It would be easy to write a story about Venezuela’s energy problems and, in it, focus on the corruption and mismanagement that have taken place. This would make it look like Venezuela’s problems were different from everyone else’s. Taking this approach, it would be easy to argue that the problems wouldn’t have happened, if better leaders had been elected and if those leaders had chosen better policies.
I think that there is far more behind Venezuela’s financial and energy problems than corruption and mismanagement.
As I see the story, Venezuela realized that it had huge oil resources relative to its population, back as early as the 1920s. While these oil resources are substantial, the country misestimated how high a standard of living that these resources could support. To try to work around the issue of setting development goals too high, the country chose the path of distributing the benefits of oil exports in an almost socialistic manner. This socialistic approach, plus increased debt, hid the problem of a standard of living that could not really be supported for many years. Recent problems in Venezuela show that these approaches cannot be permanent solutions. In fact, it seems likely that Venezuela will be one of the first oil-exporting nations to collapse.
How the Subsidy from High-Priced Exported Oil Works
Oil is a strange resource. The cost of oil production tends to be quite low, especially for oil exporters. The selling price is based on a world oil price that changes from day to day, depending on what some would call “demand.” The difference between the selling price and the cost of extraction can make oil exporters rich. In a sense, this difference might be considered an “energy surplus” that is being distributed to the economies of oil exporters. The greater the energy surplus being distributed, the greater the quantity of goods and services (made with energy products) that can be purchased from outside the country with the hard currency that is made available through the sale of oil.
In fact, the existence of such a profitable resource tends to crowd out development of other, less profitable, enterprises. Thus, Venezuela has tended to be a country whose economy revolves around oil. There is a small amount of agriculture and quite a bit of services, but for the most part, the goods used by the economy must be purchased from outside the country. Furthermore, nearly all of the revenue that is available to purchase these goods comes from the sale of oil exports. Thus, the economy tends to follow the fortune of oil sales.
Figure 1 shows a rough estimate of the benefit that Venezuela’s oil exports have provided in inflation-adjusted US dollars. Based on this approach, the per capita benefit from oil exports seems to have peaked very early, in about 1981.
Figure 1. Venezuela per capita value of oil exports, calculated by multiplying Venezuela’s year-by-year quantity of oil exports by the price in 2017$ of oil, and dividing by estimated population. Both price and quantity determined using BP 2018 Statistical Review of World Energy. Population based on 2017 United Nations middle estimates.
The people of Venezuela did not realize that the amount of benefit that oil exports would provide would start falling very early. Instead, leaders set their sights on living standards that would be affordable if the level of subsidy that the economy could obtain from oil exports were to remain as high as during the 1973 to 1981 period.
Figure 2 shows how much energy the population, on average, consumed over the 1965 to 2017 period. This figure shows that energy consumption per capita rose dramatically between 1973 and 1981. In this way, citizens were able to benefit from the huge rise in per capita oil export revenue, shown in Figure 1.
Figure 2. Energy consumption per capita for Venezuela, based on BP 2018 Statistical Review of World Energy data.
This higher level of energy consumption meant that the economy readjusted in a way that added more goods and services using energy. For example, the economy added paved roads, airports, schools, electricity generating capacity and healthcare. People came to expect this higher standard of living going forward, even if the level of subsidy that oil exports had been adding was rapidly disappearing.
The way the amounts in Figure 1 “work” is that they depend both on the quantity of oil exported and the market price for that oil. If Venezuela’s oil exports are not rising quickly enough, or if the price of oil is not high enough, the level of oil subsidy fails to rise enough to support the economy. Also, rising population becomes an issue because as population rises, more homes, cars, electricity, streets, and other goods (requiring energy consumption) are needed. Because Venezuela must import practically everything other than oil, it must either (a) export an increasing quantity of oil per year, or (b) get an increasingly high price for the oil it exports, if it wishes to support its rising population at its chosen standard of living.
It became evident very early that Venezuela had set its sights on a living standard that was far higher than it could really support. In the period since 1965, Venezuela’s first debt crisis took place in 1982, as the subsidy suddenly started falling. Later debt crises occurred in 1990, 1995, 1996, 1997, 1998, 2004, and 2017. Clearly, as soon as the per capita subsidy started falling in 1982 (see Figure 1), Venezuela’s economy became very troubled. It could not really support its chosen standard of living.
How could Venezuela hide the problem of an unsupportable living standard for over 35 years?
I see three major ways the insupportable living standard could be hidden:
(a) Pushing the problem off into the future using added debt
Nearly everyone is willing to believe that oil prices will rise as high as is needed to extract oil resources that seem to be available with current technology. Would-be lenders are also willing to believe that oil resources can be extracted as rapidly as needed to support the economy. Given this combination of beliefs, Venezuela has had little difficulty adding more debt, even in periods not long after it has been forced to restructure previous debt.
Recently, the biggest lender to Venezuela has been China. With this arrangement, Venezuela has been able to obtain the economic benefit of part of its oil resources, before the oil has actually been extracted. Unfortunately, this arrangement makes Venezuela more quickly susceptible to the adverse impact of a downturn in oil prices. To make matters worse, the debt to China appears to include a provision that creates a lower repayment level (in oil) if prices rise, but creates a higher repayment level (in oil) if oil prices fall. This provision no doubt looked favorable to Venezuela, back in the time period when it was believed that oil prices could only rise.
As far as I know, Venezuela is the only oil exporting country that has used debt as extensively as it has. Some oil exporters, such as Saudi Arabia, have taken the opposite approach, setting aside reserve funds to use in the event that oil prices fall. Needless to say, Venezuela’s use of debt has tended to make its economy very vulnerable to restructuring or defaults if oil prices fall.
(b) Pursuing economic simplification
A complex economy is one that is set up, as much as possible, to keep up with growing technology. A significant share of expenditures go both toward making new capital goods and maintaining existing capital goods. There are considerable differences in pay levels, to make certain that those who are providing technical expertise are adequately compensated for their efforts. Business leaders also are adequately compensated for their contributions.
A much simpler economy, which is what most of the Venezuelan leaders have been aiming for, is an economy in which everyone gets a basic level of housing, transportation, and healthcare, but virtually no one gets very much. There is also not much investment in new technology and new capital goods because nearly all of the hard currency being obtained by selling oil exports is being used to purchase imported goods and services to support the basic level of goods and services (such as roads, electricity, education, and food) being provided to the many citizens of the economy. Since the external value of oil exports sets an upper limit on the quantity of goods and services that Venezuela can import, this leaves virtually no capacity to purchase imported goods and services needed to support new capital investment and research.
In Venezuela’s economy, the cost of both oil and electricity have been kept very low–below the cost of production. This helps keep citizens happy, but it also cuts off funds for new investment in these areas. This, too, is part of the simple economy approach.
One disadvantage of a simple economy is that the low wages for engineers and other professionals encourage these professionals to move to other countries, where compensation is more adequate. Another disadvantage of a simple economy is that it encourages bribery, because graft is a way of adjusting the system so that those who “can make things happen” are adequately compensated for their efforts. The simple economy approach also tends to discourage research and investment in new areas, such as natural gas production and improved methods of heavy oil extraction.
A simple economy can be kept operating for a while, but it quickly reaches limits in many ways:
- The limited skill level of residents who have not emigrated for higher wages elsewhere makes the completion of complex projects, such as new electricity generation facilities, difficult.
- The inadequate level of oil export revenue puts a limit on the amount of spare parts and other goods needed to maintain the infrastructure, such as electricity transmission.
- As existing oil wells deplete, little funding (in hard currency needed for imports) is available to make investments in new wells for extraction.
- Research on new techniques for oil extraction is also inhibited.
(c) Neglect of current systems becomes an increasing issue, as the lack of hard currency revenue from oil exports becomes a bigger issue.
Venezuela can, in theory, buy what it needs from abroad, but there is a limit to the total amount of goods and services that can be imported, based on the amount of hard currency funds it obtains from selling crude oil. If the price of oil falls, then Venezuela must, in some way, cut back on goods and services that it had previously supplied. One of the least obvious way of doing this is by cutting back on maintenance and repairs.
The recent long electricity outage in Venezuela seems to be at least partially related to neglect of usual maintenance activities. It seems that Venezuela’s state-owned electrical company failed to keep the brush cleared under electric transmission lines leading away from the very major Guri Dam. It now appears that one of the causes of Venezuela’s recent long electricity outage was damage to transmission lines caused by a brush fire within the Guri complex. This could perhaps have been prevented by better maintenance.
Figure 2 shows that energy consumption per capita has been falling, especially since 2011. This would suggest that standards of living have been falling. Needless to say, if Venezuela’s oil exports drop further, a further reduction in standard of living can be expected.
Why Is America Issuing Sanctions Against Venezuela’s Oil Company PDVSA?
On January 28, 2019, the United States imposed sanctions against Venezuela’s state oil company, PDVSA. The reasons given for these sanctions are the following:
- To hold accountable those responsible for Venezuela’s tragic decline in oil supply
- To restore democracy
- To help prevent further diverting of Venezuela’s assets by Maduro, and thereby preserve those assets for the people of Venezuela
These reasons sound good, but I expect that the primary real reason for the sanctions was to try to take Venezuela’s oil production offline and, through this action, force oil prices higher.
World oil prices have been far too low for oil producers since at least 2014.
Figure 3. Historical inflation-adjusted oil prices, based on inflation adjusted Brent-equivalent oil prices shown in BP 2018 Statistical Review of World Energy.
Many people, thinking about the oil price situation from the consumers’ point of view, are completely unaware of the problem that low oil prices can cause for producers. Oil producers may not go out of business immediately because of low oil prices, but eventually the low prices will cause a cutback in investment, and thus production. Countries that have sold some of their oil production in advance, such as Venezuela, are especially vulnerable.
Figure 4. Venezuela’s energy production by type, based on data of BP 2018 Statistical Review of World Energy.
Figure 4 shows that oil production for Venezuela has been dropping for a very long time. Its highest year of production was 1970, the same early high year as for the United States’ oil extraction. Natural gas is mostly “associated” gas, which is made available through oil production. Hydroelectric is small in comparison to oil and gas. Hydroelectric production has been generally falling since 2008.
There is a widespread belief among oil executives and politicians that reducing oil production will force oil prices up. I expect to see, at most, a brief spike in oil prices. The major issue is that the world economy is a networked system. Prices for oil and for electricity cannot rise higher than consumers, in the aggregate, can afford. If there is too much wage disparity around the world, the low wages of many workers will tend to hold oil prices down, because these workers cannot afford goods such as smartphones and automobiles made with oil and other energy products. These lower oil prices reflect the fact that the economy has been changing in ways that leave less surplus energy to distribute to oil exporters to operate their economies.
The way the networked economy works is determined by the laws of physics, whether we like it or not. As far as I can see, the end of oil extraction comes because oil prices cannot be raised high enough to make extraction profitable. Once oil extraction becomes unprofitable, oil exporting nations will start collapsing. Venezuela is the “canary in the coal mine” in this collapse process, because of the extensive use it has made of debt.
What If Oil Prices Can Be Forced Upward?
If somehow oil prices could be forced up by reducing Venezuela’s exports to practically zero, this would have a double benefit:
- More oil from around the world, including the United States, could be profitably extracted, because oil resources that are more expensive to produce would suddenly become profitable.
- Venezuela’s oil could be more profitably extracted.
If prices actually rise, and if the United States remains in control of the situation, the US could theoretically expand Venezuela’s oil production. Venezuela has the largest oil reserves of any country in the world. Its expected cost of production is relatively low, if the exports of oil are not expected to support essentially the whole economy. The cost of pulling the oil out of the ground in Venezuela seems to be about $28 per barrel, if we believe a 2016 estimate by Rystad Energy.
Figure 5. Cost of producing a barrel of oil and gas in 2016. WSJ figure based on Rystead Energy analysis.
The cost of supporting the entire economy with the revenue from oil exports is far higher. Figure 6 shows that back in 2013-2014, the cost of oil, including the subsidies needed to maintain the operation of the rest of the economy, amounted to about $110 per barrel. I would expect that with all of Venezuela’s debt, the real cost might be even higher than this.
Figure 6. Estimate of OPEC break-even oil prices, including tax requirements by parent countries, from Arab Petroleum Investments Corporation.
If the US doesn’t plan to support all of Venezuela’s population with the export revenues from oil extraction, it can theoretically extract the oil more economically than the $110 per barrel price that is needed to support the whole economy. Thus, it could get along with a price closer to $28 per barrel.
Furthermore, the investment capabilities and technical expertise of the United States could, at least in theory, ramp up Venezuela’s oil production, if this is desired at some future date. Similarly, “non-associated” natural gas production could be ramped up, if desired, because this seems to be available, but has been neglected.
I expect that all of this development would be more difficult and expensive than a simple comparison such as this seems to suggest. The ultimate problem is that a whole economy needs to be in place to make the extraction possible. Even if a cursory examination suggests that substantial savings are possible, the cost associated with maintaining necessary support services would make the total cost of energy extraction much higher.
Conclusion
Venezuela seems to be the canary in the coal mine with respect to where oil exporters are headed. Other countries will want to push them out of oil production, so as to try to raise prices for themselves. Debt defaults and lack of availability of debt may also become issues.
One item of interest is the fact that in Venezuela, lack of oil revenues can adversely affect electricity supply. Thus, we should not be surprised if electricity supply fails at about the same time that oil production falls. Even electricity supply provided by hydroelectric plants seems to be at risk.
Another item of interest is how Venezuela’s attempt at even distribution of goods and services, using a somewhat socialistic approach, is working out. This approach (which is now being advocated by some political candidates) seems to have some short-term benefits, because it tends to keep the population happy–almost everyone seems to have a minimum standard of living. But, over the long term, this approach leads to the loss of the ability to maintain today’s high-tech economy. This approach doesn’t prevent collapse either, because a lack of investment and expertise eventually causes important parts of the system to stop operating.
Speaking of oil-dependent country – Russia. Standards of living are falling and it’s happening since 2008 crisis. Since the last oil-crash 2014 things are accelerating, I monitor situation very closely. The complexity of economy is falling and role of government in economy is rising, government (state owned companies) represents about 70-80% of economy now, government itself by far the biggest tax payer and biggest employer. Constant raising tax & utility costs are killing everything except government itself. Poverty grows, but it’s hidden in reports of state owned statistics providers as they are represent government. I can only guess if my country can sustain even current standards of living with current oil prices. Probably not.
The next step down in oil prices is coming? Will the Russian government survive $20 oil?
Will the U.S bomb Venezuela and Iran if the oil price collapses to $20?
https://pbs.twimg.com/media/D2X1ex_WsAALl-d?format=jpg&name=large
I think comfort price is above $80/bbl. As largest-state-owned CEO said (this was a private talk which was publicly released two years ago) the break-even price average $30.
Yes, and comparatively speaking that’s large part behind these long term natgas lockdown deals (price+volume) and pipelines vs just crude exports.. setting aside the obvious question of bigger amounts of natgas vs oil deposits remaining.
Can you please explain how “the complexity of economy is falling” when dependency on formerly imported industrial goods is by gov mandate being replaced by investment in domestic production be it in various joint ventures with foreign partners etc. The spike in domestic production of food etc. is other well know subject no further comment necessary.
Btw are you living in Russia or London/NY/Seychelles ??
(This is not a trick question)
I explain how exactly “the complexity of economy is falling”. Take any industry. Banks for example. Many commercial banks fall into bankruptcy. Lot of them. It’s consolidation of banks system in favor of government owned banks like Sberbank & VTB. Monopoly. Financial system shrank. Huge insurance companies went into bankruptcy. Autodealers lot of them went into bankruptcy. And so on and on. Domestic food production. The quality below all standards. I used to buy finland’s Valio milk, but now we have domestic milk production which is very low quality. Now I am using only farmers milk/eggs/meat because the supermaket quality is below any standards. By complexity falling I mean reduction in number of service/product providers in favor of monopoly. The result is expensive services/products being eliminated from market almost completely (people have no money for them) and the number of positions in cheap segment is also reducing. That’s what is exactly happening right now. In Moscow we had food-supermakets for rich (Alie-Parysa) and they hit a bankcupcy. And yes, I am from Moscow.
This point has been discussed here previously several times both in general sense as well in respect to your country.
Russia is simply in process trying to rearrange itself into more vertically integrated (‘antsy’ / Asian) style of economy and society. Now, some segments of the population, who previously flirted with the ‘western’ individualism don’t like it, that’s understandable. It’s a loss for them. Perhaps you are finding yourself a bit on the loosing side of the equation.. but what does it actually mean for the bigger part of the society? Is momentarily ‘lower’ quality of some domestic grown food (and upshot in resiliency on imports) a bad thing? Is shutting down part of the frivolous consumption (upper class condos, foreign import carz, and other crap..) via crack down on non gov approved banking a bad thing vs funds now going more towards new / repaired /ROI infrastructure (ports, bridges, power-plants, domestic tooling and machinery, ..) ?
I recall there was a time, say 10+ yrs ago (already after some of the purges of the oligarchs) when it was still kind of understood the Russian upper classes with a hand in the gov pot on one side can also have two existing loyalties in the sense of having bolt holes abroad and appetite for imported luxury lifestyles. Well, though luck, times changed, nowadays many people close to levers of power (gov+biz/economy) must practically demonstrate they are ‘Russian firsters’ i.e. showing real goals achievement in their respective professional field, and give self indulgence much lesser priority.
So isn’t this sort of forced quasi authoritarian rule – dictatorship and clipping the ‘wings of freedom’ ? Well, probably yes, the distribution of rewards simply shifted more towards the state and further distributed to selected priorities. Is that communism v2.0 or just rehashed Asian style mixed capitalist model? Is this model sustainable and robust enough lo deliver in near – mid – long term as well? I don’t know but it is certainly working better than the chaos and broadly distributed impoverishment before.
Thanks for all of the updates.
I wonder if a repeat of the 1991 collapse is coming. Or perhaps a different version of collapse.
Gail, can you tell us more of what value Venezuela’s oil is? My understanding is that it’s quite heavy. Does it mix well with the light oil from tracking? What can it be used for on its own if anything?
Every oil is also a mix of molecules of various chain lengths. The very short lengths are more like natural gas. The heaviest are like asphalt or lubricating oils. The middle are the ones we tend to use for transportation fuels.
Gasoline is a mixture of fairly short-chain molecules. Diesel has a mix of somewhat longer chain molecules.
At one point (and still today, to some extent) natural gas was simply a waste product. It doesn’t sell for very much, compared to gasoline or diesel. The cost of the pipelines are often were very high, relative to the selling price of natural gas. Natural gas can be transported by ship in a super-chilled state, but the cost of this transportation is very high as well. There seems to be a lot of natural gas in the world, but getting it out and transporting it cheaply enough to its destination gets to be an issue.
The “conventional” oil that oil companies extracted first were a mixture of molecule lengths, but emphasized the middle of the range of lengths, so provided a lot of gasoline and diesel. Oil from shale formation is a mixture, but the mixture tends to be on the light end of the range, with relatively less diesel. Heavy oil is a mixture that includes more of the relatively long chains. Since we started with the middle mixtures, these oils are the ones that tend to be depleting first. So now we must “make do” with some crude oils that have relatively an over-abundance of shorter chains, together with some crude oils that are on average too heavy to be easily transported by pipeline, without using a diluent.
In theory, we should be able to make do with the combination of oil from shale and heavy crude oil if we can get the cost of producing the desired end products down to an affordable level. I explained earlier that we left the affordable selling price for oil, long ago.
https://gailtheactuary.files.wordpress.com/2018/09/26-in-the-1970s-oil-became-unaffordable1.png
The real issue isn’t whether end products based on a combination of very light crude oils and very heavy crude oils will work (they certainly can produce gasoline and diesel), the big issue is whether the gasoline, diesel, and other end products produced become too expensive for consumers to afford.
The fuel that is in shortest supply today is diesel. Europe made the bad choice of running practically all of its transportation vehicles on diesel. It encouraged the use of diesel-powered cars. Its trucks also use diesel. Diesel has fairly long chains, so it is most abundantly provided in heavy oils. The US uses a lot more gasoline. Oil from shale tends to produce quite a bit of the length of chains used in making gasoline.
Refineries divide up oils into their component parts. They separate out the very short chains, the medium chains, and the longer chains. They also remove impurities. Some refineries are set up to “crack” long hydrocarbon chains into shorter hydrocarbon chains. Cracking long hydrocarbons into short hydrocarbon chains uses natural gas in the process. The US has had a good supply of fairly cheap natural gas, so cracking hydrocarbons into short hydrocarbons is a service that quite a few US refineries sell as a way of making money. To some extent, the US imports heavy crude oil, sells the service of refining this oil, including cracking long molecules into short, and exports the output as diesel and other products. In some sense, heavy oils are the most flexible oils. But the refinery takes a fairly big chunk of the price for its services, so heavy oils need to be extracted and shipped very cheaply, in order for the system to be profitable for all.
I have written many times about the argument regarding whether oil prices can rise endlessly. If they can rise endlessly, then there is no problem with producing oil and gasoline using some oil from shale and some heavy oil. But if there is an affordability cap on oil prices, then we find that someone comes up “short” when oil companies try to work around the problem of depleting conventional oil using a combination of very light and very heavy oil.
Regarding your specific questions: The big issue is how high a price crude oil can sell for. Venezuelan oil would be worth a lot, if oil prices could rise to $300 per barrel. At $50 or $60 per barrel, Venezuelan oil isn’t worth much because refinery and transportation costs become too high.
Does heavy oil mix well with oil from fracking? There may be some cases that refineries want to purchase oil from shale to balance out a mix that is on the heavier side, but I would expect that heavy oil would usually need to go to refineries set up to provide cracking services. These refineries may choose to mix some light oil from shale in their mix as well. I don’t think that oil from shale would be used as a diluent; Canadian bitumen is diluted with something like naphtha, for transport purposes.
“What can it be used for on its own if anything?” I don’t think that any kind of crude oil is very useful without refining. Natural gas, on the other hand, can be burned directly, if it can be used nearby. Offshore oil drilling rigs often take some of the “associated gas,” and burn it to produce electricity. So, if transportation is not a problem, natural gas can be very useful on its own. But if crude oil is refined, it provides a whole array of products. Each refinery is set up differently; it uses a different range of input crude oils. The mix of output will differ, depending on the types of crude oil inputs and the extent that cracking services are provided.
if Venezuela or neighboring countries have natural gas, then on-site refining would make their heavy oil transportable and profitable. perhaps that is what the US wants to do there, in the long run.
I am still not sure it would be cheap enough, even with the availability of on-sight natural gas for cracking. The cracking facilities are expensive to build. The real affordability threshold for finished goods is very low–probably equivalent to about $20 per barrel of crude oil, and no one can get close to that. This is why crude extraction is becoming profitable, and the debt bubble looks likely to pop!
“Natural gas, on the other hand, can be burned directly. Offshore oil drilling rigs often take some of the “associated gas,” and burn it to produce electricity. So, if transportation is not a problem, natural gas can be very useful on its own.”
this is where I think natural gas might give the world a higher overall EROEI if it is used more…
and it’s a cheap FF… $17 of natural gas has the energy equivalent of a $59 barrel of oil (today’s USA prices)…
NG might extend BAU and give us many more years of IC…
or not… time will tell…
NG lacks gasoline’s energy density by far. I read somewhere that a lt of NG will propel passenger vehicles 10 m vs 10000 m for gasoline. The solution is chill-compression in thick metal tanks at high energy and money cost.
okay, I don’t think it would be necessary to use NG in transportation to get a higher usage of NG in the world’s energy system…
but for production of electricity, it seems to be a cheap FF, and also perhaps abundant enough to keep up the growth in electricity for quite a few years ahead…
countering that is the ongoing slow decline in net (surplus) energy from oil…
I think the net (surplus) energy from NG may be enough to keep the wobbling world economy from falling over for perhaps another decade…
maybe not BAU FULL THROTTLE, but maybe quasi-BAU…
NG storage near power plants isn’t feasible. Pipelines can’t supply everywhere and require fairly intensive maintenance.
Sustainable quasi-BAU is a pipe-dream. It’s either full throttle or rapid metamorphic collapse over several years.
EROEI is calculated at the wellhead. Natural gas EROEI is very high at the well-head. The costs that eat you alive are the transportation costs, from the well-head to the end user.
People used to talk about “stranded natural gas.” This is natural gas that is easy to get out, but the cost of transporting it to where it is needed makes it non-economic. At one point, there was a lot of stranded natural gas in the world. After the run-up in natural gas prices in 2007-2008, it seemed likely that quite a bit of this stranded natural gas might actually be economic. But high-priced natural gas only works if buyers (in the aggregate) can buy goods made with natural gas. Prices have not stayed high.
Gail, This is a very valuable summary for me and I would like to reproduce it in my 3rd Edition book (with acknowledgement of course). Please may I have your permission to do so?
That would be OK. I edited it a bit, to remove things like “the the” and make other small fixes.
Thanks so much Gail, you are very gracious.
That’s an excellent summary of the situation as I understand it!
I do have one minor nit, or perhaps a question you can answer:
You go on to discuss “cracking,” the process by which heavy, long-chain hydrocarbons can be converted to lighter, short-chain hydrocarbons. This does use some energy in the process, but as you point out, it usually comes from cheap and abundant natgas. Heavy oils also contain more energy per unit (volume or weight) than light oils, so cracking is energetically almost free.
But my understanding is that the opposite process — creating long-chain hydrocarbons from short-chain ones — is a lot more complex, is energetically fairly expensive, and has long been economically infeasible.
If this is true, then heavy oils are, by their nature, potentially more valuable than light oils, because you can make light oils out of heavy ones, but not vice-versa.
If this is true, then the “fracking revolution” is even less useful than Wall Street has indicated. Fracked oil cannot power America’s long-distance truck transportation fleet, nor its farm machinery fleet. Given abundant kerogen (light oil from fracking), America would still need to import heavy oil for those particular uses.
This would tend to make Europe look prescient in comparison, no? Unless the oil industry moguls have planned to usurp Canada’s tar sands all along.
My understanding is that diluent is pretty much a product of what are called “NGLs,” or “natural gas liquids,” and thus, tends to be a byproduct of fracked natgas.
So I guess this too-long question is about the comparative merit of light versus heavy oils. I used to think that the heavy oils were the trash that needed taking out, but I’m coming to see that the lighter oils are ultimately less useful, even though oil workers are known to put fracked light oil right in their gasoline cars. The gasoline-powered farm tractor or highway truck simply doesn’t exist.
Diesel is more energy dense—
Very simple, only the lower ends of society would use gasoline for truck transport.
If gasoline is what you have, you would use gasoline. Gasoline is a lot more energy dense than natural gas.
When crude oil comes out of the ground, it provides a mix of end products. The trick is to find uses for all of those products in an efficient way. Perhaps Europe thought that when they were importing, it wouldn’t matter what they imported. It does, if their overuse of diesel drives the price up. Diesel tends to be more polluting as well.
You are right: It is possible to crack long molecules to make them short, but trying to do the reverse doesn’t work at a reasonable cost. So in that sense, heavy oil is preferable. In practice, I think that there are some other considerations as well.
The advantage of oil from shale is that it produces a fair amount of molecules that can be used in creating gasoline. Gasoline prices are what voters tend to worry about. If a person is concerned about what US voters think, oil from shale is helpful. Also, with very light oil, the simplest refinery will do. Furthermore, natural gas can be burned off as a waste product, or it can be burned locally, to provide electricity. (There may be a little processing to do, especially if the natural gas includes sulfur.)
On the other hand, we tend to have a superabundance of very light oil products, at current prices. It is the longer molecules that are more in demand, relative to supply. So from that point of view, heavy oil is more worthwhile.
I think that the real problem is that neither oil from shale nor heavy oil really produces end products end products cheaply enough to be affordable by consumers. We really need crude oil production inn the $20 per barrel range. Nearly all oil left the sub-$20 per barrel range years ago back in the 1970s.
Thank you Gail for your clear, understandable explanation of the different grades of oil & how they could be used & how much more expensive they have become to extract.
I will need to save that as a .txt for future reference.
So it would seem the reason the US want’s Venenzualia’s oil is to mix it’s light oil with it’s heavy oil to produce diesel & products that need a heavier oil I also expect diesel is needed for it’s military machines like tanks, ships etc.
Why can’t the US be satisfied with just buying Venenzualia’s oil like everyone else?
Is it about world domination as I suspect?
Venezuela cannot get a high enough price for its oil to make its extraction worthwhile. If oil were $300 per barrel, it is likely that Venezuela would be able to support it entire economy on the price of oil it exports. At current prices, Venezuela’s economy tends to collapse. A collapsing economy cannot keep oil production flowing. So Venezuela continuing to produce the oil is not a real option.
It is not at all clear that the US could do any better than Venezuela, in producing the oil cheaply enough to work in the economic system. The big problem is oil price too low relative to the overall cost of production, including producing electricity needed by the system and repaying the debt owed to China and Russia. In theory, the US could stop repaying China and Russia, so its costs would be a little lower.
The suggestion I gave was that the US was trying to get Venezuela’s production off line. In that way, it might be able to get the world price of oil up (it hopes). I don’t think strategy will really work very well. It it does, it will make more oil from around the world profitable to extract.
In France the situation gets slowly more interesting, yesterday one of the opposition leaders said at his press conference the following major three points, basically calling upon the military to not obey orders issued by the french president and his cabinet.. (because of looming EU Parliament elections the msm/TVs have to held more political debates which are often redirected to the domestic situation and that keeps the boiling pressure up)
– A call to the military not to respect the orders which would be contrary to their engagement and thus not to shoot the demonstrators.
– An appeal to citizens to mobilize widely, strongly and without violence for this act 19 Yellow Vests.
– A call to the government to reconsider its decision to use Operation Sentinel for law enforcement tasks.
Zerohedge just posted an article where French authorities have been given the legal right to use “deadly force” against the Yellow Vests if they feel threatened or if they feel the public is at harm. Should be interesting to see how it develops.
All too late, perhaps: the army should have been deployed at key points long ago, these things have to be nipped in the bud.
Now, with tensions so high after such a prolonged period of unrest, so much resentment
(rightly) for injuries to protesters, the probability of fatalities is so much higher than if timely action had been take and the repression had been firm.
Quite fascinating to see this developing, almost as exciting as 1968, which seems to excite so much nostalgia among the elderly.
Our Duncan must be thrilled?
There is really nothing there, the “sentinel forces” (military) are the ones already surveying critical places for terrorism under the “vigi pirate” procedure. The only thing decided was to use more of them for that purpose, in order to free up policemen for surveying/maintaining order for the yellow vest protests. Never as it suggested to use the army in front of the yellow vests.
If Ponziworld is done posting that would be sad. He has some great insights. Daily read.
I thought he’d stopped also but actually he has been consolidating all of his posts since last week or so in one big post.
http://ponziworld.blogspot.com/2019/03/ponzi-world-is-ending.html
“In order to keep my most recent posts near the top of the blog, this post will be an open-ended stream of consciousness. The most recent ramblings will be at the top. But first, I want to set the tone by borrowing from hedge fund manager Hugh Hendry, who characterized this era of Powerball gambling far better than anyone else. His words are every bit as appropriate now as they were in early 2015. To paraphrase:
I am taking the blue pill now. There are times when an investor has no choice but to believe in things that don’t exist, and be long risk assets in the full knowledge that this is all going to end painfully. The good news is that this era has proven beyond all doubt that mankind has the ability to suspend rational judgment long and often. Today there is no half-assed stimulus program that our Disney markets will not consider to be successful. China is set to record its weakest growth in GDP in 25 years, yet it amply demonstrates the power of imagined realities. Therefore that is where we have deployed the majority of YOUR capital in 2019. Just thought you would like to know. Cheers, your money manager.
What he calls “Imagined reality”, I call “Consumer Choice”
He is another author following the same story I am. The pull on the power plug doesn’t look as far away as we would like.
Mexicans Are Stealing Border Wall Materials, Using Them For Home Security
https://www.huffpost.com/entry/border-wall-stolen-tijuana-home-security_n_5c9291bbe4b08c4fec33b5f4
As a former resident of Mexico, my comrades were always resourceful.
I wonder if Don The Con can figure out a cut?
That’s hilarious!
Interesting! The stones of the Great Wall of China in many places were later taken away and used elsewhere.
In Atlanta, It doesn’t seem like we have run into many problems with Mexican workers. Of course, they are not a majority here. They do a lot of construction, painting, yard work, and similar jobs.
@Gail, like Mike Roberts above I am skeptical of the Rystad graph. How can shale have a $25 breakeven? They’re probably excluding things like overhead and transportation?
Also, I don’t see how forcing Venezuela to abandon its oil production causes more profitability in the future. Prices may go higher for a while but restarting production in a failed state will be enormously difficult. The only lesson here is that like any country, Venezuela is broke without sufficient profits and unrestricted access to the global energy-economy.
The story about ‘socialist inefficiency’ isn’t believable because Venezuela isn’t that socialist even relative to the US.
Yes, Shale is much higher and they have yet to make a profit. Just sayin’
I believe Steve St Angelo of the SRSRoccoreport has that number around $100 p/b. There’s also cleanup fees and now Shale producing States are beginning to chargeback Shale producers for cleanup costs which they weren’t doing just so they could create jobs in their State.
With the current Shale model, profit doesn’t seem necessary.
You just can’t stop the ponzi—-
See my comments to Mike Roberts, above, regarding how difficult it is to determine the real cost of oil.
I might add that in some sense the only way that the whole economy can be kept going is by keeping the oil, coal, natural gas, hydroelectric, and nuclear operating. In fact, their production needs to be rising. Pretty much all of these are running into financial difficulties, in part because of competition from subsidized wind and solar, which are pretty close to worthless in the whole scheme of things.
In some sense, the cost of production is higher than the market price for pretty much every energy source we have. We are just covering up the problems of un-affordability of energy prices at today’s prices by charging such low prices that it drives all of the types of production (other than wind and solar) out of business.
Of course, the government cannot last without these fuels. Without the government, the subsidies for wind and solar cannot continue. Ultimately, the whole economy collapses, for lack of energy supplies. Or perhaps the debt bubble goes first.
The mythology that everyone has been taught is “If the cost of energy production rises, the price of energy products will rise. These higher prices will allow renewables to be competitive in price.” This is simply nonsense, based on a very inadequate model of how supply and demand work.
Higher energy costs represent, in some sense, inefficient production of energy supplies. There is no reason to believe that these higher costs can be passed on to consumers. A debt bubble can act to temporarily hide the problem, but it cannot be hidden indefinitely. Ultimately the debt bubble will cause the economy to collapse.
Unless the cost of energy supplies (combined with efficiency gains) can keep falling, the rest of the economy cannot keep growing. Energy growth is needed to keep the debt bubble from collapsing, among other things.
Figure 5 seems far too optimistic for the cost of production. This Forbes article, for example, gives the Saudi figure as about the same (perhaps a bit higher) but gives US shale as between $30 and $50, in 2017. The PostCarbon Institute has often talked of shale costs being at the top of that range, or above. It seems inconceivable, to me, that shale costs are only a little higher than conventional oil costs.
There seem to be a lot of ways to count the cost of oil from shale developments. Those drilling the wells count the cost in as optimistic a way as possible, to make investors think that investing money will be an extremely good idea.
One of the issues is that oil wells in shale will supposedly produce oil for a very long period, something like 40 years. (These wells really deplete quite rapidly, but no one can prove that it won’t be producing at least a little oil for quite a long period.) If a person builds a model with optimistic assumptions, it is possible to have the wells produce much more oil than they will produce.
Another issue is “infill drilling.” When wells in shale formations were first drilled, they were quite widely spaced. They then decided to add more wells, in all directions from the same pad. Most models assumed that the new wells would not simply cannibalize the old output. It is becoming increasingly clear that the while the additional wells add some production, it does not increase total production anywhere near proportionately. So barrels to be produced in the future, from current investments, have been overestimated from this as well.
Another implicit assumption has been that oil prices will be at least as high or higher, going forward, so that it will be economic to take out. A more realistic assumption is that overhead expenses are likely to start eating the owners alive, it prices stay at their current level or fall.
Then there is the issue of what should be included when estimated the cost of extraction. Does this consider the least cost of the land? Interest and dividends that need to be paid to owners and lenders? Is enough profit being set aside, so that the company can keep reinvesting?
How about taxes paid to the government? These can be half of the cost. Are these included?
The Energy Returned on Energy Invested calculations are not any help either. There is a EROEI widely quoted study by Cutler Cleveland on the EROEI on Shale Oil, but this relates to a totally different kind of oil, produced by heating a large area for a long time. Its EROEI is very low. But this has nothing to do with what is produced today. The study that I am aware of that is more relevant is on Bakken Oil by Adam Brandt. It shows quite a high EROEI for Bakken oil. EROEI leaves out a lot of important costs, however. Also, other oil we are now extracting, such as deep sea oil, aren’t winners in terms of cost either.
I think that extraction from the Permian Basin is too new to have any EROEI studies. But basically, unless heating is used, the EROEI of extraction techniques tend to be pretty good, especially if a person assumes that a lot of future oil can be extracted from a well, without needed to perform future energy expenditures. There is no time value of money in EROEI calculations, so the fact that a huge amount of money needs to be borrowed to support the operation is not an energy cost, for example.
Cheerful news: Uri Geller is going to deploy his telepathic powers to ensure that Brexit doesn’t happen, and also bend the keys to No 10 the British PM’s residence, should they get into the hands of Corbyn, thus denying him access to the levers of power.
This is a very hopeful and hitherto unexpected development in economic affairs, which may well render Gail’s inter-connected stick model obsolete.
That Seneca Cliff may well soon point upwards again, who knows?
Never mind the Seneca Cliff. When Uri starts deploying his telepathic powers, better check your cutlery draw for bent forks.
I was really excited when as a boy of 8 the spoon I’d put in a drink came up bent: super-powers were mine!
I should have realised that my aim in life should have been to become a Central Banker – unlimited power to change the course of history….
Spoons also
Not cheerful enough.
I want to read of occultists using black magic to lay a curse on the global elite so they get their dues. Let their homes (and yachts and collapse hideouts etc) become infested with demonic entities that eventually drive them insane. Let them run into mysterious ‘accidents’ at every turn in their daily lives. Let them contract inexplicable forms of illness no doctor knows how to cure. Let them see terrifying things that are not there whenever they look into a mirror. Let them…
No need to sully your own soul with thoughts of well-merited vengeance: they’ll get their punishment in the next life, and the next, and the……
I do wonder about Soros though: will he, can he, ever die?
He’s like the supermarket apple I tossed into the dung heap: it came up month after month unchanged, just going a little bit spongy…..
It would still be more satisfying if one could see the miscreants get their comeuppance in this life, though. As for Soros, he probably accumulated enough brownie points in his previous lives to enable him to last a little longer. That is all.
As for what you said elsewhere regarding certain people who lived in Mexico in the past, I don’t know how many of them chose to be born into that cultural milieu. (Same with the whiteys for that matter, I guess.)
Nor do I know just what good the West really did for the rest, if we look at the state of affairs the legacy of the West is about to bring us all. Sure, the white man also did a few good things, but how do the good and the bad things balance out?
https://peanuts.fandom.com/wiki/December_1959_comic_strips?file=19591227.gif
Private pedo islands, huh?
And this is still not the worst stuff?
Only makes the elite even more deserving of what I recommended if you ask me. High time the black magicians of the world united to work a mega-curse on them.
I am waiting for the elites to upload their souls into AI androids as part of their quest for immortality. Then I intend to sneak up behind them one at a time and remove their rechargeable batteries.
Blackmail would explain very much that occurs. Berlusconi was quite a master at it, and as for the inner workings of the British Conservative party……
Soros?
Please, have you swallowed that diversion?
(sorry- I find it humorous)
«One of China’s biggest state-owned investment companies has exited the coal industry three years earlier than originally planned, joining a growing list of sovereign wealth funds globally bowing to investor pressure over climate change.»
https://www.afr.com/news/world/asia/china-state-investment-giant-drops-coal-20190318-p51597
I expect that lack of profit paid a role as well. Prices have been too low for quite a few producers.
The Australian Financial Review is just another “Australian” publication that is pumping up “Global Warming” for all it is worth. Our previous prime minister, Malcolm Turnbull is a very wealthy my. He was the head of Goldman Sachs in Australia. He made a fortune selling another company of his. Through his son, he is heavily invested into wind turbines – a heavily subsidised scam.
“Enemy Within: Virtue Signalling Renewable Energy Zealots Determined to Destroy Australia’s Economic Prosperity”
https://stopthesethings.com/tag/alex-turnbull-infigen/
What the AFR will not report to its readers is that China is building a massive number of coal-fired power stations.
“Renewables Rejected: Modern Coal-Fired Plants Powering Asian Prosperity”
https://stopthesethings.com/2018/06/06/renewables-rejected-modern-coal-fired-plants-powering-asian-prosperity/
I am a big fan of Cleaner coal…Not sure how long it will last tho
Cleaner coal = Use of more debt to try to keep the economy going for a little while longer.
https://www.bloomberg.com/news/articles/2019-03-22/u-s-treasury-yield-curve-inverts-for-first-time-since-2007
‘U.S. Treasury Yield Curve Inverts for First Time Since 2007’
Did you catch that year in the headline, 2007? Didn’t that predate the mortgage meltdown by a year or so? Check out the information from the article below. Well worth a quick look over.
“A closely watched section of the Treasury yield curve on Friday turned negative for the first time since the crisis more than a decade ago, underscoring concern about a possible economic slump and the prospect that the Federal Reserve will have to cut interest rates. The gap between the 3-month and 10-year yields vanished on Friday as a surge of buying pushed long-end rates sharply lower. Inversion is widely considered a reliable harbinger of recession in the U.S. The 10-year slipped to as low as 2.439 percent.”
“It looks like the global slowdown worries have been confirmed and the market is beginning to price in Fed easing, potential recession down the road,” said Kathy Jones, chief fixed-income strategist at Charles Schwab & Co. “It’s clearly a sign that the market is worried about growth and moving into Treasuries from riskier asset classes.”
Fed easing? Are they hinting the Fed may resurrect Quantitative easing once again? Please say it isn’t so. Please say all this CB intervention to bolster markets and the economy with added liquidity has already done the trick to igniting the economy to run on its own, i.e. by way of its own momentum via net energy. Please don’t say that there isn’t enough surplus energy to avoid more CB action.
I see the stock market is -460 today.
According to Martin Armstrong – who knows a lot more about capital flows than anyone else – as soon as the Europeans panic, they will move their money into USD. They will buy shares (private sector) not government bonds (public sector). All of that will result in a relatively higher USD and a much higher Dow Jones. Of course, that may change a few years later.
Here is a prediction of his from 18 months ago. Since then, the dollar has gone up by another 5%. Totally against the wishes of the Federal Reserve and Trump
“The Euro & the dollar”
https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/euro/the-euro-the-dollar/ (2017)
Anyone buying into the Dow Jones with Euros at that time would have made a return of 15+%
The market is meant to be ‘forward looking, Gail but in my view they are behind the curve. It has only just occured to them that the global economy is slowing down. It is so confused with HFT and algos that human interactions are limited. I follow the markets but don’t indulge – too risky in these days of unpredictable volatility – it’ll all crash in then end.
Sorry Chrome, I can’t give you any assurances. IMHO The Fed will continue with QE, they have no option, and the music keeps playing so we have to dance until it stops at some pint in the near future. The markets can stay irrational longer than you can stay solvent – so stay away now and buy gold bullion!
1519 — México: Cortez brings a sample of Western Civilization to the New World in the name of his King & Catholic faith: looting, killing, subjugating, raping & massacres in his “March of Death.”
Typical Catholics.
Spain has a level of responsibility for Latin American commensurate with the other colonial powers. But what can it do, or what can any of them do now, in their reduced circumstances, to help us to help them?
Time out for some Mello tune version of Neil YOUNG
Cortez the Killer Solo & Unplugged Tour 2003 Neil Young
https://m.youtube.com/watch?v=29eltVuft0w
“Cortez the Killer” is a song by Neil Young from his 1975 album, Zuma. It was recorded with Young’s band Crazy Horse. It has since been ranked #39 on Guitar World’s 100 Greatest Guitar Solos and #329 on Rolling Stone’s list of the 500 Greatest Songs of All Time.[2]
“Cortez the Killer”
Song by Neil Young
from the album Zuma
Released
November 10, 1975
Recorded
June 16, 1974 – August 29, 1975
Genre
Hard rock, blues rock
Length
7:29
Label
Reprise
Songwriter(s)
Neil Young
Producer(s)
Neil Young
David Briggs[1]
Young has stated in concert that he wrote the song while studying history in high school in Winnipeg. According to Young’s notes for the album Decade, the song was banned in Spain under Francisco Franco. According to El País and book author Xavier Valiño, the album Zuma was released in Spain in full following Franco’s death, with the song renamed to the less inflammatory title “Cortez.”[3] from Wikipedia
Peace is a theme of this song. From verse six: “But they built up with their bare hands, what we still can’t do today” indicates that even in the most barbarian times there was still peace, and in present day, as sophisticated as it may be, there is anything but peace. The Aztecs were peaceful, representing sort of a utopian nonviolent society. Cortez and the Spanish brigade used trickery to beat the Aztecs, people who had never committed any offensive acts towards the Spanish. The Spanish could represent the status quo society, completely antonymic from the amicable Aztecs.
https://www.songfacts.com/facts/neil-young/cortez-the-killer
Neil Young’s song brings an interesting alternative viewpoint to the history of Cortez’ invasion. While not a complete history of Cortez or the Aztecs, it’s title alone gives you a very good idea of how Young viewed the invasion. Young’s romantic imagery near end of the track highlight the emotional toll (lost romance, etc.) of the invasion
Ah, now that it an artist in the truest meaning..
“The Aztecs were peaceful, representing sort of a utopian nonviolent society. ” WHAT?
From what I have read about the Aztecs, they were a very militaristic people, too bad you can’t ask the tens of thousands of their neighbors who were captured then killed in dedications to their temples & each year at the winter solstice as sacrifices to the “gods” to thank the gods for the return of the sun.
They had racks full of skulls from past sacrifices, thousands of victims were taken to the tops of their pyramids, placed on their backs on a stone & their hearts cut out as a sacrifice to the “gods” & the bloody bodies cast down the blood soaked steps of those pyramids.
Far from “utopian” or “nonviolent”.
The Mayan were almost as bloody, they had their priests dance while wearing the skins of sacrificial victims.
Only the Spaniards were worse in the magnitude of their killing but then they had better weapons, steel armor, horses & vicious dogs.
The Aztecs sound like a great role model for the modern Greens led by the Cortez’s great great great great granddaughter, who seems determined to sacrifice and rip the heart out of everything that keeps most modern Americans rich enough that they don’t have to live in tents and hunt bison for a living.
Incidentally, Neil Young also wrote a nice ballad about Elizabeth Warren!
https://youtu.be/gn7XL69ybvQ
Depends what shade of green you’re talking about. And we all know we’re headed for a state of affairs where modern Americans will be lucky if they have any tents to live in and bison to hunt at all, and it’s not the fault of the greens, many of whom are in fact trying to prevent this eventuality.
Sheila….calm down… It all depends on how one sees it…like so….
https://m.youtube.com/watch?v=AbO-aN31CLE
I’m not certain if Neil actually wrote the above about “peaceful” or what context…but the Aztecs, initially at least, did not harm Cortez or the Spanish and viewed them as God’s.
Read the link I posted
This song is about Hernán Cortez, the Spanish conqueror of the Aztec Empire. The Aztecs lived in what is now considered Mexico, and Cortez had an army of 600 sail from what is now Cuba to the Aztec town of Tobasco (yes, where the hot peppers and the name of the sauce originally came from). The Aztecs thought Cortez was a god and bowed before him. They let his army roam free. Cortez, however, became wary of their good nature and took their leader hostage. He then captured and killed many of their people. He also unwittingly brought new diseases to the Americas, which the natives had no immunities towards. On top of all this, he built what is now Mexico City with slave labor. He returned to Spain a hero.
Neil revealed the inspiration of the lyrics
During a show in Manassas, Virginia on August 13, 1996, Young told the audience that he wrote this song after eating too many hamburgers in high school. “One night I stayed up too late when I was goin’ to high school. I ate like six hamburgers or something. I felt terrible… very bad… this is before McDonald’s. I was studying history, and in the morning I woke up I’d written this song.”
PEACE!
Great post & I’m chill, but still scared to death at what I see coming.
Yes, the Aztecs thought those Spaniards could be the return of their “god” Quetzalcoatl & not being stupid, they wanted to “feel” out those strangers, by the time they realized they were just humans, it was way too late.
I’m glad we “civilized” people don’t burn people at the stake or hang them because we believed they were “witches” or unbelievers but the veneer of civilization is thin & will soon be lost when times get hard for all & thousands more migrants fight to enter the country illegally.
There have been large crop loses in the central states of the US, thousands of cattle & their calves have been lost, even crops in silos were destroyed, we can expect food prices to rise this summer as flooded fields can’t be planted.
I don’t understand why the prairie states are called the “mid west” when their no where near the west & certainly not in the middle of the west, their not even half way to the west.
How on earth did these central states get to be called the “mid west”?
I won’t call them the “mid west” instead I call them the central states, the prairie states or the grain belt. Yeah, I’m picky, I like names that make some sense.
Outside, I can here the birds singing, the sound of spring.
I wonder how much longer will we hear birds singing?
Hi Ms Chambers, sure it’s a messed up social setup…Hey, posting this cool version of Neil’s song with pictorial outtakes and lyrics…the original soundtrack version.
Ya, he took artistic license, but it was a symbolic backdrop, I suppose..
https://m.youtube.com/watch?v=UudoW_7ufoU
You planted in the Central States are you? Man, taking a beating weather-wise.
Beautiful region and to think I had a romantic notion of settling in Winona Minnesota!
Boy, I dodged a bullet going there! Nice place to visit…Four months out of the year!
Betcha the Bluffs will see another snow storm or two before May!
Poor me, toasting in South Florida …sunny 🌈, warm and lovely. Too nice and now beyond crowded….time to head out of Dodge…before Cortez lands….
When people came up with the term “Middle West” or “Midwest”, the US was much smaller geographically than it is these days. The western frontier moved progressively further west as the country expanded, but for a long time what is now the continental US was envisaged as the civilized East and the wild West with a region between them that was west of the civilized part of the country but not quite as far west as the untamed wild West. The Midwest was populated by small farmers living in little houses on the prairie and cowboys who had sent the local injuns packing, and occasionally visited by new school ma’ams, carpet baggers and snake oil salesmen.
The Aztecs thoroughly merited extermination. The Spanish were very vulnerable to Aztec sling-shots though, which could concuss even an armoured man.
I have a Spanish rapier in my collection, a beautiful thing giving a long reach, 3.5 ft long in all. ‘The Spanish gentleman: small in stature, but with a big heart, and an even bigger sword!’ 🙂
A burial pit containing the bodies of captured Spaniards who were sacrificed was dug up a few years ago, and to everyone’s surprise it contained lots of native Indians, from the tribes who had allied with the Spanish in order to bring the Aztecs down, so much were they hated.
Without the native allies, they wouldn’t have survived.
The Serbs also merit extermination for causing World War I.
I think you are overstating the Serbs’ culpability and ability to get Queen Victoria’s grandchildren to go at it hammer and tongs at each other’s empires. The Aristocracy always need whipping boys, and the Serbs make excellent whipping boys.
Sure, the Aztecs deserved it…just like you know who deserves what’s coming…
BTW, don’t remember reading the Aztecs inviting Cortez and his men as Guests!
Boy, those sling shots sure did them harm…
But bad omens are worse…
Bad Omens
During the reign of King Montezuma II, the Aztecs had seen several bad omens. According to Aztec religion, these omens meant that something bad was going to happen. There were eight bad omens that were recorded later by a Spanish missionary.
Fire in the sky
The temple of Huitzilopochtli burned down
A lightning bolt struck one of their temples
They saw fire across the waters
A lake appeared to be boiling
They heard the sound of a weeping woman at night
A strange animal was caught by some fishermen
And …Cortés arrived with around 500 men, 16 horses, and some cannon. He founded a small settlement that would eventually become the city of Veracruz. He also began to get to know the natives. He brought along an American Indian woman named Dona Marina who worked as his interpreter. Cortez created alliances with some of the local tribes including the Totonac and the Tlaxcalans.
Divide and conquer…
Interesting Facts about the Spanish Conquest of the Aztecs
Cortés became worried that some of his crew would steal his ships and desert him so he sunk his fleet before marching to Tenochtitlan.
After Montezuma II was killed the Aztecs elected Cuauhtemoc as their new king. Cortés eventually had him executed.
The Aztecs were severely weakened by diseases that the Spanish brought such as smallpox, influenza, and malaria. Over time, around 80 percent of the people living in the Valley of Mexico died from these diseases.
Cortés founded Mexico City on the ruins of Tenochtitlan. Today it is the capital of Mexico and one of the largest cities in the world.
The night that Cortés and his men escaped from Tenochtitlan is often referred to as “La Noche Triste” or “The Sad Night
https://www.ducksters.com/history/aztec_empire/spanish_conquest.php
Yep, History is written by the Victor’s…God Bless Spain!
Why did the Aztecs thoroughly merit extermination? Because they did things like ripping people’s hearts out to sacrifice to their gods?
If so, what about the Europeans of the colonial era, considering what they did around the world? The misdeeds of the Aztecs were at least limited to their turf.
You see, what matters is that “both sides have faults”. The early Christians condemned the sexual freedom enjoyed by the Roman elite, which was anti-liberal/feminist. Therefore Diocletian’s persecutions were somewhat justified.
At least europeans are decent people.
The Aztecs would have had you on the chopping board pretty quick, so why defend them?
I take your point though; but, on the whole, the whole colonial period was nothing compared to what the natives were doing to one another with gusto when the Europeans arrived: for instance, the life of a peasant in Mughal India was sheer hell as the empire collapsed, and the Brits did (despite themselves) actually improve things in that respect.
Empires rose and fell long before Europeans arrived in Asia and Africa.
Ever heard the saying common in Iraq when the Brits left: ”Wicked Imperialism has gone! Now WE can crap in our own back yard!’ Iraquis laughed because they knew the truth of it.
The other thing I hold against the Aztecs, apart from their corrupt blood-thirsty priesthood and imbecile belief that blood would bring the sun back each day, is their simply ghastly art. There is no excuse for that. 🙂
Now if they only burned victims at the stake, that would be acceptable in the eyes of the Spanish?
What was medieval heresy?
A: Heresy was an opinion about the teaching of the Catholic church, which was condemned by the church as inconsistent with it.
From the early 11th century, many people accused of heresy were burned at the stake as a result. In 1022, people who were considered heretics were burned for the first time since antiquity.
Q: How many people were burned for being heretics?
A: Again, impossible to say, but we do know that on many occasions heretics were burned in large groups – sometimes 200 at a time. That gives you an idea of the scale
: Is heresy comparable to the witch craze?
A: Yes – no one now believes there’s any basis in the fear of witches. We know it’s something dreamt up. I say it’s the same with the Cathars.
In the case of witches, between the 15th and 18th centuries people were put to death all over Europe, usually by burning, on the basis of a belief that they were agents and worshippers of the devil.
the case of witches, between the 15th and 18th centuries people were put to death all over Europe, usually by burning, on the basis of a belief that they were agents and worshippers of the devil.
https://www.historyextra.com/period/medieval/in-case-you-missed-it-your-60-second-guide-to-heresy/
YEP, WONDER WHAT THE NEXT FANTASY will be to exterminate others?
https://www.historyextra.com/period/medieval/in-case-you-missed-it-your-60-second-guide-to-heresy/
But I’m quite sure it will most efficient and civilized. Hint ..concentration camps WWII
While not exactly “extermination,” people are being thrown in jail for leaving food and water out near the Mexican border.
My crystal ball won’t tell me exactly what will happen, but I’m betting it will have something to do with immigrants. As the twin pincers of resource depletion and climate change kick in, people are going to be moving all over.
resource depletion has always caused conflict and movement
only the scale of it is up for discussion
this time it’s the biggie
Come on, nobody truly believes that hatred of an empire justifies genocide. Besides, the Indians who sided with Cortes were just looking for more resources and wrongly believed the Spanish would keep their end of the deal.
“The Aztecs thoroughly merited extermination.”
Perhaps but then going by that logic, the Germans after WW2 should also have been exterminated for what the German Nazis did.
The Russians too deserved extermination for what Stalin did to the Ukrainians.
The Americans deserve extermination for what we did to the native peoples.
Most of us have skeletons on our closet we would rather forget.
Hit-ler was an Austrian, Stalin was a Georgian, and everyone else was just obeying orders. So that lets the Germans and Russians off the hook.
Americans are nice folks but unfortunately, they are the most propagandized people on earth according to no less an adept than Gore Vidal, so I guess we can commute their sentence on the grounds of diminished responsibility. Their sin is being Americans and it is also their punishment.
And given the above precedents, we can hardly condemn the Aztecs for being a bloodthirsty lot. The Spanish did the right thing in civilizing them, Christianizing them, and turning them into the Mexicans we know and love today.
However, Mexico, Central America and the Caribbean is still overall the most violent region on Earth outside of actual hot war zones. Whether this is due to the people’s genetics, the climate, the Aztec Mayan cultural heritage, the Conquistadors, the Church, the United Fruit Company, the poverty, or to all the tortillas, hot chilly peppers and hallucinogenic mushrooms they eat is anyone’s guess.
Skeletons in cupboards notwithstanding, most of us aren’t exactly Jeffrey Dahmer.
The bond market is flashing its biggest recession sign since before the financial crisis
Jeff Cox | @JeffCoxCNBCcom
The spread between 3-month and 10-year Treasury notes has fallen below 10 basis points for the first time since 2007.
An inverted yield curve, where short-term yields are higher than their longer-term counterparts, is considered a reliable recession signal.
The Federal Reserve this week said the U.S. economy is still strong but is facing challenges from global weakness
To be sure, the dire warnings coming from the bond market have been coming over the past year or so, with still no recession in sight. Some market veterans are betting that this may be an example of the stock market getting it right and the fixed income side being too cautious.
“Could it be that the yield curve is signaling weak global economic growth and low inflation without necessarily implying a recession in the US? We think so, and the US stock market apparently supports our thesis,” Ed Yardeni of Yardeni Research said in his morning note Friday. “So why are global stock markets also doing so well? Perhaps there is too much pessimism about the global economic outlook.”
There’s also some indication in the market that the Fed’s move Wednesday to telegraph a decidedly dovish stance could help widen the spread somewhat.
However, the challenges for the economy remain.
https://www.cnbc.com/amp/2019/03/21/a-key-recession-indicator-just-did-something-that-hasnt-happened-in-12-years.html
What is the cost of producing a barrel of oil in the US, both the “unconventional” or the “conventional”
What proportion does the petroleum extraction “Non-conventional” with respect to the “conventional” oil?
Our Sir Harry, with his assiduous reporting of ominous news, reminds me of an artillery officer I once read about: salvo after salvo hit his battery, but at the end he alone stood, unbowed and unwounded! Facing into the storm of steel, we salute you! 🙂
Xabier, thank you! It is most kind of you to paint me as a resolute and heroic figure when in truth I probably veer closer to obsessive crank territory. 😀
Moving to an island in the tree-less Far North counts as heroic, in my book at least! Brrr….
Here, here
Hear, hear!
oops – quite correct! Senile moment
Pingback: A Different View of Venezuela’s Energy Problems - Deflation Market
IEA expects according to Aspo Germany a supply gap of 35 MM barrels until 2025. In the best scenario with huge investments they expect a gap of still 11 MM barrels per day. According to Forbes Venezuela’s highest-ever oil production peaked at 3.5 MM barrels per day (1998), double of the current output. So it seems as if even with huge US investments in Venezuela the supply crunch can only be moderated but not avoided.
http://aspo-deutschland.de/dokumente/100MioBarrelOil.pdf
https://www.forbes.com/sites/rrapier/2017/05/07/how-venezuela-ruined-its-oil-industry/#6f20c22d7399
I think that the idea of a “supply crunch” that most people have is wrong. In a networked economy, lack of supply can reveal itself as excessive wage disparity and collapsing debt bubbles. It looks like an impending recession or depression.
The idea of a “supply crunch” comes from trying to model a multidimensional economic system in too few dimensions. Huge numbers of people believe these models, but they fundamentally are not correct. ASPO has been a leader in promulgating incorrect models.
Of course, part of the confusion lies in the fact that Venezuela is part of a world economy. Even if the Venezuelan system is not sustainable, for a time, it can keep going based on the way the rest of the world is willing to supply goods and services that it cannot really afford. This, too, is part of the multidimensional system that it is impossible to model correctly. Economists simplify the modeling by assuming that the future will be like the past; all that is needed is curve fitting to past relationship, and that will provide the correct answer. That approach sort of works, for a while, but it misses turning points.
Excellent points Gail, thank you, and I do agree with you and take the view that the economies of the world are, as you say, networked together in so many ways that they form a complex adaptive system, much like a natural complex organism or perhaps a weather system or the stock market. If this is the case, then they are subject to non-linear growth and contraction, rarely remaining in stasis for long. Complex adaptive system theory therefore applies here.
On occasion, again you mention a tipping point, which in physics is a phase shift or critical point such as when water turns to ice or vehicles congest on a motorway for no good reason,- it happens all of a sudden. I feel that we are approaching such a point in the global economy, but ‘feel’ is all I have, I can’t support this feeling with modelling or calculations.
All I do know is that the statistics and models that academia are using do not reflect the real world and there is a deliberate faking of the numbers across many sectors..John Williams at:
http://www.shadowstats.com/ exposes this at his alternate data tab. And people do know, deep down, that their lives are not going on as well as the elite would have them believe. Even the Fed is guilty of sugar-coating their reports to keep a feel-good factor in play.
I think this is all wrong and the people should be told the truth, regardless of the consequences, because it will happen anyway at some time so the sooner we can get through it the better, allowing populations to live at a standard comensurate with the natural constraints inherent in the world. Brexit is a classic example of our leaders being unable to fulfill their responsibilities which exposes their incompetence in glaring ways and their inability reflect the wishes of their electorate. After all this is what representative democracy is meant to be all about Or is this me just whistling in the wind – sort idealistic wishfulness?
Excellent post. I agree especially with the last paragraph. People should be informed about where we truly and what we can expect.
“The IMF, central banks and politicians have warned about the proliferation of collateralized loan obligations (CLOs) and the threat they pose to the global financial system. Currency markets may be battered by breakneck volatility if a slowdown in global economic growth triggers a collapse in this fragile market.”
https://www.dailyfx.com/forex/fundamental/article/special_report/2019/03/22/Currencies-May-See-Wild-Swings-if-Slow-Growth-Breaks-CLO-Market.html
I am indebted to you again Harry – many thanks for the link on CLOs. Again it saves me time searching and I will add the link to my book footnotes. Cheers.
Lots of ways the world debt bubble can break! Think of what would happen to the derivatives market in the case of wild currency swings.
“Argentina’s economy sharply contracted in the fourth quarter while unemployment rose, potentially hurting President Mauricio Macri’s approval ratings as he seeks re-election later this year.
“Gross domestic product fell 6.2 percent from a year ago, the country’s statistics institute said on Thursday. It was the worst quarterly performance since 2009 after the global financial crisis…”
https://www.bloomberg.com/news/articles/2019-03-21/argentine-economy-shrinks-the-most-since-global-financial-crisis
“Mexico’s deputy finance minister said on Thursday the government was considering using part of a $15.4 billion public income stabilization fund to pay some debt obligations for heavily leveraged state oil company Pemex… Pemex has some $16 billion of debt payments due by the end of next year.”
https://www.reuters.com/article/us-mexico-oil/mexico-could-pay-pemex-debt-from-15-billion-stabilization-fund-idUSKCN1R303B
“The stakes in Turkish elections this month could hardly be higher, if the behavior of local investors is anything to go by. Households and businesses scooped up another $4 billion of hard currency last week, the most since 2012, driving their holdings to a fresh record.
“Fueling the rush for foreign tender is inflation, which is eating away at their lira savings, and concern the government will double down on policies geared toward priming growth rather than reining in prices after municipal elections on March 31.”
https://www.bloomberg.com/news/articles/2019-03-21/shock-of-lira-crash-pushes-turks-to-cushion-savings-with-dollars
“Fulfilling the world’s growing energy needs summons images of oil pipelines, electric wires and truckloads of coal. But Michigan State University scientists show a lot of energy moves nearly incognito, embedded in the products of a growing society.
“In this month’s journal Applied Energy, MSU researchers examine China’s flow of virtual energy—the energy used to produce goods and products in one place that are shipped away. What they found was that virtual energy flowed from less-populated, energy-scarce areas in China’s western regions to booming cities in the energy-abundant east.
“In fact, the virtual energy transferred west to east was much greater than the physical energy that moves through China’s massive infrastructure investment, the West-To-East Electricity Transmission Project. China is a powerful model of energy use, having surpassed the United States. In 2013, nearly 22 percent of global energy use occurred in China.”
Read more at: https://phys.org/news/2019-03-energy-stealthily-hitches-global.html#jCp
The fact that energy hitches a ride on physical transfers is what makes the measures of carbon used in carbon taxes completely false. Carbon taxes tend to send goods production to less industrialized countries. These countries tend to be bigger users of coal. The transfer of manufacturing very much stimulates all aspects of these economies, including road building and home building (with concrete homes, in the case of China). The outcome is completely the opposite of the intended result.
“Germany’s manufacturing slump deepened this month amid tensions in global trade. IHS Markit’s Purchasing Managers’ Index for the sector fell to 44.7, the lowest since 2012 and well below economists’ expectation of 48. That’s the third consecutive reading below 50, which indicates contraction. Gauges for new orders and employment declined.”
https://www.bloomberg.com/news/articles/2019-03-22/german-manufacturing-sinks-deeper-into-contraction-in-march
“Uh oh, are the wheels starting to come off again? The prints here are rather poor as they all fall into contraction territory (below 50.0). Markit notes that French business recovery is running out of steam in the face of deteriorating demand and that “there is definitely a risk of renewed downturn in France”.”
https://www.forexlive.com/news/!/france-march-flash-manufacturing-pmi-vs-514-expected-20190322
“The pound had its worst day in two months as traders suddenly awoke to the prospect of a no-deal Brexit. Sterling plunged as much 1.5 percent against the dollar Thursday as U.K. Prime Minister Theresa May gambled on getting her plan over the line with just over a week to go before the exit. Cable crumbled after the European Union told May that she can only have a short extension to delay Brexit if Parliament ratifies the divorce deal in a vote she wants to hold next week.”
https://www.bloomberg.com/news/articles/2019-03-21/no-deal-brexit-possibility-suddenly-comes-alive-for-the-markets
“One of the UK’s major toilet tissue importers has been stockpiling to ensure it can maintain supplies in the event of a no-deal Brexit. German-owned Wepa has stockpiled an extra 600 tonnes of finished product, or about 3.5m rolls, in UK warehouses.”
https://www.bbc.co.uk/news/world-47640908
My wife and son go through that much in a week.
Side note – On the podcast “Things You Should Know” they had an entire segment about TP – on average it increases a reliable 2% a year in good tmes and bad..
And worse: Sears is bankrupt!
When I was a kid, the Sears catalog went into the outhouse.
It was printed on very thin, strong, and somewhat soft “kraft” paper, not the heavy, clay-coated paper used with coloured inks these days… assuming you can still find a mail-order catalogue at all!
(Try wiping your but on an e-commerce site… 🙂
i preferred the Sears catalog over the alternative of a bucket of dried corn cobs.
That was indeed quite interesting turn of events suddenly.
Just for the fun, even many of the bookies stopped offering brexit bets, or paused for very unusual length of time at that point. That’s usually one of the best signs something systemic brewing on when the casino parlors go dark..
On national level it smelled like someone doing constant daily re-balancing act realized the threshold is here – it’s not worthy risking complete political realignment (public beyond ‘pizzed off’), i.e. loosing levers of power, so instead lets deliver the brexit now (before summer), and obviously readjust (con again) afterwards..
Very volatile times, looking in rear view mirror from say ~2025-7 vantage point, lot of things are going to change substantially.
My suspicion is that we will be using rear view mirrors, if at all, for starting fires and perhaps long distance signalling by 2025-7.
Let us hope that the global slowdown has not become irretrievably self-reinforcing and that the central banks’ return to ‘dovish’ policies can still stop the rot.
““Let’s be very clear what Wednesday’s full-frontal capitulation by the Fed means: It’s coming. The next recession that is. It’s just a matter of the how and the when… the Fed will never, ever overtly tell you a recession is coming. They can’t. Their underlying primary mission is to keep confidence up… but their actions speak loud and clear.”
https://www.marketwatch.com/story/the-feds-total-capitulation-is-a-bad-omen-for-the-stock-market-2019-03-21
Excellent review Harry, thanks – the market is telling us the truth, but it takes time.
The fact is that growth has stopped and has been negative if you believe John Williams at http://www.shadowstats.com/alternate_data which conforms to my projections described in Chapter 13 of my book: The New Emergent Economy”.
I propose that USA is already in recession (and has been ever since 2000) – just check out GDP figures published by John Williams at: http://www.shadowstats.com/alternate_data/gross-domestic-product-charts which is why the 95% are suffering a severe depression but the elite are fudging the stats and SNAP etc avoids the food queues. My timing is restricted to the 2020s because EROEI is driving the global economy to slow down quicker than expected.
On the CBs note, I guess it was Farage, yesterday, who spilled the beans on Carney (BoE) ‘secretly’ with his entourage visiting the Brussels HQ in some sort of hasty negotiations trip there..
“South Korean exports, seen as a bellwether for global trade, fell nearly 5%in the first 20 days of March…
“Exports to China and Japan fell by more than 10%. Shipments of microchips, oil products, and telecoms devices were all down.
“These data bode ill for [the first quarter],” said Freya Beamish, chief Asia economist at Pantheon Macroeconomics. She says the decline suggests an annualized plunge of 27.6% for the full month, a far sharper contraction than the 9.7% fall in the fourth quarter of 2018.
“The nation’s 20-day exports shrunk 11.7% in February, and there could be worse to come. “Leading indicators suggest the floor is not yet in sight,” Beamish said.
“South Korea’s export data is one of the first major economic indicators released each month… The latest downswing will fan fears of slowing growth in China and recession in Japan.”
https://www.sfgate.com/technology/businessinsider/article/A-data-point-seen-as-the-bellweather-for-global-13706055.php
“In 2009, China launched a $600 billion (€528 billion) stimulus program in an attempt to shield itself from the worst effects of the global financial crisis. Through its system of regional banks, the government offered cheap loans to thousands of state-run industrial enterprises, including steel, aluminum, cement and coal producers…
“A decade on, many of the estimated 10,000 zombie companies — including more than 2,000 funded by the central government — are losing money hand over fist, partly as a result of their own massive excess capacity.”
https://www.dw.com/en/frayed-nerves-as-china-kills-off-its-zombie-companies/a-48013707
“China’s rising unemployment adds to the economic woes of a shrinking labour force, which had declined every year since its 2011 peak to 897.3 million in 2018, with 775.9 million people employed.
“That puts pressure on the government to create 11 million new jobs this year to cap the surveyed urban unemployment rate at around 5.5 per cent and registered unemployment rate within 4.5 per cent.”
https://www.scmp.com/economy/china-economy/article/3002521/chinas-middle-class-stress-over-debt-payments-unemployment
In their december World Energy Outlook 2018 IEA warns against supply crunches starting 2020-2025 and recommends large investments. As it seems US fracking is not able to collect enough money now. I wonder if investments into Venezuela could do the trick and how long. OPEC reduces quantity to raise prices and make investments more profitable. Where will the money for higher prices come from? Obviously they will squeeze some people out to keep the system running. To exclude people from minimal living conditions is no solution? Economy is for people and not vice versa. I am not convinced that the braindrain causesd inefficient solutons, watch the Brexit process! The more close we come to the end of cheap oil the more socialist societies will be to keep people calm and maintain the right to property. For me the only option seems regional self supply with sustainable techniques, including building up soil and keeping in mind clima change. There are a lot of obstacles to do so, though, so we never reach a sufficient level. For those into econometrics the following study from 2014 might be interesting, they clarify some historical deficits in measuring the role of energy for creating wealth: https://iopscience.iop.org/article/10.1088/1367-2630/16/12/125008/pdf
It appears that the US “fracking revolution” has been almost entirely structured by debt, as well.
How do these two compare? I know the US probably has more profit-making conventional oil, but the much-touted “second peak” appears to be like a strapless evening gown — no visible means of support!
I know the US probably has more profit-making conventional oil
Actually, Venezuela has more conventional oil.
Much more—–
Countries With The Most Protected Lands (Percentage Of Area As Reserves)
https://www.worldatlas.com/articles/countries-with-highest-percentage-of-protected-reserve-lands.html
Thanks. Great info! Venezuela almost at the top! And no children or homeless people littering the streets. They must be doing SOMETHING right!
Anyone relying on MSM for information on Venezuela is delusional.
They have been wrong all along.
I use friends returning from the country.
Protected lands are often lands with little commercial value. I think that that is part of Venezuela’s problem. A lot of its land is not very useful, for anything other than forest. Forest fires are part of the natural cycle within these forests. (The same is true in California.)
If a country wants to string electricity transmission lines through these areas, it must be awfully careful, because it requires a huge amount of effort (and energy costs) to keep fires in the regrowth from damaging the lines. This is in addition to the risk that sparks from the transmission lines could cause fires. While it looks like these areas could be developed, this is only the case with huge inputs of energy.
Gail—
You really need to look at that closer.
Different eco systems.
Well said Every sugared centimeter of Earth is sacred-or none of it is -To include the space between Maduros ears
every square centimeter can anybody tell how to disable spell$&&@&&@“”!!check?
Oh Gail. How is it you continue to provide the best commentary that can be found! Just a few little comments. Libya going off line during its regime change didnt effect world markets in oil one bit. Things that make you go hmmm. And the debt of the USA government. How does it apply in comparison to venuzuela? It doesnt. Venuzuela didnt have the military power of the USA. Is that in doubt? Ask Saddam or Qaddafi.
Maduro is still there—-
Let me know when this changes.
It will He’s a mortal as is Guido Pinocchio All things must pass This whole world system is an absolute verification of the Absurdist School of philosophy We really can’t do better than this?Youve got to be kidding me man The dude abides
the nothingness of eternal death awaits us…
Drumpf just declared GOLAN as Zionist sovereign turf.
This is getting interesting, having someone with this lack of competency running the show—
Many of his previous real estate and other deals have been co(n)-invested from this very angle. Not mentioning the current family-clan status of his son-in law..
So, this is sadly not about lack of competency, this inner club is simply in charge since at least late 17th century globally. Now, they are facing interesting times for a change, they can’t move in person into China or India, and are to large extent blocked from orthodox Russia at least for current and upcoming next generation of policy makers there. And that’s shaping up while their assumed “home turf” West burns down, chiefly thanks to their successful prior subversion. They are increasingly desperate and pushed into corner, it’s about time.. Anyway it would be likely only temporary setback though as being the longest un-interrupted urban concentric civilization for say past ~4-5k yrs gives them huge leverage vs any other competing tribe, culture, ethnicity or what have you.
On the other hand, if this collapse wipes out all urban civilization for a few centuries (or even millennia) they’re not exactly set up to succeed.
yep, exactly, that’s implied in my post, however not sure if and when that’s going to happen though..
Can “we” make a deal with them though? They take their foot off our necks and we cut them in to some perks? They get to keep much, most or all of their stolen land (that they can manage without harm), but don’t try to acquire more. They allow us to carve out enough of our own territory to enable us to step the civilization down in an organized manner…
Gail,
I work in the oil business. At one point a few years ago I worked for a company that was a very large importer of Venezuelan crude into the US. My wife is Venezuelan, her family lives there, and I’ve traveled there a few times. I think I can add value to this discussion.
There are some hits and some misses in this piece. You’re trying to fit Venezuela’s collapse into the Finite Resources framework, which has some relevance in the long scheme of things, but the immediate cause of the collapse is socialism. They call it Bolivarian Socalism over there, and it most closely resembles Cuban socialism, updated and repackaged with new marketing and social justice themes for the 21st century.
Among some of the rank stupidities I saw with my own eyes while on trips there between 2012 – 2016:
– government building and handing out fully furnished 2 and 3 bedroom homes for the favela-dwellers, for free, by the tens of thousands. Within a couple of years these neighborhoods already started to look like the favelas the residents had previously inhabited.
– government passing a law in 2014 IIRC that banned companies from firing employees without government permission, which they never got. The result: businesses that are de facto not running, but where employees show up, collect a paycheck, turn on/off the lights, while the business owner bleeds out all capital until going bankrupt.
– the price controls….oh, the price controls! They fix a price for everything down there. There is a department in the Ministry of Popular Power for the Economy called the “Department for Fair and Just Prices” (I’m not making this up). They fix prices for consumer goods based on a social justice agenda, so that even the poor can afford to eat well, because anything else would be unjust, right? The result is, for example, chicken meat that sells for less than the cost of production, so all the chicken producers/importers go out of business and now no one has any chicken to eat any more.
– shopping in grocery stores where 3/4 of the shelves are empty and you have to visit 3 stores to find a few hot dogs for a birthday party.
– regular blackouts
– …and many more.
Venezuela is an oil-exporting petrostate. The last decade saw the highest continual oil prices in history. Venezuela should be swimming in money. So many other major exporters – Norway, UAE, Russia, Saudi – have set up huge investment funds with their export earnings from the past decade. Venezuela is dead broke. You even point out this massive difference in outcomes in your article, but then don’t follow through and recognize the one major variable that’s very different in Venezuela: the government and its Marxist economic agenda. The government is hostile to business and capital (remember the expropriations and nationalizations of oil companies, banks, mining companies, etc. there in the early 2000s?)
The US policy towards the country has nothing to do with its collapse. US sanctions didn’t start until 2015 and even then were against only a few individuals to begin with. Collapse was well underway then already. I don’t think the goal is to cause an oil shortage to raise prices. Trump has been very vocal about lowering oil prices for the good of the consumer economy and has tried to push the Saudis to compensate for what Venezuela is losing. I think the US is finally getting involved because Venezuela’s collapse is causing problems for neighbors in the region like Colombia, who are US allies, what with several million people leaving Venezuela in the past few years. The Venezuelan military and air force have also becomes involved in drug trafficking as a side business to pad their coffers. It’s not good policy to have chaos in your back yard.
FWIW, Guaido is the representative of the only governing body elected by the people in Venezuela – the National Assembly. The Presidency has become a dictatorship, surviving on rigged elections, the court system is stacked with Socialist loyalists, ditto for the new legislature that Maduro created (unconstitutionally) to replace the National Assembly after they started blocking his agenda.
All that being said, I agree with you that Venezuela had some long-standing structural issues shared by many other countries. Too many people, too little output. The country had 6 million people in 1960 with pretty good oil prices and exports over 2 million bpd. The fertility rate at the time was around 6 children per woman. Around 2010 or so the country had just under 30 million (lower now because of emigration), but was exporting a similar amount of crude oil. Think about that for a second – in 50 years, just 2 generations, they multiplied themselves 5 fold! It wouldn’t surprise me if fertility is below 2 now. That kind of mismatch between growth in mouths to feed and growth in available energy to consume is being seen in many countries today and it will hit a wall at some point. The difference in Venezuela is that the incompetence of the gov’t made it hit the wall right now in a catastrophic manner, rather than 30, 40 or 50 years in the future in a managed manner.
Phil,
Thanks for your fine comment. It is helpful to hear the views of someone who has been there.
I have been to Cuba and seen first hand how poorly their version of Socialism/Communism does. What is the point of going to work, or being a supervisor, if a person gets paid the same, regardless of what they do? I didn’t know how far Venezuela had gone in this direction.
I have talked about the laws of physics dividing up what is available, varying from very equally (as in the hunter-gatherer society) to very unequally (as in capitalism, when energy supplies are becoming too high-cost to produce).
The laws of physics also demand that the self-organizing economy “dissipate” as much energy as possible–provide as many jobs for people as possible, for example, and give people things that they desire, including homes, families, and vehicles. If citizens see other people with nice things, they want to have them as well.
When a large amount of a resource, such as crude oil, becomes available to a country that has previously been poor, there can be a tendency of leaders to be overly generous. If we think about the situation, this is (at least theoretically) helpful both to the citizens who are able to have many goods that they could not have had previously, and to the workers who are able to have jobs making some of these goods and services. And on top of this, leaders get to be popular with their citizens, if they can give them things that they could not previously afford. I think a lot of oil producing countries have followed this path. Economists encourage taking out debt to stimulate the economy. Of course, the IMF and other lenders encourage debt as well, because the lenders can skim profits off the top as interest payments.
In fact, our whole economic system revolves around “growth” and “development.” What is the point of all of the research being done in colleges and universities, if no one can afford the new products they come up with? University professors tend to be overwhelmingly liberal. They, too, encourage growth and development and use of new products. So every economic consultant that a person talks to encourages more roads, schools, electricity generation, and other things that people want.
Of course, because of diminishing returns and rising population, a country can quickly find that the new system that has been purchased by debt is unaffordable. In the case of Venezuela, the approach to dealing with this unaffordabilty was to cut back on new capital investment and on wages for those who should be higher paid (such as technical people and managers), in order to keep citizens from revolting. Equal incomes, if a person doesn’t understand what this does to motivation, look like they can sustain a bigger population on a smaller outlay. College professors and consultants are good at putting together “models” showing that whatever they recommend will work. They overlook the dependence of the system on a depleting resource base.
Our self-organizing system is very good at bringing together popular views that seem believable, but are really nonsense. This too, helps push countries in the direction of making bad decisions. The belief that we can get along without fossil fuels is one of them. Another is the belief that electric cars are in some way “better” or more sustainable. The belief that less developed countries can become more developed, especially if they have a resource like oil that can be extracted, is another one. The only story we ever hear is that everything will get better and better; the economy can only grow. The models we read about (even the climate model) are based on the false everlasting growth assumption.
In Spain there is a category of public employee called ‘funcionario’: basically un-sackable whatever you do.
Something of a hang-over from the paternalistic side of the Franco dictatorship, but just loved by politicians and above all the Left, as it delivers a secure voting base of public workers who can be bought off with privileges and pay rises that those in the private sector can’t dream of. Young graduates eagerly submit to a whole rigmarole of extra exams to get such coveted positions.
When people get paid regardless of whether or not they work, the worst of them just don’t do much, and the whole system becomes infected by laziness. Particularly true of the teaching and university sectors, local government and a whole host of advisory boards and councils. Most of my family feed off this system – smart move.
There is also the layer of directly-appointed public ‘workers’, at management level, in the gift of political parties. Again, no real need to accomplish anything while in the job.
Lots of young people I know in Spain have been educated in the beliefs of the radical Left, which is that if something is a human right, ‘it should be free’.
They are rubbing their hands at the thought of the collapse of Capitalism, as the wonderful day when everything will be free is dawning. After all, wealth is there and just needs to be redistributed……..
When I first joined the (UK) civil service, I couldn’t understand why I was first in every morning and last out every night. Whenever I asked why this was, the answer my colleagues gave me was “flexitime”. It took me a while to work out I was the only one doing my full contracted hours. Some were present as little as core hours i.e. 20 hours out of their contracted 37 hours.
My second civil service position was even worse. Where I worked there was a subsidised canteen (we’d all go eat a long breakfast mid-morning and a long lunch at lunchtime), a gymnasium (we could go work out anytime during the day), a library (we could read books/magazines or surf the internet all day) and a cheap bar that opened at 5pm. My job was maintaining a qualifications database and producing some tables. I received data once a quarter and could easily have the tables published within a week, leaving me little to do for the next twelve weeks except write computer games for my own amusement.
Can’t believe I ever left! (It was many decades ago, so perhaps things have changed now.)
Civil service joke:
Q: Why don’t civil servants look out of the window on a morning?
A: Because then they’d having nothing to do in the afternoon.
That comment also offers the ultimate argument against UBI too
Agreed. Work was at an individual’s discretion and many opted to do the bare minimum.
Yes Norman, and the Finns have given up on their pilot experiment because it didn’t produce the expected results., and I am not surprised.
it never could have succeeded
yet i feel like the eternal pessimist for pointing it out, as I did when it first kicked off, giving my detailed reasons
Size is the element that keeps being ignored. Is this on account of normalcy bias? It’s impossible to imagine a decentralized system, since we’ve never seen one. But it’s surely more costly to run a centralized system than the alternative. These days, nothing much works in a centralized system. Whether UBIs would have a better chance in smaller increments of governance is hard to say, if we don’t even think in those terms. Small groups write grants and must report on how effectively they use the money. That would be one consideration anyhow.
Yes indeed and our small group have been canvassing for change here in UK for some years now – to no effect I might add.: http://harrogateagenda.org.uk/
I am afraid that only a massive crisis will invoke the magnitude of change required for smaller government, locally based economies and sound money.
Peter Underwood
http://harrogateagenda.org.uk/
I use a different process, but it might arrive in a similar place over time. I tend to be incremental, feeling my way as I go. And what matters most is not people or democracy (although it may be, in a counter intuitive sense) but the land. Land must come before people. I’d also like to see some consideration of the British Commonwealth in a British-related vision..
Thanks Artleads and your observations are noted, I will pass them on to the group.and hopefully get back to you as only they can comment
@Artleads
I promised to come back with info from the Harrogate Agenda group in response to your questions.. They are people of few words and rapid action – and say: –“ THA has six demands to improve our governance based on returning sovereignty to the people and using many of the principles of Direct Democracy which will make our politicians our servants instead of our masters.”
We don’t think marching achieves anything but that lobbying key people in power and spreading the information by successful argument and interactions with others on social media etc is the way to promote change.
Peter Underwood,
This seems to be the moment for your group. Assuming that the UK costs the center more to maintain than it can afford, the question would be less about democracy than how to hold British civilization together in some unprecedentedly low-energy form. Mind over matter. Form over content.
Form for me exists already in how the empire organized itself: villages, towns, parishes, cities. boroughs… With the oil economy, did these units of government get compromised? If so, can they be restored? People respond to teams. “Our team/neighborhood/town/etc. is the best!”
With the energy crisis Brexit, how can these old forms be used to create order within a decentralized British realm? Can Ireland FEEL unified while also keeping within the Kingdom? Can Scotland and Wales restore a taste of their old independence while staying within the union? Can the UK find INFORMAL ways to FEEL like it’s still part of a (more decentralized) new EU?
Anyway, please indulge all this speculation. Thanks for responding!
Many thanks Artleads for your kind and supportive observations & questions and I am delighted to give you my own ideas. I have sent your last comments to the group for comment and I will send this one too and get back to you. You ask some very pertinent questions.
Yes, we do think our group is gaining relevance but we have a long way to go against the entrenched elite who have total control over the UK centralised state. The City of London is the ‘Deep State’ here in UK and is totally independent of government. This is along video but it will explain a lot about this:
https://www.youtube.com/watch?v=np_ylvc8Zj8
Britain was and is organised as you say but the real power is held centrally as they control all the budgets and political decision making. Regional and local governments have no power to raise funding or taxes unlike the American state system. All funds are allocated from the centre. Britain is one of the most secret states of all, all key decisions are made behind closed doors and in secret chambers established many centries ago.
You are right to suggest that centralisation is not feasible in the New Emergent Economy following the coming crash and energy crisis. TPTB will be forced to decentralise in order to hold the country together but not before riots and rationing are enforced because the elites will fight tooth and nail to hold on to their power base – but in the end they will lose.
UK has plans in place for regional controls in the event of a nuclear war designed during the cold war era and they have stockpiles of supplies and organisation already. It is likely that this plan will be implemented as dsiorder becomes unmanageable. UK has an advantage here because of our relatively recent experiences of survival during WW2 when we stood alone.
Brexit is a spoof IMHO. The elite will never let UK leave the EU, too much graft and money at stake. All this political noise will only result in an extended Art 50 period of up to 2 years, a general election and a 2nd referendum to keep us in the EU. When the crisis comes the EU will be one of the first to fail so I don’t see it impacting UK. N.Ireland will be just another region to administer. I don’t think the Union of N.Ireland, Scotland and Wales will survive; each area/region will become almost autonomous in their daily activities. Defence & Police might remain centralised but this is far from being a given.
We live in interesting times. I always thought that I would be long gone before the collapse arrives but my wife (who believes in the bible) says I am going to be around as surely as her God has dictated! Oh dear, I am 75 this year, so according to the prophesies we are close to the end times! I don’t put much store on 2000 year old scribbling but others do.
“I always thought that I would be long gone before the collapse arrives but my wife (who believes in the bible) says I am going to be around as surely as her God has dictated! ”
This produced more genuine mirth than I’ve experienced for some time. I still can’t stop laughing. I’ll side with your wife on this one.
Your Brexit scenario sounds very plausible, but barring an enormous popular effort, I suspect that the crash we envisage would be too costly to endure (in such a networked society). I think the times do call for a new religion–one that is somewhat amenable to secular tastes–to head off the worst aspects of a crash. Not a moment to waste.
Religions are likely to mushroom anyway, but without intellectual guidance and rigor, I’d expect the most alarming, batsh—t crazy ones to dominate.
Phew, that’s some confession. I’ve been in business all my life and thoroughly enjoyed it, being able to create things and feel the excitement of ‘winning’ orders etc. I can’t think of any other way to spend my time and putting myself in your shoes fills me with horror – I would be bored out of my mind in short order.
But many thanks for sharing it anyway. However you were talking of long ago, it can’t be like this now, surely?
I suspect things have changed for the better, what with our top civil servants (aka Members of Parliament) setting such a good example ‘n’ all.
My next employer eventually went full on Office Space, with micro-management, endless meetings and every minute of the day having to be accounted for. That was a ten times worse working environment and stifled productivity.
Oh, Yes I too have experienced that of which you speak. A very distessing experience and one I removed myself from very quickly!
Almost Soviet, Yorchican, (without the shootings, camps and compulsory lessons in political awareness).
Did people still moan about being underpaid? 🙂
Self-employed, I actually get up and work at sunrise because I love it (also like the afternoon siesta).
Interesting!
Obviously we can’t have a system that pays the same wage to everyone, those who’s skills are of greater value to the system must be paid more than let’s say, a dishwasher. Another problem is those who need help also must stop producing more mouths that need feeding or the $$ will stop flowing.
Nothing is “free”, free healthcare has to be paid for by someone, usually the taxpayer but there must be limits on the kind of care that will be provided, no boob jobs for you pauper.
How can companies expect to have “consumers” of it’s products & services if the “consumer” is out of work & homeless? ‘Bots are not “consumers” of goods & services.
Will the machines who now produce most of our goods also BUY some of the products they produce? Don’t hold your breath!
Our current business model is totally unsustainable, you can’t have 5% of the population stealing most of the produced wealth leaving the remaining workers with too little to live on.
Like Gail, I also noticed that the end is coming for fracked oil, it’s stock prices are falling, investors are not investing as much & banks are reluctant to loan it more $$ for companies that aren’t profitable & will likely never be profitable.
Without more investment, fracking will come to an stuttering end.
So what will the US do when it no longer has enough light fracked oil to blend with heavy oil from Venenzualia & elsewhere & it’s fracked oil production drops off the Seneca cliff?
Where or who will be the US’s next target?
Would it dare to go after Saudi Arabia’s oil?
Stay tuned.
‘….because Venezuela’s collapse is causing problems for neighbors in the region like Colombia, who are US allies, …..’ hmmm
‘For well over a generation Colombia has seen political corruption in government and mass murder undertaken by its army and by pro-government “death squads” – violence on a far greater scale than is recently purported to exist in Venezuela. There were, however, no US calls for the overthrow of successive Colombian governments. On the contrary, the US supported the Colombians with armaments, finance and goodwill.’
https://www.theguardian.com/world/2019/feb/25/us-hypocrisy-on-venezuela-sanctions
“government building and handing out fully furnished 2 and 3 bedroom homes for the favela-dwellers, for free, by the tens of thousands. Within a couple of years these neighborhoods already started to look like the favelas the residents had previously inhabited” – I know this from Slovakia regarding the Roma people. The problem is that when you have some limits, those people living on the limits, will not become rich when you move them to better houses: their income is so low that they can not sustain the living in better houses.
“The difference in Venezuela is that the incompetence of the gov’t made it hit the wall right now in a catastrophic manner, rather than 30, 40 or 50 years in the future in a managed manner.”
“Think about that for a second – in 50 years, just 2 generations, they multiplied themselves 5 fold!”
It is not the things that matters, it is the energy that can be distributed. In that way Gail is totally right: its not about government incompetence, but about the needs of the growing population vis-a-vis the ENERGY THAT IS HERE AND NOW at the disposal.
I should have written “bigger houses”, because that is the crucial difference: the energy poor people can not afford bigger houses, as living in bigger houses is more energy demanding.
Moreover, when you cover an area with houses, you need the corresponding energy, food etc. inputs to sustain the existence of such “island inhabited by human species”. If your country can not sustain such “island”, then you have to import those required items from other countries.
We should think about the urbanized areas or areas with human dwellings in such a way – as islands that need to be fed with the inputs from the surrounding areas and, at the same time, provide some inputs for other islands and areas – be it resources or pollution. That way the favelas provide more pollution than resources.
It’s hard to think of a rich trading (and industrialising) country more corrupt than 18th century England, the figures are staggering: but energy flows from a global empire were ever-growing, so the corruption and mis-direction did no real harm to the whole.
I saw that documentary- Paradise.
Blah blah blah. You sound like a partisan with a partisan wife.
Venezuela has had garbage support from the rest of the world. Most countries that aren’t tier-1 military powers are suffering similar circumstances, but minus the asymetric warfare.
If USA would act more like Russia and China have behaved in their hemispheres, Venezuela would probably have a much better go at things, Maduro or whomever.
All lies how do we know you are not a cia mole using a mix of truth and disinformation Trust but verify Example:I am a Martian citizen of the Northern province of ///()wxybn I have been farming Martian ungulates As has my family for approximately 10000 years ever since the great volcanic eruption of the sandurian epoch Our government recently……as infinity To great the great Ronald Raygun-“Trust But verify”Sir can provide with concrete verifiable evidence that anything you wrote is true-birth certificate witnesses where you went to school pay stubs work evaluation photos videos-Anything?no Extraordinary claims with no evidence can be dismissed with no evidence In this climate of full on economic warfare by the Chump admin don’t believe ANYTHING u read anywhere
Don’t believe none of what you read and half of what you read unless it confirms your current prejudices and worldview, certainly.
But what’s all this about extraordinary claims? I never agreed with Carl Sagan that they require more extraordinary evidence than common or garden ordinary claims do. Logic dictates, according to Mr. Spock, that all claims should require the same standard of evidence, and that applies whether you’re claiming you spent the evening touring the local bars or touring Mars.
So, you would require the “same standard of evidence” for a death-penalty crime as for a traffic ticket? The law disagrees with you.
There’s something called the “precautionary principle,” which demands that when the result of making a wrong decision would be catastrophic, a lower, “precautionary” level of evidence is warranted.
Probably the US has multiple reasons for what they’re doing with respect to Venezuela. While short-term oil price increases are no doubt a plus to domestic shale operators, LTO also needs to be blended with heavier oils; Venezuela’s oil is a suitable source option. Then there is the rabid fear of SOCIALISM! that seems to weigh heavily on the US elites. Cuba has no oil yet we’re 50+ years into trying to starve it off the map. And there is the long history of CIA operations in the southern hemisphere, though mostly those were driven by desire for easier access to resources, agricultural and/or minerals.
The US better hope that they hold onto the dollar staying to reserve currency; things may well go sideways if it doesn’t.
Pingback: A Different View of Venezuela’s Energy Problems – Olduvai.ca
It must be NICE….Yes, it is NICE….
WASHINGTON (Reuters) – The Federal Reserve will remain the top holder of U.S. Treasuries for the foreseeable future after the central bank said it would stop shrinking its $4 trillion (£3.02 trillion) balance sheet by the end of September.
So just what is inside this vast holding of assets?
Before the financial crisis struck in late 2007, the Fed’s balance sheet was less than a quarter of its current size and consisted almost entirely of Treasury securities.
Then, to help foster an economic recovery, the Fed went on a buying binge that ran from the end of 2008 to late 2014 in three phases, a programme known as quantitative easing (QE). It bought a mix of Treasuries and mortgage-backed securities (MBS) and over those six years its balance sheet mushroomed nearly five-fold.
Today, Treasuries account for just 55 percent of the assets on the Fed’s balance sheet. The other big chunk is MBS at about 40 percent. The remainder is a hodge-podge of other assets, including gold.
The Fed would like to get back to a balance sheet consisting mostly of Treasuries.
https://finance.yahoo.com/news/inside-feds-balance-sheet-four-000244089.html
Some comments…
$3T stimulus over an 8 year period (’09-’16) accounts for pretty much 100% of any GDP growth reported during that same period. This will not end well
The Federal Reserve will remain the top holder of U.S. Treasuries for the foreseeable future…………Nope, the FED does not intervene and manipulate markets, nope, not at all—-right
The Fed can’t balance any thing
Just like the trillion dollar annual budget deficit… Our grand kids will curse all of us for allowing this to happen. Our annual interest expense is currently $500B. Soon it will be $1T. Just think what we could do with that money. Rebuild our infrastructure. Improve our military. Shore up Social Security. It’s bad enough to run a massive deficit during a major recession. It’s completely unforgivable to do it when the economy is strong
And finally
They don’t even have to print it anymore. Just punch in a number in a computer screen and a zero or 2 or 3 or 10
See YA!
The overall US debt is ~$70T and that’s even without some of the under rag unknown unknowns (for us).. Is it beyond systemic stability threshold? Well yes and no. Firstly, it’s large part of the overall substrate for global economy, so no fool from competing factions is going to put it in jeopardy, powerful and stake-holding elites new or of recent pedigree simply want to ride that wild tiger till the last nanosecond possible..
Exactly: still The Keystone.
‘Improve our military…’ huh, with MOAR money?
How so grasshopper; you spend more than the next 10 countries combined (?) …are there more countries that need droning?
Isn’t there a problem though, if the US unloads the Mortgage-Backed Securities? This is likely to raise interest rates on mortgages, isn’t it?
It is my understanding that he US government’s mortgage plans are what allow most of the mortgages for all except the very wealthy. Cutting off the funding for this (or raising rates) would to be a major blow to the housing industry.
FedEx Earnings Signal a Changing World
InvestorPlaceMarch 20, 2019, 1:48 PM EDT
FedEx (NYSE:FDX) stock is on the investing menu today as the “disaster of the day” and it could take the whole market down with it. The shares are off almost $10 today, or over 5%, after announcing disappointing third-quarter results.
https://finance.yahoo.com/news/fedex-earnings-signal-changing-world-174818832.html
CEO Frederick Smith didn’t try to sugarcoat it, calling the numbers “below our expectations.” He promised new investments to lower costs and return to earnings growth.
Smith himself said he saw “green sprouts” in the international market, although CNBC called the earnings a warning that global growth is slowing.
Costs at FedEx Ground were up as the company launched six-day-a-week service and saw higher gas prices. FedEx International revenues were down, in part, due to weaker international currencies. Global profits were down on lower shipment weights and a customer preference for lower-profit services. Graf said the company is taking the usual responses to slowing business, buying out some employees, limiting hiring, and looking at other cost-cutting measures.
When they start laying off employees and mandating pay cuts, we be in deep poo poo.
Oh, doom and gloom post of the day.
Back to watching “The Price is Right”.
FEDX costs for international mail are totally out of sync with the needs and affordability of most people. That is bad for social cohesion and community development across their service area. They don’t seem to lose things, and they’re fast. bUT THEY NEED TO WORK WITH cUSTOMS IN LANDS THAT THEY SERVE. tHEY SHOULD PROBABLY HAVE A CHEAP CLASS THAT TRAVELS BY FREIGHT SHIP. Customs need to decrease their costs too.
“New investments to lower costs” seems to equate to capital investments to replace jobs. Ultimately, this leads to few jobs and more wealth for the owners of the capital goods (assuming that the system can be kept going, and earns a profit. If it doesn’t really work, we end up with investment with no real value, especially if international package shipment dwindles, regardless of shipping cost.
Folks…don’t push the Panic Button yet….but keep your thumb on it …just in case they cut rates
The yield on the benchmark 10-year Treasury note fell to its lowest level since January 2018 on Thursday, a day after the Federal Reserve held interest rates steady and suggested it may not need to adjust rates again for the rest of the year.
The Fed also downgraded its economic forecast for the U.S. economy and said it plans to end its program of reducing the bonds and mortgage-backed securities it holds on its balance sheet. Investors viewed the move — and subsequent comments from Chair Jerome Powell — as more restrained than expected.
https://www.cnbc.com/2019/03/21/us-bonds-jobless-numbers-in-focus.html
The 10-year yield held lower at 2.517 percent, while the yield on the 30-year Treasury bond was also lower at 2.965 percent. The yield on the 3-month Treasury bill, more sensitive to changes in Fed policy, was up at 2.48 percent, higher than the rate of return on both the 2-year Treasury note and the 5-year Treasury note
Gail, very good write up on the dynamics of Venuezal and their Public Economic History under Socialism. Makes me feel fortunate to live here in kleptomaniac USA….God Bless America.
We shall see how long our “, socialism” here continues with Social Security, Medicare/Medicaid,
Disability, ect. My 96 year old Mother went to see her eye doctor yesterday. After a battery of eye tests, ect. Her doctor again suggested having her cataract surgery to improve her sight.
She declined because she’s functioning and has other issues. Seems they don’t like that answer.
Of course, if she wants it, that’s fine with me.
Naturally, we have no clue how much this will cost the Government!
Just saying, enjoy the credit card magical spending…it ain’t gonna last.
P.S. for now will get a new left lense prescription for her glasses👁️
You can imagine how well pension plans are doing with these yields.
What we see in Venezuela is the impact of conventional oil production peaking.
Chavez demonstrates Orinoco extra heavy oil:
https://pbs.twimg.com/media/D1sWDw_VYAArTER.jpg
Orinoco oil is not cheap or easy to produce as it does not flow through pipelines. Naphtha or light oil is needed for blending. The funds for developing Orinoco should have been saved during the boom years of conventional oil.
26/5/2018
Peak oil in Venezuela: El Furrial field
http://crudeoilpeak.info/peak-oil-in-venezuela-el-furrial-oil-field
29/12/2017
Impact of oil production decline and low oil prices: Venezuela (part 1)
http://crudeoilpeak.info/impact-of-oil-production-decline-and-low-oil-prices-venezuela
“And I believe the history of communism is American history. America owes a great debt to the Red Menace. After all, the threat of Communism inspired us to our greatest achievements. The communists forced our hand on issues of poverty, lest the entire American capitalist project be swept away in a tide of home-grown Bolshevism. They held us morally responsible for our quotidian atrocities. They made us appreciate the arts. They made us stronger and faster. They sent us all the way to the moon.
Watching Rachel Maddow babble and hiss about Russians cutting your gas lines, one might come to the conclusion she’s merely a xenophobic paranoiac—which she indeed is. But when you catch all the anachronistic hammer and sickle iconography that so often accompanies our recent Russophobia revival, it’s clear that we’re not merely panicking, we’re mourning, and that we’re nostalgic for a worthy opponent. We miss the Soviets. Sure we make eyes at China, (who yes, looks stunning in red), but it’s just not the same. We are all the poorer for the loss of the communist states. The whole world is.”
indeed it was strange to hear the west all these years completely lose their minds over communism as though it was the worst thing that ever happened since the beginning of time. A philosophy that wanted to help people, and make them more cooperative. Not that it worked out that way mind you. Let us remember 2 things 1)The US had 10000 troops in Russia during the civil war after 1917.The Russian paranoia about foreign intervention was legitimate 2)Some of the estimates of the death tolls from alleged atrocities (the higher ones)are categorically impossible given the demographics of Russian census. Its complicated as to what exactly happened. I have no doubt “things were done “For my money I have never seen anything like the explicit photographic evidence we saw of the camps in Germany. The fact is the Soviets did do some good things. The Sputnik launch did inspire a resurgence of science in the US-no doubt. We need to work with the Russians and all humanity to get through the coming depletion of resources. I am a fan of JM Greer’s catabolic collapse model.In any case people who live in glass houses shouldn’t throw rocks.The USis not and never will be a shining city on a hill.Its just one more nation state ina long line,and its behavior dovetails with historic trends
I don’t think democracy is possible without a fairly high level of energy per capita. Governments take energy to operate. The simplest system is simply a medicine man or king or other ruler to be in charge, with a few assistants if needed. More complex economies can be possible with more energy per capita.
Having a very diverse economy, with each person having a lot of freedom on what he/she can do, also takes a lot of energy per capita. A teacher can teach much more easily to a group of students who all memorize the same material, rather than accommodating students from many different backgrounds and ability levels. This has to do with how much complexity the economy can have.
I expect that quite a few of the atrocities have to do with not enough cheap resources to go around. Killing off part of the population raises the food per capita.
agreed
the so called democracy of ancient greece was in effect supported by the energy input of a slave system
Superb article Gail. Have to go to work now, will comment more later. Thanks.
“…it doesn’t take a catastrophe like war or drought to disrupt [food supplies]. In Venezuela, a country blessed with rich oil reserves, a political crisis driven by rocketing inflation has led to shortages of food and medicine, forcing families to live off rotten meat and leading millions to leave the country all together. The Eurozone crisis that sent Greece’s economy to the brink of collapse also brought food shortages to the struggling country.
“Meanwhile, disease, poor weather and rising prices have led to shortages of a number of popular crops in recent years. Soaring rice prices led to panic buying in the Philippines and other Asian countries in 2008, causing a supply crisis for this staple food. Bad weather in Europe in 2017 saw prices of many vegetables rise while there also were worldwide shortages of avocados after several countries were hit by poor harvests.
“The fuel protests that hit the UK in 2000, where farmers and hauliers blockaded oil refineries and fuel depots, led to supermarkets rationing food as they struggled to get deliveries to restock their shelves. Even the stockpiling of food by schools, care homes, hospitals and pessimistic shoppers in the UK ahead of Brexit show what effect even the mere rumour of food shortages can have…”
http://www.bbc.com/future/story/20190319-what-happens-when-the-food-runs-out
Many thanks Harry, that is a remarkable article; so much so, that I have included it as a footnote in my book. It really does show how people draw together in times of adversity. I remember the 2000 fuel crisis in UK. I was in a supermarket and witnessed an elderly gentleman ahead of me with a basket containing 2 loaves of bread (the shelves were empty). He turned around to get something from a shelf and, whoosh, the bread was gone and a young person was rapidly disappearing down the aisle!
A salutory lesson for me who tries to think the best of people.
You are welcome, Peter.
The fuel crisis of 2000 is one of the examples of supply-chain vulnerabilities used by David Korowicz in his excellent ‘Trade Off’ paper:
“…in the UK in 2000, when the UK Home secretary Jack Straw accused the blockading truckers of “threatening the lives of others and trying to put the whole of our economy and society at risk”. This was not hyperbole. As the protest evolved over about ten days, the UK’s Just-in-Time fuel distribution system started to break down.
“Supermarkets, which had also adapted to Just-in-Time re-supply, began to empty. Supplies and staff could not reach hospitals, forcing emergency-only admission. If it had gone on for only a few days longer, large parts of UK industry would have shut down as the normal operation of re-supply ground to a halt. One of the most advanced and complex societies on the planet was within days of a food security crisis.”
http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/
After the 2011 London riots, supermarkets and other stores in those areas cut their stock levels down even further.
Harry, you are a wonderful source of amazing information, many thanks for this one – again I can use it in my book (Part 2) WIP at present and due to be released later this year as the crisis develops. Part 1 – 3rd edition is in the final stages ready for publication in H2 – 2019 (When Brexit is finalised or NOT! Best regards.
Bless you for the kind words, Peter.
I often get slagged off for pointing out that in times of absolute life threatening crisis, people are only concerned with themselves and immediate kin
I hope you hold and show the evidence to prove otherwise, Norman, for they know not what they talk about. My book contains many examples.
No surprise. In Bilbao these days the immigrant criminals actually specialise in robbing the weak and elderly – they never go near their equals in age or strength.
In London, my very elderly mother had to endure a house raid by 4 large men, just hours after I’d left her.
My goodness – how horribly traumatic, Xabier! Did they catch them? And was she able to continue living there afterwards?
Fortunately, it wasn’t traumatic at all as it lasted only about 10 minutes and no violence was used or threatened, but they got into every room in that time: they were very skilled, and even walked up her creaking stairs without a sound (I’ve taken notes on their technique!)
£10,000 in cash gone,and all her jewellery, some 200 years old and very sentimental. They wore vests with pockets into which the loot went, no bags.
I suspect an awful lot of elderly people have stashes of cash,and these people must make a very good living: only 10% of reported crimes get to court as you know.
For anyone interested, the initial scout was – as far as I have pieced it together – someone who hung around the street and pretended to be a building worker with tool box, always on his phone. This was one month or so before the robbery, and my mother – who is very intuitive – thought he was dodgy.
Won’t happen in your island paradise, I’m sure.
IMHO, Xabier, it happens all over the world. I spent 10 years in Cape Town and this ploy was so common with the blacks that we always had to take notice when buidling work either private or public was going on. I learned to be very canny during those years having come from innocent UK, which looks as if it’s going this way too. It was never a problem in the 1950s, but that was a more civilised time I believe.
Well, we have had some instances of gas canisters being nicked recently, although suspicions as ever are directed at mainlanders, particularly the travelling folk who like to come here and do a spot of coursing.
Glad your poor mother wasn’t too brutalised. But – ouch! 10k and sentimental losses, too. 🙁
Sorry to hear that. It can leave emotional scars for life. As a trained humanistic counseller I have come across many examples of these sad cases. I am hoping that under the New Emergent Economy following GFC2 as described in my book, people’s attitudes will change, more like they did during the war here in UK.
Bravo
“At the end of 2015, managers at Rosneft, the Russian state-controlled oil firm, sounded the alarm to their bosses about the company’s investments in Venezuela. Rosneft’s local partner, Venezuelan state oil company PDVSA, owed it hundreds of millions of dollars, according to internal documents, and there seemed no prospect things would get better…
“Rosneft was standing by its Venezuelan partner just as the Kremlin was supporting leader Hugo Chavez and his successor as president, Nicolas Maduro…
“Rosneft has poured around $9 billion into Venezuelan projects since 2010 but has yet to break even, Reuters has calculated, based on Rosneft’s annual reports, its public disclosures and the internal documents.”
https://www.reuters.com/investigates/special-report/venezuela-russia-rosneft/
And another post peak oil producer in a pickle:
“…[UK North Sea] drilling activity is at a “record low rate” and supply chain firms remain under “significant financial stress”.
“The report states that operators will need to spend £200bn over the next 16 years to achieve “Vision 2035”, an industry objective to extend the life of the UK offshore sector.”
https://www.energyvoice.com/oilandgas/north-sea/195167/200bn-needed-to-add-generation-to-north-sea-life-says-flagship-report/
Interesting! More money-losing oil operations. Anyone want to take this over?
As .no controls ~ $750B portfolio in their wealth fund, they can easily ‘borrow against’ that and subsidize the energy – extractive industries for many years to come. Again, lets repeat the fundamental key change, since ~2008 aftermath the question of debts, deficits, and negative yields does not matter anymore. It’s simply a new paradigm VISIBLY agreed upon and performed daily by the CBs, govs, and biggest private stakeholders GLOBALLY. It’s the (very?) last stage of the unchained credit system going back to late 17th century (in the global sense). We have to wait till serious political realignments occurs due to ECoE prosperity impoverishment (unlikely) or real physical shortages intervene first (more likely). But at that edge cliff point the chaos would be unbearable for most to cope with the situation anyway.. so why bother. Actually, even the upper management level people like Macron know that very well, (evidently several PO/surplus energy aware advisers on various gov panels) so why not having a ski holiday during ongoing protests in Paris.. good live continues..
And again similarly, only now some of the French unions are in lukewarm fashion proclaiming they might consider to join in and mount general strike. But obviously it will be watered down version of that, not true decisive attempt like blocking refineries or other core JITs. They just want some new version of socialist policies in place and go home.
You see it’s a very slow process, nobody is rushing anywhere as long as food and games are somewhat a plenty. It’s human nature, it’s biology, there is still lot of stuff to be burned on the altar of consuming society even when we likely reached the no growth bumpy plateau..
Good analysis but I’m confused about the references to the US being in control or having the ability to decide how export revenues are used. Could you expand a bit more on that?
The United States is Venezuela’s biggest trading partner, both for exports and imports. If the US “cuts off” Venezuela, it is in tough shape. It doesn’t need to send in military.
Thanks, Gail. Well, the US could certainly wreak havoc but I’m not sure that equates to being in control of the situation or being able to dictate how Venezeula’s revenues are used.
The Venezuelan economy is already on the edge of collapse. Having its biggest import/export partner cut it off would likely push it over the edge.
Also, a portion of its exports are already pre-sold to China, and perhaps some to Russia. The US would try to cut them out of the deal. As long as they take part of the total, Venezuela is definitely headed for collapse quickly, even without US actions. If the US can cut out China/Russia, that would leave more for the US and the Venezuelan people.
Greetings from the Big Mango (Bkk).
Thanks Gail, for a very credible alternative View. It also highlights the significance of large debt collapse.
With the coming decline or choppiness in production you indicated last post, would you anticipate the US taking the oil industry under National control? They would then make sure the military got their cut first and the rest of us got Ration cards.
Countries normally take over oil companies in order to gain revenue from them. Taking over money-losing operations, when the US is already having debt problems, doesn’t sound like an option most would favor. Also, it takes a whole lot of specialist to run an oil company. They have to be paid big bucks, in order to work. This also isn’t something that the US wants to get involved with.
So you think the US want’s to curtail Venenzualia’s oil production to raise prices? Venenzualia oil production was already in decline so if that was the goal of the US, all it had to do was, nothing.
I suspect the real reason it wants Maduro out & Gwido in is that US fracked oil production will soon tank, the value of stocks of fracking companies is crashing, they have been losing money for years & paying dividends by borrowing, but if the banks won’t lend them more $$ & investors stop investing in a losing enterprise, production from fracking will collapse & oil prices will rise, temporarily if the economy can’t support those higher prices & past high oil prices proved it can’t.
Also Venenzualia’s oil is very heavy but it can be upgraded with light fracked oil to produce transportation fuels that the OIL powered, US military empire needs.
I guess the US empire doesn’t think that Venenzualia’s economy isn’t collapsing fast enough so it’s forcing it’s collapse so it can install it’s puppet who will then allow US oil companies to take over Venenzualia’s oil fields, ship it’s oil to US refineries so it can upgrade it with it’s fracked oil.
That move will probably stall our collapse.
This looks dead on, excellent analysis Sheila, thank you. Interesting to see what Gail says, perhaps I’ve missed something..
I think so too. I did read that Venezuela’s oil cannot be fractioned in Venezuela. No plants were allowed to be stationed there[?]. This means that for petrol and kerosene etc Venezuela has to import it all for domestic consumption. That certainly doesn’t help.
I wouldn’t blame socialism. You have to blame the management of it, often highly incompetent. The USA is partly socialist, what I call ‘small S’ socialism. The Military and the police are included as well as social security ,infrastructure and education and healthcare. These are partly privatised at great cost to the nation, now looking decidedly third world, because of it. At least when you call the Police they don’t have to ask you for your credit card number.
“At least when you call the Police they don’t have to ask you for your credit card number.”
Yes, John – there are some benefits:
In my part of the UK, Somerset, the police don’t even turn up, they are so laid back. But I must admit that crime is somewhat limited here.
Here in police states of america I’m more intimidated and fearful of the police than criminals or crime. In fact when you factor in taxed to pay for them to act like an occupying army they have taken more from me than any criminal ever could.
Wow, I have read about the cops in USA but didn’t really believe it was that bad, Dan. What a terrible state of affairs.
I tend to agree with this as well and some who follow the geopolitics surrounding Venezuela say pretty much the same thing. The rolling (US sabotage) blackouts and US sanctions have crippled Muduro’s country.
There are also reports that there is plenty of food in the country and that most have gone to a non meat diet becuase it’s too expensive.
No, 20 years of ham-fisted socialism crippled the country. The (very recent) sanctions are just the final nail in the coffin. The rolling blackouts were already a thing several years ago. They’ve just accelerated in frequency more recently.
The Venezuela situation is right out of the playbook of John Perkins “confessions of an economic hitman”. Yeah I see the USSA’s fingerprints all over the Venezuelan crisis. I stopped listening to the USSA with “that Saddam Hussein has WMD’s. Fool me once, shame on you, fool me twice shame on me.
Saddam was a madman. He had plenty of chemical perhaps some biological. Chemical used both in iran iraq war and on civilians the kurds. No one liked Saddam. While the shia didnt have us kissing babies like we thought saddam was hated. Most of the Iraq military didnt put up a real fight. The ones that wernt decimated. Saddam had to go.
Do you honestly believe Iraq is better off today than before we invaded? Can you explain to me if the region is better off and why?
While you shed your tears over chemical attacks (which is atrocious) think about the tons and tons of depleted uranium we have littered Iraq with from our munitions.
I really want your answer here on how Iraq is better off – I’ll grant you SH was an ahole but having your country invaded and occupied by a power that wants resources is no picnic either.
Absolutely agree Rodster, you are so right to distrust Amercia. IMO they are losing credibility daily. When I read John Perkin’s book I was reminded of another one I read a long time ago but cant remember the title. It was about all the false flags initiated by USA over the years. I remember the ‘Tonkin’ incident and Northwards proposed operation on Cuba, but little else.
https://www.wanttoknow.info/010501operationnorthwoods
Very recent…since 1994… guess thats a blink in geologic time but it forever when it comes to financial terms.
VZ has suffered the modern equivalent of a medieval siege at the hands of the US regime. But the US regime grows impatient, as they did with the Syrian govt.
I do believe that the US regime has a lower voter ‘legitimacy’ than the Maduro Govt?
Just saying.
Election meddling anyone?
Evidence please You have submitted none
The US needs higher oil prices now. The US saying that it doesn’t plan to raise interest rates has pushed the US dollar down, making the US’s oil prices higher. But it could use even more uplift to the dollar and the price. Waiting for Venezuela’s production to fall would be to slow. Also, the country would tend to fall apart as its exports drop. Doing something before everything falls apart would, in some sense, be optimal. Otherwise, the oil production from Venezuela is permanently lost. In fact, it may already be permanently lost, because the electricity system is in such terrible condition.
I don’t know how the US will do this. I think it will take more than US oil companies going in. There has to be a huge investment in electricity, as well, for example. I am not sure anyone has thought this through. A puppet government can’t really fix the problem, IMO.
Could Nuclear Power hold the answer? Its reactions pound per pound has a higher energy density after all? Could it be the holy grail to all this?
I see China is investing heavily into Nuclear Power research. And even Saudi Arabia too is investing in Nuclear Power.
Should help kick the can down the road at the very least in your scenario, at least until we run out of fission fuel.
Nice comment! Enjoyed omost as much as the comments from the one who is gone who may not be mentioned 🙂
Gail,
Love and admire your work but believe the real problem in Venezuela is socialism that allowed the over expectations and failed to plan appropriately for the future. Have been following Jose on Daisy Luther’s blog for over a year. It paints a dire picture evolving for since the election of Chavez.
on a related side note, this story…
https://www.thegatewaypundit.com/2019/03/icymi-120-christians-slaughtered-by-muslim-herders-in-nigeria-media-silent/
and to think some people are horrrified by the fiction of The Handmaid’s Tale…
when this is an actual worldwide reality…
Quite: getting their knickers in a twist over what white males might do , as portrayed in a mere (improbable) novel, when ‘religious’ savages are murdering and raping at will.
Doesn’t get any headlines either, for some reason.
Poor Nigeria, and everywhere else where poor people are the playthings of fanatics and ambitious politicians.
Although there is another interesting aspects to this: the age-old struggle between the herders and the settled.
you are right to be worried about the handmaid’s tale
https://www.dailykos.com/stories/2019/3/19/1843361/-MAGA-s-advocating-for-Dictator-over-United-States-at-Bannon-Rally?
there you see evil personified—someone who wouldn’t hesitate to make Atwood’s predictions come true in the flesh—and look at Bannon grinning and applauding her every insane word, and the audience. Nobody walked out
look at her face as she speaks, and know what she’s capable of—and millions like her who see Trump as their saviour.
Hit ler didn’t dirty his own hands, he had plenty of eager and willing helpers. In her, you see what they look like, and hear the words they utter
The fascist spectre is rising again, with the same aims as last time
On the ridiculous concept of “evil”…
Friedrich Nietzsche, in a rejection of the Judeo-Christian morality, addresses this in two works, “Beyond Good and Evil” and “On the Genealogy of Morals”, where he essentially says that the natural functional non-good has been socially transformed into the religious concept of evil by the slave mentality of the weak and oppressed masses who resent their masters (the strong). He also makes a critique of morality by saying that many who consider themselves to be moral are simply acting from cowardice (wanting to do evil but scared of the repercussions).
We get it Norman – you don’t like Trump. I think a lot of people share your view.
But Trump-lovers, people advocating dictatorships, fascists themselves… none of these things are inherently “evil” (assuming there even is anything inherently evil in this world). They’re just misguided and/or opposed to what you see as being “good” or “right” in your perceived existence.
Fascist Germany, Maoist China, Stalinist Russia, Kleptocratic USA, perhaps the soon-to-be US Trumptatorship, “Peoplekind” Canada, the father who beats his kids, the kid who kicks his dog, the husband who cheats on his wife, the student who cheats on their test, the bully in the schoolyard, etc. … none of these things are inherently “evil”, they’re just symptoms/outcomes of the reality we’ve all created for ourselves.
Labelling them, moralizing over them, making derogatory statements about them or passing judgement on them really doesn’t help; understanding (with an open mind) how they came to be part of our reality may be a more fruitful/productive option.
Just my 2 cents…
Cheers,
GBV
i do understand how these people ”came to be”
it doesn\t make their aims any more pleasant though, or what they desire to inflict on the rest of us
those who welcome the dictator for salvation, are always the ones who get screwed by him
Beautiful Well said!!!
When there are not enough resource to go around, people fight their neighbors.
Any breakdown will work to accomplish this goal. Different religions is one such breakdown.
If it weren’t religion, it would be something else–say, skin color.
I don’t see the situation as “bad” or “wrong.” This is the way the world’s self-organizing economy works. The worst outcome would be a situation like Haiti, with way too much population for the arable land. Most of the oil countries have a huge problem with too much population relative to arable land. Animals set up territorial markers and fight others that cross them, as a means of keeping population down. That would also work.
Nigeria is an oil exporter with declining oil production, besides falling prices. This chart is by Ron Patterson of The Oil Barrel.
https://gailtheactuary.files.wordpress.com/2019/03/nigeria-oil-production-ron-patterson.png
Nigeria’s population has been growing as well. It would be another candidate for collapse, between falling oil prices and declining oil production.
whilst high-speed train touring South Korea top to bottom with a local friend, I noted that a lot of land that would normally be unproductive for crops, like the odd-sized lots around roadway intersections, train bridges, steep slopes, etc. were being cultivated. at first glance, it looks like high efficiency, upon further review, it looks like desperation. there’s not a lot of flat land in Korea.
This country’s (NZ) media and governing classes have gone batsh*t crazy over the Christchurch event. Never let a ‘crisis’ opportunity go by. Haven’t bothered with MSM media here since last Friday.
Female popn being encouraged to wear head scarves today…maybe they will give up their other freedoms (voting, driving, etc etc) eventually…
Definition of insanity (doing same thing expecting different results) comes to mind re the thousands of years of failed long-term co-existence of different religi**s groups.
Of course the US has had a siege mentality towards VZ since 1994 and the advent of Hugo. No matter what system of Governance a country has, the imposition of sanctions for so long a period, the theft of opportunities and assets, and the denial of access to capital and technology would cripple any country.
This is a continuation of US meddling with oil rich countries, and in this case, the intentions are barely concealed.
But Maduro is still there–
And they are still selling oil.
On the Ground in Venezuela vs. the Media Spectacle
https://dissidentvoice.org/2019/03/on-the-ground-in-venezuela-vs-the-media-spectacle/
Helpful article. I know the region, and this seems like a plausible explanation.
This is good:
” What surprised me was how many people are growing their own vegetables. It is a bit like in Russia, where everyone has a dacha. Venezuela is tropical, so it is easy to grow produce. Mango trees are everywhere, so you can pick a mango whenever you want.”
“No matter what system of Governance a country has, the imposition of sanctions for so long a period, the theft of opportunities and assets, and the denial of access to capital and technology would cripple any country.”
and add on Maduro’s incompetence and corruption…
nearly perfect recipe for disaster…
Venezuela – Journalists Doubt Guaidó’s Legitimacy – Regime Change Plans Continue
https://www.moonofalabama.org/2019/03/venezuela-journalists-doubt-guaidós-legitimacy-regime-change-plans-continue.html
“This will be a long fight.”
regime change… coup… apparently will take an additional long time…
the US led coup in Ukraine in 2014 was swift…
and seems to have been a disaster to the citizens of Ukraine…
Maduro on a plane to Cuba would probably be beneficial to the citizens of VZ…
but doesn’t seem like it will happen soon…
my sympathies to the people of VZ…
Thank you Gail for this post.
Very interesting and to the point.
This is the first time I comment and I am curious if you could contrast this socialistic republic with the quite socialistic monarchy of social democratic Norway, as you know this as another oil exporting and partly dependent nation.
I would like to differ, for instance, on redistribution policies which have worked quite well (US readers: Read astonishingly, feel_the_Bern-well) in Norway.
The average citizen of Norway has a value of 1.2 million dollars.
Not bad for a socialist country.
(According to the Federal Reserve, the average net worth for families in the U.S. under the age of 35 was $76,200 in 2016. That same year, the median net worth was $11,100)
relative to its small population, Norway has massive FF reserves… oil and natural gas…
by exporting much of these, Norwegians have amassed much wealth…
they are probably the luckiest socialist country ever…
they just happened to have all that FF…
socialism and luck have been a good combination for them…
With vanishing fish stocks, rather infertile land, and over-populated, the prospects for Norway are not very good of course: there was a reason for the Scandinavian expansion of the Dark Ages – poverty and over-population. As well as the 19th century migration to North America.
Like everyone else, they have failed to control population, and kicked out the lower rungs of the ladder they climbed with the rest of us in Western Europe.
The newly-imported welfare class in Norway (as everywhere) will also cause huge problems when the fossil fuel bounty fades.
the biggest joke of all of course
is that Norwegian oil funds are invested in areas unconnected with oil—to ”safeguard the investment”
what advice genius are they consulting? Everything is linked back to oil availability. When oil goes, everything goes, The Norwegians will be in the same boat as the Saudis, only colder
“The greatest risk to the global economy today is that the fossil fuel industry — if you want to lump it all together, which in itself is dangerous — becomes so battered that it doesn’t invest enough to keep the system going.
“I think the world today, especially the young among the populace thinks that the renewable industry is taking over and that’s fine, it’s all going to be hunky dory. Paris met, two degrees, fossil fuel dies, renewable takes over. What we’ve tried to do at Lambert Energy is just point out the unbelievable risk of that position unless we’re very careful.
“Today, June 1 [2016], we will consume the equivalent of 270 million of oil, and most people imagine that you can replace that pretty quickly and seamlessly with wind, solar, electric cars whatever. But of that 270 million, 75 million is coal, 65 million is gas, and 95 million is oil. Nine million of that is wind and solar, and bio-fuels. So before we delude the world that it is going to be easy to replace it we’ve got to have a realistic debate about the cost.”
(Phillip Lambert of boutique advisory firm Lambert Energy, speaking at the Financial Times’ Energy Transformation Strategies conference in London)
any discussion on re-investing to provide more in the future should always include the word ”surplus”—it almost never does
The only thought is of money itself
surplus is the critical factor that most people ignore.
in previous times there was lots of surplus energy in reinvest to get hold of more energy, no we don’t have those surpluses, but the magic word keeps getting reused as though we do have those surpluses, same as we did 50 70 years ago
that’s the part that few recognise and accept—we won’t crash through lack of oil we will crash through lack of surplus oil
quite a joke
The citizens of Libya, were probably the wealthiest per capita in Africa, before the Western powers destroyed the country to prevent its move into a gold currency, which could not be allowed to threaten the petrodollar. Libya had a state bank, in which the oil wealth was shared with the citizens, a high standard of living, etc.
The wealth of Norway could disappear in a heartbeat in the future.
Norway’s socialism was established long before its recent wealth from oil and gas. Before oil, Norway was basically a very poor country. Most of the land was (and is) not arable. Building roads required huge investment in tunnels, making travel by vehicles difficult. Population grew rapidly for a time, making resources per capita low. Many people from Norway emigrated to the US in the latter half of the 19th century and the early 20th century, because it was so hard to make a living in Norway.
In this situation, sharing everything as much as possible was optimal. If we go back to hunter-gathering, this was based on a “Gift Economy.” A person’s status depended on how much the person could share with others. Even today, parts of Africa and India use this approach. If someone gained $1,000,000 in a lottery, that person would share the proceeds with all his friends and neighbors. No one would consider the idea that being wealthier than his neighbors would be helpful. In these situations, there is not a lot of capital investment required or desired. A big part of what drives inequality is capital investment. Also specialization, so that not everyone is a farmer with few modern tools.
In Norway’s undeveloped state, sharing was optimal. Fighting neighboring countries was not; it would lose every battle, no matter how big an army it would put in place. There was no need for a big army. Staying neutral was optimal in wars.
With the advent of oil wealth, Norway became unbelievably wealthy. Hydroelectric wealth played a role as well. Norway’s leaders realized that this wealth was not permanent wealth, however, so trying to ramp up everyone’s living standards to this level didn’t make sense. Instead, it made future promises, which probably can’t be kept. It was able to provide outstanding benefits that we associate with socialism. But still, there seem to be wealthy people in Norway as well, with fancy houses and boats. It wasn’t in a situation where there was “not enough to go around.” The situation was that there was a temporary superabundance, that could be shared with all.
You may know that my ancestors came from Norway, some around 1910, others earlier.
When
“If prices actually rise, and if the United States remains in control of the situation, the US could theoretically expand Venezuela’s oil production. Venezuela has the largest oil reserves of any country in the world.”
And it should be pretty obvious why a self elected leader is claiming he’s the President of Venezuela with the USA’s backing and why they are seeing their electric grid crippled with blackout after blackout. Survival of the fittest I suppose.
Could be. I am sure someone would volunteer for the position.
Thanks, Gail. I really like this “case study” approach to the issue. Will you consider doing other countries?
That is an interesting suggestion.
What seems to happen is that I dig through a whole lot of data on a particular subject, and make quite a few graphs on a subject. I then try to write a post on the subject, and discover that I have way too much. I end up rewriting it, and focusing it differently, sometimes more than once. Eventually, it sort of comes together.
If I knew the answer completely first, it would be a lot easier to write.
India looks like it would be interesting. Saudi Arabia would as well. I have written about China somewhat earlier. Its huge debt level is frightening.
If you do choose to write a post about China, be warned in advance; you can expect an attempted point-by-point rebuttal from Godfree Roberts, which is bound to be thought provoking.
Not even Einstein or Hawking — let alone some unheard-of gentleman by the name of Godfree — can deny the validity of the basic laws of arithmetic, according to which China is simply headed for a very rude awakening if she seeks infinite growth in a finite world.
I absolutely love (premodern) China, but this doesn’t stop me from seeing the tragically mistaken nature of the path down which she now travels. And it is seeing this that makes my love for China… a very painful thing…
Consider writing on Oman, whose debt has recently been downgraded to “junk” status.
Very interesting post. The canary in the coal mine comment raises the question whether you have already been thinking ahead to which other oil exporting countries might be most likely to collapse next. Any thoughts about this?
And how exactly is the us sanctions in any way the wisest approach to solving these problems As soon as the word socialist is spoken the us system goes completely berserk maybe someday cooler heads will prevail but I doubt it
I am not sure what is the wisest approach. I think that physics decides the outcome for us, in some sense.
I imagine that what US leaders are looking for is higher oil prices, and sanctions against Iran and Venezuela sort of meet their ideas of how higher oil prices might be accomplished. Personalities and political parties (Obama vs. Trump for example) don’t really matter too much, I am afraid. As I said in the post, I don’t expect that this plan will really work. It may be the underlying story of how oil production falls.
It is all very strange. There seems to be a literal higher power, somewhere acting in the background. The literal higher power pulls the strings, so to speak. This higher power created the laws of physics, and uses them in a way that we mortals have a hard time understanding. There have been a huge number of strange situations which seem to be coincidences that have kept our civilization on earth operating. How our civilization ends seems to be beyond our direction or control. Needless to say, this is not what the Powers that Be tell us is the case. They say that they are in charge. Just trust them.
Maduro was to be gone long ago, and obviously again in Dec/Jan.
He is still there, with popular support.
I would not trust MSM– they have been continually wrong.
We will see who gets that largest oil supply—–
The US is getting frustrated.
We should also recall the MSM assurance that Putin was ‘just about to topple in a month or two’ a couple of years ago, as the Russian people were so angry with him and everything was going wrong there.
At the same time, a Russian friend told me, after visiting Moscow, that he’d never seem Russians look happier or more relaxed (a great contrast to the Moscow of his childhood!)
Of course, the situation in Venezuela is very different and really turbulent, but one can always take these propaganda assurances with a pinch of salt.
I find this scenario impossible to refute. Feeling or sensing how the higher power physics wants to flow (and going with it) does seem wise. But if one hasn’t lived in Central America, they might miss how much Venezuela’s oil subsidies helps maintain what ever thin vestige of stability there is there, and how very dependent US stability is, in turn, on that.
https://www.democracynow.org/2019/3/21/anti_government_protests_continue_in_haiti
Excellent article Gail, thank you so very much, in amongst all your domestic affairs – you do so well to keep us informed. I have a contact in Venezuela who keeps me informed of what’s going on and I will send him your link.
As regards what happens next, I think Dr Tim Morgan has the best prognosis which of course conforms with yours and mine. If the price of oil escalates then we will be back in GFC2 very quickly, just like last time because oil prices affect every other commodity and people will be unable to maintain their standard of living which is gradually decling now anyway as dictated by physics. QED we end up with a severe depression and collapsing asset values.
But I don’t think oil and energy prices will suddenly go up this time around. I believe that a crisis will occur before this happens – I am speculating that we will have two more years at most and so I am preparing accordingly.
It is possible to come to a similar solution several different ways.
Yes, agreed and it is pleasing that we are all coming to similar solutions which might indicate that we are on the right path in our prognostications. We are a small group though and the bulk of the populations are living in ignorance and are deaf to it, sadly.
https://www.democracynow.org/2019/3/21/anti_government_protests_continue_in_haiti
Good question. The first country to collapse from low oil prices was the Soviet Union, back in 1991. The initial impetus underlying this collapse seems to be the raising of US interest rates to a very high level, back in 1980-1981 period. So it is clear that there can be a long time lag involved. These high interest rates dropped oil prices, and thus removed the implicit subsidy that the Soviet Union had been getting from selling its oil exports.
I would have to do some studying to see if I could figure out which countries seem to be next in line.
Soviet Union rather disintegrated than collapsed into internal chaos. Thanks to the diversified economies of its states, these states could survive somehow. But the desert states like Yemen or Lybia fell into chaos. Venezuela with its population fed almost solely on oil exports, too.
USSR disintegrated chiefly on political-social grounds (incl. many other factors, like the economy Q, nomenclature corruption, as well as active foreign meddling – subversion), which is demonstrated by the fact of the deepest slump registered there somewhat later ~1993-1999. Simply, the naked printing plan of the West in the late 1970s and 1980s, among other things enabling notched up arms race left them with very little maneuvering space, which they did not manage to utilize wisely in that so called mid 1980s ‘perestroika’ plan implementation as opposed similarly and batter planned transition in China. If you study the case in detail, what the post Yeltsin era regime actually did was to revive the already prepared-existing but not acted upon strategic plans to modernization. Yes, the rising energy prices during 2000s helped, but their govs worked with a gamut of scenarios for this revenue (hi-mid-low), and delivered on the upper boundary wave of that. It was bit of timing luck and preparedness, plus resolve working together in great synchronicity or actually acceleration effect.
Dr. Tim’s very recently revealed estimates on ECoE (incl. developed vs emerging re-balancing) puts them on the top best spot (predicted here before), hence the always repeated theme of their high chance of attempted quasi autarky for a while vs. the likely implosion of some of the other Western IC hubs, especially those not linked to their energy exports potential, in the mean/near time horizon..
Mozambique is a possible candidate, as they are mired in debt problems and have just been absolutely whammed by Cyclone Idai. Algeria is also not a bad bet:
https://www.wsj.com/articles/algerias-political-turmoil-casts-doubt-on-oil-and-gas-deals-11552911490
Also why is the US attempting to force Europe to buy more expensive LNG All Russia wants to do is provide Europe with natural gas perhaps the most versatile resource ever at affordable rates What about Us never ending brutal intervention in Central/South America And how are all those capitalist paradises dosing in the other Latin countries I am a hybridist when it come to economics
The US is trying to force Europe to buy more expensive LNG because it wants to cause a shortage of natural gas in the United States and, in that way, drive up natural gas prices. The plot line is a lot like the oil plot line. Shipping costs of LNG are terribly high. The US cannot ship LNG to Europe at other than quite high prices.
Natural gas is also reaching the limits of the price level that consumers around the world can afford. Without higher natural gas prices, the US will reach limits on its natural gas extraction very soon.
Any oil producer that stops to provide cheap energy to the goods producers is doomed to collapse. Hiring foreign qualified workers like in Lybia could help for a while. The next collapsing oil producer is somebody who is on the same track. Is there in fact anybody similar to these two countries? Iran or Argentina started to deploy nuclear, which is repeated by the Gulf states. Syria failed to do that and collapsed, too. So the answer is: those oil exporters that do not deploy nuclear.
Using nuclear does save some oil and gas for export, I agree.
It seems like there are a number of Middle Eastern oil exporters that cannot get along for very long on today’s low prices. But most of these countries were not borrowing early in their oil extraction, so they can hang on longer.
One country that started doing borrowing earlier and more aggressively than most others is Ecuador. In fact, Ecuador and Venezuela have been friends. I see a December 2018 article in the LA Times called Ecuador faces a huge budget deficit because of loans it received from China.
According to the article:
I visited Ecuador in 2009, with a group of oil bloggers (not peak oil folks, however) and Chevron employees. The situation was amazing. Correa was strong arming the press and putting out an anti-Chevron campaign that everyone believed. Correa was trying to shake down Chevron for a huge amount, and Chevron refused to pay. The US press was republishing the nonsense that Correa was putting out. I wrote up a story about my experience on The Oil Drum. No one believed me. They thought that I had been misled by the Chevron employees. The Dubious Lawsuit against Chevron.
There was a Part 2 as well, which I published on a website other than The Oil Drum, because Oil Drum bloggers were so totally taken in by the Correa nonsense. (Big bad oil company harms country, etc.)
The suit was ultimately resolved in Chevron’s favor.
September 2018: International tribunal rules in favor of Chevron in Ecuador case
This shake down was part of Correa’s funding scheme at that time. (Would save the country from adding yet more unrepayable debt.) The US press fell for it because it fit in with the “big bad oil company” narrative that everyone was telling.
I expect Ecuador should be on the list of countries that could collapse.
This is a link to my second Ecuador post. In other words, the one I wrote after The Oil Drum said that they did not want a Part 2.
https://dailyreckoning.com/a-baseless-lawsuit-against-chevron-in-ecuador/
Thank you Gail, a fantastically strong post.
There are so many lessons to learn from Venezuela, but it is being used as a mere political football: ‘Look what Socialism does!’ or ‘Look how the wicked US conspires to bring a strong Socialist country down!’
And so the real lessons are not learned.
In Spain, the ‘radical’ Left still adore Venezuela for the social justice policies, ignoring the fact that it was first spending a substantial oil bounty, and then an oil bounty that really didn’t exist anymore.
And the Right hate it for the same policies: both failing to see what has really happened and that it was always a house built on sand, whatever external enemies did.
Thanks! It seems like it takes looking at particular circumstances to see what is wrong with the system in general. There is so much published nonsense that it takes someone coming from a different direction to take a fresh perspective.
I had trouble finishing this post in a timely manner partly because I decided to change topics late in the timeframe. There were also a couple of other issues–a room redecorating project, in anticipation of company coming this next weekend, and a minor back injury (now pretty much healed) that arose out of a furniture moving project gone wrong. I still need to do some things before the company comes, so I am not completely past my time availability problem.
and of course the collapse of Saudi will follow a similar pattern (disbelief–blame in on someone else) but the violence of that really will engulf the world because it will cut our oil jugular
Saudi Arabia is of course on the list of countries that could collapse. Needless to say, the scenario in each country will be somewhat different.
Saudi is built on infinite expectations
collapse is certain
SA needs to get back to a mobile population of less than 2 million.
They did fine for thousands of years with that model.
It will happen no matter what.
… and his son will ride a camel.