and they have been caught making ‘mistakes’ in the math (i.e. faking the math)….
Yet people insist on quoting their data and math….
To put in perspective just how mor on ic this is…
Imagine Man U and Chelsea played… the score was 4-2 for Man U…. but the MSM across the board reported a 6-1 victory for Chelsea…..
Then someone posted in the comments section a link to a replay of the game online below the report of the 6-1 defeat… you watched the actual game .. saw that Man U won….
But because you are a Chelsea fan — you jump in on the comments section and post ‘What a great match – Chelsea KILLED Man U – awesome result’
I don’t even know if what Duncan posted qualifies as stu pidi ty… it is so f789ing stu uuupid that it does a disservice to all the billions of more ons out there…
Duncan… please apologize to the more ons…. right this minute!
Volvo trots out the argument that has my BS meter utterly pegging.
HIs comment actually broke my re tar d detection meter in half…
Have a happy Thanksgiving Gail and everyone else here!
https://i.redd.it/0t09y06ezpz11.jpg
I may be around less the next few days, because of family related events.
Axis of power in WW3
https://i.redd.it/95v1gnmeynz11.jpg
Ford Prepares for Mass Layoffs, Estimated at 12% of Global Workforce, After Losing $1 Billion to Trump’s Trade Tariffs, Report Says
https://finance.yahoo.com/news/ford-prepares-mass-layoffs-losing-002618564.html?soc_src=community&soc_trk=fb&fbclid=IwAR28XejR6SPzsNXKduU3HUTXdwHdHYy1OwsYbeIFUWaQ5QV9p3dVadzP0P8
And GM is getting ready for massive layoffs as well..I live in Michigan so its big news here..
Snopes says:
It is true that, according to Ford CEO Jim Hackett, the company lost $1 billion in profit as a result of Trump’s tariffs on imported steel and aluminum. Hackett told Bloomberg Television on 26 September 2018 that “The metals tariffs took about $1 billion in profit from us — and the irony is we source most of that in the U.S. today anyways. If it goes on longer, there will be more damage.”
It’s also true that layoffs will be taking place at Ford, but spokeswoman Karen Hampton told us those job reductions have nothing to do with losses resulting from President Trump’s tariffs and will affect the company’s salaried workforce and not their hourly/manufacturing positions. Hampton said that “this [reorganization] is a global effort and not specific to the U.S. We began this effort recently as part of our CEO’s work to make us a faster, more nimble, more innovative company.” The reorg has nothing to do with external forces such as tariffs, she added.
Tariffs… or is it because auto sales are cratering… or a bit of the former … and a lot fo the latter…
Meanwhile — Tesla is profitable — in spit of the fact that the market for sedans is cratering … and Tesla loses money on every vehicle they sell…. (but they make up for that by not selling very many cars)
GM will lay off 1,600 workers at 3 factories
https://abcnews.go.com/Business/story?id=6053665&page=1
More Recession Signs: Layoffs, Store Closures, Lowe’s, Starbucks, Dollar Tree, Wells Fargo, GM
https://youtu.be/oFUyLTbjGOw
A $9 trillion corporate debt bomb is ‘bubbling’ in the US economy
https://www.cnbc.com/2018/11/21/theres-a-9-trillion-corporate-debt-bomb-bubbling-in-the-us-economy.html?__source=Facebook%7Cmain&fbclid=IwAR3d3QGbxl1yoZ0LDyrbts-x_pLf4XMr6_ZnNukpkKt3O08zQjp65itsF3s
What harm could come of this arrangement?
From that linked article is this:
“As things stand, though, he thinks conditions are still favorable for the corporate credit market. “In our view, economic activity will probably moderate next year, but at a very high level,” he said. “That’s not enough to cause the chaos that I just described.”
People love to have it both ways.
How temp workers became the norm in America
https://phys.org/news/2018-11-temp-workers-norm-america.html?utm_source=nwletter&utm_medium=email&utm_campaign=daily-nwletter
People who are characterized as disabled are likely to be caught up in this arrangement. In fact, almost anyone can get dragged into it. Businesses save money by paying people as little as they can get away with. Sometimes, a second company is involved. The temporary worker is a contractor working for the other company. No one can claim discrimination, because the lower-paid workers work for a different company.
Trump is just a pussy. We are still waiting for a real kiIIer.
https://m.youtube.com/watch?v=gOqblSqx_VI
Smoke stacks are ridiculous phallic symbols. Male dominant edoc for you. Even if it ultimately proved unsuccessful, they could at least have tried running perforated exhaust outlets along the ground for long distances and covered them with highly carbon-absorptive, cycled vegetation.
I like the Washington Monument…
what does it say to the world?
The Trump Song
https://m.youtube.com/watch?v=1ysgG3zNUOg
PPT would never allow this to play out…
https://wolfstreet.com/2018/11/21/stock-market-margin-debt-plunges-most-since-lehman-moment/
I can see why people wouldn’t borrow money to invest in stocks in the current market.
Disgraced Nissan Chairman Bought Luxury Homes With $18 Million In Company Money
https://asia.nikkei.com/Business/Nissan-s-Ghosn-crisis/Nissan-startup-unit-spent-18m-on-Ghosn-s-homes-in-Rio-and-Beirut
Not sure how he thought he was going to get away with this…. maybe he should have asked the board for a raise instead — a 10 million dollar pay package was obviously not allowing him to keep up with Mr and Mrs Jones….
A friend of mine in security was asked to investigate thefts from the country house owned by a major British bank, and used by the Chairman. He found that the Chairman was the thief – wine, antiques. (God knows, probably towels and bath robes too?) For some reason, the investigation was dropped….
The Nissan story is page one news two days running in Japan. Chairman Carlos Ghosn and Representative Director Greg Kelly (both gaijins, by the way—just sayin’) are now under lock and key and lots of carboard boxes and PC drives are being investigated.
Ghosn is the charismatic “savior” of Nissan but he is also a big man at Renault and he has allegedly been in cahoots with Macron to clandestinely merge the two companies under the French carmaker’s roof. So his outster can be seen as a preemptive strike, a coup d’etat by forces anxious to ensure Nissan stays under Nipponese control.
No doubt he has had his hand in the till, but that may well be a pretext. Had he not been plotting the Renault takeover, they might have been happy to let him syphon off more than his fair share of the company’s lifeblood. It’s possible to force a top exec out sumo style, but its so much cleaner to do it with a sharp sword severing the head from the body in a single well-aimed slice.
I’d love to read that he had seppuku’ed himself with a pen knife. That would be mildly entertaining.
And this is why the Fed owners organized the plunge in oil … it was too high for too long…
https://www.zerohedge.com/news/2018-11-21/thank-you-saudi-arabia-falling-oil-prices-big-tax-cut-americans-trump-says
I am wondering … where are the PPTs??? How about some more Chinese ghost cities?
‘hold… hold… hold… hold….ok the porridge is at the right temperature… NOW!’
I’m sure Gail will have fun with this article: “Scott Tinker: Can The World Energy Supply Become Fully Sustainable?”
https://www.peakprosperity.com/podcast/114535/scott-tinker-can-world-energy-supply-become-fully-sustainable
Scott Tinker is Director of the Bureau of Economic Geology at the University of Texas at Austin. Reading the little blurb that is posted, I get the impression that the title is a come-on. As he looks at the details, he sees the huge amount of non-sustainable materials that go into these devices. So he is pretty skeptical.
One thing I am pretty sure he hasn’t realized is he quantity of energy required for maintaining the economy, under the laws of physics. This would likely make him give up completely.
Also, this is a link to an article I found recently talking about how densely wind turbines can be spaced. It turns out that most estimate for scaling up wind assume that wind turbines can be spaced much more closely than they really can.
https://www.city-journal.org/wind-power-is-not-the-answer
https://news.nationalgeographic.com/news/energy/2013/05/130516-wind-energy-shadow-effect/
Had a listen. This guy is completely clueless about the reality of physics and the energy cost of energy.
Says we have 100’s of years of oil, coal and gas.
Middle East GCC has been collapsing since 2015. There are many cases and examples:
https://voiceofthemarkets.blogspot.com/2018/11/another-giant-contractor-collapses-in.html
https://voiceofthemarkets.blogspot.com/2018/11/ominous-dark-clouds-encircle-dubai-4.html
https://voiceofthemarkets.blogspot.com/2018/11/uae-economic-situation-deteriorates.html
https://voiceofthemarkets.blogspot.com/2018/10/gcc-disintegrates-further-kuwait-seeks.html
https://voiceofthemarkets.blogspot.com/2018/10/saudi-standoff-could-lead-to-pricing-of.html
https://voiceofthemarkets.blogspot.com/2018/10/entire-gcc-is-crumbling-like-pack-of.html
https://voiceofthemarkets.blogspot.com/2018/10/trump-humiliates-saudi-king-in-fight.html
Middle east will crumble soon so the end of BAU is very close. The blog author predicts that when Saudi depegs which is soon, a great many fortunes will be lost across the world. Both choices depegging or not will equally bad for KSA.
Thanks for all those links. They are certainly concerning. The selection of news we get in this country tends to be rather limited.
I am trying to figure out what exactly de-pegging the Saudi royal from the US dollar would do. Saudi Arabia would tend to get more goods and services for the oil it sells; the situation would be more like Russia and the ruble. And there would be a lot of derivative contracts that couldn’t be paid, because of the sharp changes in currency relativities, I expect. This could cause bank failures, among large US banks.
But exactly what else would we expect? Would the US dollar and the Canadian dollar be relatively lower, so that the oil price would be higher for us? I am sure that US and Canadian oil producers would like this; consumers not so much.
What do you guys think about wood (gas) powered cars?
Why wasn’t that idea pursued instead of biofuels from food crops?
It is the lowest hanging fruit.
Telsa Motors would probably have an easier time selling premium wood powered cars and making a profit than what they are doing now.
A colleague of mine claims that not a lot of wood is required to run wood powered cars but given the lower energy content of wood, more wood would be needed as fuel than gasoline to power a vehicle to go a certain distance.
One litre of diesel may push my 1600 kg car 20 kilometers down the road. How many liters of wood would one need to do the same?
Weren’t they used in Germany post-WW2?
Scandinavia I think
over 1 million VW beetles were powered by wood gasification during WW2 along with some tanks!
Thanks for this reference, read about scandanavian versions some years ago, but the German effort is very impressive. Even had cobblestone pullout on the autobahn to agitate the fuel and keep it combusting.
American killed on Andaman island home to uncontacted people, body yet to be recovered
The murder took place on an island inhabited by the Sentinelese people, who are protected under Indian law
The American man was a missionary who wanted to preach Christianity, local media reported
He went to the North Sentinel Island with the help of a fisherman
North Sentinel Island is home to a tribe that violently rejects contact with outside world
https://www.indiatoday.in/amp/india/story/american-tourist-killed-on-andaman-island-home-to-uncontacted-peoples-1393013-2018-11-21
dumbass american this is not 1492
My sympathy here is also limited, I must confess.
RIP, so unnecessary, but surely he got what perhaps he wanted: martyrdom.
Other than that, they seem a fairly sensible bunch, rejecting all contact.
Let’s hope they made him suffer badly … before sending him off to the magic man in the sky
Maybe he’ll tweet a selfie.
Those are probably the most enlightened indigenous people in the world. They know without having to go down that path what it would entail if they transitioned to a modern lifestyle. They’d all become slaves of a sort working their tails off in part time jobs or eeking out a troublesome existence on the streets, no land, endless abuses to their people and way of life, an apocalypse for their culture. As long as India keeps that law in tact of not allowing people there, and as long as the natives do away with intruders, they likely will be there long after our civilization has dwindled into obscurity. Long live the uncontacted people of Andaman Island!
Too bad for them…
http://i1.wp.com/www.dianuke.org/wp-content/uploads/2011/07/nuclear-energy-map-of-India.jpg
https://twitter.com/nickcunningham1/status/1065191530082836481
Small Nuclear War Could Reverse Global Warming for Years
https://news.nationalgeographic.com/news/2011/02/110223-nuclear-war-winter-global-warming-environment-science-climate-change/
I hate to say it, but with climate change and a global oil shortage headed our way..A major nuclear war to depopulate the planet would make a lot of sense..
A person wonders how accurate these models are. What are they leaving out?
I wonder what John Bates would have to say about this … remember John?
KKKLIMATE DATA FAKED
by John Bates (leading kkklimate scientist)
In the following sections, I provide the details of how Mr. Karl failed to disclose critical information to NOAA, Science Magazine, and Chairman Smith regarding the datasets used in K15. I have extensive documentation that provides independent verification of the story below. I also provide my suggestions for how we might keep such a flagrant manipulation of scientific integrity guidelines and scientific publication standards from happening in the future. Finally, I provide some links to examples of what well documented CDRs look like that readers might contrast and compare with what Mr. Karl has provided.
https://judithcurry.com/2017/02/04/c limate-scientists-versus-c limate-data/
Why bother when the planet is about to see the entire human species wiped out… very shortly
http://astronomydork.com/175/clip-art-of-a-smiling-happy-mother-earth-by-cory-thoman-2786.jpg
The UK, Italy and China are the three economic powder kegs:
“Among those risks that have a high chance of materializing next year and that could cause serious global economic damage is an intensification of the Italian sovereign debt crisis.
“This has to be of concern for both the European and global economies considering that Italy is the eurozone’s third-largest economy and is approximately 10-times the size of the Greek economy.
“It is also of concern considering that the Italian government debt market is the world’s third-largest sovereign debt market and that a considerable proportion of the $2.5 trillion of that debt is held by Italian and other European banks.”
https://thehill.com/opinion/finance/417507-uk-italy-and-china-are-the-3-big-economic-powder-kegs
“Just eight months into a period of intense political strife, Italy’s debt profile is starting to deteriorate as the country is forced to depend on shorter-dated local bond auctions and small individual savers to raise money… Staggering under a debt ratio of 130 percent of annual economic output and one of the world’s biggest bond issuance programmes, Italy needs its borrowing to be low-cost but also long-maturity.”
https://uk.reuters.com/article/uk-italy-bonds-analysis/dearth-of-italian-bond-deals-flashes-long-term-debt-danger-idUKKCN1NP1VX
“Romania’s small and medium enterprises (SME) didn’t recover following the financial crisis as their employment is still bellow the level reached in 2008 and the number of major deals involving SMEs is negligible… EU-wide developments of SMEs are not evenly reflected in member states. In six member states the 2017 level of SME value added was still below its 2008 level (Croatia, Cyprus, Greece, Italy, Portugal and Spain).”
http://business-review.eu/business/romanias-smes-didnt-recover-yet-after-the-financial-crisis-191383
“Populist parties have more than tripled their support in Europe in the last 20 years, securing enough votes to put their leaders into government posts in 11 countries and challenging the established political order across the continent. The steady growth in support for European populist parties, particularly on the right, is revealed in a groundbreaking analysis of their performance in national elections in 31 European countries over two decades…”
https://www.theguardian.com/world/ng-interactive/2018/nov/20/revealed-one-in-four-europeans-vote-populist
It is often the small, new enterprises that offer the path to greater employment. They have a new idea, and hire workers to back up that new idea.
Interest on debt is likely to be the deal-killer, as the economy slows.
“The European Commission has again rejected Italy’s draft budget for 2019. In an escalation of the row between Brussels and Rome, the EC has ruled that Rome has “seriously violated” debt rules, and will begin disciplinary procedures.
“Italy faces an excessive deficit procedure after Commission rules that Rome’s 2019 tax and spending plans aren’t acceptable.”
“Italy’s populist government has refused to succumb to pressure to change its deficit target of 2.4% of GDP as it seeks to move forward with election campaign promises, such as introducing a universal basic income, cutting taxes and lowering the retirement age.
“In response to the news of disciplinary action, Matteo Salvini, Italy’s deputy prime minister and leader of the far-right League, said: “A letter from the EU? I’m also waiting for one from Father Christmas.””
https://www.theguardian.com/business/live/2018/nov/21/markets-rattled-us-china-trade-brexit-pound-dow-ftse-business-live
It seems like we have a number of smaller powder kegs as well. Venezuela, for example, and some of the other oil exporters. India’s is not doing well with respect to debt, even though its debt level is not high. Turkey and Argentina come to mind. And Japan, with its constant high level of debt, and its lack of its own energy supply.
“Algeria may face an economic crisis by 2019 in case the Algerian authorities did not undergo immediate economic reforms, after oil revenues have fallen since 2014, according to a report released by the International Crisis Group (ICG) on Monday. According to Agence France-Presse (AFP), the report said that “In the absence of reforms (…) the economic crisis could affect Algeria by 2019, which would fuel the tension surrounding the upcoming presidential elections.””
https://www.middleeastmonitor.com/20181121-algeria-on-the-verge-of-serious-economic-crisis/
Venezuela’s economic crisis has forced citizens living in a renowned national park into a drastic step – illegally mining for gold.
“The country’s indigenous Pemon people, native to the region containing Venezuela’s famous Angel Falls, have now left ecologically driven lives as tour guides in Canaima National Park to mine for fragments of gold.”
https://www.businessinsider.in/venezuelans-fighting-the-countrys-economic-crisis-are-illegally-mining-gold-to-survive/articleshow/66711310.cms
Heavy Canadian crude has been on a downward spiral since mid-May, with prices plummeting by more than 60 per cent as an onslaught of new production from the oil-sands overwhelms the nation’s pipelines. In the past two months, the decline accelerated as many of the U.S. refineries that processed all that oil shut down for maintenance. The result is the worst pricing environment in the Canadian oil industry’s history and a disaster for a sector that accounts for about a 10th of the nation’s economy and a fifth of its exports.”
https://www.bnnbloomberg.ca/historic-price-crash-plunges-canadian-oil-patch-into-crisis-1.1171279
Prices for a barrel of oil produced from the tar sands in Canada last week hit $19 per barrel and that’s for the premium stuff!
Interesting. It was apparently a loss-making proposition at that price:
“A financial analyst says prices being paid for Western Canadian oil sands bitumen have fallen so far that producers are losing money on every barrel sold into the spot market.
“Analyst Matt Murphy of Tudor Pickering Holt & Co. says recent headlines have been focused on the falling value of the Western Canada Select price, but that measure is for a blend of heavy, sticky bitumen and the light oil needed to dilute it so it can flow in a pipeline.
“The price of WCS fell to about US$19 per barrel on Thursday, about US$52 per barrel below the benchmark U.S. West Texas Intermediate price.
“But Murphy says the condensate used to dilute the bitumen was selling for about US$63 per barrel at the same time and that means the bitumen part of the WCS barrel was actually fetching between negative 11 cents US and negative 28 cents US per barrel.
“It’s the first time that has happened, he says, adding bitumen prices have always been in positive territory — even in early 2016, when U.S. oil prices fell below US$30 per barrel.”
https://www.bnnbloomberg.ca/oil-sands-bitumen-prices-are-actually-in-negative-territory-analyst-1.1151813
Wow!
This is not a problem… in fact it is a good thing … ask Elon Musk about that… all you do on the calls with analysts… is explain that you will make up the losses by simply pumping out more barrels… if they ‘get it’ then you are golden… institutional money will pour in to fund the ongoing losses… with expectations of a Bonanza down the road…
Alternatively you make an argument to the owners of the Fed that your resources are necessary – to keep BAU alive…. they will help you out (see fracking)
“United States Vice President Mike Pence’s remarks at the end of this year’s summit season just about blasted the word “cooperation” out of the APEC acronym… the many handshakes, photo ops and positive sounding joint-statements could not mask the reality of hardening US-China geopolitical competition. It is a cruel irony that a group of meetings created to advance cooperation became the platform for what amounted to a very public drawing of lines of great power competition.”
https://www.channelnewsasia.com/news/commentary/apec-no-joint-statement-china-united-states-pence-xi-jinping-10948976
“Shares in China edged lower in choppy trading on Wednesday as a continued selloff on Wall Street and a plunge in oil prices stirred uncertainty over the global economy.”
https://uk.reuters.com/article/china-stocks-midday/china-stocks-weaken-amid-global-slump-idUKL8N1XW0DV
“Credit markets are set for the worst year since the global financial crisis as investors abandon hope of a late rally.
“High-yield and investment-grade notes are headed for losses in both euros and dollars — the first time all four asset classes have posted negative total returns since 2008, based on Bloomberg Barclays indexes.”
https://www.business-standard.com/article/markets/credit-set-for-worst-year-since-2008-crisis-as-crashes-roil-markets-118112100014_1.html
“After years of easy monetary policy, the liquidity it provided in global markets — allowing assets to be easily bought and sold — is starting to reduce. The US Federal Reserve is already raising rates and easing back on its bond purchases, and the European Central Bank (ECB) has signaled it plans to follow suit.”
https://www.businessinsider.com.au/global-monetary-base-economic-slowdown-2018-11
“With another 2% or so decline on Tuesday, U.S. stock indices have given up their gains for the year. The rout that started in tech stocks has moved to oil shares amid worries about global demand… We hope someone at the White House is listening to this trade canary.”
https://www.wsj.com/articles/the-trade-canary-1542758721
Not exactly a good sign!
https://youtu.be/HV0cS1TGve4
Chris Hedges wonderful.
I listened to the first part. In it, Chris Hedges talks about the importance of social bonds, and keeping them strong. Otherwise, people tend to become depressed, and may commit suicide.
I would agree. Today’s world, revolving around Facebook, TV, and video games works in the opposite direction. Churches in the US have tended to give a place for social bonds, whether or not a person really agrees to a significant extent with the teachings. Churches have been especially important to women, because many are not in the paid workforce (especially older women). Also, hanging out in bars does not provide very good social bonding experiences for women. Without churches, women are fairly much left by themselves, if their children have moved away, and their earlier friends have died off. Independent Living homes and “55+ year communities” try to provide new settings for bonding among older people. It seems to be young men with their cell phones, who never married, that are especially left out.
Diversity works in the opposite direction since people with different experiences don’t tend to form strong social bonds.
Back in the 1950s and 1960s, US schools were very much less diverse. Teachers often knew the parents of the children they were teaching, through contacts such as those at church. In some cases, teachers were related to some of the children in their classrooms. Discipline was much less of an issue, and parent co-operation was pretty much of a given. It was much easier to teach in such a school.
A different thought: People try to fit in by acting like others in the group. In fact, this is why uniforms are popular in schools in some countries. Fitting in becomes more difficult, when there are many different subgroups, each with their standards regarding what is appropriate. I struggle with this with women’s clothing. What am I supposed to wear, and does this change with each group I am with? Men’s clothing is at least a little standardized. With women’s, there is way too much diversity.
The same problem occurs with food. It used to be that everyone ate the same food, depending a bit with the region. Meat-stretcher dishes, with a lot of potatoes, noodles or rice and a tiny bit of meat, were pretty common. Portion sizes were small. Then things changed and there was suddenly a great diversity of oversized portions of various foods offered by restaurants. People reacted differently to this new variety–some ate way to much; others tried to limit what they ate in some way. It became impossible to invite a diverse group of folks over for dinner, because of the huge differences in food people eat.
Young women, are allowed to wear things that would objectively be deemed inappropriate in professional settings for reasons that escape me. Wearing leather pants and heels as a medical practitioner sends a confusing messages–primarily to men. A woman who wears something like that is not trying to be seen for her value as a worker in the workplace but is drawing attention to her attractiveness. Cleavage, tight clothing, and makeup, are all things that should be banned by employers at many workplaces but they aren’t.
There would normally be a strict dress code but the media sells clothing along with a Hollywood lifestyle where women can dress provocatively and be cheered on for expressing themselves. Older women have an incentive and would love to bring in a strict dress code but “the media”n, do not want a strict dress code. That limits the type of clothes they can sell, I suspect. Furthermore, I think there are women who are only doing things outside of the home, such as working or going to school in order to attract a wealthy man and they are told they must “put out ” to do that.
“With women’s, there is way too much diversity.”
Music to my ears. Been struggling with this one for a long time, and this is the first time seeing a reasoned analysis of the matter. I think of peasant Asia where the sexes dressed pretty much alike without losing any of their specialness.
There is also a lot less social stratification in rural agarian societies so most people would dress in what could be cheaply produced. Wealthy people, and other people of distinction always dressed differently. In modern, multicultural and multiple-class societies, different groups show status different ways. It is shameful to dress like a poor person in many urban areas.
Is the opposite of good economics? Everything done by hand. But not the blending. But does that matter since they’re using relatively little energy throughout?
https://www.facebook.com/ZLocalHeroes/videos/323675608417215/UzpfSTEwMDAwMTUwMzYyNzQ5NTpWSzoyMTYwMTA2MDMwOTA0Nzg1/
As long as there are wealthy buyers who will pay a premium for the fancy paper products, making cards from banana waste products will work for a few places. But it certainly isn’t a solution to the world problem of lack of jobs that pay well in countries without adequate cheap energy supplies.
This is clear-ish. I find the fancy cards “ugly” and that sense of aesthetics is generally a fair guide. I’m less clear about the well paying jobs, as that seems somewhat relative. If a lot of people can get by and can buy some stuff–enough people that is–I’m not seeing how well paying jobs is entirely determinative. For instance, I was intrigued that so much was done by hand here. But I suppose doing more, strategically, by machine, would increase the pay for a lot more people. Puzzling issue.
Hey, there is a tiger behind you…. You are can be scared of this though but the following???
https://www.theorganicprepper.com/frighten-university-students-all-caps/
WOW THAT IS SO SCARY!
“safe spaces”= psychiatric wards.
https://www.zerohedge.com/news/2018-11-19/france-suffers-anti-carbon-revolt-massive-road-blocks-against-macrons-diesel-tax
1. Somehow I think this diesel issue is about there not being enough diesel — which is spiking prices…
2. See the video near the top of the article…
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
This is why the masses must be controlled…. when things get out of hand and the MSM is unable to reign them in …
https://youtu.be/Fp7ihY2aAaY
When the economy is doing badly, raising taxes (no matter in what way) is not a good idea, if a politician wants to be popular. Putting the tax on fuel is an especially bad idea, when the Euro is low, so oil costs are already high. This is part of what contributes to falling oil “demand.”
Not the onion:
Life on Mars: Hawaii had for the past several years hosted a Mars simulation, a habitat replicating as closely as possible how a human colony on Mars might play out. Then earlier this year, something went wrong, and the program put on hold. Now the habitat is in use again, for a slightly reined-in ambition: “Let’s learn how to live on the moon before we start trying to live on Mars.”
https://www.theatlantic.com/science/archive/2018/11/hi-seas-mars-habitat-nasa-moon-simulation/576295/?utm_source=newsletter&utm_medium=email&utm_campaign=atlantic-daily-newsletter&utm_content=20181120&silverid-ref=NTI4Mzg1NDQwMDc4S0
Let’s come closer… let’s try to live at the bottom of the Mariana Trench first… or how about in the middle of a desert — with no resupplies.
Or how about in the middle of New York City, with no resupplies. Or even without globalization.
All my golden dreams have crumbled one by one: being a Mars colonist, having a mini roof-top wind turbine,……
doomphd says:
November 19, 2018 at 11:33 pm
“recent discoveries of planets surrounding stars and an increasing number of them found in the “habitable zone” around stars and probably also containing water make the Progressives ideas more plausible than those of the Intelligent Design folks”
The recent discoveries of planets surrounding stars in the context of our predicament seems like a attempt to reassure the public that industrial civilization will take us to these allegedly habitable planets if we invest more in industrial civilization. There is nothing plausible about that.
There is more to a planet being habitable other than whether it can support water in liquid form.
” A truly Earth-like planet, an Earth analog or “Earth twin”, would need to meet many conditions beyond size and mass; such properties are not observable using current technology.”
https://bit.ly/2QUiQYt
In other words, the habitable planets stories are ruses based on incomplete observations.
chances are that most of these “habitable” planets will have very little FF…
quantities of FF as large as here may be extremely rare…
At a minimum, these planets need the equivalent of biomass that can be burned. That is what got humans started. I expect that is missing most places, too.
Based on the observations, scientists announced “definitive evidence of lakes filled with methane on Saturn’s moon Titan” in January 2007. The Cassini–Huygens team concluded that the imaged features are almost certainly the long-sought hydrocarbon lakes, the first stable bodies of surface liquid found off Earth.
Maybe dinosaurs had inter planetary travel.
Dennis L.
one rarely if ever sees the point made about
”habitable planets’—is that they will already be ”inhabited”
and they wont be best pleased if we show up
if you have the bigger cannon, the place is yours.
or stronger bacteria
That is why they haven’t tried to contact us. They took a look and thought: deadly virus, stay dark.
wait a minute! latest Black Friday sale prices:
Bitcoin – only $4,307
a barrel of oil – only $53.50
but if you can resist buying now…
prices should be much lower on Friday!
Why do they still call it “Black Friday” when retailers are no longer in the black?
when the economic death spiral accelerates by Friday…
perhaps Black Friday will take on new meaning…
Sorry, bs cover edition. Real one:
Like ‘The Black Death’……
Can we make a list of the good things?
For students — no need to endure the pressure of exams…
For those with massive debts — the stress of making payments ends
For the elderly… the sick… the weak — the daily struggle and pain is almost over…
And for good measure…. these abominations …. will be done
http://i3.mirror.co.uk/incoming/article1710100.ece/ALTERNATES/s615b/Kim%20Kardashian%20and%20Paris%20Hilton.jpg
http://wac.450f.edgecastcdn.net/80450F/popcrush.com/files/2014/01/Biebs.jpg
no more MSM…
no more Black Fridays…
no more glowball worming “data”…
no more Democrats and Republicans…
The Collapse has its benefits…
Check it out…. the horsemen are getting ready!!!
https://youtu.be/Mkp8ZdQ9SqI
https://m.youtube.com/watch?v=TqtehtSB0LI
Changing direction …. the vast majority of the masses… are completely oblivious to what is playing out in front of their eyes…. yes… for many it’s rather grim… but there is forever hope…. that the future will be brighter… because it has been their experience that this is the case…. or maybe they see there is no way out … but choose to shunt those thoughts to a box in a dark corner in their minds….
So let’s join with the masses for a couple of minutes…. and forget out the fact that we are witnessing the beginning of the end of history….
https://youtu.be/uGBie5pT9nw
Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US Banks
So what’s going on here?
In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%).
The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9%
https://wolfstreet.com/2018/11/20/subprime-rises-credit-card-delinquencies-spike-past-financial-crisis-peak-at-smaller-banks/
The real problem with credit cards isn’t the banks – credit card debt is not big enough to topple the US banking system. It’s the consumers, and what it says about the health of consumers.
The overall numbers give a falsely calming impression. Credit card debt and other revolving credit has reached $1.0 trillion (not seasonally adjusted). This is about flat with the prior peak a decade ago.
Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US Banks
by Wolf Richter • Nov 20, 2018 • 1 Comment
So what’s going on here?
In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%).
The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9%
These numbers that the Federal Reserve Board of Governors reported Monday afternoon are like a cold shower in consumer land where debt levels are considered to be in good shape. But wait… it gets complicated.
The credit-card delinquency rate at the largest 100 commercial banks was 2.48% (not seasonally adjusted). These 100 banks, due to their sheer size, carry the lion’s share of credit card loans, and this caused the overall credit-card delinquency rate for all commercial banks combined to tick up to a still soothing 2.54%.
In other words, the overall banking system is not at risk, the megabanks are not at risk, and no bailouts are needed. But the most vulnerable consumers – we’ll get to why they may end up at smaller banks – are falling apart:
Credit card balances are deemed “delinquent” when they’re 30 days or more past due. Balances are removed from the delinquency basket when the customer cures the delinquency, or when the bank charges off the delinquent balance. The rate is figured as a percent of total credit card balances. In other words, among the smaller banks, at the end of Q3, 6.2% of the outstanding credit card balances were delinquent.
So what’s going on here?
The credit card business is immensely profitable, and so banks are willing to take some risks. It’s immensely profitable for three reasons:
The fee the bank extracts from every transaction undertaken with its credit cards (merchant pays), even if the credit-card holder pays off the balance every month and never incurs any interest expense.
The fees the bank extracts from credit card holders, such as annual fees, late fees, etc.
The huge spread between the banks’ cost of funding and the interest rates banks charge on credit cards.
So how low is the banks’ cost of funding? For example, in its third-quarter regulatory filing with the SEC (10-Q), Wells Fargo disclosed that it had $1.73 trillion in total “funding sources.” This amount was used to fund $1.73 trillion in “earning assets,” such as loans to its customers or securities it had invested in.
This $1.73 trillion in funding was provided mostly by deposits: $465 billion in non-interest-bearing deposits (free money), and $907 billion in interest bearing deposits; for a total of $1.37 billion of ultra-cheap funding from deposits.
In addition to its deposits, Wells Fargo lists $353 billion in other sources of funding – “short-term and long-term borrowing” – such as bonds it issued.
For all sources of funding combined, so on the $1.73 trillion, the “total funding cost” was 0.87%. Nearly free money. Rate hikes no problem.
In Q3, Wells Fargo’s credit-card balances outstanding carried an average interest rate of 12.77%!
So, with its cost of funding at 0.87%, and the average interest rate of 12.77% on its credit card balances, Wells Fargo is making an interest margin on credit cards of 11.9 percentage points. In other words, this is an immensely profitable business – hence the incessant credit-card promos.
With credit cards, the US banking system has split in two.
The largest banks can offer the most attractive incentives on their credit cards (cash-back, miles, etc.) and thus attract the largest pool of applicants. Then they can reject those with higher credit risks – having not yet forgotten the lesson from the last debacle.
The thousands of smaller banks cannot offer the same incentives and lack the marketing clout to attract this large pool of customers with good credit. So they market to customers with less stellar credit, or with subprime-rated credit — and charge higher interest rates. 30% sounds like a deal, even if the customer will eventually buckle under that interest rate and will have to default.
That’s why banks take the risks of higher charge-offs: They’re getting paid for them! But at some point, it gets expensive. And if it takes a smaller bank to the brink, the FDIC might swoop in on a Friday evening and shut it down. No biggie. Happens routinely.
The real problem with credit cards isn’t the banks – credit card debt is not big enough to topple the US banking system. It’s the consumers, and what it says about the health of consumers.
The overall numbers give a falsely calming impression. Credit card debt and other revolving credit has reached $1.0 trillion (not seasonally adjusted). This is about flat with the prior peak a decade ago.
Since the prior peak of credit-card debt in 2008, the US population has grown by 20 million people, and there has been a decade of inflation and nominal wage increases, and so the overall credit card burden per capita is far lower today than it was in 2008 (though student loans and auto loans have shot through the roof). So no problem?
But this overall data hides the extent to which the most vulnerable consumers are getting into trouble with their credit cards, having borrowed too much at usurious rates. They’ll never be able to pay off or even just service those balances. For them, there is only one way out – to default.
The fact that this process is now taking on real momentum — as demonstrated by delinquency rates spiking at smaller banks — shows that the group of consumers that are falling apart is expanding. And these are still the good times, of low unemployment in a growing economy.
https://s3.amazonaws.com/media.eremedia.com/uploads/2017/03/canary-in-a-coal-mine.jpg
Another worrisome sign!
The traders are saying that a credit event is taking place right now, that credit is contracting, since everything is going down.
As the selling goes on to get hold on cash, the credit contraction is getting worse, since the price of all assets fall.
The markets are now in a deflationary death spiral. The Fed will be forced to change its policy of rate hikes and QT?
As we know QE has never stopped… not in the US nor in the EU nor in Japan etc….
https://www.theepochtimes.com/the-rules-of-the-bond-game_2600435.html
There is no doubt a very good reason(s) why the Fed is hiking rates…. from what I have read they are picking their poison … maintaining Zirp would force the massive global to explode…. so they are picking the less lethal poison… the bubble will explode but perhaps this policy delays the explosion of the bubble a bit longer
i.e. they are navigating through a sea of icebergs…. they saw imminent catastrophe from ZIRP in the form of a massive iceberg 100 metres away… so steered towards another massive iceberg 200 metres away….
Which raises the question …should I only be buying ripe bananas at this point?
Pretty scary stuff … when you consider the worst case scenario is not a Great Depression…
Doomie Preppers — does this get your adrenaline pumping? Are you doubling down on your pumpkin planting? Are you viciously pulling those weeds getting locked and loaded for the Big Adventure? Exciting times eh!!!
This is the article we saw earlier, from July. It would be interesting to see some updated numbers now. Is the situation really the way this author thinks it is?
I just ordered my pumpkin seeds for next year’s garden. I’m not a DP, you have convinced me it’s futile, I just like gardening. That doesn’t mean I won’t try to feed myself and defend my property as best I can, as long as it seems worthwhile. Planting season isn’t for another five months here, and I’m not sure we are going to make it that long.
I have no doubt that, end of the world or not, the Great Pumpkin will reward all gardeners who sincerely plant pumpkins. Personally, I plant three different kinds every spring. And last year my cucumber plants also produced some little white pumpkins when the root stock sent out some fresh shoots.
According to David Hunter “The Wends (or Sorbs) were slavic peoples who settled in increasing numbers into the Germanic lands between the Elbe and Oder rivers from circa 500AD”. I read about them in the London Review of Books about 10 years ago. Apparently they lived in the marshes in raised areas and built dykes around their homes to keep out the flood waters. On the top of the dykes they planted pumpkins and lived happily ever after until the time of Bismarck, when the German obsession with efficiency, regularity and development took aim at them. They were forced out of their backwater life and into towns, their culture was germanized, their marshes were drained, their rivers straightened and their land “reclaimed” for “serious” agriculture. The Great Pumpkin was not amused.
A person would hope that the Fed will look at what is happening.
Today the Dow Jones is down -552; the price of WTI is at $53.39.
https://i.redd.it/9zzwbbghhhz11.jpg
Nice!
These days I’m into ‘inspirational’ videos of baby bears climbing rock faces.
Or going sliding on their bellies head-first.
Oh, it’s baby elephants who do the sliding.
Also has recipes…for the end times
After Acosta decision, Lou Dobbs and Gregg Jarrett agree that Trump should tell the judge to “go to hell”
https://www.mediamatters.org/video/2018/11/19/after-acosta-decision-lou-dobbs-and-gregg-jarrett-agree-trump-should-tell-judge-go-hell/222118?fbclid=IwAR2hn8PyOoOqKAfNIRjak3d7ZTV8a_R56er-XitsCeoDp1zGsmz1jpd7WOE
Energy companies lose $1 trillion in value as crude price plummets
https://www.chron.com/business/energy/article/Energy-companies-lose-1-trillion-in-value-as-13404799.php
Oil prices are way too low..The Saudis should have been focusing on stabilizing oil prices instead of murdering a journalist..
Hi,
Long time lurker here. Posting first time.
This video on Brexit is amazing.
https://youtu.be/svwslRDTyzU
Love the £ plummeting from the stern and bouncing off the propellor on its way down.
Yes, very nice touch the forlorn little,plunging, £………
California has a larger GNP than the UK.
Now if we could only get the rest of the US on board, third world status would improve.
California can’t tug along our wingnut friends forever- eventually they are going to have produce.
Going on the facts, there’s no need to be quite so smug, Duncan.
California also has a huge homeless crisis, in the same ballpark as the UK’s and with all the makings of Third World squalor.
https://youtu.be/T1yCTL5dJro
On any given night in California there are about 134,000 people without a home, according to annual data from the U.S. Department of Housing and Urban Development. That’s nearly equivalent to the population of Pasadena or Roseville sleeping on the street, on a bench or in a shelter.
California’s homeless population jumped 13.7% between 2016 and 2017.
And those 134,000 Californians without a place to call home are the visible edge of a much larger, much deeper housing problem in the state. “We now know that there is a very close connection between housing costs and homelessness,” said Margot Kushel, director of the University of California San Francisco Center for Vulnerable Populations.
If you’ll compare this to Japan, with more than double the population of California and with probably around 20,000 homeless people, you’ll see how clueless you are as to what a proper First World level of homelessness should be.
https://www.cnbc.com/2018/03/12/us-states-with-the-highest-levels-of-income-inequality.html
California is #4 in terms of income inequality and #2 in growth rate of income inequality. I saw some figures on home prices, and California’s home prices seem to be off the charts compared to places that are home to less wealthy individuals. There also has been little building in California. The combination seems to result in a lot of people without homes.
29th of November is the day of reckoning and it is all part of the plan so dont worry the empire will not die it will simply evolve
What kind of “evolving” could happen in a dag? Or system-dying also for that matter.
adonis!
the economic death spiral has just started!
asset prices are plunging everywhere!
I don’t know if we can make it another 9 days!
OMG!
Yes, but if this is it … did collapse start nov 8th? Or 29th? Or when Trump was elected? Or August-71? Or july-69? Or at peak energy per capita? Or the last day they had a functioning electric grid somewhere in the US?
Bill Nye: We are not going to live on Mars, let alone turn it into Earth
https://www.usatoday.com/story/tech/science/2018/11/19/bill-nye-mars-were-not-going-live-there-make-like-earth/1905447002/
https://www.scmp.com/economy/china-economy/article/2174195/us-china-trade-war-raises-risk-financial-market-flash-crash
“The effects from the US-China trade war and mounting costs of doing business for companies are fuelling investor fears of the likelihood of a “flash crash” in financial markets, analysts have warned.
The deteriorating climate, they said, would force cash-strapped firms to offload assets quickly and reduce debt to buffer profit declines next year that could be brought about by the trade war. But these risks would be magnified by the rise of artificial intelligence-driven electronic trading as automation speeds up financial transactions, allowing them to be conducted across multiple markets at the same time. Any macroeconomic data shock that forces abrupt forecast downgrades for economic growth and corporate earnings could lead to rapid, violent market moves or “flash crashes,” analysts said.”
Ugo Bardi about war and piece:
«Power laws are typical “emergent phenomena” that take place in complex systems. They are the result of the dissipation of accumulated energy that occurs not gradually but in bumps. The quintessential system that behaves in this way is the “sandpile” that Per Bak used as a representation of the condition that he called “self-organized criticality.” Fascinating in a mathematical model, these bumps can be deadly in the real world. Earthquakes, landslides, avalanches and more phenomena involving natural disasters tend to occur following power laws.
These results confirm Tolstoy’s intuition: wars are not the result of ideologies, religions, mad rulers, or the like. They emerge out of a social network as a result of the way the system is connected. That doesn’t mean there are no causes for wars: they are the result of accumulated capital that needs to be dissipated in some way. Wherever there is an unbalance in the accumulation of capital, the excess will spill from the more endowed side to the less endowed one. In a sense, war is the offspring of capitalism, but capitalism is just another emergent phenomenon of complex societies. In short, wars are not caused by a lack of resources, they are caused by an excess of resources.»
https://cassandralegacy.blogspot.com/2018/11/should-we-prepare-for-new-world-war.html?m=1
I am not sure about, ” In short, wars are not caused by a lack of resources, they are caused by an excess of resources.”
There is a difference between:
(1) Resources now, which can be dissipated
(2) Future resources, which are perceived to be a problem.
When resources are high cost to extract, but prices cannot be raise high enough to cover these high costs, wages for workers tend to fall too low. (This is what happened before WWI and WWII.) Starting a war has multiple impacts:
(1) It raises wages of non-elite workers, because debt is normally used to finance the cost of war. This debt makes it back into the economy as wages, to a significant extent. Some of the debt may be used directly to buy energy products.
(2) The higher wage of the non-elite workers with this debt helps raise energy prices, keeping production going during the war at least.
(3) Some of the new debt may also directly be used for buying energy products, thus helping to raise energy prices, and help keep the system going.
(4) Longer-term, there is a chance that some benefits may be won, so that the country is better off.
I don’t think that Ugo understands the role debt plays. Governments typically borrow money for wars. This is what allows the bump.
‘Forget real estate. You can’t afford it anyway’: Monopoly for millennials triggers outrage
“Millennials, generation snowflake, or the ‘no house, no money, just avocado’ young people who brought you hipsters, are now being derided by toy giant Hasbro with its new edition of every capitalist’s favorite board game Monopoly.”
https://www.rt.com/news/444097-millennial-monopoly-triggers-outrage/
Hmm:
The aging Eskimo, the iceberg and the polar bear come to mind.
Millennials will be the majority of voters, they ccan hange the laws, make student debt dischargeable by bankruptcy, which means the owners of that debt(many of whom are the “mature” generation”) lose their wealth, make more resources available for the young and life is as it always has been. The major source of negative cash flow for governments is not welfare, but pensions, e.g. SS and medicare. If it is not paid, things change, laws can be changed, the budget balances, and the metaphorical polar bear begins the cycle anew. Or as Gail likes to say, “The per capita changes.” The trick is to be in the right per capita.
Dennis L.
I can agree with you that a different generation of pensioners is comming: the ever poorer pensioners. Finally, without the profits, there are no pensioners.
Without pension dollars, demand for goods and services drops considerably. A major cutback in pensions would likely send the economy into recession. It would be like a big tax hike, but affecting a relatively poor group.
One twitter response was, “Every time you pass GO you pay rent on your properties.” LOL!
The properties owned by the pensioners and rented by the millenials constitute another tax for the millenials.
If corporate BBB rated bonds turn into junk and and lose value while the yields go up, then the corporates can no longer borrow money to buy back their own shares to keep the stock market bubble going…and then it’s good night?
https://pbs.twimg.com/media/DsaN4IMXQAEt5pX?format=jpg
I think that part of the issue is that companies with good bond ratings depend on a whole chain of suppliers. Those supplier often have poor bond ratings. If they lose their supplier chain, the companies with good ratings are in just as poor shape as those with junk ratings.
Or, they purchase the key supplier for penny’s on the dollar and increase their profit margin consolidating their industry. Modern information technology seems to facilitate this growth and AI makes management much easier as global maximums become easier to find. “Them that gots get.”
Dennis L.
Looks like the good folks who are 100% long Bitcon will have to make do with lumps of coal this Christmas.
BTC-USD
4,694.79
-114.83(-2.39%)
“If you significantly slice through a level like US$6,000, people don’t have a lot of protection below it – and then you see a lot of stop-loss selling which exacerbates the move,” said Marc Ostwald, global strategist at ADM Investor Services International in London. “It doesn’t help that we have a genuinely risk-averse environment, with equities and credit under pressure.”
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12163628
It also does not help that CCs are a massive ponze…. for the life of me… I don’t understand how this does not keep cratering right down to zero….
If I were holding any of this stinky rubbish … and was sitting on a decent profit …. I’d be dumping it as fast as possible right now….
The writing is on the wall….
Alberta MLA says marijuana legalization could lead to communist revolution
https://globalnews.ca/news/3889241/alberta-mla-says-marijuana-legalization-could-lead-to-communist-revolution/
No one really wants to bust his asz paying for McMansions, shoes for waifu and edgily nihilistic self-esteem. Smoking weed makes that fact more obvious.
Come on! Dope heads are too lazy to start a revolution!
The flat earth society proudly announces that they now have members all around the globe.
LOL!
they meant on both the top and bottom of the flat Earth. maybe some on the edges, too.
“A growing homogeneity in business models and strategies among U.S. large banks may worsen overall risk in the financial system, warned Kevin Stiroh, the head of supervision at New York Federal Reserve… ” If all firms are effectively the same, they could become ‘systemic as a herd’ and susceptible to the same shocks in a way that leaves the aggregate provision of financial services more volatile…””
https://www.reuters.com/article/bc-finreg-banking-increasing-systemic-ri/increasing-similarity-in-banking-raises-concern-for-systemic-risk-u-s-fed-official-warns-idUSKCN1NO1LH
““Buying the dip has not worked in 2018 for the first time since 2002,” Morgan Stanley equity strategist Michael Wilson said in a note to clients Monday. “Such market behavior is rare and in the past has coincided with official bear markets (20 percent declines), recessions, or both.”
“The strategy worked even during 2008 and 2009, the height of the Financial Crisis, Morgan Stanley said. But a key factor makes this cycle different, according to Wilson: Quantitative easing is turning to quantitative tightening. The Fed is now reducing its balance sheet while the European Central Banks and Bank of Japan taper their own quantitative easing programs.”
https://www.cnbc.com/2018/11/19/this-chart-is-proof-buy-the-dip-is-dead.html
https://m.youtube.com/watch?v=BmlnltVzksg
What is considered appropriate humor changes a lot. Clearly, this humor would be inappropriate today.
No kidding! We know that the people who work on the models used by different insurance companies/banks migrate from company to company. There is a lot of cross-fertilization regarding what is in the models. Also, there is a lot published about what seems to be important. A big increase in stories about things getting bad all over will eventually cycle into models that indicate a “sell” order for practically everything. Such a cycle can’t end well.
http://www.davidgriesing.com/wp-content/uploads/2014/09/lemmings-350×220.jpg
Ice Age Update
Temps are now revised DOWN to 0 tonight https://www.metservice.com/towns-cities/queenstown
Those f789ing frost fighting windmills in the vineyards will be firing up at 2am driving me f789ing bonkers yet again ….
My fruit trees are not going to like 0.
Oddly symmetric here the temps for Thanksgiving Day (Thursday) high 23, low 10 (-12 to those drifting from her majesties ruler), this is far below seasonal.
I wonder what it will take for the DelusiSTANIS to acknowledge that they have been made fo.ols of….
Don’t feel badly … I was a fo.ol too … for many years….
http://1zl13gzmcsu3l9yq032yyf51-wpengine.netdna-ssl.com/wp-content/uploads/2017/07/awaken-your-inner-fire-synchronicity.jpg
“Moves by Chinese companies to guarantee each others’ debt have left the world’s third-largest bond market prone to contagion risks — making it all the tougher for officials to follow through on initiatives to sustain credit flows…
“…now that China is going through a record run of debt defaults, the links pose the risk of a daisy chain of distress. Price moves are reflecting that.”
https://www.hellenicshippingnews.com/chinas-chain-of-debt-guarantees-looms-as-systemic-danger/
“South Korea’s manufacturing capacity utilization was 74.3% in the third quarter of this year, the lowest since the Asian Financial Crisis of 1998. In addition, its capital expenditure fell 19% from a year earlier in September, which is close to the decrement recorded during the 2008 global financial crisis. Besides, the number of unemployed persons topped one million for nine months in a row until that month, which was the largest since 1999.”
http://www.businesskorea.co.kr/news/articleView.html?idxno=26704
“The scandal erupting at Nissan, following the arrest of its chairman Carlos Ghosn over allegations of financial misconduct, is far from the first crisis to hit Japan Inc. The allegations against Mr Ghosn – the boss of the Renault-Nissan-Mitsubishi strategic alliance – could have a seismic effect on the global car industry. But Japan has, in recent years, dealt with a number of high-profile corporate scandals.”
As an aside, look at how Ghosn’s character is writ large on his face – the very embodiment of malevolent greed!
https://www.bbc.co.uk/news/business-46267868
Somehow, this kind of “crime” doesn’t seem all that bad/unexpected. I know that the President of Kennesaw State University was let go (or decided to retire a bit earlier than originally expected) because he had obtained a special deal with the Office of Advancement (that handles financial gifts from Alumni) to collect some of his supposed post-retirement benefits while he was still working. And we know about any number of “purchasing managers” who were let go, because they were getting kick backs from some of the companies that they chose to do business with.
Apparently Carlos 10 million dollar per annum income (lower end of the scale for auto CEOs) was just not enough…..
Poor Carlos had to raid the company coffers… you know … to make ends meet….
Let’s shed a collective tear for Carlos boo hooo!!!!
https://stupendoustidbits.files.wordpress.com/2010/11/cry.jpg