Why it (sort of) makes sense for the US to impose tariffs

Nearly everyone wonders, “Why is Donald Trump crazy enough to impose tariffs on imports from other countries? How could this possibly make sense?”

As long as the world economy is growing rapidly, it makes sense for countries to cooperate with each other. With the use of cooperation, scarce resources can become part of supply lines that allow the production of complex goods, such as computers, requiring materials from around the world. The downsides of cooperation include:

(a) The use of more oil to transport goods around the world;

(b) The more rapid exhaustion of resources of all kinds around the world; and

(c) Growing wage disparity as workers from high-wage countries compete more directly with workers from low-wages countries.

These issues can be tolerated as long as the world economy is growing fast enough. As the saying goes, “A rising tide lifts all boats.”

In this post, I will explain what is going wrong and how Donald Trump’s actions fit in with the situation we are facing. Strangely enough, there is a physics aspect to what is happening, even though it is likely that Donald Trump and the voters who elected him would probably not recognize this. In fact, the world economy seems to be on the cusp of a shrinking-back event, with or without the tariffs. Adding tariffs is an indirect way of allowing the US to obtain a better position in the new, shrunken economy, if this is really possible.

The upcoming shrinking-back event is the result of too little energy consumption in relation to total world population. Most researchers have completely missed the possibility that energy limits could manifest themselves as excessive wage disparity. In fact, they have tended to assume that energy limits would manifest themselves as high energy prices, especially for oil.

The world’s networked economy doesn’t work in the simple way that most researchers have assumed. Too much wage disparity tends to lead to low energy prices, rather than high, because of increasing affordability issues. The result is energy prices that are too low for producers, rather than too high for consumers. Producers (such as OPEC nations) willingly cut back on production in an attempt to get prices back up. The resulting shortage can be expected to more closely resemble financial collapse than high prices and a need for rationing. Trump’s tariffs may provide the US a better position, if the world economy should partially collapse.

Let me try to explain some pieces of this story.

1. Energy is needed to power the world economy. This fact has been missed by politicians and most economists. 

Economist Steven Keen recently developed a graphical explanation of the role energy plays in the world economy. In his graphic, he shows that workers need food (an energy product) just as machines need some sort of energy product to operate. In Steve Keen’s words, “Labor without energy is a corpse: capital without energy is a sculpture.”

Figure 1. Graphic by Steven Keen, depicting the role of energy in the economy. Energy in the form of food is necessary for human labor, just as energy (in one of its many forms) is needed for physical transformations that make the activities underlying GDP possible. These physical transformations necessarily lead to both the desired products and multiple types of waste.

In fact, there is a physics reason why energy consumption is needed in the economy. Energy “dissipation” is needed for the physical actions underlying GDP. For example, transportation requires a physical movement of people or objects. This can only happen with the use of energy. Even the use of heat or of electricity requires energy dissipation.

2. China’s huge growth in energy consumption since it joined the World Trade Organization (WTO) in December 2001 is truly amazing. It has changed the world order in a few years.

China’s energy consumption ramped up very quickly after joining the WTO in late 2001. At the same time, the energy consumption of the US and the EU stagnated, as manufacturing moved to China and other Emerging Markets.

Figure 2. Energy Consumption for the United States, China, and European Union, based on data from BP’s 2018 Statistical Review of World Energy.

As the shift in energy consumption occurred, jobs shifted elsewhere. Also, the competition with China and other low-wage countries tended to hold down wages of workers whose jobs could be shifted overseas. When we look at labor force participation rates for the US, we see that these seem to have turned down about the same time that China joined the WTO. This suggests that workers started leaving the workforce about the time competition with China ramped up.

Figure 3. US Labor Force Participation Rate, in chart prepared by the Federal Reserve of St. Louis.

3. China is now facing a problem with Peak Coal. Its level of coal production is barely sustainable because of depletion and low coal prices. 

Figure 4. China energy production by fuel, based on BP Statistical Review of World Energy 2018 data. “Other Ren” means Other Renewables. This includes wind, solar and other renewables, such as wood burned for fuel.

If China is to manufacture goods and services for the world economy as well as its own people, it needs a growing supply of cheap-to-produce energy. China’s largest source of energy is coal. China’s coal production hit a peak in 2013 and has been on a bumpy plateau, or falling, since. The problem has been a combination of (a) a higher cost of coal production, because existing mines are depleting, combined with (b) coal prices that do not rise high enough to make production from these mines profitable.

Of course, if coal prices were to rise higher, China would have a different, but equally serious problem: The cost of finished goods created for the world marketplace would be quite a bit higher, making it difficult to export them profitably. If customers’ wages rose at the same time coal prices rose, there would be no problem. The problem could be described in some sense as growing mining inefficiency because of coal depletion. Unfortunately, the world economy does not reward a shift toward inefficiency.

4. With Peak Coal occurring in China, it makes little sense for the United States, the European Union and others to depend as heavily on China as in the past.

The economy of every country today is built on debt. If the world economy is growing, this debt pile can rise higher and higher. If interest rates can be brought ever lower, this also helps the pile of debt rise higher and higher.

China’s economy also uses increasing debt to sustain its economic growth. If the economy of China should slow down or start shrinking because of energy limits, debt defaults could start overwhelming the system. Uprisings from laid-off workers might become difficult to quell. The situation could easily spiral out of control.

Economies around the world depend on China for many manufactured goods. In fact, for many minerals, China’s usage amounts to over half of the world’s consumption. This arrangement doesn’t really make sense because (a) China cannot really be depended on for the long term because of coal depletion, (b) jobs that pay well in Advanced Economies are being lost to China and other Emerging Markets, and (c) the level of concentration of manufacturing in China puts the world system at risk if China has any kind of adverse shift in its economy.

5. The whole idea of buying fuels from other countries only works as long as there is enough to go around. 

Many people are of the opinion that if there is not enough fuel of a particular kind, fuel prices will rise, and the market will continue to operate normally. There are at least two reasons why this doesn’t make sense:

Reason #1. The issue underlying rising costs of fossil fuels is nearly always depletion. For example, with coal mines, the coal closest to the surface in the thickest seams is extracted first. As this is depleted, deeper coal in thinner seams can also be extracted, but the cost tends to be higher. When depletion takes place, it is nearly always possible to extract more of the given fuel if some combination of more human labor and more technology (powered by energy) is used. Of course, adding labor and/or technology leads to a higher cost of production. 

But the prices of commodities are not determined based on the cost of production; prices are determined in the marketplace. They reflect the quantity of finished goods and services made with these commodities, that consumers (in the aggregate) can afford. Extracting coal or another fuel in what is essentially a less efficient manner doesn’t add to what consumers can afford. The combination of flat prices and higher costs leads to unprofitable producers–precisely China’s problem. Producers tend to cut back on production.

We can see that higher energy prices don’t lead to higher wages by looking at what happened when oil prices rose a few years ago in the US. We see that higher oil prices led to lower average wages because of recession.

Figure 5. Average wages in 2017$ compared to Brent oil price, also in 2017$. Oil prices in 2017 dollars are from BP Statistical Review of World Energy 2018. Average wages are total wages based on BEA data adjusted by the GDP price deflator, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Reason #2. If we look back at the timing of Peak Coal in the UK and in Germany, it looks very much as if depleting coal supply was one of the causes of both World War I and World War II. Governments know that energy supplies are required to operate their economies. If they cannot get enough energy products internally or through trade, they will fight other countries for access to supplies.

Figure 6. Image by author.

Economists, sitting in their ivory towers, have not stopped to think through the obvious. Their standard supply and demand curve does not work for energy because an adequate supply of cheap energy is needed for both the demand for goods and services (coming from wages workers earn) and the supply of goods and services. Once affordability becomes a problem, because too many people have low wages, the prices of fuels stop rising. It is the fact that prices don’t rise high enough that causes the “peaking” of oil, natural gas, and coal production. Extraction stops, even though there seem to be plenty of resources still available with current technology.

6. A major energy issue today is the fact that China and India have run through their own energy supplies and now need to import energy from outside their countries to supplement domestic supplies.

As shown in Figure 4 (above), China’s coal production stopped rising in 2013, keeping the total amount of energy it produces close to flat. To compensate for this shortfall, China has started to import oil, coal and natural gas. The difference between the thick black line and the top of the “stack” of types of energy produced in China (in Figure 7 below) represents the quantity of fuel that it has needed to import. Clearly, this quantity has been increasing.

Figure 7. China energy production by fuel plus its total energy consumption, based on BP 2018 Statistical Review of World Energy data.

India’s coal supply is not yet decreasing, but it is running into a similar problem. It needs to import more and more energy products from abroad, as its energy consumption (thick black line) rises above its energy production “stack.”

Figure 8. India’s total energy consumption compared to its energy production by type, based on BP 2018 Statistical Review of World Energy. “Other Ren” includes wind, solar, and other commercially traded renewable types of renewable energy, such as geothermal.

7. Worldwide, there is a growing need for imported fuels of many kinds.

Figure 9 shows the imports needed for five major areas of the world. In this analysis, the European Union is treated as a single unit. Thus, in this analysis, the imports it receives are only those from outside the European Union, taken as a whole.

Figure 9. Required energy imports for five major areas of the world, based on the difference of energy consumption and energy production shown in BP’s 2018 Statistical Review of World Energy.

We can see from Figure 9 that the European Union and Japan have been major importers of fuels for a very long time. India and China have only in recent years become energy importers. At the same time, the US is becoming more and more energy sufficient with its own fuel production.

Figure 10 shows the ratio of imported energy to total energy consumption for these five areas.

Figure 10. Percentage of energy imported in 2017 in Japan, India, the EU, China, and the US. Imports calculated as the difference between Total Energy Consumption and Total Energy Production based on data from BP 2018 Statistical Review of World Energy. The European Union is treated as a single unit. Thus, energy imports are those from outside the EU.

The US is clearly in a better position than other countries/groups shown, with a smaller share of energy imported in Figure 10 and a declining trend in imported energy in Figure 9. Japan, the EU and India are all subject to substantial risk if available imports should fall.

8. The ramp up of “clean energy” to date has proven to be a major disappointment. The quantities added are far below what the IEA believes is needed.

Partial confirmation of this statement can be seen by observing the tiny orange “Other Ren” bands on Figures 4, 7, and 8 for China and India, which include wind, solar, and other non-hydroelectric renewables. China is the largest user of wind and solar in the world, yet its use of these devices provides only a tiny portion of its total energy consumption.

We have known since the 1950s that fossil fuel supply would eventually become a problem. Academics, with their focus on making models, have been able to come up with hypotheses regarding what might act as substitutes. But these models tend to miss a lot of things, including the following:

  • Adverse events, such as Fukushima for nuclear.
  • The need for electricity storage and extra long distance transmission lines, as wind and solar usage are ramped up. The cost-benefit analysis is much less favorable with these added.
  • Issues that affect only some installations, such as workarounds to keep long-distance transmission lines from starting fires in dry areas, or the high cost of underground transmission lines.
  • The best sites are taken early.

It is not until the actual experience arrives that we see how these substitutes are working in practice. If we think back, the nuclear promise of producing electricity that was hoped to be “too cheap to meter” hasn’t really panned out. In fact, many Advanced Economies are cutting back on their use of nuclear.

With respect to “renewables,” (including hydroelectric, wind, solar, and others) the amount of new generation added each year seems to have hit a plateau. It may be that the additional need for storage and transmission lines are already slowing the growth of renewables.

Figure 11. IEA Renewable Net Capacity Additions as of May 2019. Source: Chart from India Times.

The IEA has started pointing out that far more energy investment is needed if sustainable development goals are to be met–about 300 GW per year, instead of the current 177 per year in additions, on average, between 2018 and 2030.

9. Donald Trump and his advisors have sensed that the current economic system is not working because of too much wage disparity. If the economic system is destined to break in one way or another, Trump can influence which way the break will occur by the imposition of tariffs.

Trump and his advisors no doubt recognize the importance of a cheap, available energy supply. They also realize that energy is an important enough factor of production to fight over. Furthermore, many past wars have been resource wars. Tariffs are, in some sense, a step toward a resource war.

One of the immediate problems at hand is too much wage disparity. Strange as it may seem, excessive wage disparity can be a sign of inadequate energy supply because in a networked economy, high prices of commodities and low wages of workers are almost “mirror images” of each other. High commodity prices tend to cut off consumption of commodities (such as oil or coal) by prices of finished goods that are too high for consumers.

Excessive wage disparity works in reverse: It sends prices of commodities (such as coal and oil) too low, cutting off production because prices fall too low for producers of these commodities. Production falls because producers cannot make a profit. When wage disparity is very high, a large share of workers have very low wages, leaving them unable to purchase more than a small amount of high-priced goods (such as cars and homes) made with commodities. It is this low “demand” that holds down commodity prices.

Figure 10 shows that wide income disparities were issues both at the time of the Great Depression and in recent years. Commodity prices have been relatively low each of these times. The problems didn’t look like shortages; they looked like gluts because of issues related to lack of affordability.

Figure 12. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.

The US has raised tariffs in the past. One time was immediately before the US Civil War. Tariffs were again raised in 1922 and 1930, when wage disparities were at a high level.

Unfortunately, there is a significant chance that major parts of the world economy will start collapsing, with or without Trump’s tariffs and the trade war, because energy supplies worldwide are not growing sufficiently. In fact, some of these energy supplies are purposely being removed by producers, such as Saudi Arabia, because prices are too low.

By putting tariffs on some goods, Trump is providing a substitute for the missing high oil prices needed to slow the growth of globalization, if the issue of ever-increasing wage disparity is to be solved. The tariffs tend to raise the value of the US dollar relative to other currencies, making the cost of commodities (including fossil fuels) cheaper for US consumers than for other consumers around the world. The tariffs tend to encourage new investment in US production of many types, at the same time that they make investment in other countries, such as China, less appealing.

All of these changes indirectly give the US an advantage if there should be a partial collapse of the world economy. With the benefit of the tariffs, perhaps the partial collapse would leave some combination of countries, including the US and Canada, mostly unaffected. There might be other groups remaining as well. Weak economies, such as Venezuela, Cuba, and Haiti, would likely be pushed aside. Even Europe and Japan would likely have major problems.


Most observers have missed the point that excessive wage and wealth disparity can be a sign of serious energy problems, just as high prices can be a sign of short supply. They have also missed the point that coal supply is very important, just as oil supply is very important.

In the real world, when there is not enough to go around, wars are a definite possibility. A trade war is a somewhat reduced version of a war. Trump and his advisors, whether or not they understand the real situation, seem to be trying to guide the US to as good an outcome as possible, in the current situation of excessive wage disparity.

The underlying issue is likely the Limits to Growth problem modeled in the 1972 book, The Limits to Growth, by Donella Meadows, et al.

Figure 13. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil,” with dotted line added corresponding to where I see the world economy to be in 2019.

As resources become depleted, it becomes increasingly difficult to maintain economic growth. Industrial output per capita (for example, the number of new cars or number of smartphones per 1000 people) starts falling. The 1972 computer simulations did not consider wages or prices, only physical quantities of various items.

Now, as we can see how the limits are playing out in the real world, it appears that the most prominent manifestation of the world’s low resource problem is excessive wage disparity–an issue most people have never considered as being related to shortages of resource supplies. Few people have stopped to think that goods made with energy products are equally unaffordable whether the problem is prices being too high, or wages of most people being too low.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,341 Responses to Why it (sort of) makes sense for the US to impose tariffs

  1. Harry McGibbs says:

    “Mario Draghi pledged to do “whatever it takes” in 2012, buying government bonds to stop the panic in the eurozone debt and banking crisis. The result was cheery markets but debt-laden governments and unreformed economies.

    “The same action on a global scale could lead to debt mountains everywhere. As an example, the US is already running a vast budget deficit in the good years – with QE backing it. This could go exponential in a slump.

    “Such forecasts sound a lot like monetary financing – printing money to fund Government spending, which is anathema to independent central bankers.

    “The likes of Powell, Draghi and Mark Carney say that they are only employing QE in order to hit their inflation targets. If it starts funding government spending then there is a risk that inflation could get out of hand.

    “Countries such as Italy are already struggling with their debt levels. Rome’s Government wants to borrow and spend more and is facing a new battle with the EU over its borrowing plans. The temptation for extra borrowing and spending, backed by ECB bond purchases, could spark chaos.”


    • Harry McGibbs says:

      “From within financial systems, a crisis can become deeper through a ‘doom loop’ mechanism. Today low interest rates have led to a buildup of debt because it’s cheap to borrow. Corporate debt is at historic highs, creating considerable concern for UK and US officials. Household debt is also high.

      “High sovereign debt could also bring down already weak banks if their exposure to the debt loses value, forcing governments to bail out the banks. This would create more sovereign debt, leading to downgrading of the sovereign debt held by the banks, which in turn makes the bank balance sheets look worse and triggers further bail outs. Each step in turn sends institutions spiraling down.”


      • This article also points out that a new risk is emerging–that of the big central clearing houses that could fail.

        A little understood new threat to financial stability are the central counterparties, according to Professor Portes. After the crisis the authorities insisted that central counterparties take the risk between agreement and implementation.

        “So the idea was to put deals through central counter parties. The trouble is these institutions are absolutely enormous. The London Central Clearing House transacts trillions. If one of these institutions failed we would be in big trouble.”

    • John Doyle says:

      It is all a sign of total economic incompetence. Neo-liberal policies are all collapsing and none of the economic heavyweights has a clue about what to do. This is why Brexit was a good idea[doesn’t mean it won’t get stuffed up] ‘The EU is a neoliberal construct, deliberately by Delors etc. Thatcher made one [just one] good move and that was to keep the pound. The treaty of Lisbon accommodates it so it can move freely in response to circumstances. Italy cannot, having committed the cardinal sin of giving up their monetary sovereignty. They can only act independently by disregarding the treaties and replacing the Euro with the Lira again. Greece too baulked at it but should have persevered. Brussels would have to come around or scrap the whole edifice. You just cannot countenance 60% youth unemployment. a common figure in several nations. Wealthy nations can afford full employment[2% unemployment].
      It would pay for itself in short order, not only by adding to gdp with workl but saving on mental health problems.

      • But we know what happens when people are paid for barely working. For example, in Cuba, people don’t come to work, or appear late. The story is, “They pretend to pay us and we pretend to work.” At least that is what I heard.

        Pay needs to compensate for real effort. We have too much wage disparity now. But this approach compensates too much in the wrong direction.

        • John Doyle says:

          I don’t support a UBI, but I support the Job guarantee. Up until the 1970’s there was a virtual job guarantee in all the western nations, as far as I know. IF each person has a meaningful life, then you case won’t arise.’The jog guarantee has a major plus;
          Jordan Peterson said “I don’t care how open, how creative you are, without a routine people just fall apart. Money doesn’t give you a routine; a job does”.

          • Japan has essentially been trying a job guarantee, as far as I can see. It creates a whole lot of unneeded jobs for people and essentially pays for them with its ever-rising enormous debt. It ends up with negative interest rates.

            • Tim Groves says:

              But in contrast to Cuba, in Japan, workers in unneeded jobs have to come to work on time and pretend to be awake and alert all day, or face disciplinary action. This takes considerable skill and dedication to duty.

            • I am sure that their pay varies somewhat based on their job responsibilities in Japan. This has not been true in Cuba.

            • Harry McGibbs says:

              “Mainstream economists, even when they’re generally supportive of more government spending to promote growth, warn that MMT risks letting public finances get out of control. Olivier Blanchard of MIT argues that it is only possible to finance large deficits by money creation without sparking inflation when interest rates are at zero.

              “For now, the Bank Of Japan’ is running low on ammunition, proving the case that a central bank can’t simply conjure up price-growth out of nowhere without the help of government spending.”


          • Xabier says:

            This is why the bland assurances that the death of retail, advances in automation, etc, don’t matter are nonsense: retail jobs and other non-prestige employment provide that routine, discipline, opportunities for promotion and a sense of solidity – essential for a stable society and mentally healthy people.

            • Tsubion says:

              The only thing that will stop these advances from happening is a crash.

              And the crash (or collapse) needs to be systemic otherwise someone somewhere will pick up the slack and continue progressing in the direction of advanced technology.

              For everything to grind to a halt, relatively speaking, would require systemic failure of one of the columns holding up industrial civilisation.

              The real question is how resilient is the global network at this stage? Would there be time to restructure, adapt and evolve once a collapse is under way?

        • Xabier says:

          Apart from the odd case of artists who simply have to create come what may ( if the materials are available) ordinary people, however much they might dream of leisure, need a purposeful existence involving labour of some kind or they fall apart both mentally and physically – and a penalty for not working has to be in the equation.

          Much as our ancestors simply died if they didn’t attend to shelter, clothing, tool-making and hunting.

          Cuba might seem a poor example, as the climate and culture somewhat inclines people to laziness – but the Soviet Union saw just the same erosion of purpose and slovenliness in a world of no unemployment, but also no real purpose in applying oneself.

          There was no penalty for doing your work poorly, only for saying the wrong thing and being politically ‘unreliable’ ….

          • Tsubion says:

            Even retired folk feel the need to be actively involved maintaining a sense of purpose. Many do this through gardening, helping in the local community, helping family members with all kinds of problems, travel and restaurants, spending surplus on house improvements, general maintenance, advice to younger generations even though they don’t want it, providing work to doctors and nurses, etc etc.

            And some of carry on working until they drop if they happen to enjoy their line of work.

    • It is debt mountains as high as a person can see, plus government promises (such as pension plans) as far as one can see. To add to this, we have private pension plans with promised payouts which vastly exceed the amount that they can really pay out. Plus people who think that they can sell their assets (houses, shares of stock, farms, boats, factories) and use the proceeds to buy goods and services that they want today.

      In order to have any goods and services, a pretty big piece of the world economy has to hang together. Otherwise, all of these promises fail.

  2. Lastcall says:

    Zerohedge site seems to have the wobbles lately; do the powers that be disapprove of the articles?

    • Examples?

      • Lastcall says:

        I will retry when I get access (still no access from here in NZ), but questions about Assange, articles questioning the Mueller report, delving into the pales.tin question, continuing articles on FB and I, and stories about the Douma bombing are all lifting the carpet on the preferred’ narrative.

  3. WTI is down to $51.30. May be headed down further.

    • Yoshua says:


      Crude oil +6.77MM, Exp. -0.5MM
      Gasoline +3.21MM
      Distillate +4.57MM
      Cushing +1.79MM

      The largest weekly crude and product build since 1990.

    • Greg Machala says:

      Yes. The trend seems to continue where the oil price recovers less and less with each subsequent crash in price. It looks like we we be testing lows again.

      • Chrome Mags says:

        The non elite consumer is getting weaker. Remember when oil price remained above 100 a barrel for a long time? That level of consumer monetary strength is gone.

        The producers floor price and non elite consumer ceiling price are banging into each other.

  4. Harry McGibbs says:

    “Defying increasing criticism from within his own party, U.S. President Donald Trump said on Tuesday he would likely go ahead with new tariffs on imports from Mexico to pressure it to clamp down on rising numbers of migrants entering the United State. Trump told a news conference in London he expected to impose 5% tariffs on Mexican imports from Monday.”


    • Harry McGibbs says:

      “…the yield curve’s alarm bells may be global markets’ awkward attempt to put a price on the rapid loss of an intangible but deeply valuable asset: global trust in the United States as a trading partner and more generally as a leader in the pursuit of democracy and human rights… frightened investors don’t see any other safe investment alternatives to Treasury bonds yet.”


      • Harry McGibbs says:

        “…when the Senate finally passed a tariff bill in March 1930, the thinking was not that different from what we see today. They thought they could preserve and even extend the good times. But conditions worsened quickly, and by 1931, unemployed men were standing in soup lines.”


        • Harry McGibbs says:

          “China has issued a travel warning for the US, saying Chinese visitors have been interrogated, interviewed and subjected to other forms of what it called harassment by US law enforcement agencies. The warning comes amid an increasingly bitter trade dispute between Beijing and Washington and tougher immigration enforcement by the Trump administration.”


          • This seems unlikely to help travel the other direction as well. I see the article says, “The US shot back with its own warning about travel to China.” Of course, if there are not enough resources to go around, personal travel is one thing that can be cut back without too much harm to the overall system, at least in theory.

            US universities seem to have an awfully lot of students and faculty from China. The students pay “out of state” tuition, which is much higher than “in state” tuition, making these students very attractive to universities from a funding point of view. University enrollment is already declining. I imagine declining Chinese student enrollment would push the University system down as well.

            • John Doyle says:

              It’s big business for Australian universities as well. They all enjoy the high fees. I don’t know the numbers however. But Education is about our third biggest export.

            • Xabier says:

              A decline in cheap mass tourism would sink Spain, Portugal, Italy, etc, it’s hugely important.

              My hippy dancer cousin made enough money for the whole year selling crystals and polished minerals on the beach last summer – smart chap who owned the stall employed very pretty girls to sell to the German tourists.

            • Even back when I was in high school in Wisconsin, local tourism was a big source of employment. People would drive up from Chicago to the Wisconsin Dells area, which was near where I lived. High school young people would get jobs in nearby resorts for the summer. I am sure that local gas stations benefited from the source of revenue, as did local stores.

            • Grant says:

              A significant number of overseas students pass through the UK University system as well and for much the same reasons though I suspect that US colleges may be much more effective at ensuring they receive the money.

              It has been thus for a couple of decades or longer.

              It also seems to be a model for all of Europe in countries with a history in higher learning.

        • Of maybe the story should be, “The laws of physics are again forcing a result similar to that in the 1930s, through different human actors.”

          • Tsubion says:

            I don’t think it’s so much the laws of physics as it is the corrupt economic rules that were activated a couple hundred years ago and that still enable the rollercoaster ride that we are on.

            Things would be very different right now if we hadn’t gone down that road. Govts should never have relinquished control of the issuance of currency. We have been infected by a parasite and the parasite has been directing global economic behavior ever since. Remove the parasite. Neutalise it. Do whatever you have to do because it is killing the host.

            We made it through the 1930s, barely a blip on the trend line. I’m wondering if we can restructure our economic system now that it is global in scale. I think three or four independent regions makes sense and there have been plans made along those lines. For example, we don’t all need to source rare earths from china. We can do so according to our modified economic region and thereby avoid these kinds of conflicts. This appears to be playing out in real time.

            A shrinking back to more manageable regions makes sense. We overextended and pushed beyond natural boundaries and now comes the correction. The Americas, Eurasia, Africa etc would need to be more self sufficient. Setting up localised factories, food production, resource extraction makes more sense than shipping all of these products around the world.

  5. Harry McGibbs says:

    “Italy’s current political instability comes after months of rising tensions between the governing partners which formed a coalition government in May 2018 after an inconclusive election. Both Salvini and Luigi Di Maio, the head of the M5S, chose Conte as prime minister to lead Italy’s 66th government since World War II…

    “JP Morgan’s house view is that it is likely that the government will fall by the end of July.”


    • Harry McGibbs says:

      “The German Bundesbank has warned that it could face heavy losses if a major country leaves the euro and defaults on debts to the European Central Bank system, but warned that any attempt to prepare for such a crisis could backfire by triggering a speculative attack.

      “The analysis is highly sensitive coming just days after the insurgent Lega-Five Star government in Italy passed a decree in the Italian parliament authorizing the creation of a parallel payments system known as ‘minibots’, a scheme decried by critics as a threat to the integrity of the euro and potentially a ‘lira-in-waiting’.”


      • Harry McGibbs says:

        “The European Union took the first step toward disciplining Italy over its failure to rein in debt, intensifying a dispute with Rome and paving the way for an initial penalty of as much as 3.5 billion euros ($4 billion)…

        “The step marks an escalation of the country’s budget tussle that roiled markets at the end of 2018 and is a warning for Italy’s populist leaders, particularly Deputy Premier Matteo Salvini who has vowed to change EU budget rules.”


        • Xabier says:

          Being disciplined by the EU sounds deliciously naughty: does one get a choice of whips, or is it all brute domination? One simply, dear boy, shivers with delight……

          (To read with the voice of Anthony Blanche from ‘Brideshead Revisited’ in mind).

          • Harry McGibbs says:

            “Being disciplined by the EU sounds deliciously naughty.”

            It does, lol. Salvini sounds disinclined to play submissive though.

  6. Harry McGibbs says:

    “Energy markets are being battered across the board as negative data fuels concerns that consumption of oil, natural gas and coal will be hit hard by a global economic slowdown.”


  7. Harry McGibbs says:

    “The World Bank has forecast the weakest growth for global trade since the 2009 financial crisis, joining a host of leading organisations in condemning the economic fallout from the US-China trade war. The Washington-based lender has issued a grim warning about the health of the world economy, downgrading its predictions for the global expansion amid threats from the US-China conflict, high government debt and sharp slowdowns in major economies.”


  8. Harry McGibbs says:

    “Claria – also known as African catfish – is a big, tasty, and above all resilient fish. It breeds abundantly and cheaply. But now that Cuba has decided to make claria a solution to its economic crisis, can it contain the catfish’s ecological threat?”


    • I noticed this from the report:

      “Claria were introduced to Cuba 20 years ago during another, more severe economic crisis known as the Special Period. Since then, hurricanes are blamed for letting the fish escape its breeding tanks – and wreak ecological havoc on the island.”

      People don’t think through what they are doing. They think that they are solving one problem, but they are really creating the roots of another problem.

      • Grant says:

        Future consequences of ecological interventions used to solve perceived problems rarely seem to produce a net good result.

        The greater the perceived urgency of the intervention the less well considered it is likely to be.

        Most of the proposals for ‘fighting’ climate change seem to fall into that category.

        It reminds me of testing new drugs in recent times. There seemed to be a spate of tests that were abandoned early because the reported results were so evidently beneficial to those taking the drug compared to those taking the placebo that it was adjudged morally unacceptable to block the placebo takers from the treatment.

        Fair enough one might think but to do so then means that long term adverse effects, should there be any, will only be discovered in the real world usage.

        Presumably the pharma providers insurance suppliers were ok with that. The risk would, presumably, apply to only a very specific part of the population.

        Not so for the climate war. If a measure is to have any effect it would have to be global (we are told).

      • Rodster says:

        “People don’t think through what they are doing. They think that they are solving one problem, but they are really creating the roots of another problem.”

        Isn’t that how the African Honey Bee aka “Killer Bees” came about? Trying to solve one problem creates another.

        • Duncan Idaho says:

          Honey Bees are not native to the Western Hemisphere,
          There are over 400 native bees in Pinnacles National Park CA,

        • Greg Machala says:

          I agree Rodster, it is funny how humans think they can solve “problems” in a few years that took nature billions of years to sort out.

        • Chrome Mags says:

          Experiments were done with African killer bees to cross breed them with more docile European bees, and supposedly it was an accident that pure Africanized bees were released.

          • Chrome Mags says:

            Additionally; the tests were done in Brazil. If they’d done the research in Africa, the worse case scenario is European bees may have been accidentally released.

      • artleads says:


  9. Harry McGibbs says:

    “[China’s] manufacturing PMI shows several recent dips below the important 50-mark into contraction territory, corresponding to the “recession” in late 2018, followed by a recovery after Q1 2019, and then another fall into contraction territory in the latest May 31, 2019, release. These recent fluctuations suggest the recovery is shaky.”


    • Harry McGibbs says:

      “Underwriters of a new Chinese credit hedging tool just narrowly avoided their first-ever payout in the nation’s $13 trillion bond market.”


      • Harry McGibbs says:

        “South Korea’s economy contracted more than expected in the first quarter as exports and construction investment were downgraded from initial estimates… “Gross domestic product shrank 0.4% in the first quarter from the previous three months, the worst performance since the global financial crisis.”


        • Harry McGibbs says:

          “Japan’s manufacturing sector contracted in May with both output and new orders falling for fifth successive months, according to a survey.”


          • Harry McGibbs says:

            “Australia’s central bank lowered the cost of borrowing for the first time in three years on Tuesday… The Reserve Bank of Australia cut rates by 25 basis points to a historic low of 1.25 per cent, as the pace of growth slowed to levels not seen since the global financial crisis.”


          • A combination of (1) weaker orders from China and (2) a planned increase in the sales tax in Japan in October seem to be behind the falling output and falling new orders.

            Raising taxes is terrible for an economy, especially when the rest of the economy is doing poorly. But unfortunately, programs become more and more difficult to fund, as a population ages, roads need more repairs, and other government planned expenditures keep rising.

            • TIm Groves says:

              The current 8% consumption (sales) tax in Japan is scheduled to rise to 10% on October 1. However, a government spokesman suggested in April that the increase could be delayed, depending on a key economic indicator to be released for June.”

              I would expect that if the rise is implemented on schedule, the July-September quarter will see a hefty rise in consumption as consumers and businesses alike stockpile supplies in advance of the tax rise, to be followed by a corresponding fall in consumption during the quarter when the tax kicks in.

        • “Korean exports tumbled a worse-than-expected 9.4% in May, a sixth-straight drop, as slowing global growth and a downturn in the semiconductor industry take a toll on Asia’s fourth-largest economy.”

          This kind of drop is terrible!

      • I am doubtful that it is possible to actually get these hedges to pay off. If it were possible, there would be a flood of banks needing to be bailed out, but not nearly enough money in the hedging tools.

        • Harry McGibbs says:

          Lot of alarming data today. I haven’t covered Europe, as I didn’t want to totally clog up the comments section but the UK has posted a contraction in manufacturing and construction for May and experienced its worst retail sales drop on record.

          The Italian Prime Minister, Giuseppe Conte, is threatening to resign unless the two parties in the governing populist coalition stop squabbling.

          Germany’s manufacturing PMI was 44.3; well inside 50, which denotes contraction. Overall the Eurozone manufacturing PMI fell to 47.7 in May from 47.9 in April.

          Globally PMI is in contraction at 49.8.

          Also, “South Africa’s economy contracted by 3.2 percent in the first three months of 2019, its largest quarterly drop in a decade, the national statistics agency said on Tuesday. The decline was mainly driven by shrinkages in the manufacturing and mining sectors.”


    • Interesting charts in this report. Also, the author links to another report with more charts and graphs, regarding China’s growth.


  10. Harry McGibbs says:

    “America’s manufacturing industry suffered the sharpest slowdown last month since the depths of the global financial crisis, prompting calls for emergency rate cuts to avert a spiral into recession.

    “IHS Markit’s momentum gauge fell to the lowest since September 2009 as America’s fortress economy succumbed to fading fiscal stimulus and mounting damage from trade wars with China, Europe, and Mexico.

    “Chris Williamson, the group’s chief economist, said US profit margins are being squeezed. Manufacturers are cutting output and laying off staff. “Surging order book growth just a few months ago has now turned into contraction – the first such decline seen in the series’ 10-year history,” he said.”


  11. Harry McGibbs says:

    “A stampede to safety sent benchmark government bond yields tumbling on Monday, hoisted the Swiss franc to its highest in nearly two years and gold to a 10-week peak, while oil veered close to bear market territory. After a torrid May that wiped $3 trillion off global equities, worsening trade tensions and the broader economic backdrop made for a jarring start to June…

    “German government bond yields — which move inversely to price — fell to a new all-time low and those on two-year U.S. Treasuries were flirting with their biggest two-day fall since October 2008, at the start of the global financial crisis.”


  12. Dennis L. says:


    You are getting company on the deflation hypothesis, a very challenging time to invest.


    Serious question, why is everything I purchase going up in price?

    Dennis L.

    • doomphd says:

      crude oil is getting cheaper all the time. WTI at $53 per barrel.

    • DJ says:

      Guess: because everything those you buy from buys goes up in price.

    • It does look like rates could head to zero. Anything to keep the ship afloat a bit longer.

      “why is everything I purchase going up in price?” Are you buying bonds with yield above today’s yield, by any chance?

  13. Lastcall says:

    Ooopsie, will we get through the cricket chaps…..


    …2 month long tournament I believe!
    Keep calm, keep a straight bat…. and lets see if the wickets/domino’s start to teeter.

  14. MG says:

    More violence in the centre of the capital of Bratislava, Slovakia.

    Just 30 years ago, Obchodna Street was the street where a lot of shops was situated, it was the real heart of this town. Then, with the advent of shopping centers, the street emptied. Now, the centre of the city becomes the centre of the crime?


    • SuperTramp says:

      Seems Europe can take so much “Union” after all. From the article, it may have been a race attack on folks from Kenya! Imagine few blacks live in Slovakia. When people are under stressful circumstances, they act out to vent. Yes, Imagine the capital, Bratislava, has undergone a radical transformation in the 30 years since the velvet revolution.
      I know my Slovakia Father, when he was alive, disliked certain ethnic groups.
      Don’t know why…same as it ever was

      • MG says:

        Maybe the energy consumption of the human races difffers based on where they come from. Maybe the blacks consume more energy in order to survive in the cold areas. And the whites can not withstand so much sunshine when they are in the areas with stronger sunshine.

        Surely, the black skin seems to be more suitable for living in the areas with a lot of sunshine. And the white skin for living in the areas where the sun shines weaker.

        • hkeithhenson says:

          There is a reason light skin was selected among people who lived in the north. It took a diet that was deficient in Vit D. If that was the case (and it was for a lot of farmers) then light skin was more effective in making Vit D. The consequence of Vit D deficiency was warped pelvic bones and death in childbirth. So over the generations, those who lived in the north got pasty white. The people who lived on fish got plenty of Vit D and were not under this evolutionary pressure.

  15. Davidin100millionbilliontrillionzillionyears says:




    because the global economy is going down the Crapper?

    [Crapper: and allusion to the former Fast Eddy…]

  16. gpdawson2016 says:

    Has anyone mentioned ‘Triangle of Doom’ regards this months fall in oil price?

  17. Sven Røgeberg says:

    According to George Monbiot almost all of our societal problems arise from the fact that a false and dangerous ideology has conquered our hearts and minds. Isn`t it a bit uplifting and hopeful that we can put the blame on a «false consciousness», because then we can find a political solution out of the mess?
    « A coherent alternative has to be proposed. For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.»

    • The title of this article is Was the Rise of Neoliberalism the Root Cause of Extreme Inequality?

      Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.

      Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organization of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve.

      No need to worry about resources, or resources per capita. Economists have all of the theories, and thus all of the answers.

      • Chrome Mags says:

        That’s a harsh way to run a society, heartless. Is life simply the bottom line net liquid worth of a person?

        • Duncan Idaho says:

          Capitalism 101.

        • TIm Groves says:

          We’re born (or conceived, if ya prefer it) and then we die. Life is the bit in the middle.

          While we’re here, we have the right to pursue happiness. George pursues happiness by preaching like a reform church minister or a guy on a soapbox at Hyde Park Corner.

          Keep reading his preachings and giving him the oxygen of publicity and he’s as happy as a sandboy.

          (Incidentally, As happy as a sandboy is an expression which implies blissful contentment and comes from the days when Publicans in the 17th-19th Century used to spread sand on bar floors to catch slops, spills, spit and so on. They used little boys ie Sandboys, to spread sand on the floor & sweep up the soiled sand. They were ‘paid’ in ale, normally the slops, which made them drunk/merry/happy.)

          • Tsubion says:

            I don’t think we have the right to pursue happiness.

            There’s no such thing as human rights.

            Some people naturally tend towards happiness regardless of their level of wealth. Others not so much.

            • Grant says:

              You would need to define happiness and how it might need to be constrained by social needs – which limitations, if applied, might mean that some people may never be able to experience their very personal interpretation of what happiness might be.

              For example if some poor twisted soul could only find happiness when torturing and murdering other people, should their preference and need be tolerated in order to satisfy their ‘human rights’?

        • Xabier says:

          True, but you will observe that Nature is utterly ‘heartless’.

          We can only modify that a very little with our social constructs – and we certainly should, within reason.

          The real crime of Neo-liberalism is: sheer stupidity.

          • hkeithhenson says:

            “you will observe that Nature is utterly ‘heartless’”

            Natural selection has shaped everything about human psychology including what we think of as “heartless.” Exactly what gave people a selective advantage for having a negative mental response of “heartless” to some inputs may never be known. It could be a side effect of some other selected trait. It seems possible, if not likely, that caring for your tribe would convey a survival advantage.

            The ability to feed kids through frequent famines in the UK prior to 1800 seems to have selected for the drive and ability to learn skills such as literacy and numeracy. Gregory Clark says the selection intensity was about the same as that applied to the Russian friendly foxes for about the same number of generations. Nobody doubts the personality of those foxes has profoundly changed.

            “The highly capitalistic nature of English society by 1800 – individualism, low time preference rates, long work hours, high levels of human capital – may thus stem from the nature of the Darwinian struggle in a very stable agrarian society in the long run up to the Industrial Revolution. The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.” Gregory Clark University of California, Davis, CA http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Capitalism%20Genes.pdf

            • Yes, that is a very fine paper.

              Now the question seems to be, “Why do Asian children seem to do better than Caucasian children on tests of all sorts: SAT tests, IQ tests, etc.?” Clearly, China and Japan have been very organized societies, for a very long time.

            • hkeithhenson says:

              “Why do Asian”

              I have been accused of racism for saying the same thing. There *are* differences between groups in the average intelligence or just about any other characteristic you want to name. In a few places, such as UK probate records, it is clear that wealth fed into differential genetic survival. Thus the genes such as literacy, numeracy, intelligence, and willingness to put off rewards became more common in the population as the wealthy out-reproduced the poor.

              Clark thinks much the same happened in China and Japan, Of course, acknowledging that population averages are not uniform and that selection in particular environments is how humans got their psychological traits puts you in politically incorrect territory. That’s true even when you are not trying to put anyone down. You are not permitted to admit differences even when they show your own race less favorably.

              None of this will make any difference when gene edited kids are the norm.

            • Xabier says:

              This town is annoyingly full of drunk, drugged and often violent beggars in the summer: caring for them would confer no evolutionary or social advantage, even though technically they belong to the tribe known as the English nation. Getting rid of them would, however: the ‘heartless’ approach would be the best for everyone else. They make themselves obnoxious to everyone, even those who are nice to them.

            • hkeithhenson says:

              “Getting rid of them”

              You can make a good case that we have been doing that for a long time. “drunk, drugged and often violent beggars” are not likely to have children. See the work of Gregory Clark for evidence that such differential selection has changed human nature, at least for those subjected to such selection.

      • Lastcall says:

        I skimmed through…found no mention of population or personal responsibility….(did I miss it) ..this guy is so light-weight and politically correct he’s sure to be the darling of all of the greener-dreamer cohort.
        He makes the mistake of thinking there is a magic wand where we could all have enough if we just shared it all out via a PTA style committee.

        • Xabier says:

          Monbiot is even more of a chump than that: he actually dismisses over-population as a problem, out of hand – intellectually negligible. But quite a following. Just platitudes for the ill-informed.

      • Greg Machala says:

        It is amazing that no externalities are considered: resources, pollution, ecosystem impacts, wildlife impacts, climate impacts. So, a “generator of wealth” could be a destroyer of our ecosystem and thus life itself – no?

        • Slow Paul says:

          To tell people that we live in a self-organizing world, where humans are programmed to dissipate available resources until we can’t, is not a way of making friends nor money. And we are programmed to make friends and money (reproduce and eat).

    • Davidin100millionbilliontrillionzillionyears says:

      “According to George Monbiot almost all of our societal problems arise from the fact that a false and dangerous ideology has conquered our hearts and minds.”

      it runs deep… a few generations ago, the greed/selfishness of most people was restrained by religion/myth where you better behave in this world or else pay for it in the next world…

      now we are in an age where in the western world the followers of religion have fallen to the 4% range…

      it’s the age of facts… factosophy rules… or infosophy…

      most people doubt any afterlife and so they can live unrestrained…

      the fall of belief correlates very well with the rise of inequality in the past 4 or so decades…

      the children who grew up without belief in the 60s and 70s and 80s are now the adult money grabbers…

      • Tsubion says:

        Now we just have political correctness and the surveilance police state to give us something to think about before we decide to live a life unrestrained.

    • Davidin100millionbilliontrillionzillionyears says:

      “A coherent alternative has to be proposed. For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century.”

      this reminds me of the mini discussion on the previous page (yesterday) about Jared Diamond and his latest book…

      it’s “hope for solutions” again…

      once in a while, a writer will fall back on the “Apollo Program” meme, because, since it successfully got men to the moon, then it follows logically (not!) that all we need to do is have an Apollo Economic Program, and all problems will be solved…

      and “new system” and similar phrases are conjured up likewise…

      like, oh!, there are “demands of the 21st century” that Nobody before has thought should be addressed and fixed, so all we need is for Somebody to make a “conscious attempt”…

      isn’t there a cricket match that he could be watching?

    • John Doyle says:

      What George Monbiot fails to understand is that there IS a remedy to the “vacuum” left behind in 2008. It quite simply to reimagine the existing economy without the Neoliberal overlay. All the ways we can make things better, less unequal and dangerous, evil indeed, are spelled out with Modern Monetary Theory. It is clearly making waves this last few months afterMMT got mentioned in Congress along with a Green New Deal by Alexandria Ocasio Cortez a very outspoken personality.
      The criticism is almost entirely around the ability to “print Money” without admitting that has always applied even to neo-liberals and their ruses designed to make the public think that money is a limited resource. Well, money is a limited resource but not to how much tax is levied, but to the Productive capacity of the economy, which we would say was an economy fully utilising the resources available at maximum employment. Adopting MMT will reduce the levels of inequality and re energise the social welfare state that gave validity/legitimacy to governments. Validity lost now, leading to surveillience and coertion to rule. MMT is a new paradigm for the present, but economics in general has yet to figure out how to survive in a world of non growth and diminishing resources. Until we figure out a way to attend to that then by adopting MMT we can make the present a much more equitable place to live, and more resistance to shocks.

      • MMT, to the extent it works, is a way to use up resources more quickly. This happens because the poor can have more spending power, and thus can purchase a larger share of goods and services. Commodity prices can stay higher, hopefully keeping production of food and fossil fuels from collapsing. If MMT can be made to work, it is a possible way for making the system lasting a bit longer. MMT doesn’t inherently fix anything.

        I am skeptical that MMT can work, because currencies float among each other. An increase in MMT would seem to make a currency float lower compared to other currencies, reducing the overall buying power of the economy using MMT. Thus, businesses (including farmers) would find their cost of internationally traded commodities used in production rising higher at the same time that the price that they could sell the finished goods for in the world market would be falling. I wonder if businesses would be hurt by more than consumers would be helped.

        • John Doyle says:

          Don’t forget, The existing economy is MMT, just distorted by neoliberalism and politics.
          Your first paragraph is the good news, helping obviate the gap between the haves and the have nots. Of course it uses more resources, That has to happen to help at all. and A S A P.

          Your second paragraph is a cautionary tale for today’s economics. MMT can’t fix it if the politicians are blind to the damage they cause, like the evils of austerity. Everyone deserves a living wage. Joblessness is a Federal problem, not a private sector one.

        • theblondbeast says:

          I agree with your first paragraph – what MMT “fixes” best seems to be excess unemployment and demand destruction. Warren Mosler and Steven Keen have a good discussion about your second paragraph available on youtube. I’m not fully convinced it isn’t a problem but Mosler had some good rejoinders to this matter.

          There doesn’t seem to be any evidence that an increase in the quantity of currency decreases the relative value of that currency on forex markets so long as productive capacity is increased (and unemployement decreased) by the printing. Spending into a decline is the “Zimbabwe” comparison.

          Reserve banks convert foreign currency at the time of sale through largely invisible ledger activities and the SWIFT system. As odd as it sounds, it seems like demand for most currencies has more to do with the existence of goods available for sale.

          This is their discussion:

          • Thanks! I am not sure I would figure out enough more from an hour and half discussion of where the money would really go. Does it stay in one bank, or does it get consolidated back to the head office’s bank account? And so on. Some of these ideas almost have to be tried out, to see what all goes wrong.

            • Harry McGibbs says:

              You would think it also depends on the individual circumstances of a nation. If a currency, like the Argentinian peso, for example, is already perceived by holders/potential holders as vulnerable or weakening, an announcement of radical monetary interventions by the central bank might push it over the edge.

              Also, if a nation is beholden to an IMF loan package, would the IMF allow it? Their current Chief Economist is a sceptic:


            • A lot of countries would have a problem with IMF loans, I expect.

            • John Doyle says:

              The economic “Heavyweights” are shitting their pants because all their favourite theories and nostrums are rendered invalid. They are emperors with no clothes. What is particularly ridiculous is the idea that MMT is something new. It isn’t but it is a new way of understanding the existing economy, it is not a disprovable hypothesis. That makes their comments total garbage and will return to haunt them soon enough.

            • Harry McGibbs says:

              Plus one final economic supernova powered by MMT just shunts us up against environmental limits more rapidly, although as a parent of young boys and a selfish aficionado of hot showers and groceries I’d be glad of the additional years.

          • Harry McGibbs says:

            To me MMT just feels like another way of attempting to outrun the laws of physics via creative accounting, akin to giving a starving person amphetamines to keep them going a bit longer.

            I suspect it’ll be tried but it just makes the financial system even more arcane, surreal, complex, imbalanced and, ultimately, even more vulnerable to failing entirely.

            Given that we are energy and resource-constrained, I can see a situation where a few stronger, more ‘credible’ nations briefly get away with boosting their economies to maintain or increase their share of the resource-pie by using MMT, but at the expense of the less credible ones, until contagion from those weaker, peripheral nations collapses the whole.

            • hkeithhenson says:

              I suspect that the outcome will depend on the details of what the nations do. For example, investing in power satellites, StratoSolar, or something else that can scale might kick the can down the road for a long time. Probably enough for humans to actually change.

            • Harry McGibbs says:

              No doubt the funny money will be malinvested in all sorts of crazy ways, especially greenwashed projects.

            • hkeithhenson says:

              Perhaps. But it is worth noting that the latest greenwash in the US was dismissed on technical and economic grounds.

            • Grant says:

              Could be good for Tesla.

            • Xabier says:

              MMT or some such nonsense, will merely be used to maintain the failing legacy institutions (health, welfare, ‘education, innit’ etc) left over from the days of energy surplus.

              Then we will crash all the same, after only a brief respite.

              A bridge to Nowhere…….

      • MM says:

        There was a recent discussion about MMT with the GND
        “The human resources ofr a MMT/GND are not here now because the US economy is pretty busy”

    • MM says:


      It became already clear from the 80’s that there is no future with neoliberalism. FFF now ? Well, come on.
      Please define “Future” ….

    • He who refers for whatever reason to ‘Apollo programme’ with serious straight face still in 2019 has got negative credibility..

  18. The WSJ is now reporting, Tesla Careens From Growth Story to Demand Worries.

    One paragraph explains the difference between most people’s view of “demand,” and the affordability version of demand that really matters:

    Tesla Chief Executive Elon Musk has described demand for the Model 3 as “insanely high.” “The inhibitor is affordability,’’ Mr. Musk told analysts earlier this year. ”It’s got nothing to do with desire.”

    • Chrome Mags says:

      That says it all right there. Affordability restricts its market. Whoops!

    • Davidin100millionbilliontrillionzillionyears says:


      millions of young adults with low worth college degrees and poor job prospects probably want to own a Tesla…

      a status symbol for those whose minds are tinted green, as is typical for younger generations…

      but it has become quite obvious that Tesla cars aren’t very affordable by anyone who is below the upper class…

      if most of the upper class that has “desired” a Tesla now owns one, then the future of the company looks bad, especially with the looming global recession…

      • Lastcall says:

        The planet can’t ‘afford’ too many Tesla’s either……. just saying

      • TSLA is a joke as long as their entry level models are sedans only, wtf are they nuts? while everybody else offers hatchbacks, liftbacks, stationwagons or vans.. Kia/VW-Audi/Renault-Nissan/.. as the few extra Wh consumption / range drop is irrelevant, the form factor is more important nowadays when the drivetrain-batt technology is mature enough.

    • Greg Machala says:

      So, how can Tesla ever be profitable?

  19. Harry McGibbs says:

    “US President Donald Trump has waded once again into UK’s Brexit debate, urging Theresa May’s successor to leave the EU with no deal.”


    • Harry McGibbs says:

      “Clock ticks louder as Netherlands’ pension crisis intensifies.”


      • Harry McGibbs says:

        “The leader of German Chancellor Angela Merkel’s junior coalition partner stepped down in a surprise move that puts into question the survival of the government itself.”


      • “Dutch workers currently can look forward to more generous pensions than employees in other advanced economies. Gross pensions for Dutch workers, on average, almost match their earnings in employment, according to the OECD, the Paris think-tank.”

        Workers are striking, as cutbacks in pensions are planned for as soon as next January, according to the article. A Melbourne Mercer report claims (an actuarial group) claims that the Netherland’s pension scheme is the world’s strongest.

        • Grant says:

          Strongest is a relative term. One might also use ‘least weak’.

          Pensions in an era when, inter alia, non self funding periods of living to ages where ‘useful’ work, in GDP terms, is not possible for most or is potentially dangerous due to incapacity creep that will rarely be admitted and is difficult to see from the outside, are not affordable. Or to more specific, generous pensions are not affordable and baseline pensions are marginal.

          It sounds like the Netherlands is about a decade behind the UK in taking steps to address this. Whether what they can achieve is good or bad in the final analysis will, of course, be a judgement only possible at some point in the future.

          However it seems likely that people in the middle period of their pension plan now and with little option for replanning success will not have great outcomes whatever happens for a number of reasons.

          • I agree that least weak is a better name for the situation than strongest.

            I am afraid I am not as optimistic as you are regarding the future of pensions. Unfortunately, pensioners share in the same supply of food, housing, medical care, and everything else as the rest of the population. One way or another, in order for the pensioners to get as much as promised, hard-working young people have to cut back on what they receive. I cannot imagine that this will work unless there are a huge number of young people relative to older folks, and the young people are earning pretty good incomes. Needless to say, this is the reason why governments have been willing to endorse immigration, even though these are low-wage earners.

            • when pensions started in UK in 1908, there were 28 young workers for every pensioner—and pensions were only paid to MEN at 70–and only then if they had been good citizens, not given to drink or idleness, at 5s a week–or i/4 of a british pound.

              now the ratio is around 6 workers to every pensioner, or only 4 if you discount govt workers, because they are paid by the state anyway

              pensions can only function on the certainty of infinite growth, which isn’t going to happen

            • Grant says:

              Another way to make pensions function would be to plunder ‘wealth’ from a source outside the apparent funding system.

              So, for example, energy products that are available in quantities beyond the needs of local demand and that can be relatively easily and securely transported and used elsewhere.

              Alternatively just plunder materials of value from other places in order to control particular markets and the profit they may offer.

            • OK. Let’s think about this. China has been the big user of commodities of all kinds, but its demand seems to be collapsing. So there are big quantities of copper, coal, and other commodities that might be available, if someone else can bid the prices higher, and thus help producers make an adequate profit.

              How is this going to help the pension crisis?

            • Grant says:

              Ownership of stuff with significant value.

              Like rare earth metals.

              Dominate supply globally and one can draw in the wealth required to support pension commitments – or anything else one might prefer to use it for.

              Certain products are, currently, somewhat central to creating a brave new electricity from renewables centric world. China has a lot but seeks also to control other sources.

              Some centuries ago Spain managed something similar for a while by occupying what we now call Central America and redistributing its gold deposits. It helped some of the major powers in Europe to hang on to power for longer than would otherwise have seemed likely.

              And some naval battles, piracy, etc.

            • referring back to the pension start in 1908, in uk

              that was exactly what we brits did—the brit empire was 1/4 of humanity—we just took the best of what we wanted

              the wealth of the empire supported the empire.
              when the wealth stopped flowing in, the empire collapsed

              pensions were just the unwanted sweepings of it

            • Harry McGibbs says:

              South Korea is particularly miserable for pensioners, I gather:

              “As younger generations abandon the Confucian tradition of caring for elders and the government struggles to pick up the slack, shockingly high numbers of older South Koreans are killing themselves. In 2017, the suicide rate per 100,000 people stood at 48.8 for 70-somethings and 70.0 for those in their 80s or older, according to the Korea Suicide Prevention Center, an arm of the Health and Welfare Ministry. The national average was 24.3.”


            • TIm Groves says:

              The place with far and away the highest suicide rate on Earth, as far as I could find, is….. the frozen hades of Greenland—About 80 people per 100,000 take there own lives there.

              And the places with far and away the lowest suicide rates are the warm sunny Caribbean island paradises of Barbados (0.4) per 100,000 people and Antigua and Barbuda (0.5).

              South Korea’s suicide rate of 20.2 (the 10th highest rate in the world according to the World Health Organization, as well as the second highest suicide rate in the OECD after Lithuania) is a reflection of cultural factors that lead to a lot of unhappy people, including intense competitiveness (exam pressure, business pressure, financial pressure, peer pressure,etc.), intense bullying (these days South Korean parents are hiring muscular, tattooed men to pose as fake “uncles” to protect their children from bullies at school), intense ageism (a low social security net for the old and infirm, job discrimination against older workers, etc.) and intense vindictiveness (even a former president leapt to his death rather than face hounding by prosecutors). Then there is a slew of suicides by pop stars and actors /actresses, etc., that help to spawn suicides among their fans as well as bouquets on the streets.

            • I wonder if the long, cold, dark winters don’t play a role in Greenland as well.

              I see that in the US, Alaska has the second highest suicide rate (25.4 /100,000), right after Montana (26.0 / 100,000). Both are very cold, and have a lot of gun owners.

            • John Doyle says:

              It’s called SAD, seasonal affective disorder. Extreme winter blues, depression at the same time each year

            • Grant says:

              For some, yes. But for others there seem to be deeper reasons.

              There is much in the UK media these days about children self harming and sometimes committing suicide.

              Whether there are really increased occurrences or just a media frenzy about matters that in past times were not so publicised remains to be assessed.

              That our Royal Princes seem to need to talk about such matters perhaps fuels the interest.

              To my mind the apparent increase in self harm and apparent self hatred fits with the Greta syndrome and probably a decade or two of every part of the school curriculum for all age groups and all subjects carrying an underlying message about nasty humans destroying the planet and murdering nice cuddly polar bears and other similarly cannibalistic creatures.

              The media find it much easier to blame social media providers. Whilst I have no time for Facebook, et al., for the news medias to point their fingers without firstly looking at their own position and role in society seems to be poor value for their self perceived position of influence.

            • Grant says:

              There will undoubtedly be multiple factors but at one time Finland had a reputation for being at or near the top of the Suicides League on per capita basis.

              Another cold country with a long dark winter.

              Oddly the peak month for suicides was May, a rather pleasant month, usually, with good though not exactly hot weather.

            • Grant says:


              I’m certainly not positive about pensions though I suspect that governments will continue to promote self funded versions to generations of people at a critical early point in the working life they hope for.

              If they do that it means they can get people hooked and committed with some ‘investment’ before they change the rules. Once committed most people will likely stick with the plan.

              That means there will be a chunk of ‘money’ that the government can tap into any time it feels the need. Change the terms of the deal, extend the age of retirement, etc. Whatever suits.

              The key will be getting back to the ratio of those who predecease the allowed retirement age which itself needs to be set at a point that greatly restricts the number of years that need to be supported.

              Alternatively just reduce life expectancy.

              Realistically the cost of attempting to support and usefully integrate ever more elderly and physically/mentally compromised workers in a typically fast changing business world of technology may turn out to be too expensive to support.

              If so there could be some challenging decisions required.

  20. Harry McGibbs says:

    “The most recent GDP numbers are out, and they reveal that US consumer activity is weak. This is important, because consumer spending represents more than 2/3 of total GDP. Consumption weakness is most obvious in the declining spending on goods, where purchases are at their lowest percentage of GDP since the Great Recession.”


  21. Harry McGibbs says:

    “The China Banking and Insurance Regulatory Commission (CBIRC) took control of Baoshang on May 24, rattling Chinese markets and prompting the People’s Bank of China (PBOC) to inject cash into the banking system.

    “In response to concerns that regulators planned more takeovers of financial institutions, the PBOC said on Sunday that Baoshang was a standalone case.

    ““Everyone, please don’t worry. At present we don’t yet have this plan,” it said in a statement on its website.”


    • Harry McGibbs says:

      “Bank of Jinzhou Co. said its auditors resigned, sending some of its debt securities plunging and reigniting investor concerns about the riskiness of China’s smaller lenders… Trading in bank’s Hong Kong shares suspended; AT1 debt plunges.”


      • It seems like this kind of thing can happen very easily in China. Banks skate on the edge of what is legal, and auditors look the other way. E&Y had been hired fairly recently (mid 2018) to try to figure out, and now it is resigning as well.

        • Harry McGibbs says:

          I am often surprised by articles (not this particular one) suggesting that potential problems in China’s banking and financial system are not a major cause of concern because they are insulated from the rest of the world, as if they are somehow separate entities to China’s physical economy, which is of course of absolutely pivotal importance to the health of the whole.

          Jinzhou is in Laoning province in China’s rust belt. I recall that even Liaoning’s governor has admitted their economic data is fanciful:

          “Liaoning governor says many cities and counties across the province massaged economic figures, with some local governments inflating fiscal income by up to 23 per cent.”


        • their banking system is no different to anywhere else

          it functions on the basis of infinite growth, none of us have any option but to buy into that particular scam

          Their version is on a sharper knife edge thats all

    • According to the article:

      All personal accounts and interbank debts of less than 50 million yuan would be guaranteed, the PBOC said, adding that the average guarantee ratio of debts of above 50 million yuan would be “around 90%”.

      Chinese regulators issued instructions to banks last week that could see larger creditors facing haircuts of as much as 30%, sources told Reuters.

      I suppose that larger creditors would include employers. It seems like they would need to lay off staff, if their bank accounts get big haircuts.

      • Harry McGibbs says:

        50,000,000 Chinese Yuan currently equals $7,240,250, according to Google

  22. Harry McGibbs says:

    “Factory activity contracted in most Asian countries last month as an escalating trade war between Washington and Beijing raised fears of a global economic downturn and heaped pressure on policymakers in the region and beyond to roll out more stimulus.

    “Such growth indicators are likely to deteriorate further in coming months as higher trade tariffs take their toll on global commerce and further dent business and consumer sentiment leading to job losses and delays in investment decisions.

    “Some economists predict a world recession and a renewed race to the bottom on interest rates if trade tensions fail to ease at a Group of 20 summit in Osaka, Japan at the end of June, when presidents Donald Trump and Xi Jinping could meet.”


  23. Davidin100millionbilliontrillionzillionyears says:



    global recession is coming soon, so what can be pointed to as the cause besides declining net (surplus) energy?

  24. Hubbs says:

    The drug drain is similar to the oil depletion in many ways. No more new drugs, especially since they are no more effective compared to already existing generic drugs, just like Tesla is no better (here at OFW we say worse) than ICE. Oil that is too costly to drill for is no better than medicines that don’t work or are too costly to produce.
    It’s not that there aren’t enough “profits,” rather it is the classic chicken or the egg argument. The people don’t make enough money to afford these designer drugs, just like they aren’t going to be able to afford to keep up with the McMansions in the suburbs, the taxes, utilities, and the costly commutes for declining paying jobs in the cities. People have been getting health care subsidized heavily by a debt binging government full of political errand boys and girls whose only interest is staying in their cushy jobs, and therefore have had to make promises, like Medicare, Medicaid, and now socialism to get re-elected. The debt bomb fuse continues to burn away.

    • The direction that someone really needs to go is in the direction of getting the right nutrition for everyone. Enough magnesium in the food supply, for example. But there is no motivation to do that. You can’t make money on something that there is no patent for.

      Somehow the wide disparity of wealth needs to go away, too, but that only happens through collapse.

    • our health and health industry has been a direct and specific derivative of our fossil fuel industry

      hospitals are energy guzzling factories.

      As energy input begins to decline (like now) then the entire medical edifice must collapse, while we demand medical interventions that are no longer possible.

      You only have to walk through a hospital to know instinctively it’s unsustainable.
      Bugs haven’t gone away–they are just regrouping into more interesting forms ready for when our energy-walls finally collapse

      • Even the epidemic among the hogs in China is evidence of how poor our defenses are against microbes.

        • hkeithhenson says:

          If you dig around, there is good news about ASF.

          “The good news is that Huvepharma, a pharmaceutical company in Bulgaria, has developed an ASF vaccine. The vaccine is proving effective in early trials. The USDA had granted a provisional license for its use while further validation is performed.”


          • We have to keep inventing new vaccines (and vaccinating more animals) to keep up with all of the mutations that develop.

            In theory, it is good work for scientists, but it is basically more “overhead expense” for the rest of us.

            • Greg Machala says:

              Fending off diseases by artificial means only makes the diseases more severe later on. It is like kicking the can down the road with regards to finance. Nature eventually catches up and deals a heavy blow. The more disconnected we get from the natural order of things the more severe the reset will become. There really are no nice easy answers.

            • I expect that you are probably right.

              We also have worked around adaption in as many ways as possible. We continue to try to keep children alive who seem to have terrible inherited issues. Even very low birth weight would seem to be one of these. When these children have children, the gene pool will be worse by their addition.

            • hkeithhenson says:

              “more severe later on.”

              What is the mechanism? I can’t see any way this would be coupled.

              Of course, the growth of a large population of vulnerable individuals would make the consequences of disease more severe when an epidemic occured, but not the disease itself.

            • Perhaps, more severe means “not killed by readily available antibiotics,” so hits the population harder.

            • hkeithhenson says:

              “hits the population harder”

              Again, there is no mechanism. Antibiotic resistance only evolves in the presence of antibiotics. Besides that, most of the major epidemic threats are from viruses.

              Incidentally, nanotechnology will more or less eliminate disease problems so if we can avoid collapse till then, we may not have a major population cut due to epidemics.

        • Harry McGibbs says:

          Slightly off topic but reminds me – China’s not just having problems with hog farming:

          “A pest that ravages corn crops is spreading in southern China, posing a growing threat to the world’s No. 2 producer of the grain, said an expert based in the country…

          “After reaching China’s southwestern Yunnan province in January, it was detected in the neighbouring Guangxi region and Guangdong province this month, said Wang Zhenying, a researcher at the Institute of Plant Protection at the Chinese Academy of Agricultural Sciences, a government think-tank.”


          • That is right; we saw this article at the end of April. It sounds like the disease spread to China, originally from the Americas. We had somehow figured out how to keep it under control.

            Native to the Americas, the fall armyworm has spread east in recent years, causing as much as $3 billion worth of damage in Africa, before reaching parts of Asia last year.

            Before turning into a moth, the worm feasts in large numbers on the leaves and stems of many plant species and can infest and damage hundreds of hectares of corn overnight, according to the Food and Agriculture Organization of the United Nations.

            But when I look up Armyworm as a Pest of Corn Field, I find

            It [armyworm] has long been known to be an occasional serious pest of small grains and corn. However, with the increase of reduced-tillage culture and planting corn into sod and small grain cover crops (particularly rye), armyworm damage to corn has sharply increased during the past decade.

            True armyworm primarily feeds on plants in the grass family but under hunger stress will also attack some legumes and other plants. Conventionally tilled corn is seldom damaged. Problems most frequently occur in reduced-tillage corn planted in old sod, grassy fields, or small-grain cover crops. . . Stand losses are usually low to moderate but in some cases may be severe enough to warrant replanting.

            • Interesting, thanks. Seems as first serious – no till / shallow till – blow back..
              However, I hope some combination of winter cover crops would eventually block the bug and or supported re-introduction of his predators (birds or other insects possibly?)..

            • Hm, it seems also climate zone dependent. So in selfish mode no worry..

      • Duncan Idaho says:

        “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”
        —Benjamin Franklin

  25. Lastcall says:

    Oh and the cricket world cup has started so Brexit may have to wait until the summer of hope (England are favourites) and distraction is over.

    • Rodster says:

      I tired watching several Cricket games on the internet and just couldn’t get into the sport. I’m sure the Brits probably say the same thing about Baseball.

      • Xabier says:

        Cricket is really something to be watched from a deck-chair under a summer sky with a good drink at hand, on a village green, just like here.

        And only proper white clothing permitted for the players – aesthetics are important!

    • Davidin100millionbilliontrillionzillionyears says:

      and Liverpool just won some sort of major European football (soccer) cup…

      (I won a small bet there so thank you very much…)

      it must be some sort of Remainer strategy from across the channel…

      no Brexit at any cost…

  26. Lastcall says:

    3rd world countries are now sending their rubbish back to whence it came.This stuff was meant to have plastics for recycling, but contained household rubbish, including adult diapers. A political stunt in many ways, but yet another strain on resources; I wonder what the energy balance of shipping rubbish around is? Maybe plastic should just not be made, or it should find its way to high temp incinerators?


    Meanwhile here in NZ the ski-fields are open ahead of schedule, and this morning we have a frost on the ground.

  27. We don’t think too often about generic drug makers, and the role that they increasingly play. The WSJ has an article about how vulnerable they are today, These Drug Companies Are Too Frail to Cure.

    Partly companies making generic drugs were drawn into producing generic version of opioids. They are now being drawn into the opioid litigation.

    Also, there have been price fixing allegations, and litigation with respect to price fixing. And most of them have way too much debt.

    Ultimately, we have an economy that is not producing enough profits for everyone. The companies making new drugs are increasingly finding that the easy-to-find drugs that cured a lot of people cheaply have all been found. The generics are supposed to be making the many drugs that we know how to produce. But they system must be working in a way that produces enough profits for everyone. If it doesn’t, the health care system has a real problem.

    • Chrome Mags says:

      There are also generic drugs being sold out of Canada & India sidestepping prescription requirements that are sold dirt cheap, putting additional price pressure on Pharms. But the argument could be made that all product prices are being pushed down by internet sales. For example over a decade ago people going into retail outlets interested in art, would look for it online and if found it was cheaper. This ended many art gallery retail stores and forced artists to sell online at cheaper prices.

      • Of course, with generics, there is always the question of whether the quality is adequate. Your average consumer won’t have any idea one way or the other.

      • Xabier says:

        The advent of real-time online bidding at auction, at even the smallest auction houses, has eroded the position of the mid-level dealers and enabled the auction houses to become the new retailers – just as they were 400 years ago before the dealers arose.

        We found it almost impossible to acquire works of art at auction for our small but successful gallery at a decent profit margin as online bids drove prices realised for lots up, often to above the old retail price, or too close to be worth buying. And after 2008 the sales of lower-priced £50-200 original prints simply collapsed and never recovered.

        Similarly, antiquarian booksellers can’t get books at the right margin, and people have simply stopped coming into bookshops to browse which was always one of the great pleasures of life for the bookish. The 120 yr-old shop here sold only two remaindered books last weekend and will probably soon close, the owner is in despair – it was a very good business just a few years ago. His ability to acquire stock at auction has gone.

        Only one or two very big dealers with an online presence, and shops at ideal retail locations, will survive, out of hundreds of small bookshops pre-2008 which made a steady modest living for their owners, employed people and contributed to the look of the high street.

        On the other hand, galleries in central London selling original paintings in the £1,200 – £15,000 range are doing quite well, often works are selling online weeks before the shows open. But again, there were so many more galleries before 2008.

        • The loss of these smaller businesses is something we don’t notice. The profits (what remain of them) have gone to the few big sellers. The profits of the small businesses have dried up, and with it the incomes of many individuals.

          Music has also seen a big loss of money to the artists.

  28. well worth a half hour to listen to this talk by Jared Diamond


    • Duncan Idaho says:

      Diamond is facing reality.

      • doomphd says:

        but still not completely. he continues to hold out hope for some solution, if only political leaders would wake up to the problems. he’s still hawking new books at age 80+. perhaps that’s why we needs to sound upbeat about the future. at least he and his publisher apparently feel that way.

    • Lastcall says:

      A similar interview from RNZ; obviously book tour time.
      No one has changed direction from earlier missives, this will join that collection.

      • Duncan Idaho says:

        I agree– we will go until we can’t.
        Probably next 10 years.

        • Davidin100millionbilliontrillionzillionyears says:

          yes… 10 or so…

          plenty of time for more books with hope for solutions…

          • SUPERTRAMP says:

            Yes, books…hope it’s a best seller! Wonder if Henry David Thoreau or John Muir would have ever pick up a writing instrument if they new how many trees and forests would be mowed down after their death to satisfy the market for their love of nature. Ironic, isn’t it, Thoreau had in his attic copies of books that didn’t sell as he struggled making a living.
            BAU is a harsh teacher and takes no prisoners!.

            “Recognizing the terminal nature of his disease, Thoreau spent his last years revising and editing his unpublished works, particularly The Maine Woods and Excursions, and petitioning publishers to print revised editions of A Week and Walden. He wrote letters and journal entries until he became too weak to continue.
            When his aunt Louisa asked him in his last weeks if he had made his peace with God, Thoreau responded, “I did not know we had ever quarreled.” Wikipedia

            Betcha, Henry David would have burned them outright, before sending them for publication!

  29. Yoshua says:

    There’s something wrong with Wall Street banks.



  30. Rodster says:

    I think I found Fast Eddy aka “Crapper”. 😀


    • TIm Groves says:

      I’ve just read it and I think that by the tone it could well be FE.

      However, it would be ironic if after telling so many people that they don’t belong on OFW and should move to Peak Prosperity, that FE would end up as a commenter there.

      • Rodster says:

        “To my detractors: I have very high income, my own industrial automation business, a stable family who’s wealth is protected by a Family Trust and prenup. I live on acreage and hold three citizenships. ”

        Yup, sounds like Fast Eddy 🙂

        • doomphd says:

          i don’t think it’s FE. sorry.

          • Rodster says:

            I still get the feeling that “Crapper” = Fast Eddy. He’s not making too many friends over there that’s for sure.

            • doomphd says:

              I reed more of the Crapper comments. in one he states “my own industrial automation business”. FE was and probably still is a financial advisor/expert working out of Hong Kong, with most of his time now spent in the southern area of New Zealand. i see the similarities in Crappers remarks, but the above statement and references to his children do not jive with FE, who has decided to not have children with his wife.

      • hkeithhenson says:

        Last week I went to see “The Tomorrow Man.” Wife and I are John Lithgow fans clear back to Buckaroo Bonzi. Much impressed with Blythe Danner who is acting in her 70s. Painful in that the movie got the people who post and prep very accurately. FE would have fit right in.

        I won’t spoil the movie for you except to say the ending was perfect.

  31. hkeithhenson says:



    Electrocatalytic transformation of carbon dioxide (CO2) and water into chemical feedstocks offers the potential to reduce carbon emissions by shifting the chemical industry away from fossil fuel dependence. We provide a technoeconomic and carbon emission analysis of possible products, offering targets that would need to be met for economically compelling industrial implementation to be achieved. We also provide a comparison of the projected costs and CO2 emissions across electrocatalytic, biocatalytic, and fossil fuel–derived production of chemical feedstocks. We find that for electrosynthesis to become competitive with fossil fuel–derived feedstocks, electrical-to-chemical conversion efficiencies need to reach at least 60%, and renewable electricity prices need to fall below 4 cents per kilowatt-hour. We discuss the possibility of combining electro- and biocatalytic processes, using sequential upgrading of CO2 as a representative case. We describe the technical challenges and economic barriers to marketable electrosynthesized chemicals.

    4 cents/kWh

    • Right. It needs to be a pretty low price.

      The price of energy production (combined with efficiency gains) needs to keep falling, if the rest of the economy is to keep growing. The growing economy can then get more and more output from the economy, without the energy cost, as a % GDP, rising.

      One person explained the situation this way, “If the cost of the essential part of the economy is falling, then the non-essential parts can grow. Economic growth comes from growth in non-essentials.”

    • Grant says:

      Below 4cents per kWhr.

      Almost too cheap to meter…

      • hkeithhenson says:

        “too cheap to meter”

        An interesting point for Gail is that the advanced world power budget of ten kWh per day per person would be about $.40 a day.

  32. Australia’s economic slowdown heading to GFC levels as GDP growth continues to drop.


    • Slowing growth of Australia is one of the many things feeding into low oil prices.

    • Davidin100millionbilliontrillionzillionyears says:

      “Australia’s economic slowdown heading to GFC levels…”

      which makes sense, since the countries of North and South America and Europe and Asia also seem to be slowing down to GFC territory…

      perhaps most of Africa is immune to this slowdown, being so low on the economic ladder, but South Africa is in big trouble also…

      the one bright spot:

      Antarctica… no economic slowdown there!

  33. SuperTramp says:

    Boy, what some folks pronounce as “facts”. Wish it were true what you professed in the above….time will tell. Please name one scientific academic body that supports this view.
    Just one Robert, thank you.

    • TIm Groves says:

      Please name one economic body that supports Gail’s views on the likelihood of global economic collapse.
      Just one SuperTramp, thank you.:)

      “I want to pause here and talk about this notion of consensus, and the rise of what has been called consensus science. I regard consensus science as an extremely pernicious development that ought to be stopped cold in its tracks. Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled. Whenever you hear the consensus of scientists agrees on something or other, reach for your wallet, because you’re being had.

      Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics. Science, on the contrary, requires only one investigator who happens to be right, which means that he or she has results that are verifiable by reference to the real world. In science consensus is irrelevant. What is relevant is reproducible results. The greatest scientists in history are great precisely because they broke with the consensus.

      There is no such thing as consensus science. If it’s consensus, it isn’t science. If it’s science, it isn’t consensus. Period.”

      ― Michael Crichton

      • Tsubion says:

        Absolutely Tim,

        You can ignore anyone that adheres to the consensus excuse. They are brainwashed sheep trotting out ideology. Over the years, true scientists like Corbyn have been quietly obliterating the whole AGW scam. It’s a shame that AGW cultists are unable to listen to reason.

        I’m a bit concerned that Gail has switched sides recently. She seems to be paying lip service to the AGW ideology so that her articles line up with current dogma. There is absolutely no reason for this based on her comments on the subject over the years.

        • I really do not want to be drawn into the climate change debate. I see it mostly as a distraction from what we should be talking about.

          There is not a thing anyone can do about it, or could have done about it, 20 years ago. Our self-organizing system economic system behaves under the laws of physics, not under the wishes of us humans. We think we have more “power” than we really have.

          The authors of The Limits to Growth thought that there might have been a way that they could greatly put off the Limits to Growth by (1) limiting population to essentially 1972 levels, (2) switching to nuclear, and (3) becoming much more energy efficient. But even this would have been beyond the capabilities of human groups to implement, and really wouldn’t have worked.

          a. Increasing energy efficiency would have caused too much wage disparity.
          b. Trying to keep populations to the 1972 levels would have meant a lot of 1 child families, given how much longer people were living. Governments would not be willing to enforce such one-child families.
          c. Substituting nuclear (electricity) doesn’t keep prices for fossil fuels up high enough to extract them for other purposes (such as lubricants and asphalt), leading to a lot of different problems because some sort of infrastructure (such as roads, electric power lines, water pipelines and sewer pipelines) would still be needed, for a 1972 level of population.
          d. Microbes and insect would continue to mutate, necessitating a never-ending battle with them.

          A pseudo steady state economy doesn’t really work, because there are too many problems with diminishing returns, because we humans use metals and minerals of many types. These are theoretically renewable over a long enough time scale (as older bedrock reaches the surface), but this is still a much slower scale that we are using these materials. Also, financial systems tend to collapse, without growth. The overall system is geared for growth as long as the system “works,” and collapse when many diminishing returns and too much entropy.

          There are an endless number of wrong models of how we can succeed along these lines.

      • SUPERTRUMP says:

        So, Tim, in another words, you are unable to name just one, right?

      • Harry McGibbs says:

        “I also hate verbal debates with people who regard them as a form of contact sport. They can be very interesting when all the participants are trying to understand each other’s point of view and explore why they think what they think.”

        Clogging the comments section of OFW with regurgitated Heartland Institute propaganda on a platform of feigned concern for the mental welfare of worried ‘alarmists’ is probably not a good way of keeping verbal debates low contact, Tim, as we have seen a few pages ago.

    • TIm Groves says:

      Richard Feynman’s views on the pseudo sciences, which include the social sciences, economics, and, often these days, climate science, are well worth listening too.

      I would recommend everybody to listen to this every morning before breakfast for a week, and learn it by heart. Because so many authoritative folks are full of it, crowing like cockerels standing on a hill of their own excrement.

      We can all learn a lot from Mr. Feynman.


    • Tsubion says:

      Yeah, it’s crazy alright!

      Some people (IPCC) have been pronouncing all kinds of “facts” that are anything but for the past 20 years in an attempt to brainwash only the most gullible idiots on the planet (and there are a lot of them it seems) into believing that they are all going to die a horrible death by rising sea levels within years every few years.

      I’ll give you this. They are geniuses. Their genius entails psychology, mind control, political manipulation, greed, corruption and the ability to manufacture mass hysteria on a level that previous religions would be ashamed of.

      At this point… I’d rather burn in the fires of hell for all eternity than listen to one more whiney biatch eco nazi blathering in my earhole about how self righteous they are because they think everyone should drive a Tesla and save the planet.

  34. aaaa says:

    He’s parroting a theory as much as the pro-AGW people. Does he get paid well?

    EIther AGW will cause climate change or it won’t. If we live long enough, we can find out the eventual results of burning up all available fuels on earth as fast as possible

    • hkeithhenson says:

      “EIther AGW will cause climate change or it won’t.”

      And it really does not matter. We have to fix the energy supply problem regardless and there are no long term solutions where we keep burning fossil fuels.

    • Tsubion says:

      It doesn’t matter if we have a tiny effect on climate change or not.

      The much larger swings in climate that have always happened will still continue to happen. Or do you honestly believe that these changes will suddenly stop on a dime because we stop burning coal and oil?

      This goes beyond normal and acceptable and tolerable levels of insanity as witnessed in the history of the human race. AGW scare mongering and belief that we can maintain a steady state global climate for ever and ever has to mean that some of our species have reached peak insanity.

      It’s truly sad… but the time has come for the afflicted to walk off the nearest cliff. Not only will they solve the problem of their personal suffering but they will collectively alleviate the royal pain in the butt they have become to normal people everywhere.

      Thank you in advance for doing the right thing.

    • Grant says:

      Or perhaps in a shorter period we can find out what it will be like if we don’t use the energy we have been using or try some of the proposed concepts for reversing the alleged problems that are perceived as destructive by some future point.

      Let’s think of the grandchildren and great grandchildren. It may be that the best way to help them is to try to ensure they never exist?

  35. aaaa says:

    So I got a job at a local plant, and one of my coworkers and peer-trainers is a king-of-reddit political type. We debated a little as I got baited into it; he boasted of the Trump economy, the ‘low’ crime rate of USA, the record unemployment, etc, but lamented the lack of growth in the producer economy, highlighted the need for better wages and more sensible work-hours; he thought defense spending was fine, was against welfare and entitlement spending, or at least he feigned as much.

    I said that only democrats, despite their crappiness are worth voting for since republicans are, in-general, loony toons, that we needed to tax the rich, that UBI was worth trying, and that usa couldn’t grow its productive capacity by much. I failed to mention that the ‘low’ crime-rate is probably the result of better policing deterrent along with juiced numbers from municipalities that decriminalize small crimes in order to look good, which isn’t a good argument for stat-touters – ditto can be said for unemployment numbers, which I did not address.

    Later, the ‘debate’ devolved into evolutionary fitness, with me saying that intelligence was not necessarily an advantage for humans, that the ability to outbreed the other tribe is all that really matters; he then painted a scenario of a superior tribe having the inteligence and technological means to defend themselves, which I didn’t deny as a potential advantage, but did say was not necessarily an advantage in the grand scheme of human survival.

    Anyhow, it highlighted how much I hate verbal debates, since they are manipulative rhetorical displays more than anything, but it also made me think about how BAU has to keep going for the sake of the current ‘good life’. Trump is playing chicken with near-peer rivals in some near-last-ditch effort to maintain USA’s primacy, probably at the advising of think tank members. Maybe it’s a smart move on his part in a machiavellian sense, but there is major risk if China/India resists, and global credit siezes up as a result. I think ordinary Americans would get FUBAR’d in a matter of days.

    • TIm Groves says:

      it highlighted how much I hate verbal debates, since they are manipulative rhetorical displays more than anything

      I also hate verbal debates with people who regard them as a form of contact sport. They can be very interesting when all the participants are trying to understand each other’s point of view and explore why they think what they think. But it is not often that involved in a debate like that.

      Very often people who voice strong opinions identify with these opinions and are emotionally attached to them, with the result that they react to others taking issue with anything they say as if it was a personal attack, and so they either get very defensive and pout or else very aggressive and shout.

    • Davidin100millionbilliontrillionzillionyears says:

      “Later, the ‘debate’ devolved into evolutionary fitness, with me saying that intelligence was not necessarily an advantage for humans…”

      it’s really survival-of-the-fit-enough… a species just needs to be fit enough for its environment…

      if global credit seizes up, then small tribes that live without credit should be able to continue to live…

      though for most of us, without banking/finance there will be a major challenge to continued survival…

      The Bottleneck… 99% of us are gone in a few weeks/months, and the unlucky ones live on for a few more years/decades…

      • Tsubion says:

        The unlucky ones might consider themselves the lucky ones if they are the type that are up for a challenge.

        After drowning in so much post apocalyptic fiction over the years I can certainly get behind the aesthetic “beauty” of a world gone by.

        Maybe this young lady will be among the Remainers? By the way, this video made me laugh so much when I finally scrolled down to read the comments. The level of disconnect is huuuuge.

  36. http://oil-price.net/ shows both dub & Brent prices having finished the week down in all four of their time-period measures — while this has happened before in recent years, now there’s kind of a new time-period symmetry here: the “recovery” after the “Great Recession” started in about June, 2009, & the oil-price collapse started in about June, 2014 (5 years, & 10 years, from the middle of this month) — how long can “BAU” last?

    • I am concerned about how long BAU can last as well. I think peak in world oil production took place about October (or perhaps November) 2018.

      I hadn’t thought about the symmetry in the period of the price collapse.

      China’s peak coal seems to have occurred in 2013. So by 2014, the coal that China needed to “dilute” the high prices of oil was disappearing.

      When I visited China in March 2015, my hosts were concerned because China’s economy was doing much less well than was being advertised to the outside world. I expect that China’s poor economic situation is one of the issues underlying the price collapse.

      • Duncan Idaho says:

        We shall see—

      • Tsubin says:

        Did you travel by high speed rail at all?

        I was watching a video yesterday on their incredible achievement. Thousands of miles of HSR compared to America’s zero miles.

        I was wondering how long it would take for most of that railway infrastructure to be abandoned due to inability to finance maintenance costs when financial truth hits China’s economy hard.

        I still think that reliable air taxis are a much better way to shuttle even large numbers of people around compared to very high cost HSR. Small landing areas outside cities would do fine for short take off and landing vehicles. No need for VTOL but why not if it’s possible. Small planes that carry twenty to fifty peope at a time would be fine as shuttles. Very low cost and maintenance and very few accidents. Routes can be flexible unlike fixed train lines. No need for airports. Simple on off for previously vetted trusted travellers and taxi service back and forth to destination.

        EU has very low cost flights off peak for international travel but could have similar mass produced air taxi service for national travel instead of ridiculous HSR. Flying economically as the crow flies from A to B over mountains and water in record time makes a lot more sense than building large scale infrastructure projects all over the country for decades.

        • I have traveled by high speed rail in Japan. There was no space whatsoever for luggage. A person had to send it ahead, or go without.

          A whole industry of sending luggage ahead has developed to work around this difficulty.

          • didnt know about the japanese luggage thing—thanks Gail

            puts a different perspective on it—the time save on the train journey is wasted by sending/picking up/waiting for baggage

            must be an oriental thing—sounds ridiculous

            • The higher speed of the trains no doubt makes the system much less efficient than the slower trains. To keep prices down, people are packed in tightly. There is room only for a small backpack or briefcase per person. Our bus carried our luggage for us, and met us at the other end of the line.

              Hotels have little forms in them to fill out, if you have luggage that you need sent ahead of you, to pick up at your next destination.

            • maybe there’s an aspect of sanity about all this that I might have missed.

              But the Japanese have a certain reputation for creating employment—so they employ people to build and run a railway line, then employ even more people to service the aspects of the line that it wasn’t built to handle, and use drivers buses and roads instead.

              i need a quiet place to go lie down

            • The Japanese have decided to pave everything with stones. I imagine this adds lots of work for people. I took this photo of a creek bed when I visited a couple of years ago.


              It seems like everywhere we went we found make work jobs, almost alongside fancy machines that replaced workers. For example, often a single worker would be cooking food for sale. There would be a machine that took the money and order, so the worker did not have to stop, wash his hands, and make change. But nearby, there would be other jobs made for the purpose of employing more people (directing traffic, making tea, or whatever.)

          • Grant says:

            It seems to me that airlines are trying for something similar. Take no luggage or pay a huge amount to do so.

        • Lets not forget that low cost airliners are exclusively product of cheap debt-financing.. and also wider gov support for deemed critical industries as civil aviation can ~overnight switch into military one (meaning production capacity, skilled staffers, facilities..)

          HSR undoubtedly belongs to the few crown jewel of this techno civilization.
          However, here comes the question is it really necessary at all, as in truly balanced civ the aim and advantages of speed, long distance travel for masses is dubious at best. Horse powered station wagons and sailing ships were good enough upto 18th century..

  37. Davidin100millionbilliontrillionzillionyears says:

    remember when the US 10 year rate was OMG over 3.00? OMG…

    that was in late November…

    6 months later it’s 2.13%

    something is very wrong in the USA…

    and Germany keeps creeping down… 10 year bund is now minus 0.207%

    • I explained to life and annuity insurance people back in September that they should expect interest rates to go down, not up. They were not happy about this.

  38. hkeithhenson says:

    This is a post that did not seem to make it into the thread

    “energy “miracle.”

    There is plenty of energy out there, all we need to do is tap it. We might, we might not.

    An interesting question that I have not seen is how much more can human energy use grow before leveling off? Developed countries use close to 10 kW/person. There is lots of energy growth that can be anticipated as less developed parts of the world catch up, but how much more growth in the developed world?

    Uploading might make the problem worse. I once estimated 20kW/person to lead the uploaded life. Oddly enough, sunk in the deep ocean (for a heat sink) made more sense than going into space.

    • Davidin100millionbilliontrillionzillionyears says:

      “There is lots of energy growth that can be anticipated as less developed parts of the world catch up, but how much more growth in the developed world?”

      anticipated by whom? economists? futurists?

      apparently, you do not seem to grasp that almost all of the world’s economic activity is facing diminishing returns…

      the per capita energy growth for less developed parts of the world is ending…

      the per capita energy growth for the developed world HAS ENDED…

      there is a blog OFW that has many posts, about once every 3 weeks, about this topic…

      you could read or reread them for a better understanding of what is really happening in the world now…

      it’s far far different from futurist fantasy…

      • hkeithhenson says:

        This is a “what if” kind of question. Assuming we open up a very large and cheap energy supply, how much demand do we get? Can data centers soak up more than the 1-2% of the energy they do now?

        Incidentally, one thing that does not get much attention here is that the system is dynamic. If we have problems and they are recognized, someone (or government) is going to go after a solution if there is one.

        One of the economic problems is that we don’t have enough projects to use the surplus money. That’s what’s forcing down interest rates.

        • Davidin100millionbilliontrillionzillionyears says:

          “Assuming we open up a very large and cheap energy supply, how much demand do we get?”

          highly unlikely assumption, but if it happened, the diminishing returns of economic activity would mean a continual requirement of ever more energy just to keep the economy level…

          “If we have problems and they are recognized, someone (or government) is going to go after a solution if there is one.”

          there is no solution to continuous diminishing returns…

          “One of the economic problems is that we don’t have enough projects to use the surplus money.”

          per capita energy decline is the basic fundamental “economic problem”…
          because net (surplus) energy is declining, “projects” (human economic activities) will be declining…

          the value of money is determined by the net (surplus) energy available to the society that distributes their money…

          • hkeithhenson says:

            Power satellites require the cost of liting parts to LOE to come down to an amount that depends on the kg/kW of the power satellite. Can this be done? Not certain but looking fairly good. They return the energy needed to make them in about two months. We may not take this route out of energy problems, but there doesn’t seem to be a reason why not.

        • doomphd says:

          “If we have problems and they are recognized, someone (or government) is going to go after a solution if there is one.”

          This is a variant upon “they will think of something”. Without a new source of abundant cheap energy, to replace what we are presently burning with the fossil fuels, it is ‘game over’ for the industrial civilization we all know and presently enjoy. I’m sure this will come as a shock to many.

          • Tim Groves says:

            There are going to be millions of angry Facebook users when they can no longer access their digital life histories, that’s for sure.


          • hkeithhenson says:

            “they will think of something”

            As an idea, power satellites have been around since 1968. What’s finally caught up is the low-cost lift into space.

            Not that power satellites are the only solution. StratoSolar is worth investigating. Molten salt reactors and other fusion reactors will probably work. And there are wilder things, like nanotechnology that grows PV all over the desert.

            I don’t ignore the possibility that the whole of humanity could suffer what happened to Easter Island. In which case, if you need a battle slogan, they used “The flesh of your mother sticks between my teeth.”

            • BahamasEd says:

              I don’t thing anyone has, to date, put stuff into space for less then about $17,000 per KG in bulk.
              Many groups say that sometime in the future they will be able to do it much cheaper, but no one has done it yet.

            • Ed says:

              Google says:
              But what really sets SpaceX apart, and has made it a magnet for controversy, are its prices: As advertised on the company’s Web site, a Falcon 9 launch costs an average of $57 million, which works out to less than $2,500 per pound to orbit.
              Is SpaceX Changing the Rocket Equation? – Air & Space Magazine

            • Davidin100millionbilliontrillionzillionyears says:

              is SpaceX receiving massive US government subsidies?

            • hkeithhenson says:

              “massive US government subsidies”

              For power satellites, it doesn’t make any difference. Musk is really down on power satellites.

        • Jason says:

          What if questions should be based as close to reality as possible otherwise you are just daydreaming, fun for you but not for others. There is no very large and cheap energy supply, anymore.

          • hkeithhenson says:

            If you want to give up and die, best wishes, But if you go out in the daylight, you might notice the big hot fusion reactor overhead.

            • aaaa says:

              It’s still in *COSTLY* R&D stage, and results won’t be available for years, if not decades. https://cleantechnica.com/2019/03/11/china-exploring-space-based-solar-power/.
              BAU may have to hold out for another 40 years for us to determine of space solar electricity can be safely delivered in a cost-efficient manner

            • hkeithhenson says:

              “won’t be available for years”

              Yep. I should note that the Japanese are way ahead of the Chinese on power satellite work, particularly microwave transmission.

              But the long lead items are the vehicles and flight bases (on the equator). You are mostly correct except that the R&D is small compared to the cost of building thousands of power satellites.

            • Ed says:

              I am still a SPS fan. I would like to see a few groups put up small one just as inspirations. I mean at the 10KW delivered to the group. Enough to light a BIG light bulb 24/7/365.

            • hkeithhenson says:

              “10KW delivered”

              Unfortunately, it’s not simple. Basic geometry and physical laws (diffraction) push the minimum size up to around 5 GW for 2.45 GHz, or perhaps 2 GW for 5.8 GHz.

              That brings the mass of a power satellite up to around 30,000 tons, 30 million kg. At a rock bottom price of $100/kg, that’s $3 B for the transport into space, probably twice that including moving from LEO out to GEO and twice again for the parts and rectenna. Still, 5 GW at $12 B is $2400/kW. With that investment, power would sell for 3 cents per kWh. That’s less than coal.

              It’s even more complicated. Boeing’s original concept was to build the power satellites in LEO and move them out to GEO under their own power. But even back in the 1970s, there was too much space junk for this to be practical. In the last month, it has been proposed to use chemical rockets to push large cargos of parts up to 2000 km (above the junk) and build the power satellite there. It takes considerable fuel to move the parts and return the tug, increasing the cost by about 20%.

              Another complication is that all the construction will have to be done by robots or teleoperation because the radiation level at 2000 km is much more than humans can stand. We don’t have these construction methods yet, but they would not be hard to develop.

              If there was a sensible way to deliver 10 kW from a power satellite to the ground, I would be solidly behind it.

            • TIm Groves says:

              If JFK was alive and in his fifteenth term as POTUS, be might well be saying: “We choose to put a space based solar power plant into orbit within the next decade not because it is easy, but because it is hard. And I am appointing Keith Henson to head the project.”

  39. SUPERTRAMP says:

    Well, well, well, a long while ago remember an article about immigrants from Mexico and peak oil.
    Too bad don’t have it handy, but the author pointed out there is a correlation between the two.
    Seems we here in the land of the free have reached the state where the economy return on new arrivals is just not profitable anymore in a general basis. Now, we will be selective in our own self interest for skills and professions that are in demand. The author of the article, if my memory serves me right, wrote we here will know we mean business when we mow desperate border crossers with machine gun fire. Suppose Donald Trump is just testing the waters with the Wall and trade tariffs. My own take is the Fed tried it’s best to inflate the debt away and it’s just not working as planned, now to plan B. Kill two or three birds with one President Making America Great Again

  40. SUPERTRAMP says:

    (Bloomberg) — Big Oil probably won’t be buying up the Permian Basin’s struggling independent drillers any time soon.

    Years of costly exploration and frantic buying sprees have gutted shareholder returns in the world’s largest shale basin. And management teams and their financial backers can’t count on shale-hungry, cash-rich supermajors to buy them out.

    Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and ConocoPhillips are all on record saying they are wary of scooping up smaller rivals at a time when would-be sellers are demanding premium payouts and global crude prices are under pressure from ample supplies.

    There is “not always alignment among buyers and sellers,” Exxon Chief Executive Officer Darren Woods said Wednesday. He suggested Permian drillers may have to be squeezed by weak prices for a bit longer before they dial down their expectations.

    “That’s often the case in a market, particularly in one that’s in transition,” Woods said


    Yes, we are in a period of market transition…the oil age is in it’s last chapter of human history

    • There seems to be a lot of belief in the view, “Of course oil prices will rise.” As long as some investors will hold onto that hope, it would seem like there might be investors, even when returns are pretty dismal.

    • Duncan Idaho says:

      Sorry, Barbie Dolls are sold out. I don’t care if you want to pay twice the amount for one.

    • Davidin100millionbilliontrillionzillionyears says:

      “He suggested Permian drillers may have to be squeezed by weak prices for a bit longer before they dial down their expectations.”

      WTI was 76 in October and crashed to 42 in December…

      got up to 66 in April and now crashing to ?? in June/July…

      those numbers do not predict the future, but WTI in the 30s would get a lot of attention…

      like there is something fundamentally wrong economically… and the OFW Scenario of brief “lower highs” followed by “lower lows” will again be reaffirmed…

  41. Harry McGibbs says:

    Low-rated companies are the biggest accumulators of debt, prompting a major credit agency to warn of significant troubles if current conditions deteriorate. The alert from Moody’s Investors Services comes as worries mount over a looming economic downturn. Short-term bond yields have passed their longer-duration counterparts, a trend that often portends recessions.

    “Should conditions continue to deteriorate, it could mean trouble for companies that are rated at the lower end of the spectrum…”


    • Harry McGibbs says:

      ““We have probably the riskiest credit market that we have ever had,” said Scott Mather, chief investment officer of U.S. core strategies at Pimco.

      “It’s like before the financial crisis, he said. “We see it in the buildup in corporate leverage, the decline in credit quality, and declining underwriting standards — all this late-cycle credit behavior we began to see in 2005 and 2006.”

      “Basically, as Pimco Global Economic Adviser Joachim Fels put it to Bloomberg Televison’s Jonathan Ferro: “We’re seeing the end of an era. … We’re now entering an age of disruption.””


      • Somehow, we need to keep the credit bubble going.

        This is the US story. I am sure that it is even worse in China.

      • Rodster says:

        I read an article on Zerohedge regarding college loan students who have left the US just to escape their loan burden which they said and I have no reason not to believe has ruined their lives. The common theme was their majors were essentially worthless outside of saying they had a diploma. Many had to move in with their parents because the jobs they could find were not enough to pay their bills. I read that the current student loan tab is reaching $1.6 trillion.


        • John Doyle says:

          It is totally scandalous that such a wealthy nation should burden its young with education debts. The fed owns all the debts and at the stroke of a pen could write them all out, and pay back much of the money as well. It’s all “thin air” money anyway and killing the debt would benefit the economy too.

          • Not really. We are dealing with goods and services. The government can’t print goods and services.

            Under some circumstances, a government can substitute some promises for others. I am afraid you are off in never-never land. A wealthy country would not be wealthy long, if it followed your advice. Certainly, a poor country would not be either.

            • John Doyle says:

              I shouldn’t need a whole book to explain why that is my reasoning. You pull up “straw man” arguments. Social democracies are not requiring we all work for the economy. No, the economy works for us! You have it backwards. The duty of Government is to attend to the needs and essentials of every single person in the nation. That means to have services to do that, such as healthcare, education and infrastructure to give a frame for advancement. They are not profit making, Government profit taking takes away savings from the economy as surely as does tax. This is a problem in the USA which wants governments out of the way to make room for profits. It’s actually far less sustainable than social democracy, not to mention inhumane. It is possible the USA will come around. As Churchill said the USA gets it right, but only after trying every other possibility first.
              But indeed goods and services are the barrier. I have always said so. It’s never money. Money is a token available to infinity in theory.In practice it is available resources for sale. The USA can never go bankrupt buying what is for sale and there is oodles of fiscal space for social democracy now. They just have to decide to do it, is all it needs.

            • Start framing your discussion in terms of energy supplies.

              Economies are only possible because of energy consumption (dissipation). Governments are only possible because of energy dissipation. We humans are energy dissipation devices as well. All of these devices are temporary. They can fail for any number of reasons, including too little energy to dissipate.

              You are claiming that somehow the government has magical powers. Its major powers are

              (1) Redistributing goods and services, through taxes and the ability to provide roads, schools, and services of various kinds to citizens. This also includes redistributing goods and services to military, elderly, researchers, and others deemed particularly worthy.

              (2) Creating promises for future goods and services made with energy, even though these may not in fact exist.

              You are claiming that somehow, some governments can conjure up goods and services out of thin air. Perhaps they steal them from other countries, by the slight of hand of issuing promises for something that doesn’t exist. This is somehow a way to fix the problems of the world? I don’t believe you.

            • John Doyle says:

              But I am using energy issues. I just call it available resources for sale.

            • They need to be inexpensively producible resources, that can provide the goods that people need at the wages they are receiving. The issue isn’t just “available resources.”

            • John Doyle says:

              Available resources for SALE. They are not for sale if too expensive.It’s a carefully constructed phrase.

            • They are indeed for sale, even if consumers cannot afford to buy enough goods made from them. The energy products are well-disguised by the time people buy them. They look more like rent on a person’s home, or food for the table. The system collapses because commodity prices don’t stay high enough.

            • All down to energy

              specifically cheap surplus energy. The amount of energy you can buy with the money you have defines your lifestyle:
              as a rough guide, in 1972 $1 bought 42000Btu’s of energy
              Now $1 buys you 6000Btu’s of energy
              (food — cars — housing — all have Btus locked into them)

              Only if you leave your money under your mattress does it not convert into energy-tokens

              One seventh as much. Now, you can’t run seven times faster than you did in 1972, so you lose your standard of living — -or — — you borrow money to pretend life is going on as it always has. Which of course is what millions are forced to do. It is what governments are forced to do—they want their people placid and un-revolting.

              Only it isn’t — -that one seventh differential means you can never ever catch up.

              That differential explains why your standard of living remains flat. The surplus energy (mainly contained in oil coal and gas) is what sustained the lifestyle of western society. We still have our oil coal and gas, but those fuels now cost more to get hold of than they did in 1972, so there’s less to spread around to give you an easy living.

              Remember that when cheap oil was sucked out of Texas, it wasn’t necessary to pay $trillions to defend it in Saudi or Iraq. Yet we still expect fuels to be as cheap as they always were. The USA runs 12 active carrier groups to defend the oil lines—spending on the military means there’s less for everything else.

              And munitions workers want to keep their jobs

              Sure — -there are still very rich people, and they can’t feel the tightening. Yet. But it’s there for everybody. The poor just feel it first, the extreme poor get tossed out on the street and stop eating
              Depends where you are on the food chain.

              Food is energy. No more cheap energy — -no more cheap food. People start to starve. Really easy to understand when the hysteria dies down. That’s why you have food stamps, foodbanks or whatever.

              Politics wont bring back cheap oil again, politicians like to pretend they will — -cheap oil forever — -MAGA and all that nonsense. Isn’t going to happen.
              Even on OFW–we are not immune from fantasisers—a new form of cheap energy keeps getting repeated.

              Energy derives from changing one compound into another–we extract work/employment out of that ”change” It doesn’t matter if we do wave a magic wand and suck it out of the sky—we still have to ”work” to give it function.
              We make stuff ”work” by setting fire to more stuff—that’s all there is..

              That is how humankind became elevated about all other species, and brought about our demise.

              There’s no conspiracy — -we just burned all the cheap oil, the party really is over this time

            • TIm Groves says:

              The higher education bubble is bursting because higher education has become very expensive and the economy doesn’t need as many graduates as are being produced. Unless employers are willing to pay a premium for graduates sufficient to cover the cost of their education, then the value of many of the qualifications is questionable.

              Of course, there’s also a measure of vanity involved in getting a degree, and a fear of the consequences of not getting one. Also, college helps maintain the illusion of low unemployment by keep young people out of the job market for a few years. And where would society be without its class distinctions? But on the whole, while I would be more reassured knowing that the brain surgeon operating on me had been to medical school, for a vast range of clerical and service jobs, a college education is of marginal value.

            • Tsubion says:

              Good comments Gail, Norman and Tim!

              No matter what your political leaning may be. You can even swing both ways if that’s what crumbles your cookie. It’s irrelevant. Everything boils down to the flow of energy in the end. It’s the one thing that underlies everything we do.

              When we do have surplus cheap energy flows it does make sense to share the wealth. It does make sense to meet basic needs as opposed to one mega corporation hording all the resources.

              This applies at the tribal level, through small town and city to the global level. It’s not what we’re seeing though. As we reach limits, the wealth is most certainly flowing to the top of the heap and staying there. At the other end, we have more and more people that expect handouts for nothing. Unfortunately, this situation will continue until implosion in one country, then the next, and so on. The expected energy and economic miracles are simply too far along from where we are now to have the required effect and govts will not be able to take care of everybody.

            • the american dream—such as it ever was—was a nothing more than the short term flow of cheap surplus energy

              but 99% people refuse to accept such a simple explanation

        • Strangely enough, based on what my daughter told me, there seemed to be peer pressure to have a loan, to be like all of your friends. My daughter spent an extra year in graduate school and paid for it with a loan, since that seemed like the “thing to do.”

          She now realizes that a Masters of Fine Arts in Creative Writing is not worth much.

          • Rodster says:

            “She now realizes that a Masters of Fine Arts in Creative Writing is not worth much.”

            I’m sure, much to the delight of the banksters who made money on the loan and of course the college who used the money to pay their expenses. College for the most part has become a racket unless a person is going to college to earn a degree in a high paying high demand job.

            A young person is better off trying to figure out what they want out of life and trying to start their own business instead.

            • Hubbs says:

              Not agreeing or disagreeing because I do not know how it is in the real world, as my experience is only in setting up a physician’s medical office whose “business” model was based on an artificial world, where payments through government Medicare, Medicaid, Champus, etc distorted the whole industry, and you really had to be a bad doctor or have zero understanding of money and finance to NOT be profitable.

              It is generally reported that 90% of all business startups fail, implying a persistent drain of capital, and a false argument, based on 10% survivorship bias, that all we have to do is get everyone to start a business, implying 100% success. I may be different or more pragmatic. Even with the all the uncertainties of food production, weather, disease etc., for both crop and animal husbandry, I would rather take my chances on having my own plot of land and investing in farming skills. It sounds like utter heresy in this modern age of computers and high tech, but whether we like it or not, we may be forced into the big unwind of the 21st and 20th centuries.

            • GBV says:

              I’m trying to score free funding from the province of Ontario through their Second Career program to go back to school for electrical engineering technician studies.

              I don’t suspect it will be a massive paying career, but if Ontario is willing to foot the bill then I’ll bite. I figure it might be practical to have a strong understanding of electricity (my father already being a bit of a guru on water distribution)… more useful than my university Commerce degree at this point anyway.

              Running one’s own business is also good advice. I make $20/hr as a flat roofer, but my coworker and I joke that it’s a full-time job with part-time hours (I was WELL under the Canadian poverty line in 2018). If I ran my own little flat roofing company, a half dozen small jobs per season would likely pay more than the dozens of jobs (some over 20k sq.ft.) I did for my employer throughout all of 2018…


          • Tsubion says:

            Yeah well, I know plenty of people that make a living writing genre novels and selling them on Amazon kindle and other platforms. What you certainly don’t need these days is the expensive college degree. Everything you need can be learned online for free. Tutorials, courses, tips and tricks, how to start an online business on a budget etc etc.

            I was involved in a study once that measured all kinds of parameters on why people fail to achieve their goals. The number one thing that caused failure even when outlay costs were really low was a lack of work.

            In other words, 90% of people starting their own business or going self employed have great ideas and are all set to give things a go, but end up not putting the work in. This is surprising since most of these people would prefer to work for themselves than hold down a regular job, but when it comes down to it, they don’t turn up to work at their own business. Very odd but the number one cause of failure.

  42. Harry McGibbs says:

    “Brazil’s economy shrank in the first quarter for the first time since 2016, data showed on Thursday, pushing Latin America’s largest economy closer to a double-dip recession. The contraction piled pressure on President Jair Bolsonaro, who was swept into office in January after making market-friendly pledges to boost growth and lift the gloom hanging over the economy since a brutal 2015-16 recession.”


    • Harry McGibbs says:

      “Activists in Brazil are vowing to continue their fight against cuts to the education budget that prompted mass protests earlier this month. They are part of a raft of measures the government says are necessary to get the country out of its financial crisis. But opponents have called it an attack on critical thinking.”


      • If a government cannot afford all of its programs, it needs to cut somewhere. Education is one choice.

        I noticed that a headline recently said that US higher education enrollments were down for the 7th consecutive year. Governments will certainly want to cut budgets for higher education if the US, if there are fewer students going through the system.

        • Dennis L. says:

          I have mentioned before that companies such as IBM, Microsoft, Google, etc. no longer require a college degree. There was a time, perhaps still the case, where a person could get a Professional Engineer License with no degree, but with experience and an exam become licensed.
          Coursera.org has incredible courses, MIT has many of its courses on line. Colleges and universities for the most part give a student credentials , many(most?) of which are worthless
          Dell, Wozniak, Gates, Edison, have demonstrated a college education is not necessary.
          Rumor has it an actuary does not require a degree to become licensed/ certified/member of an actuarial group.
          One could imagine virtual reality making laboratory courses obsolete and in certain areas, much more interesting. Imagine running a nuclear reactor in virtual reality and getting it wrong, what an experience!

          Dennis L.

          • Phil D says:

            We’ll end up going back to the age of guilds. Higher education has priced itself out of the market. Many degrees are utterly worthless. “Would you like fries with that?”

            • Tsubion says:

              You mean my degree in the study of black lesbian relationships in medievel Iran may not guarantee me a $100,000 job after I graduate?

              There’s no way I’m working as a Barista after all the years of effort I put into my degree. People need to recognise how valuable I am.

          • Tsubion says:

            Good comment!

            Online lifelong learning, on the job training, apprentiship, make a lot more sense going forward. I have always admired self taught individuals.

            There’s something very corrupt and generally wrong with the state education system.

          • DJ says:

            Has computing ever demanded a degree?

            But it is kind of a special case, you could in less than one hour demonstrate that you probably are a productive programmer, and a misrecruitment is cheap if caught before patching the nuclear plant .

  43. Harry McGibbs says:

    “US President Donald Trump is set to slap fresh tariffs on all Mexican imports next month, in a shock move that could threaten a recently-agreed major trade deal between the two sides.

    “The White House warned late last night that the US will impose tariffs on all goods coming into the country unless Mexico took action to clamp down on unlawful immigration and “reduce or eliminate the number of illegal aliens”.”


  44. Harry McGibbs says:

    “German bond yields have plunged to historic lows and inflation expectations are collapsing across the eurozone, prompting fears of a gathering recessionary storm.

    “The benchmark 10-year bund yield dropped to minus 0.18pc on Thursday and is testing the all-time lows seen during the brief rush to safety after the Brexit referendum. Spanish and Portuguese yields have dropped to record lows.

    “A closely watched gauge of inflation expectations – five-year/five-year swap contracts – have collapsed this year and raise concerns that the European Central Bank is losing control. It is signalling a slide into a deflationary quagmire.”


  45. Harry McGibbs says:

    “China’s manufacturing sector slowed more than expected and further signs of stress in the labor market appeared, adding to a weakening currency and financial nervousness on the list of problems faced by President Xi Jinping as the trade war worsens.

    “The manufacturing purchasing managers’ index for May slid into contraction at 49.4 and its employment sub-index tumbled to the lowest level since the aftermath of the global financial crisis. The yuan has fallen 2.5% in May, and stocks had a tough month as turbulence from Trump’s tariff hike hit home. If that wasn’t enough, the first government seizure of a Chinese bank in 20 years also has spooked markets.”


  46. SuperTramp says:

    Why are we here discussion these trivial issues!?
    Can’t believe we aren’t fighting the fight….same as it ever was….many decades later…
    Even if Roe is upheld, abortion opponents are winning
    A drip, drip, drip of state restrictions has made abortion harder to obtain
    Six states are down to only one abortion clinic; by the end of this week, Missouri could have zero. Some women seeking abortions have to travel long distances, and face mandatory waiting periods or examinations. On top of that, a new wave of restrictive laws, or outright bans, is rippling across GOP-led states like Alabama and Georgia

    The Bible belt is winning…oh my, BAU is running fine on track and on time..
    More unplanned, unwanted pregnancy to term. For whatever reason, take the moral high ground and run away afterward in raising and feeding.
    Can’t believe we are still up in arms over the same sht ….humans love to divide and separate and fight

    • Karl says:

      It does seem trivial given the prospect for a massive human die off in the near to intermediate future, doesn’t it? I read a book recently by a guy who goes by the nom de plume “John Mosby” called Forging the hero. It basically talks about the historical precedents for collapse, and the need to fall back to the tribal level for survival. The tribe, incidentally, is naturally a pretty small group. Essentially just your family and friends. His point was, you need to completely abandon concern for the nation state and wider society, and focus in on what’s good for your tribe to possibly make it. It’s a view point that relieves you from the effort of caring about the culture wars, laws (except to avoid arrest), or international news. It took me a while to get comfortable giving up attachment to an “American” identity, but it really is a practical and liberating world view.

  47. I see a WSJ article saying,