2019: World Economy Is Reaching Growth Limits; Expect Low Oil Prices, Financial Turbulence

Financial markets have been behaving in a very turbulent manner in the last couple of months. The issue, as I see it, is that the world economy is gradually changing from a growth mode to a mode of shrinkage. This is something like a ship changing course, from going in one direction to going in reverse. The system acts as if the brakes are being very forcefully applied, and reaction of the economy is to almost shake.

What seems to be happening is that the world economy is reaching Limits to Growth, as predicted in the computer simulations modeled in the 1972 book, The Limits to Growth. In fact, the base model of that set of simulations indicated that peak industrial output per capita might be reached right about now. Peak food per capita might be reached about the same time. I have added a dotted line to the forecast from this model, indicating where the economy seems to be in 2019, relative to the base model.1

Figure 1. Base scenario from The Limits to Growth, printed using today’s graphics by Charles Hall and John Day in Revisiting Limits to Growth After Peak Oil with dotted line at 2019 added by author. The 2019 line is drawn based on where the world economy seems to be now, rather than on precisely where the base model would put the year 2019.

The economy is a self-organizing structure that operates under the laws of physics. Many people have thought that when the world economy reaches limits, the limits would be of the form of high prices and “running out” of oil. This represents an overly simple understanding of how the system works. What we should really expect, and in fact, what we are now beginning to see, is production cuts in finished goods made by the industrial system, such as cell phones and automobiles, because of affordability issues. Indirectly, these affordability issues lead to low commodity prices and low profitability for commodity producers. For example:

  • The sale of Chinese private passenger vehicles for the year of 2018 through November is down by 2.8%, with November sales off by 16.1%. Most analysts are forecasting this trend of contracting sales to continue into 2019. Lower sales seem to reflect affordability issues.
  • Saudi Arabia plans to cut oil production by 800,000 barrels per day from the November 2018 level, to try to raise oil prices. Profits are too low at current prices.
  • Coal is reported not to have an economic future in Australia, partly because of competition from subsidized renewables and partly because China and India want to prop up the prices of coal from their own coal mines.

The Significance of Trump’s Tariffs

If a person looks at history, it becomes clear that tariffs are a standard response to a problem of shrinking food or industrial output per capita. Tariffs were put in place in the 1920s in the time leading up to the Great Depression, and were investigated after the Panic of 1857, which seems to have indirectly led to the US Civil War.

Whenever an economy produces less industrial or food output per capita there is an allocation problem: who gets cut off from buying output similar to the amount that they previously purchased? Tariffs are a standard way that a relatively strong economy tries to gain an advantage over weaker economies. Tariffs are intended to help the citizens of the strong economy maintain their previous quantity of goods and services, even as other economies are forced to get along with less.

I see Trump’s trade policies primarily as evidence of an underlying problem, namely, the falling affordability of goods and services for a major segment of the population. Thus, Trump’s tariffs are one of the pieces of evidence that lead me to believe that the world economy is reaching Limits to Growth.

The Nature of World Economic Growth

Economic growth seems to require growth in three dimensions (a) Complexity, (b) Debt Bubble, and (c) Use of Resources. Today, the world economy seems to be reaching limits in all three of these dimensions (Figure 2).

Figure 2.

Complexity involves adding more technology, more international trade and more specialization. Its downside is that it indirectly tends to reduce affordability of finished end products because of growing wage disparity; many non-elite workers have wages that are too low to afford very much of the output of the economy. As more complexity is added, wage disparity tends to increase. International wage competition makes the situation worse.

A growing debt bubble can help keep commodity prices up because a rising amount of debt can indirectly provide more demand for goods and services. For example, if there is growing debt, it can be used to buy homes, cars, and vacation travel, all of which require oil and other energy consumption.

If debt levels become too high, or if regulators decide to raise short-term interest rates as a method of slowing the economy, the debt bubble is in danger of collapsing. A collapsing debt bubble tends to lead to recession and falling commodity prices. Commodity prices fell dramatically in the second half of 2008. Prices now seem to be headed downward again, starting in October 2018.

Figure 3. Brent oil prices with what appear to be debt bubble collapses marked.

Figure 4. Three-month treasury secondary market rates compared to 10-year treasuries from FRED, with points where short term interest rates exceed long term rates marked by author with arrows.

Even the relatively slow recent rise in short-term interest rates (Figure 4) seems to be producing a decrease in oil prices (Figure 3) in a way that a person might expect from a debt bubble collapse. The sale of US Quantitative Easing assets at the same time that interest rates have been rising no doubt adds to the problem of falling oil prices and volatile stock markets. The gray bars in Figure 4 indicate recessions.

Growing use of resources becomes increasingly problematic for two reasons. One is population growth. As population rises, the economy needs more food to feed the growing population. This leads to the need for more complexity (irrigation, better seed, fertilizer, world trade) to feed the growing world population.

The other problem with growing use of resources is diminishing returns, leading to the rising cost of extracting commodities over time. Diminishing returns occur because producers tend to extract the cheapest to extract commodities first, leaving in place the commodities requiring deeper wells or more processing. Even water has this difficulty. At times, desalination, at very high cost, is needed to obtain sufficient fresh water for a growing population.

Why Inadequate Energy Supplies Lead to Low Oil Prices Rather than High

In the last section, I discussed the cost of producing commodities of many kinds rising because of diminishing returns. Higher costs should lead to higher prices, shouldn’t they?

Strangely enough, higher costs translate to higher prices only sometimes. When energy consumption per capita is rising rapidly (peaks of red areas on Figure 5), rising costs do seem to translate to rising prices. Spiking oil prices were experienced several times: 1917 to 1920; 1974 to 1982; 2004 to mid 2008; and 2011 to 2014. All of these high oil prices occurred toward the end of the red peaks on Figure 5. In fact, these high oil prices (as well as other high commodity prices that tend to rise at the same time as oil prices) are likely what brought growth in energy consumption down. The prices of goods and services made with these commodities became unaffordable for lower-wage workers, indirectly decreasing the growth rate in energy products consumed.

Figure 5.

The red peaks represented periods of very rapid growth, fed by growing supplies of very cheap energy: coal and hydroelectricity in the Electrification and Early Mechanization period, oil in the Postwar Boom, and coal in the China period. With low energy prices,  many countries were able to expand their economies simultaneously, keeping demand high. The Postwar Boom also reflected the addition of many women to the labor force, increasing the ability of families to afford second cars and nicer homes.

Rapidly growing energy consumption allowed per capita output of both food (with meat protein given a higher count than carbohydrates) and industrial products to grow rapidly during these peaks. The reason that output of these products could grow is because the laws of physics require energy consumption for heat, transportation, refrigeration and other processes required by industrialization and farming. In these boom periods, higher energy costs were easy to pass on. Eventually the higher energy costs “caught up with” the economy, and pushed growth in energy consumption per capita down, putting an end to the peaks.

Figure 6 shows Figure 5 with the valleys labeled, instead of the peaks.

Figure 6.

When I say that the world economy is reaching “peak industrial output per capita” and “peak food per capita,” this represents the opposite of a rapidly growing economy. In fact, if the world is reaching Limits to Growth, the situation is even worse than all of the labeled valleys on Figure 6. In such a case, energy consumption growth is likely to shrink so low that even the blue area (population growth) turns negative.

In such a situation, the big problem is “not enough to go around.” While cost increases due to diminishing returns could easily be passed along when growth in industrial and food output per capita were rapidly rising (the Figure 5 situation), this ability seems to disappear when the economy is near limits. Part of the problem is that the lower growth in per capita energy affects the kinds of jobs that are available. With low energy consumption growth, many of the jobs that are available are service jobs that do not pay well. Wage disparity becomes an increasing problem.

When wage disparity grows, the share of low wage workers rises. If businesses try to pass along their higher costs of production, they encounter market resistance because lower wage workers cannot afford the finished goods made with high cost energy products. For example, auto and iPhone sales in China decline. The lack of Chinese demand tends to lead to a drop in demand for the many commodities used in manufacturing these goods, including both energy products and metals. Because there is very little storage capacity for commodities, a small decline in demand tends to lead to quite a large decline in prices. Even a small decline in China’s demand for energy products can lead to a big decline in oil prices.

Strange as it may seem, the economy ends up with low oil prices, rather than high oil prices, being the problem. Other commodity prices tend to be low as well.

What Is Ahead, If We Are Reaching Economic Growth Limits?

1. Figure 1 at the top of this post seems to give an indication of what is ahead after 2019, but this forecast cannot be relied on. A major issue is that the limited model used at that time did not include the financial system or debt. Even if the model seems to provide a reasonably accurate estimate of when limits will hit, it won’t necessarily give a correct view of what the impact of limits will be on the rest of the economy, after limits hit. The authors, in fact, have said that the model should not be expected to provide reliable indications regarding how the economy will behave after limits have started to have an impact on economic output.

2. As indicated in the title of this post, considerable financial volatility can be expected in 2019 if the economy is trying to slow itself. Stock prices will be erratic; interest rates will be erratic; currency relativities will tend to bounce around. The likelihood that derivatives will cause major problems for banks will rise because derivatives tend to assume more stability in values than now seems to be the case. Increasing problems with derivatives raises the risk of bank failure.

3. The world economy doesn’t necessarily fail all at once. Instead, pieces that are, in some sense, “less efficient” users of energy may shrink back. During the Great Recession of 2008-2009, the countries that seemed to be most affected were countries such as Greece, Spain, and Italy that depend on oil for a disproportionately large share of their total energy consumption. China and India, with energy mixes dominated by coal, were much less affected.

Figure 7. Oil consumption as a percentage of total energy consumption, based on 2018 BP Statistical Review of World Energy data.

Figure 8. Energy consumption per capita for selected areas, based on energy consumption data from 2018 BP Statistical Review of World Energy and United Nations 2017 Population Estimates by Country.

In the 2002-2008 period, oil prices were rising faster than prices of other fossil fuels. This tended to make countries using a high share of oil in their energy mix less competitive in the world market. The low labor costs of China and India gave these countries another advantage. By the end of 2007, China’s energy consumption per capita had risen to a point where it almost matched the (now lower) energy consumption of the European countries shown. China, with its low energy costs, seems to have “eaten the lunch” of some of its European competitors.

In 2019 and the years that follow, some countries may fare at least somewhat better than others. The United States, for now, seems to be faring better than many other parts of the world.

4. While we have been depending upon China to be a leader in economic growth, China’s growth is already faltering and may turn to contraction in the near future. One reason is an energy problem: China’s coal production has fallen because many of its coal mines have been closed due to lack of profitability. As a result, China’s need for imported energy (difference between black line and top of energy production stack) has been growing rapidly. China is now the largest importer of oil, coal, and natural gas in the world. It is very vulnerable to tariffs and to lack of available supplies for import.

Figure 9. China energy production by fuel plus its total energy consumption, based on BP Statistical Review of World Energy 2018 data.

A second issue is that demographics are working against China; its working-age population already seems to be shrinking. A third reason why China is vulnerable to economic difficulties is because of its growing debt level. Debt becomes difficult to repay with interest if the economy slows.

5. Oil exporters such as Venezuela, Saudi Arabia, and Nigeria have become vulnerable to government overthrow or collapse because of low world oil prices since 2014. If the central government of one or more of these exporters disappears, it is possible that the pieces of the country will struggle along, producing a lower amount of oil, as Libya has done in recent years. It is also possible that another larger country will attempt to take over the failing production of the country and secure the output for itself.

6. Epidemics become increasingly likely, especially in countries with serious financial problems, such as Yemen, Syria, and Venezuela. Historically, much of the decrease in population in countries with collapsing economies has come from epidemics. Of course, epidemics can spread across national boundaries, exporting the problems elsewhere.

7. Resource wars become increasingly likely. These can be local wars, perhaps over the availability of water. They can also be large, international wars. The timing of World War I and World War II make it seem likely that these wars were both resource wars.

Figure 10.

8. Collapsing intergovernmental agencies, such as the European Union, the World Trade Organization, and the International Monetary Fund, seem likely. The United Kingdom’s planned exit from the European Union in 2019 is a step toward dissolving the European Union.

9. Privately funded pension funds will increasingly be subject to default because of continued low interest rates. Some governments may choose to cut back the amounts they provide to pensioners because governments cannot collect adequate tax revenue for this purpose. Some countries may purposely shut down parts of their governments, in an attempt to hold down government spending.

10. A far worse and more permanent recession than that of the Great Recession seems likely because of the difficulty in repaying debt with interest in a shrinking economy. It is not clear when such a recession will start. It could start later in 2019, or perhaps it may wait until 2020. As with the Great Recession, some countries will be affected more than others. Eventually, because of the interconnected nature of financial systems, all countries are likely to be drawn in.


It is not entirely clear exactly what is ahead if we are reaching Limits to Growth. Perhaps that is for the best. If we cannot do anything about it, worrying about the many details of what is ahead is not the best for anyone’s mental health. While it is possible that this is an end point for the human race, this is not certain, by any means. There have been many amazing coincidences over the past 4 billion years that have allowed life to continue to evolve on this planet. More of these coincidences may be ahead. We also know that humans lived through past ice ages. They likely can live through other kinds of adversity, including worldwide economic collapse.


[1] Note that where the dotted line for 2019 is placed is based on where I see the 2019 economy relative to the downturn in industrial output per capita, based on a number of kinds of evidence, not all of which is cited in this article. The 1972 base model would give a slightly different timing of the downturn, a few years earlier. Also note that while the original “The Limits to Growth” book is no longer in print, Limits to Growth: The 30-Year Update by the same authors is available for sale.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,080 Responses to 2019: World Economy Is Reaching Growth Limits; Expect Low Oil Prices, Financial Turbulence

  1. Third World person says:

    Africa by Toto to play ‘for all eternity’ in Namib desert

    Namibian-German artist Max Siedentopf has set up a solar-powered sound installation in the coastal Namib Desert to play the soft-rock classic on a loop. He has chosen an undisclosed spot in the desert to set up six speakers attached to an MP3 player with the single track on it and promises that it will run ‘for all eternity’.

    homo sapiens stupidity has no limit

  2. Harry McGibbs says:

    “”It’s good that consumers are getting food at low prices. We are here because of them. But we who are the producers, are in loss,” said Kesarinath Govari, a farmer in Rangaon village near Mumbai.”


    • Harry McGibbs says:

      “[Pakistan’s] three major auto assemblers are revising down their monthly production schedules from this month anticipating a significant sales slowdown in the second half of the current fiscal year.”


      • Harry McGibbs says:

        “Many Chinese factories have eliminated overtime and looked for other ways to trim employment costs. “Manufacturing has sunk from buoy to anchor over the past two quarters,” the China Beige Book, an economic consulting firm, concluded in an analysis last month.”


        • Harry McGibbs says:

          “President Xi Jinping stressed the need to maintain political stability in an unusual meeting of China’s top leaders — a fresh sign the ruling party is growing concerned about the social implications of the slowing economy.”


          • Harry McGibbs says:

            “Amid increasing signs of China’s industrial slowdown in 2019, data this week showing record oil and natural gas imports likely indicates a country at peak energy growth, with its thirst set to wane as the slowdown bites.”


            • It is difficult to know how to interpret some of China’s fuel statistics.

              Some of China’s record crude oil imports were used to fill up strategic reserves, including at new storage sites in Jinzhou in the north and Huizhou on China’s southern coast, meaning they did not reflect actual end-user demand.

              Additionally, independent refiners increased their overseas orders at the end of the year to use up their annual import quotas received from the government for 2018.

              But that meant they produced more fuel than even thirsty China can absorb, triggering record exports of refined products as refiners offloaded surplus fuel.

          • ssincoski says:

            Great term: social implications. What would be some less euphimistic equivalents? Anyone want to venture a guess?

        • xabier says:

          There seems to be a phrase going round business circles in China: ‘What is coming will be as hard and as real as Winter’.

          Do we then all catch a cold? Or will it be pneumonia?

        • There was a hurry-up to produce before tariffs were expected to hit Jan 1 (but Chinese reported data did not show this jump in economic growth). Now there is a cutback in orders, because the pipeline is already full. With less overtime, workers will have less to spend, going forward. Doesn’t sound good for the economy!

          • Greg Machala says:

            It looks like China was slowing before the tariff’s were even talked about.

            • I agree that China was slowing before the tariffs were even discussed.

              China’s growth in energy consumption scaled back after 2011. In fact, its scaled back again in 2014 and 2015.

              In recent years, China has likely been giving us a falsely high view of its economic growth rate. If we think about the situation, China’s growth in energy consumption ties in very much with the trend in world oil prices. The run up in China’s demand was a major factor in the oil price spike in mid 2008, and the second lower peak in 2011.

              China’s drop off in energy consumption corresponds with the trend toward lower oil prices recently. China’s growth seems to have been lower for a long time.

              India is quite a bit smaller than China in terms of energy consumption. It shows a somewhat similar but smoother pattern. Its energy consumption growth is also slowing.

    • Food is a commodity like oil. We don’t hear consumers asking for higher food prices to help out farmers around the world. In parts of the world where some people spend half of their salary on food, raising prices would be very difficult.

    • The price drops quoted are just amazing:

      The prices of vegetables have fallen in the last couple of months. For exmaple, onion prices have gone down from Rs. 70/kg to Rs. 20/kg…tomatoes have gone done from Rs. 80/kg to Rs. 40/kg…green peas from Rs. 60/kg to Rs. 25-30/kg.

      I can see that farmers would quickly starve if they needed to live within this new pricing regime.

  3. Harry McGibbs says:

    “South Korean exports, a data set often held up as a bellwether for the health of the global economy, fell off a cliff in January, pointing to a troubling slowdown in global trade.

    “Exports from the east Asian nation dropped 14.6% year-on-year in the first 20 days of 2019, according to data released Monday morning. That compared to an increase of 1% over the same period in December.

    “”We had expected a contraction, but the extent of the fall was a surprise,” Freya Beamish, chief Asia economist at Pantheon Macroeconomics, wrote in an email.

    “South Korean trade data is often held up as a canary in the coalmine for the global economy, as it often acts as an early warning sign for trouble ahead.”


  4. Rodster says:

    The Yellow Vests protest is spreading as I predicted. They are now protesting albeit peacefully for “now” in Germany.

    • Harry McGibbs says:

      “The founder of a movement to unite Germany’s left wing has said it will take to the streets in 2019, inspired by the gilet jaunes protests in France.

      “Sahra Wagenknecht, who set up Aufstehen (Get Up) in September, said the French demonstrations encouraged her to believe it was possible to effect change without being a political party. She cited growing inequality in Germany and frustration over the government’s failure to adequately tackle it as a powerful motivating force for a protest movement.”


      • Rodster says:

        Mark my words, this movement will go global. It’s nothing more than people waking up to the fact that it’s the Plebs vs The Elite. The underlying factor the movement doesn’t understand is that the global economic system is slowly collapsing and for now it’s happening at the periphery.

        • Harry McGibbs says:

          It may very well do. Holland, Belgium and the UK have already seen yellow vest protests.

          A high-vis jacket is a cheap, highly visible (obviously) and easily obtainable badge of protest – an excellent idea. And it is oddly fitting that the French, with their history of setting global fashion trends (and indeed their history of popular insurrections), should be at the forefront of the movement.

        • Weekend marching affects nothing.

          Wake me up when they effectively blockade IC infrastructure.. and or humiliate govs/CBs enough to assemble in some remote protected areas sending envoys and/or paratroopers into blocked installations and gov/office hubs.

          Obviously not there by a long shot..

          • Harry McGibbs says:

            “Weekend marching affects nothing.”

            The gilets jaunes have already forced Macron, humiliatingly, into making economic concessions, the cost of which will cause France to overshoot the European Union’s budget deficit ceiling next year.

            And the movement has become a rallying point around which the frustrations of disenfranchised populaces can coalesce. Those frustrations are only likely to worsen from here on as the economic situation deteriorates.

            I don’t think we should dismiss them as insignificant just because they are not yet threatening the very fabric of IC.

            • Rodster says:

              “The gilets jaunes have already forced Macron, humiliatingly, into making economic concessions, the cost of which will cause France to overshoot the European Union’s budget deficit ceiling next year.”

              Good point and they have also caused much economic pain to businesses and the French Gov’t with their protest.

            • The “pain involved” so far is somewhat rounded error category only anyways.
              As they will print again and or juice out more of the value from their colonies.

              I hear you, as, any tiny nail into the Frankenstein corpse counts, but we are still in very first rounds of the grand finale..

            • Slow Paul says:

              I think it has great potential as an entry-level demonstration package. All you need is a gilet jaune and the feeling of disenfranchisement.

          • xabier says:

            So true: Spain has the highest rate of street protests in Europe, there’s always one for some thing or other.

            Total effect: sweet FA.

            Or as the Spanish proverb goes: ‘Lots of noise, but no nuts.’

        • Greg Machala says:

          I think you right. We seem to be reaching the inflection point.

        • ssincoski says:

          +100. It would still be good to see the elites taken down a notch before we all descend into the abyss.

    • cal48koho says:

      I’M ready. I purchased several yellow vests for the Davos equivalent meeting here in Jackson hole next summer.

  5. Harry McGibbs says:

    “EU member states, fearing the worst, began pushing through their [Brexit] no-deal contingency measures as a matter of urgency…

    “The EU will not reopen the withdrawal agreement or scrap the backstop, but could consider allowing more time by extending article 50 for a “valid reason”. In short, we’re no nearer to knowing anything much about how things play out from here.”


    • Harry McGibbs says:

      “”We need to realize that from a monetary perspective there is no ammunition left in Europe, (the) interest rate is at an all-time low, and also the QE (quantitative easing) program which we are now building down

      “…So if we really get to an economic slowdown in Europe, I think the central banks and governments, from a monetary point of view, have no ammunition left to address it,” Feike Sijbesma, CEO of DSM told CNBC at the World Economic Forum in Davos.”


      • Hm, that Feike person seems like typical upper lieutenant for the Elders:
        biotech, climate schemes, testing it all on humans via humanitarian aid etc. https://en.wikipedia.org/wiki/Feike_Sijbesma

        • xabier says:

          Yep: rapid rise, fingers in many interesting pies.

          Even worse, ‘humanitarian of the year ‘ award from the UN…….

      • Chrome Mags says:

        “So if we really get to an economic slowdown in Europe, I think the central banks and governments, from a monetary point of view, have no ammunition left to address it,”

        What about QE for the people? Some kind of universal income, with of course the risk of debt ballooning on a scale never before seen followed by hyper-inflation, but what other choice is there? It would be a sort of last gasp attempt to jolt the world economy back into a GDP generating machine like yesteryear when oil was cheap and profit allowed for huge infrastructure projects like the US interstate highway system or the California aqua-duct from the Sierra’s to Los Angeles. Of course those kind of projects are no longer possible as we scrape the bottom of the conventional oil barrel, while pursuing much more expensive non-conventional oil, but you know what they say, ‘Desperate situations require desperate action.” So it would seem the CB’s will quickly decide to take the desperate measure of getting the masses lots of dough, a sort of going away party atmosphere will ensue until a dollar’s worth a millionth of a penny. Bon Voyage! See a scant few of you on the other side of the bottleneck. Here, have a bag of freeze dried food for the journey.

        • QE is always the last gasp

          frantic governments print money as a last resort—hoping against hope—following the universal laws of Mr Micawber, that something is bound to turn up

          This isn’t said in any facetious sense.

          It’s happened time and again. Money is printed for a while, until the proles catch to the idea that they are being conned—by which time the perpetrators hope to have skipped off to Switzerland or somewhere

        • ssincoski says:

          QE for the proles? Are you kidding? Not going to happen. Ever. Plan accordingly.

          • Greg Machala says:

            QE for the proles? I think it is possible. However, I wouldn’t get too excited. I think if that does happen, it will be done to buy a few weeks of time for the ruling class to get out of Dodge and let the system implode behind them. Another distraction, like all the others of the past 200+ years. Like a magicians sleight of hand, they slip away unscathed.

    • But as the Labor guy finally spoke out, supporting yet another referendum on Brexit, it’s clear the whole situation is one big joke, nobody supports the Leave campaign now, only minority faction both in public and inside the political/econ class.

      So it will end up as predicted, UK somehow remains with at least on leg inside.. no matter how they are going to name the new condition of being partly inside the club.

  6. Baby Doomer says:

    “President Emmanuel Macron told dozens of the world’s most powerful executives on Monday [21 January 2019] that he would not follow the path of guillotined French royals and would continue to reform the French economy despite a sometimes violent popular revolt.”


    • Baby Doomer says:

      This is a stark quote.

      ​“Even if there were 300 million [electric cars] with the current power generation system, the impact in terms of CO2 emissions is less than 1% – nothing. If you can’t decarbonise [the power sector], C02 emissions will not be going down. It may be helpful for the local pollution, but for global emissions it is not.”

    • Greg Machala says:

      I agree. Our lives run on fossil fuel energy. It builds everything in sight and will for the foreseeable future. Yesterday I saw a clip of a Tesla video showing new construction of a Giga Factory. There was heavy earth-moving equipment behind the speaker working feverishly on leveling the landscape for the new building. At least 20 very large machines. Not to mention all the metal that is going into the building and all of the energy embedded in that. Fossil fuels make it all happen. Without them there is no “Green Energy”.

  7. Chrome Mags says:


    ‘Billionaire hedge fund manager Klarman issues dire warning on global economy’

    “It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” Klarman wrote in the annual letter to investors, according to a New York Times column filed by CNBC “Squawk Box” co-anchor Andrew Ross Sorkin.

    In the letter, Klarman expressed confusion at investors’ reaction to the U.S. retreat from international leadership and President Donald Trump’s Twitter outbursts. Trump scrapped plans to attend Davos due to the government shutdown, which is in its 32nd day with no clear end in sight.

    “As the post-World War II international order continued to erode, the markets ignored the longer-term implications of a more isolated America, a world increasingly adrift and global leadership up for grabs,” he wrote.

    Klarman also warned about growing debt levels, pointing out that total U.S. government debt now exceeds GDP, a level that other countries like Canada, France, Britain and Spain are approaching.

    Klarman runs Baupost Group, which manages $27 billion and counts some of the world’s wealthiest families as investors, according to the Times.

    More warnings from prominent people.

  8. Baby Doomer says:

    The one MLK quote the media won’t post

    • Greg Machala says:

      An an “even flow of resources” sounds good. However, any use of resources leads to diminishing returns. Someone will do without regardless of the economic system that is put in place. In physics there is no free lunch – unfortunately.

      • ssincoski says:

        Agree with the quote. He should have asked: are we up for it? Now, in the US, not likely, I think there are places in the EU however that will be up for it. Not that it will accomplish anything. It will just be more of a big FU.

    • while one can only agree with MLK

      it’s been tried before

      check on what happened every time.

      (Reading Orwell is an easy way to find out)

    • Duncan Idaho says:

      As long as King talked and acted on race, the elites had little issue.
      When he started on capitalism, he ended up dead.

      • The issue isn’t really capitalism. It is the self-organized system we live in. It cannot distribute more goods and services than are made in total. India had the caste system. This wasn’t any better. Some countries just had millions and millions of very poor people, living under a dictator. This was’t any better. Communism doesn’t adequately reward people who do work; it just uses up resources quickly.

        • GBV says:

          I always get a chuckle when I meet someone who passionately argues how capitalism has failed, and what society REALLY needs is “system X” – their idealized world where none of the problems we’re currently experiencing would exist. It’s amusing to watch them passionately explain their utopian ideals, as if they’d discovered the anomaly in all of space and time that is immune to the forces of entropy…

        • an indian i used to work with explained the caste system very well

          each village had its castes, linked to various trades on different sides of the village.

          the head man lived on the side facing the rising sun, while the untouchables lived on the opposite side, with various trades around the sides, and the gold workers in the middle

          the point about the untouchables was, the head man was responsible for them—they were his untouchables

          this worked fine until ”modern” living appeared, then everyone became dissatisfied with theit station in life

  9. U.S. Home Sales Fell in December to Lowest Level in More Than 6 Years

    U.S. home sales cratered in December, causing price growth to slip to the lowest level in more than six years as the housing sector ended 2018 on a decidedly weak note.

    The National Association of Realtors said Tuesday that sales of existing homes plunged 6.4 percent to a seasonally adjusted annual rate of 4.99 million last month, the worst pace in almost three years. For all of 2018, sales of existing homes fell 3.1 percent from a year ago to 5.34 million units, the weakest total since 2015.

    “Looking ahead to 2019, expect weaker existing-homes sales as the new year ushered in a government shutdown and worsening economic uncertainty,” said Cheryl Young, a senior economist at Trulia.

    Also, “The median sales price in December was $253,600, up just 2.9 percent from last year. ”

    The previous material relates to sales of existing homes. New home sales data aren’t out yet. I did find something about new home sales through October. Countywide, sales were up 2.8 percent through October, 2018. But according to the National Association of Home Builders:

    Looking at the regional numbers on a year-to-date basis, new home sales rose 6.3 percent in the Midwest, 4.1 percent in the West, and 3.8 percent in the South. Home sales fell 17.1 percent in the Northeast year-to-date.

    The Northeast has a problem!

    • Greg Machala says:

      Well, I suppose homes in the Northeast are overpriced too.

      • I found another exhibit showing that the sale of existing homes in the Northeast is down as well.

        What little price data I found didn’t seem to show a general price problem yet in the Northeast, though.

      • Chrome Mags says:

        Maybe there could be a QE first time home buyers program, 1/2 of 1%, amortized over 50 years, zero down, no credit score required.

    • Harry McGibbs says:

      Housing markets in parts of Canada, Australia, the UK, Sweden, Hong Kong and some cities in China not doing so well either.

      Add that to a global recession in car and smartphone sales, and we have some pretty good evidence that Gail’s affordability problem is coming home to roost.

      • houses are blocks of embodied surplus energy

        now we don’t have so much surplus energy available, we can’t afford houses

        • Davidin100millionbilliontrillionzillionyears says:

          I always like that summation when you post it…

          and without a constant flow of energy “into” a house, it can’t be maintained, and can’t obtain the vital needs that keep it running… electricity, often some type of heating, and of course clean water and waste disposal…

          any metaphor for that reality?

          • MG says:

            The house should provide energy for a human being. When the house is an energy sink, then its occupier dies or abandons it.

          • to agree with MG, a house (or any structure for that matter) is an energy sink.
            To disagree—the house can’t provide energy for its occupants. The occupants must provide energy for the house. (which is why it’s a sink)

            For as long as you occupy the building, you have to keep pouring energy in. Heat, light, water—even paint. All those elements carry their own embodied energy, which is transmitted into the building.
            Then you have to input even more energy to keep the elements out.

            This goes on until the occupier runs out of energy (ie sells it or dies)–then someone else takes over.

            Without that energy flow, a structure can only decay and eventually fall down

            • Kunstler, in The Long Emergency, pointed out that to keep plumbing in houses working, it is necessary to keep inside temperatures above freezing 24/7/365.

              I thought about that last night, when our furnace stopped working, and it got fairly cold inside (still above freezing, however). Fortunately, things are working out that we can get a new furnace today, so the problem will be solved for now. We knew the furnace needed replacing; we had already received an estimate for getting a replacement. I will still need to wear warm clothing inside for a few more hours, though.

              This is a small illustration of one of the problems that won’t be easily solved after collapse.

            • that illustrates my point perfectly

              back in the middle ages, when i was a lad, we had an outside toilet

              my father, being a miner, used to hang his oil fuelled pitlamp in there during the winter

            • Greg Machala says:

              Nailed it again Norm. We humans use energy to build walls between ourselves and the natural world. We fight to keep nature at bay.

            • MG says:

              I meant the thing about the house providing energy in a broader sense: the house must be an energy hub, i.e. there must by some wood or coal collected in it or some pipes, wires providing energy must lead to it.

              The house provides energy in that way that it is an energy hub for the human being, a place for energy storage and the transformation of energy into heat and light.

              Once the energy stored or provided in the house is depleted or is no longer accessible (e.g. a power outage or the house is disconnected from the utilities), the house stops to be a house.

            • cal48koho says:

              Please keep in mind that there are houses and then there are Houses. It is possible to build a small long lasting superinsulated structure that collects and stores solar energy to heat the house and your water. Long overhangs keep water and sun at bay. We cook and heat with wood with gas backup, Well water with hand pump backup. LED lights with oil lamp backup. Grid electricity with solar panel backup(limited).More than 12 months food storage for us and dry forage for our livestock.Building it yourself from recycled components when possible is very cheaply done. If you are living in a Brooklyn apartment or a vinyl sided s____box in Sonoma mortgaged to the hilt dependent upon uncertain energy inputs………….you’re asking for it. I think most of us who follow and respect Gail understand what lies ahead for the Networked interconnected hypercomplex dissipative structure we call our industrial economy. This is evident from the quality of many of the commenters who post here. Clearly we are presented with with a predicament rather than a problem as William Catton has noted. I think I would like to see less news aggregation and more in the way of intelligent responses to this predicament. Less handwringing and more thoughtful planning on how we might bring our families and neighbors to a better place.

            • i agree

              but then the energy has gone into the house in the first place with that output in mind, as you effectively point out

              and such houses have to be sited specifically to do that, and support a very particular lifestyle that is tailored to the house itself

            • Just remember, in your small superinsulated structure that there may very well be things that cannot be replaced easily. A broken window, for example. Or a furnace or a cooling unit. A computerized system that is supposed to run the system. Banks that allow you to pay for these things.

              I suggest finding a church of your choice, rather than trying to do the impossible on this earth. Or else some faith-related group, that has a view of something that can be done here. Perhaps a cult of some kind. Most sustainability groups will fall apart under stress. You can’t do anything very much on your own. You need to be part of a close-knit group working for salvation on some basis.

            • Artleads says:

              Gail, I’ve been thinking how a religious movement would look. I would name it:


              – Everything looks the same–same tiles, same walls, same tarmac
              – But start looking at it as if seeing it all for the first time.
              – Change nothing physical, but change the habit of not looking, to one of deliberate scrutiny
              – Develop the capacity to see peripherally who potentially moving in your direction in the supermarket, and step aside in anticipation
              – Simply put, become aware of all aspects of your surroundings
              – This attitude would be consistent with care–care of live beings, care of places
              – Transformation would be from the inside–the exterior is transformed due to how it’s perceived–quantum physics
              – Physical change would be exceedingly slow., but if you went away for 10 years and came back, everything would look different–calmer, more orderly, more peaceful…

    • Wolf Richter has an article on US home sales as well. https://wolfstreet.com/2019/01/22/us-home-sales-get-uglier/

      This is his chart, showing how long the drop in sales had been going on, which is most of 2018.

      Interest rates have been rising since December 2017, when they were 4.2%. They rose to 5.2% by mid-November, then fell back to 4.75% by mid-December, according to the article. Most sales in December were bought based on November interest rates.

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