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.

Summary

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.

Note:

[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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1,243 Responses to 2019: World Economy Is Reaching Growth Limits; Expect Low Oil Prices, Financial Turbulence

  1. Mike Brunt says:

    There is one other issue at hand, that is the issue of magnetic pole shift which is underway and which has occurred approximately every 200,000 years, so not exactly at times which human history has recorded the effects and consequences of. During this time our magnetosphere (that which shields us from solar flares etc) is depleted. The last time solar activity disruption happened and which was recorded was in the 1859 time-frame and this disrupted telegraph services. Certainly these are nacently changing times. Thank you for this thought provoking post.

    • I think Trump is looking at the state of Mexico’s oil exports. Having a new Venezuela on our border in the near term could be a scary prospect to some.

      • JesseJames says:

        When Mexico goes into full collapse, many tens of millions of Mexicans will attempt to flood into our country.
        Mexico recently has declared a crisis and is deploying the military to defend their oil industry against thievery.
        Mexican citizens have been warned that they will have to pay higher prices for gasoline.
        “Drivers Running on Empty Say Mexico Must Fix Fuel Shortage” from Bloomberg…
        “Across central Mexico, drivers are running on empty or lining up for hours at service stations, as the government’s efforts to rein in fuel theft compound a nationwide gasoline shortage. More than one-fourth of Mexico City’s 400 gasoline stations are facing problems, Mexico City mayor Claudia Sheinbaum said in a Twitter video, while assuring viewers that supply would normalize Wednesday. The states of Mexico, Hidalgo, Jalisco, Michoacan, Guanajuato and Queretaro are among the worst affected.”

        I personally am delighted with joy knowing that illegal immigrants are getting welfare, housing and free health care while I struggle to pay ever higher medical costs, and will never receive benefits I have been promised.

        • Hubbs says:

          I always wonder if there is a valid “incidental indicator” which might correlate with fuel scarcity or high prices, specifically bicycle sales. How is the bicycle industry doing? My understanding is that on already paved roads, it is the one of the most energy efficient modes of transportation assuming you live in moderate climates, etc. and doesn’t cost energy much to produce relative to cars.

          • But it is generally not substitutable for other transportation, in the US. Instead, it is mostly an add-on by people with extra time and money.

            • Sheila chambers says:

              Old China moved everything by wheel barrow, human backs or sometimes, ox cart. The Chinese wheel barrow is different from what we use in that the wheel is in the center of gravity with large crates on either side. They could carry bulk goods or people on those wheel barrows. Other countries use bicycles with a cart in front or rear to move goods & people, mainly in the towns & cities.
              Such means many not be “suitable” now but when fuel becomes scarce & EV”s fail, it will look more attractive.

            • I remember reading that such wheel barrows could move on very narrow roads. These were easier to maintain than wider roads. The road cost is the big overhead item.

            • Sorry, but that’s self inflicted wound, the US rail network, incl. sub urban used to be one of the best and densely made prior ~1920s. And that would be relatively trivial to upgrade into additional e/bike transport capability for the last mile for daily commuters, e.g. redesigned the wagons, adding transport ones etc. To reintroduce it now everywhere is likely impossible, although in previous decades ~1970s there might have been windows of opportunity to put it back at least into some key areas..

        • Duncan Idaho says:

          As a former resident of Mexico, one must improve your literacy on the subject.

          • JesseJames says:

            While I have not lived there, Growing up in Texas, being educated in Texas and working for much of my career in Texas, I have probably worked with more Mexicans than you.

            My two best friends are married to Mexican immigrants, now citizens of the US.
            They fled the crime and violence. One of my neighbors that I knew all of my life went to Veracruz to staff his fathers factory and married a gal there.My father was born and raised outside of Del Rio and could tell you the origin and meaning of Spanish names for any Texas town and Cities.

            BTW….two brothers, immigrants from Scotland, ancestors on my fathers side of the family, came the what was the Bastrop Colony, bought 3000 acres, and became citizens of that part of Mexico at the time. They also both fought in the Tx revolution. One was in a Tx Ranger regiment…got wounded in the leg in an engagement. The other fought in General Sam Houston’s army at the battle of San Jacinto where they captured General Sant Anna in a surprise attack.

            I have known Mexicans who spoke of the farms they left and the small towns they left…and long to return to. I have had college buddies searched and threatened by the Ferderal police.

            My neighbor drove down to the west coast and lived in a fishing village for weeks.

            Don’t lecture me about Mexico.

      • Baby Doomer says:

        Unfortunately history has shown fear is a very strong motivator. Trump has successfully created a world to fear for his followers. Whether it be illegals, democrats, or even school kids, they are all after the republicans to force change upon them. This has created a passionate following of people looking for Trump to protect them..

        • JesseJames says:

          Baby has his head in the sand. Of course we have infinite energy and infinite resources here in the US…and always will…And California can give sanctuary to all the billions of people who wish for it in the world.

        • Very Far Frank says:

          Fear however is not always irrational- most of the time it actually has some grounding. Are you arguing that Democrats wouldn’t want to force change by having their policies enacted, or that illegal immigrants don’t break laws that ultimately cost the country money? Trump’s message would simply not resonate without a kernal of truth. If it is the reality that people feel their interests are threatened, then capitalizing on that politically will be a successful strategy.

        • Tim Groves says:

          It’s amazing!!! In this shining city on a hill filled with shiny happy people holding hands, and with nothing to fear but losing one’s livelihood and being thrown out on the street, bankrupted by medical bills, raped or murdered in or out of one’s bed, or upsetting someone by using the wrong gender pronoun, and with almost the entire mainstream media propaganda system demonizing him as The Great Dictator, this one orange-haired apelike creature with the aid of nothing more than a Twitter account has managed to mesmerize the deplorable half of the nation into hallucinating “a world of fear” that only exists inside their heads.

          • Dan says:

            Ha ha – Trump is nothing more and nothing less than a peg in the lineage of poor leadership, false promises, and shirking of the ability of telling people the truth. Everyone on the lower rungs go after the “leaders”. Trump is not a messiah he is just the orange lemon that wanted the job for all the wrong reasons (ego) holding the bag.
            News flash they all suck and he sucks and whoever comes next is going to suck.
            I’m posting from my $45 walmart phone and provide links but look up Nixon tapes transcripts specifically discussing health insurance.
            That will let you know how much they suck.

            • Dan says:

              Tim,

              Seriously look it up

              Nixon Tape Health Insurance

              Read it and read it well. We’ll discuss capitalism and health care. I use that term loosely. Bear in mind it’s a $4 trillion industry / yr in the US.
              You want to know why I’m a doomer its because I’m tired of being a slave.

            • Tim Groves says:

              No, Trump is not the messiah. And yes, they all suck. That’s a very reasonable and defensible view.

              But there is plenty to fear in the world and plenty of Americans are in fear. Trump didn’t create these fears. He merely responded to them masterfully.

              Having said that, I don’t have a dog in this fight, but I like Trump in spite of his more obvious failings. I admit I like him for some of the wrong reasons. For instance, I like him because I dislike his political enemies, because so much of the opposition to his existence (not to his policies, per se, but because he’s the one pushing them) is hysterical, and because I think he’s being treated unfairly by the media. I’m perverse that way.

              I also like the idea of bringing home US troops from Syria, Iraq and Afghanistan. I saw Clinton bomb Serbia into submission, Bush 2 invade Afghanistan and Iraq, and Obama destroy Libya. I haven’t seen Trump launch any fresh wars or invasions and I’ve heard that he’s not a war-hawk. Of course, time will tell.

              As for Nixon, I picked this up from Wikisource:

              This is a transcript of the 1971 conversation between President Richard Nixon and John D. Ehrlichman that led to the HMO act of 1973:
              John D. Ehrlichman: “On the … on the health business …”
              President Nixon: “Yeah.”
              Ehrlichman: “… we have now narrowed down the vice president’s problems on this thing to one issue and that is whether we should include these health maintenance organizations like Edgar Kaiser’s Permanente thing. The vice president just cannot see it. We tried 15 ways from Friday to explain it to him and then help him to understand it. He finally says, ‘Well, I don’t think they’ll work, but if the President thinks it’s a good idea, I’ll support him a hundred percent.’”
              President Nixon: “Well, what’s … what’s the judgment?”
              Ehrlichman: “Well, everybody else’s judgment very strongly is that we go with it.”
              President Nixon: “All right.”
              Ehrlichman: “And, uh, uh, he’s the one holdout that we have in the whole office.”
              President Nixon: “Say that I … I … I’d tell him I have doubts about it, but I think that it’s, uh, now let me ask you, now you give me your judgment. You know I’m not too keen on any of these damn medical programs.”
              Ehrlichman: “This, uh, let me, let me tell you how I am …”
              President Nixon: [Unclear.]
              Ehrlichman: “This … this is a …”
              President Nixon: “I don’t [unclear] …”
              Ehrlichman: “… private enterprise one.”
              President Nixon: “Well, that appeals to me.”
              Ehrlichman: “Edgar Kaiser is running his Permanente deal for profit. And the reason that he can … the reason he can do it … I had Edgar Kaiser come in … talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because …”
              President Nixon: [Unclear.]
              Ehrlichman: “… the less care they give them, the more money they make.”
              President Nixon: “Fine.” [Unclear.]
              Ehrlichman: [Unclear] “… and the incentives run the right way.”
              President Nixon: “Not bad.”

            • I receive my Health Care from Kaiser Permanente precisely because the incentives are to hold down the extent of overcare.

              In the US healthcare system, the tendency is to do way to much. Doctors want to see their patients again and again; they do not really want to get them well. At least Kaiser has the incentive to get patients well, in as inexpensive a way as possible.

              If you think about it, every single private practice doctor has an incentive to make as much money off each patient as he/she can. This is true, whether the patient is operating separately or as part of a group. The whole system is built around, “We have a pill or a surgery for anything that can possibly go wrong. We can keep patients alive, long after common sense would say treatment should have stopped. Don’t worry about eating healthy food or exercise. We can fix any problem.”

          • Ed says:

            Tim +++++++++++++++

            Here on Our Finite World I hope we have a consensus that there is a limit to the number of people the world can support and a limit to the number of people North America can support. I believe we are beyond the carrying capacity by a factor of four in North America. So, allowing immigration is just offering to starve some of the bottom 70% already present in favor of some new immigrants. A sick deal.

    • Very Far Frank says:

      I’m not sure a friendly, open borders mentality can survive collapse BD.

      • Dan says:

        Trump has let the best response and reasoning to curtail illegal immigration escape him and he will never be able to use it even if he understood or believed it. Trump has campaigned and boasted of the endless wealth to be had (i.e. infinite growth on a finite planet or within our own borders), resources are dwindling and are in jeopardy something he denies, he attacks the people that are raising the alarm on decreasing water resources, insect and phytoplankton losses, etc.. The ecology is being stretched to its limits. In short the barn is full and we simply don’t have the resources.

        If the right would recognize that you can’t have your cake and eat it to and that there is such a thing as shortages, climatic change, amd in general a very real limit to carrying capacity then he could make the argument that we simply don’t have the resources.

        I agree how many do we let in? 30 million, 7 billion? There has to be a limit and I believe we’ve met that limit years ago (decades). We are on fumes skidding into a disaster.

        Make no mistake I’m no Trump fan and I absolutely abhor his leadership style and rhetoric. However I agree that illegal immigration needs to be checked. Unfortunately our leaders are not and will never be honest as to why.

        • Chrome Mags says:

          “Make no mistake I’m no Trump fan and I absolutely abhor his leadership style and rhetoric. However I agree that illegal immigration needs to be checked. Unfortunately our leaders are not and will never be honest as to why.”

          I agree and have a similar viewpoint. With the partial sort of wall they already have, it’s like the politicians are saying, “You can’t come in illegally, but if you’re real determined and force your way in and make a life of it, we’ll let you stay.” Which is a bunch of double talk. Either have a wall or don’t, but if they are going to have one, have one that does the job right.

          • Sheila chambers says:

            A wall will not keep them out, IMHO, they climb over it, they dig under, they cut away the bars, they will get in, what is needed to to ENFORCE the laws we already have on the books.
            ILLEGAL IS STILL ILLEGAL why do we allow them in, give them OUR JOBS & OUR LIMITED HOUSING if it wasn’t benefiting the CORPORATIONS that OWN this government?
            Want to end illegal immigration? Take away the JOBS they were ILLEGALLY GIVEN, REMOVE THEM from the HOUSING they were ILLEGALLY allowed to rent, REMOVE THEIR CHILDREN from ILLEGALLY entering our schools for a free education on our dime but most of all, STOP GIVING CITIZENSHIP to the children of illegal immigrants who sneak in or force their way over the border to give birth!
            The 14th amendment was intended to give citizenship to the children of slaves who were not even considered “human”, it should NOT be applied to the children of illegal immigrants.
            Those who DEMAND open borders & an end of ICE are asking for DISASTER & the end of our country.

          • Dan says:

            Walls are not the answer. The elimination of incentives (Yes I’m talking to trump and his illegal maids and construction workers, etc). Accomations, etc as well like school enrollment, healthcare, and so on. The problem is that TPTB on both sides use these immigrants but we are beyond capacity.
            We as the western world especially the US needs to acknowledge we have caused many of the problems these people are fleeing from and reconcile that fact.
            Of course in the end as resources become more scarce we’ll have to kill them and take what we need.
            Smedley Butler had it right, the military is there to serve corpoate need and consumer greed.

            • Very Far Frank says:

              I would have to disagree with the argument that walls don’t work- see the Hungarian border fence- constructed quickly and well manned, it has stymied the flow of migrants across the entire length. Ultimately the incentive derives from the relative lack of risk at attempting to cross a border: guards aren’t shooting at them yet. We will all suffer a breakdown of our ethical frameworks post-collapse anyway so I see little point ‘reconciling’ our own governments’ role in their movement now when so much conflict is on the horizon. It’ll be a zero-sum scenario and that’s where Trump is ahead of the curve.

            • Nope.avi says:

              To delve into politics, many liberals do not want to address the ongoing meddling by U.S. foreign intelligence and military operations that have kept many countries destabilized instead of merely being poor
              BECAUSE
              they see a political opportunity to IMPORT voters who they can mold into future progressive voters, therefore gaining a permanent political majority,

              because they think more workers willing to work for less (can’t convince a domestic labor force to work for less and no one is buying the hogwash about educating oneself into a good job anymore) will……..somehow…….save the social security system and the retirement plans of many senior citizens…many of whom don’t have children.

              lASTLY, and this is merely speculation, but the people who are a strange combination of neoconservative, and far left, see the sabotage of weaker countries is an important step towards eliminating the nation-state, another significant barrier to human trade overcoming racism. To the people who share neoconservative and far-left views, they nation-state is an outdated institution along with marriage, and religion. and other social norms.

            • Ed says:

              Dan, no method works 100% but the more effort made to stop illegal immigration the less there will be. It does not need to be perfect. The Israelis use automatic triggered machines guns to create kill zones around their walls. The walls plus auto kill plus human snipers seems to work well in Israel.

          • DJ says:

            Wall building is great for GDP!

            • Nope.avi says:

              so is building solar panels, and putting marginal students through graduate school. and providing healthcare for people who are very sick/weak, and allowing millions of refugees to enter a country.

            • Think of all of the jobs it creates. I certainly hope that the steel is US sourced, all the way back to the ore pulled out of the ground.

            • Tim Groves says:

              How about a nice tasteful wall covered in solar panels on the south side?

              As long as some way can be found to stop people throwing stones at the panels, it’s a win-win scenario.

        • Political leaders cannot be honest.

          Neither can writers of text books.

      • Hubbs says:

        What are the “enlistment rates” of the non-governmental border volunteer militias these days? Anyone know?

        • nikoB says:

          The US is nation state yes?
          Could you please point to where its border is?
          If there is no enforcement of a border then does one have a border or a nation in the long run?
          I think what is not being stated is that a wall is needed with very big gates to allow people in legally.

    • nikoB says:

      So is this cartoon depicting less illegals or less enforcement of the laws in detaining illegals.

  2. Duncan Idaho says:

    Pink Floyd legend Roger Waters is considering a performance of The Wall along the US-Mexico border.
    http://loudwire.com/pink-floyd-roger-waters-the-wall-us-mexico-border/?fbclid=IwAR3LfGOoNCI64tHGCbFJZL5x2G9tVquI91V68javKLxnBK5dwFjqSHWnjBc

    strange days?

    • Undoubtedly Mr. Waters and his entourage would fly in to this cross border gig in personal jet, he can then trully sympathize wit the Mexican’s oil shortage problem now..
      /sarc off

    • Hubbs says:

      From its namesake, perhaps an even more appropriate song, depending on your point of view, but if you have no borders, you have no country, unless of course you are an island.

      On the Turning Away (of illegals)

    • nikoB says:

      Roger made great music but has unrealistic ideas on achieving equality. In fact believing in equality is where it all goes wrong. Start with trying to achieve equal height for all. Maybe take from the high and give to the low.

  3. Very Far Frank says:

    How we all think now, in an energy glut that enables relative abundance in the Western world, is starkly different to how our minds would operate under scarcity. Research has shown that if a human experiences scarcity, valuable mental processes such as strategic and long term planning, social intelligence and lateral thinking are heavily affected in favour of focusing on what the body needs in the short-term, producing a different set of behavioural schemas. Under a scarce environment then, you would quite simply be a different person to the one that has thus far lived in comparative security and stability.

    An interesting parallel that can be drawn is that of an energy-rich civilization; energy allows for increased complexity of social roles, services and technologies, and allows greater permissiveness due to the growing distance between the individual and their means to survival. An individual’s daily life is divorced from what sustains them and becomes embroiled in their own corner of the complexity. As less net energy enters the civilization’s thermal system, these complexities contract and break-down, and the individual is brought closer to their means to survive due to the collapse of their support systems and supply lines.

    The mind may see the same dynamic at play; while in abundance, the brain has enough spare energy for nuance, abstract thought and permissiveness as it isn’t occupied with finding food, processing it, and maintaining shelter and warmth. As scarcity takes hold, the more complex processes are shut off in favour of these survival processes; like a smartphone preserving charge. Many of us who hold certain ideologies or frames of mind now, regardless of our knowledge of the coming collapse, will see their minds change rapidly when actually faced with it, producing individuals who think in the complete opposite manner than before the collapse hit. The point to make here then, is we should ideally be more reticent. Entrenching yourself in one ideological position or another before the resource base that shapes those ideologies changes, is leaving yourself vulnerable to an inability to adapt to new realities.

    Mullainathan, S., & Shafir, E. (2013). Scarcity: Why having too little means so much. New York, NY: Times Books.

    Shah, A., Mullainathan, S., & Shafir, E. (2012). Some consequences of having too little. Science, 338, 682–685.

    • Slow Paul says:

      Good advice. To be open minded and accept everything that happens (i.e. not denying phenomena that are contrary to beliefs) is also good advice for life in general.

  4. Yoshua says:

    Goldman Sachs is the counter part to Deutsche Banks derivatives book…according to trader hks55 (Twitter) who worked in the financial industry.

    So what happens when DB no longer can pay?

    https://pbs.twimg.com/media/Dwl2DSYUcAAyHmV?format=jpg&name=medium

    • Hubbs says:

      My instinct as a lay person tells me that they will never let DB collapse (unless it is part of a more sinister plan). My wild theories have been aroused by the Corbett Report’s 3 part series on World War I produced several months ago which should be seen by everyone. It seems that the root cause was England’s distrust or fear of an up and comer Germany. Better quality manufactured items, a railway from Iran and oil fields to Germany, etc. All of which leads me in my cynical way of thinking that the English “Rothschilds” have pre-wired demolition charges for DB thru derivatives to act as the ground zero for a new monetary system, which if did occur, would be the mother of all financial convulsions.

    • This doesn’t sound so good. We can hope (probably wishful thinking) that Germany will bail out Deutche Bank’s derivatives and everything will be fine. But I don’t think we can count on it.

      • Dan says:

        Gail I know you said wishful thinking but even with a printing press would that be possible and have the euro or even the EU survive?
        Lord knows what is going to happen when the UK leaves in March.
        I’m thankful Harry is tucked away on an island full of whiskey to keep up the reporting until the lights go out.

        • I don’t know. I never expected QE last time around. It is possible that someone has something else up their sleeve, or that there will be a lot more QE.

        • Harry McGibbs says:

          Thank you for the vote of confidence, Dan. 🙂

          “Lord knows what is going to happen when the UK leaves in March.”

          I am equally baffled. There is no easy way forward and no ‘solution’ that will not anger millions of people. The whole thing has become poisonously divisive, socially and politically, and economically parlous.

          There are protesters from both ends of the political spectrum marching on the streets of London, sporting yellow vests today. Most confusing:

          “Both right-wing and left-wing demonstrators donned yellow vests and marched through the streets of London on Saturday, attending two very different anti-government protests.

          “While several hundred pro-Brexit campaigners rallied outside St James’ Park station wearing the high-vis vests made famous by anti-fuel tax protesters in France, several thousand anti-austerity activists also adopted the yellow jackets for a march from Oxford Circus to Trafalgar Square.

          “Both groups told The Independent they saw a connection between the French movement and their own frustrations and demands. And both groups insisted the other side had hijacked the true spirit of the gilet jaunes.”

          https://www.independent.co.uk/news/uk/politics/yellow-vests-london-uk-protest-march-austerity-brexit-right-left-wing-a8724851.html

      • If I’m not mistaken DB has been already for some time no longer owned directly nor controlled by Germany anyway, the control is partly shared with some offshore funds and various investors what have you. The .de gov’s alluded to your point of no longer backstopping it at all costs..

        Different thing would be some sort of systemic support, lifting all boats, incl. DB among other conduits of the debt machine.., like another global QE round or similar schemes..

  5. Yoshua says:

    Who wants to be part of a collapsing EU?

    “The City of London Corporation has just voted 60 votes to 31 AGAINST a PeoplesVote.

    This is the most powerful body in the city of London and they believe Brexit must proceed.

  6. Rodster says:

    “Something Biblical Is Approaching” – Here Are The Scenarios Of The Collapse
    https://www.zerohedge.com/news/2019-01-11/scenarios-collapse-world-utterly-unprepared

    • Chrome Mags says:

      Posted the same article further down before seeing your post.

    • The article gets the story pretty close to right, until it gets to the end. Then it comes up with:

      Fortunately, even depressions and systemic crises have the tendency to bottom-out and recover. This is driven by resiliency.

      How about “driven by a growing supply of very cheap energy”? Resiliency doesn’t just happen, except in Zerohedge, Resilience, and a whole lot of other articles we read.

      • xabier says:

        The true resiliency of human populations historically has resided in their ability to:

        1/ Fall back to a very basic life of simple agriculture, hunting and fisheries with modest energy requirements, and

        2/ Move somewhere better.

        Modernity has destroyed 1/ almost everywhere, and as for 2/ this is now a very over-crowded planet.

        • Exactly.

          Another part of the situation was the fact that people were trained for work that was pretty portable. A farmer could farm a few miles away; a merchant could sell goods in a different town. Now, work is very specialized. Without electricity, a whole lot of work would disappear.

      • Nope.avi says:

        smh, you haven’t watched Survivor , the reality tv series, OR
        The Walking Dead or many of the numerous post-apocalyptic tv shows or movies that show humans can bounce back from catastrophes with clothes, modern technology, and modern social norms.

  7. Uncle Bill says:

    Doomer preppers….your worries are over
    Costco sells out of 27-pound mac-and-cheese bucket with 20-year shelf life
    Costco has blessed us with a 27-pound “Storage Bucket” of the ooey-gooey good stuff containing 180 servings. This gluttonous golden opportunity is helpfully listed under “Emergency Kits & Supplies” on the Costco website online reviews for the $89.99 item are all raves: “Good stuff! We bought this for our grandson. He was here the day it arrived. We opened it and made it. Very pleasantly surprised. I have made it a couple of different ways. You can’t mess it up. Have purchased it again, and will continue to use it,” says MimiO

    https://nypost.com/2019/01/11/costco-sells-out-of-27-pound-mac-and-cheese-bucket-with-20-year-shelf-life/amp/
    Yummie…I’m all prepared..easy peasy

  8. amidst all the doom

    there must be time to stop, and laugh, and reflect on the sheer weirdness of the human mind. and take in the depth of certainty held by many people

    https://www.theguardian.com/science/2019/jan/09/flat-earth-cruise-nautical-navigation

  9. Chrome Mags says:

    From time to time Zero Hedge has a good article, this one seems apropos.

    https://www.zerohedge.com/news/2019-01-11/scenarios-collapse-world-utterly-unprepared

    “Something Biblical Is Approaching” – Here Are The Scenarios Of The Collapse

    “Scenario I: Global Depression:

    “In a depression, everything that has been driven the economic expansion goes into reverse. Asset markets experience severe contraction (in excess of 50 percent), credit becomes restricted, corporations and households de-lever fiercely, and global trade flows stall (for more details see Q-review 2/2018). GDP falls dramatically, between 10 to 25 percent. Unemployment skyrockets. The standard means of stimulus by central banks and governments are exhausted without any notable improvement in the economic environment.”

    Scenario II: Systemic Meltdown

    “Systemic crisis would mean that the global financial melts down due to an existential deficit of trust between counterparties within the system. Before 2008, a systemic meltdown was mostly a theoretical construct. However, in mid-October in 2008, global leaders were faced with the possibility that banks would not open on Monday. The interbank markets had frozen, because no one knew the amount of the losses banks carried on their books. The global financial system was grinding to a halt. Politicians and central bankers saved the day by guaranteeing bank deposits and by providing capital and extraordinary guarantees to keep the important financial institutions standing and credit flowing.”

    Scenario III: The fairy tale

    “Could this all be averted somehow? We’ve been pondering this for two years now, and our resounding answer is no. The leverage in the system usually results in a crash at some point, and asset bubbles very rarely deflate in a controlled manner. However, CBs can probably still postpone the inevitable, if they could re-start QE programs or find some other way to push artificial central bank liquidity into the financial markets.”

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