Powering the world’s economy with wind, water and solar, and perhaps a little wood sounds like a good idea until a person looks at the details. The economy can use small amounts of wind, water and solar, but adding these types of energy in large quantities is not necessarily beneficial to the system.
While a change to renewables may, in theory, help save world ecosystems, it will also tend to make the electric grid increasingly unstable. To prevent grid failure, electrical systems will need to pay substantial subsidies to fossil fuel and nuclear electricity providers that can offer backup generation when intermittent generation is not available. Modelers have tended to overlook these difficulties. As a result, the models they provide offer an unrealistically favorable view of the benefit (energy payback) of wind and solar.
If the approach of mandating wind, water, and solar were carried far enough, it might have the unfortunate effect of saving the world’s ecosystem by wiping out most of the people living within the ecosystem. It is almost certain that this was not the intended impact when legislators initially passed the mandates.
[1] History suggests that in the past, wind and water never provided a very large percentage of total energy supply.
Figure 1. Annual energy consumption per person (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Tony Wrigley, Cambridge University.
Figure 1 shows that before and during the Industrial Revolution, wind and water energy provided 1% to 3% of total energy consumption.
For an energy source to work well, it needs to be able to produce an adequate “return” for the effort that is put into gathering it and putting it to use. Wind and water seemed to produce an adequate return for a few specialized tasks that could be done intermittently and that didn’t require heat energy.
When I visited Holland a few years ago, I saw windmills from the 17th and 18th centuries. These windmills pumped water out of low areas in Holland, when needed. A family would live inside each windmill. The family would regulate the level of pumping desired by adding or removing cloths over the blades of the windmill. To earn much of their income, they would also till a nearby plot of land.
This overall arrangement seems to have provided adequate income for the family. We might conclude, from the inability of wind and water energy to spread farther than 1% -3% of total energy consumption, that the energy return from the windmills was not very high. It was adequate for the arrangement I described, but it didn’t provide enough extra energy to encourage greatly expanded use of the devices.
[2] At the time of the Industrial Revolution, coal worked vastly better for most tasks of the economy than did wind or water.
Economic historian Tony Wrigley, in his book Energy and the English Industrial Revolution, discusses the differences between an organic economy (one whose energy sources are human labor, energy from draft animals such as oxen and horses, and wind and water energy) and an energy-rich economy (one that also has the benefit of coal and perhaps other energy sources). Wrigley notes the following benefits of a coal-based energy-rich economy during the period shown in Figure 1:
- Deforestation could be reduced. Before coal was added, there was huge demand for wood for heating homes and businesses, cooking food, and for making charcoal, with which metals could be smelted. When coal became available, it was inexpensive enough that it reduced the use of wood, benefiting the environment.
- The quantity of metals and tools was greatly increased using coal. As long as the source of heat for making metals was charcoal from trees, the total quantity of metals that could be produced was capped at a very low level.
- Roads to mines were greatly improved, to accommodate coal movement. These better roads benefitted the rest of the economy as well.
- Farming became a much more productive endeavor. The crop yield from cereal crops, net of the amount fed to draft animals, nearly tripled between 1600 and 1800.
- The Malthusian limit on population could be avoided. England’s population grew from 4.2 million to 16.7 million between 1600 and 1850. Without the addition of coal to make the economy energy-rich, the population would have been capped by the low food output from the organic economy.
[3] Today’s wind, water, and solar are not part of what Wrigley called the organic economy. Instead, they are utterly dependent on the fossil fuel system.
The name renewables reflects the fact that wind turbines, solar panels, and hydroelectric dams do not burn fossil fuels in their capture of energy from the environment.
Modern hydroelectric dams are constructed with concrete and steel. They are built and repaired using fossil fuels. Wind turbines and solar panels use somewhat different materials, but these too are available only thanks to the use of fossil fuels. If we have difficulty with the fossil fuel system, we will not be able to maintain and repair any of these devices or the electricity transmission system used for distributing the energy that they capture.
[4] With the 7.7 billion people in the world today, adequate energy supplies are an absolute requirement if we do not want population to fall to a very low level.
There is a myth that the world can get along without fossil fuels. Wrigley writes that in a purely organic economy, the vast majority of roads were deeply rutted dirt roads that could not be traversed by wheeled vehicles. This made overland transport very difficult. Canals were used to provide water transport at that time, but we have virtually no canals available today that would serve the same purpose.
It is true that buildings for homes and businesses can be built with wood, but such buildings tend to burn down frequently. Buildings of stone or brick can also be used. But with only the use of human and animal labor, and having few roads that would accommodate wheeled carts, brick or stone homes tend to be very labor-intensive. So, except for the very wealthy, most homes will be made of wood or of other locally available materials such as sod.
Wrigley’s analysis shows that before coal was added to the economy, human labor productivity was very low. If, today, we were to try to operate the world economy using only human labor, draft animals, and wind and water energy, we likely could not grow food for very many people. World population in 1650 was only about 550 million, or about 7% of today’s population. It would not be possible to provide for the basic needs of today’s population with an organic economy as described by Wrigley.
(Note that organic here has a different meaning than in “organic agriculture.” Today’s organic agriculture is also powered by fossil fuel energy. Organic agriculture brings soil amendments by truck, irrigates land and makes “organic sprays” for fruit, all using fossil fuels.)
[5] Wind, water and solar only provided about 11% of the world’s total energy consumption for the year 2018. Trying to ramp up the 11% production to come anywhere close to 100% of total energy consumption seems like an impossible task.
Figure 2. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.
Let’s look at what it would take to ramp up the current renewables percentage from 11% to 100%. The average growth rate over the past five years of the combined group that might be considered renewable (Hydro + Biomass etc + Wind&Solar) has been 5.8%. Maintaining such a high growth rate in the future is likely to be difficult because new locations for hydroelectric dams are hard to find and because biomass supply is limited. Let’s suppose that despite these difficulties, this 5.8% growth rate can be maintained going forward.
To increase the quantity from 2018’s low level of renewable supply to the 2018 total energy supply at a 5.8% growth rate would take 39 years. If population grows between 2018 and 2057, even more energy supply would likely be required. Based on this analysis, increasing the use of renewables from a 11% base to close to a 100% level does not look like an approach that has any reasonable chance of fixing our energy problems in a timeframe shorter than “generations.”
The situation is not quite as bad if we look at the task of producing an amount of electricity equal to the world’s current total electricity generation with renewables (Hydro + Biomass etc + Wind&Solar); renewables in this case provided 26% of the world’s electricity supply in 2018.
Figure 3. World electricity production by type, based on data from 2019 BP Statistical Review of World Energy.
The catch with replacing electricity (Figure 3) but not energy supplies is the fact that electricity is only a portion of the world’s energy supply. Different calculations give different percentages, with electricity varying between 19% and 43% of total energy consumption.1 Either way, substituting wind, water and solar in electricity production alone does not seem to be sufficient to make the desired reduction in carbon emissions.
[6] A major drawback of wind and solar energy is its variability from hour-to-hour, day-to-day, and season-to-season. Water energy has season-to-season variability as well, with spring or wet seasons providing the most electricity.
Back when modelers first looked at the variability of electricity produced by wind, solar and water, they hoped that as an increasing quantity of these electricity sources were added, the variability would tend to offset. This happens a little, but not nearly as much as one would like. Instead, the variability becomes an increasing problem as more is added to the electric grid.
When an area first adds a small percentage of wind and/or solar electricity to the electric grid (perhaps 10%), the electrical system’s usual operating reserves are able to handle the variability. These were put in place to handle small fluctuations in supply or demand, such as a major coal plant needing to be taken off line for repairs, or a major industrial client reducing its demand.
But once the quantity of wind and/or solar increases materially, different strategies are needed. At times, production of wind and/or solar may need to be curtailed, to prevent overburdening the electric grid. Batteries are likely to be needed to help ease the abrupt transition that occurs when the sun goes down at the end of the day while electricity demand is still high. These same batteries can also help ease abrupt transitions in wind supply during wind storms.
Apart from brief intermittencies, there is an even more serious problem with seasonal fluctuations in supply that do not match up with seasonal fluctuations in demand. For example, in winter, electricity from solar panels is likely to be low. This may not be a problem in a warm country, but if a country is cold and using electricity for heat, it could be a major issue.
The only real way of handling seasonal intermittencies is by having fossil fuel or nuclear plants available for backup. (Battery backup does not seem to be feasible for such huge quantities for such long periods.) These back-up plants cannot sit idle all year to provide these services. They need trained staff who are willing and able to work all year. Unfortunately, the pricing system does not provide enough funds to adequately compensate these backup systems for those times when their services are not specifically required by the grid. Somehow, they need to be paid for the service of standing by, to offset the inevitable seasonal variability of wind, solar and water.
[7] The pricing system for electricity tends to produce rates that are too low for those electricity providers offering backup services to the electric grid.
As a little background, the economy is a self-organizing system that operates through the laws of physics. Under normal conditions (without mandates or subsidies) it sends signals through prices and profitability regarding which types of energy supply will “work” in the economy and which kinds will simply produce too much distortion or create problems for the system.
If legislators mandate that intermittent wind and solar will be allowed to “go first,” this mandate is by itself a substantial subsidy. Allowing wind and solar to go first tends to send prices too low for other producers because it tends to reduce prices below what those producers with high fixed costs require.2
If energy officials decide to add wind and solar to the electric grid when the grid does not really need these supplies, this action will also tend to push other suppliers off the grid through low rates. Nuclear power plants, which have already been built and are adding zero CO2 to the atmosphere, are particularly at risk because of the low rates. The Ohio legislature recently passed a $1.1 billion bailout for two nuclear power plants because of this issue.
If a mandate produces a market distortion, it is quite possible (in fact, likely) that the distortion will get worse and worse, as more wind and solar is added to the grid. With more mandated (inefficient) electricity, customers will find themselves needing to subsidize essentially all electricity providers if they want to continue to have electricity.
The physics-based economic system without mandates and subsidies provides incentives to efficient electricity providers and disincentives to inefficient electricity suppliers. But once legislators start tinkering with the system, they are likely to find a system dominated by very inefficient production. As the costs of handling intermittency explode and the pricing system gets increasingly distorted, customers are likely to become more and more unhappy.
[8] Modelers of how the system might work did not understand how a system with significant wind and solar would work. Instead, they modeled the most benign initial situation, in which the operating reserves would handle variability, and curtailment of supply would not be an issue.
Various modelers attempted to figure out whether the return from wind and solar would be adequate, to justify all of the costs of supporting it. Their models were very simple: Energy Out compared to Energy In, over the lifetime of a device. Or, they would calculate Energy Payback Periods. But the situation they modeled did not correspond well to the real world. They tended to model a situation that was close to the best possible situation, one in which variability, batteries and backup electricity providers were not considerations. Thus, these models tended to give a far too optimistic estimates of the expected benefit of intermittent wind and solar devices.
Furthermore, another type of model, the Levelized Cost of Electricity model, also provides distorted results because it does not consider the subsidies needed for backup providers if the system is to work. The modelers likely also leave out the need for backup batteries.
In the engineering world, I am told that computer models of expected costs and income are not considered to be nearly enough. Real-world tests of proposed new designs are first tested on a small scale and then at progressively larger scales, to see whether they will work in practice. The idea of pushing “renewables” sounded so good that no one thought about the idea of testing the plan before it was put into practice.
Unfortunately, the real-world tests that Germany and other countries have tried have shown that intermittent renewables are a very expensive way to produce electricity when all costs are considered. Neighboring countries become unhappy when excess electricity is simply dumped on the grid. Total CO2 emissions don’t necessarily go down either.
[9] Long distance transmission lines are part of the problem, not part of the solution.
Early models suggested that long-distance transmission lines might be used to smooth out variability, but this has not worked well in practice. This happens partly because wind conditions tend to be similar over wide areas, and partly because a broad East-West mixture is needed to even-out the rapid ramp-down problem in the evening, when families are still cooking dinner and the sun goes down.
Also, long distance transmission lines tend to take many years to permit and install, partly because many landowners do not want them crossing their property. In some cases, the lines need to be buried underground. Reports indicate that an underground 230 kV line costs 10 to 15 times what a comparable overhead line costs. The life expectancy of underground cables seems to be shorter, as well.
Once long-distance transmission lines are in place, maintenance is very fossil fuel dependent. If storms are in the area, repairs are often needed. If roads are not available in the area, helicopters may need to be used to help make the repairs.
An issue that most people are not aware of is the fact that above ground long-distance transmission lines often cause fires, especially when they pass through hot, dry areas. The Northern California utility PG&E filed for bankruptcy because of fires caused by its transmission lines. Furthermore, at least one of Venezuela’s major outages seems to have been related to sparks from transmission lines from its largest hydroelectric plant causing fires. These fire costs should also be part of any analysis of whether a transition to renewables makes sense, in terms of either cost or energy returns.
[10] If wind turbines and solar panels are truly providing a major net benefit to the economy, they should not need subsidies, even the subsidy of going first.
To make wind and solar electricity producers able to compete with other electricity providers without the subsidy of going first, these providers need a substantial amount of battery backup. For example, wind turbines and solar panels might be required to provide enough backup batteries (perhaps 8 to 12 hours’ worth) so that they can compete with other grid members, without the subsidy of going first. If it really makes sense to use such intermittent energy, these providers should be able to still make a profit even with battery usage. They should also be able to pay taxes on the income they receive, to pay for the government services that they are receiving and hopefully pay some extra taxes to help out the rest of the system.
In Item [2] above, I mentioned that when coal mines were added in England, roads to the mines were substantially improved, befitting the economy as a whole. A true source of energy (one whose investment cost is not too high relative to its output) is supposed to be generating “surplus energy” that assists the economy as a whole. We can observe an impact of this type in the improved roads that benefited England’s economy as a whole. Any so-called energy provider that cannot even pay its own fair share of taxes acts more like a leech, sucking energy and resources from others, than a provider of surplus energy to the rest of the economy.
Recommendations
In my opinion, it is time to eliminate renewable energy mandates. There will be some instances where renewable energy will make sense, but this will be obvious to everyone involved. For example, an island with its electricity generation from oil may want to use some wind or solar generation to try to reduce its total costs. This cost saving occurs because of the high price of oil as fuel to make electricity.
Regulators, in locations where substantial wind and/or solar has already been installed, need to be aware of the likely need to provide subsidies to backup providers, in order to keep the electrical system operating. Otherwise, the grid will likely fail from lack of adequate backup electricity supply.
Intermittent electricity, because of its tendency to drive other providers to bankruptcy, will tend to make the grid fail more quickly than it would otherwise. The big danger ahead seems to be bankruptcy of electricity providers and of fossil fuel producers, rather than running out of a fuel such as oil or natural gas. For this reason, I see little reason for the belief by many that electricity will “last longer” than oil. It is a question of which group is most affected by bankruptcies first.
I do not see any real reason to use subsidies to encourage the use of electric cars. The problem we have today with oil prices is that they are too low for oil producers. If we want to keep oil production from collapsing, we need to keep oil demand up. We do this by encouraging the production of cars that are as inexpensive as possible. Generally, this will mean producing cars that operate using petroleum products.
(I recognize that my view is the opposite one from what many Peak Oilers have. But I see the limit ahead as being one of too low prices for producers, rather than too high prices for consumers. The CO2 issue tends to disappear as parts of the system collapse.)
Notes:
[1] BP bases its count on the equivalent fossil fuel energy needed to create the electricity; IEA counts the heat energy of the resulting electrical output. Using BP’s way of counting electricity, electricity worldwide amounts to 43% of total energy consumption. Using the International Energy Agency’s approach to counting electricity, electricity worldwide amounts to only about 19% of world energy consumption.
[2] In some locations, “utility pricing” is used. In these cases, pricing is set in a way needed to provide a fair return to all providers. With utility pricing, intermittent renewables would not be expected to cause low prices for backup producers.
A picture of the latest nuclear accident in Russia.
https://pbs.twimg.com/card_img/1161746392924262401/JDkFvTMV?format=jpg&name=900×900
Wow!
Details on Texas problems
https://finance.yahoo.com/news/brink-blackouts-texas-makes-case-052950761.html
It sounds like someone is starting to listen. The question is whether the rates, with all of the wind and negative prices part of the time, are attractive for anyone to want to come into the market. Natural gas peaking plants (which are relatively inefficient) are likely to be what is added. They have such low overhead that they can wait out negative and low price periods.
It becomes difficult to figure out what it cost to keep a peaking plant ready.
If you go into the LCOE calculation, one of the factors is how much of the time is it operating. If you don’t know this, you can’t get an accurate idea of what it costs. I suspect that renewables will incur a substantial additional cost to keep the standby plants ready to pick up the load as wind fails.
Isn’t there also a question of how long the gas suppliers can wait out the low price periods? Fixed overhead is a period cost and does not vary, pipelines are expensive, have maintenance costs; at some point will this infrastructure be abandoned as expenses exceed revenue?
Dennis L.
Right! We are now dealing with a situation where prices are too low for all fossil fuels. Prices also are too low for backup to intermittent electricity, which is the issue you are talking about. While the peaking plants may look cheap, the whole set of infrastructure (including pipelines and storage) that the system needs is not. Analysts tend to look at very narrow boundaries, when they consider costs. (It is easier this way, and those asking for the analysis like the results better this way.) Furthermore, hope seems to spring enteral that eventually electricity prices will rise, and everything will work out OK. The pricing system for incorporating intermittent wind and solar in the system is badly flawed; this is a major contributor to the low long-term electricity prices that drive backup producers out of the system.
It seems that all of the recycling we are sending abroad inadvertently leads to more wage disparity.
‘We Are Swamped’: How a Global Trash Glut Hurt a $25 Billion Industry
I can’t figure out why Midland Texas housing is rising with falling oil prices and failing shale. Is shale strong in the region?
Midland Texas has a booming job market.
https://www.houstonchronicle.com/business/energy/article/Midland-crushes-nation-in-creating-new-jobs-13632304.php
Midland crushes nation in creating new jobs
Midland led the U.S. with an 11.9 percent increase in employment, which is more than seven times the national percentage growth of 1.6 percent. Average weekly wages in Midland also rose by a staggering 7.4 percent, more than triple that of Houston, which increased by 2.1 percent.
This article is behind a paywall, so I can’t figure out too much. The summary on Google seems to suggest that Midland is involved in jobs relating to the export of crude oil, and this has been growing by leaps and bounds.
https://odessatex.com/odessa-ranked-3rd-best-job-market-country-zippia/
This article lists the top ten job markets in the country, as of July 2018.
San Jose-Sunnyvale-Santa Clara, CA
San Luis Obispo-Paso Robles-Arroyo Grande, CA
Odessa, TX
Midland, TX
Charleston-North Charleston, SC
Blacksburg-Christiansburg-Radford, VA
Florence, SC
Ann Arbor, MI
Waterloo-Cedar Falls, IA
Roanoke, VA
Odessa and Midland Texas are near each other. They are ranked 3rd and 4th. The article says,
So it doesn’t look like the problems of the oil companies have hit workers yet, to any significant extent in this part of the world.
And yet again, another link posted by a reader on Zero Hedge today.
https://www.independent.co.uk/environment/china-solar-power-grid-electricity-uptake-nature-energy-study-a9055996.html
Are the FF embedded costs for solar power decreasing because of “efficiencies” in manufacturing of solar panels, or because the cost of oil is stabilized or even declining a bit, passing these savings onto solar to make it appear solar is more profitable now?
As I recall, China had been furiously stockpiling oil and it might be argued may have an “oversupply,” -therefore cheaper to manufacture solar panels, yet why are they reportedly short on electricity and even having to go back to coal-during an economic slowdown? The nuclear power plants reportedly are not being brought online either.
There is an incredible amount of disinformation out there. Are solar panels the new ghost cities and bridges to nowhere?
take the oil stockpiling to extremes, and the Chinese had almost all of it
then what?
without outlets for the stuff produced by oil energy, they would be just stuck with it.
If the rest of the world couldn’t buy anything, the chinese wouldnt be able to sell anything
It seems like journals will publish almost anything.
If solar panels are going to provide any significant share of electrical power, there clearly will be a lot of costs besides the solar panels themselves:
Batteries to smooth end of day transitions.
Very long distance transmission, especially in China.
Cost of trying to keep these solar panels clean.
Payment to coal and nuclear providers to provide 24/7/365 backup.
These costs will increase, as more solar is added. The abstract gives no indication that they have been considered at all.
“Cost of trying to keep these solar panels clean.”
Thank you, Gail, for again puncturing hype with reality.
Yes, I have read many times about how we can cover large areas of desert with solar panels, and thereby power the world. Having lived in sub Saharan Africa, the situation was easy to visualise: shiny solar panels + lots of loose sand + high winds. What is wrong with this picture?
Of course, the hype about power satellites is even more absurd. The Earth is warming, so the answer is to flood it with energy pulled out of space?
stating the obvious in rarely welcomed—been pointing out for years that anything in or near the sahara or any other desert gets covered in dust
and the one thing you need to clean them just isnt there
China has the Gobi Desert up near where solar panels are installed. Sand from the Gobi Desert sometimes causes dust storms as far South as Beijing. I saw one of these dust storms, and it came close to blocking out the sun in Beijing.
There is also the smog problem of China and India. This seems to substantially reduce the benefit of solar panels.
https://www.popsci.com/smog-reduces-solar-energy/
://earthobservatory.nasa.gov/images/92054/smog-smothers-solar-energy-in-china
The article suggests getting rid of smog. Of course, smog is part of the global dimming that is taking place, which keeps the atmosphere from heating up more than it is. If you get rid of the smog to make the solar panels work, the population of the world needs to live with higher heat or it needs to use more air conditioning.
I doubt that planting millions of trees will add to the loops of complexity, but I would plant them, whether or not I was certain.
Planting trees sounds like a better choice than a whole lot of others.
“Yield Curves Invert in U.S., U.K. as `Doom and Gloom’ Spreads. Rate on 30-year Treasuries also slides to a record low…
“The stream of investors seeking refuge in the safest parts of the market has triggered yet another recession warning, with yield curves inverting from the U.S. to the U.K.”
https://www.bloomberg.com/news/articles/2019-08-14/u-k-yield-curve-inverts-for-first-time-since-financial-crisis
““Investors are the most bullish on rates since 2008 as trade war concerns send recession risk to an 8-year high,” Michael Hartnett, chief investment strategist, said in a statement…
“Even amid $15.9 trillion worth of negative-yielding bonds globally, investors continue to flock to the space…”
https://www.cnbc.com/2019/08/13/investors-flock-into-bonds-as-recession-fears-rise.html
Presumably to trade these bonds, thinking that interest rates will fall lower and lower. Could this possibly blow up?
It feels to me like we are teetering on the brink of GFC 2.0 now with risks multiplying all the time. I wonder if Trump’s softer stance on the trade war is a tacit acknowledgement of this.
I get the impression that Trump’s “on-again off-again” approach to adding tariffs is working beautifully (from the US point of view), for the time being. Scare and backoff a bit, then scare some more and back off.
The rest of the world is badly crashing, but the US is more or less, holding up for the time being.
This article suggests it is the cratering US stock markets that got his attention rather than the global slowdown per se:
“The delaying of tariffs on a range of consumer goods until December 15, so as to not impact Christmas sales or have consumers pay higher prices, is a clear indication that Trump is very focused on financial markets being in the red.”
https://www.forbes.com/sites/chuckjones/2019/08/14/to-help-the-stock-markets-trump-retreated-on-chinese-tariffs/#a57ec21802ad
The article, like a lot of other articles, talks as if it is Trump’s tariffs that are the problem. The China slowdown would be taking place with or without Trump’s tariffs. China has a major peak coal problem and too much debt to go with it.
https://gailtheactuary.files.wordpress.com/2019/06/china-energy-production-by-fuel-to-2018-bp.png
Trump or his advisors is smart enough to know that the US has to reduce its dependence on China, quickly, or it will be dragged into this mess. In fact, it will be dragged into this mess, regardless.
How can you have failing economies all around the world and then not have it was up on your shores. I think the U.S does feel that it is immune to economic crash compared to the rest of the world.
For a few days or weeks perhaps. Eventually, what goes around, comes around. We are all in the same boat, so to speak.
“President Donald Trump defended his trade wars and attacked the Federal Reserve on Wednesday: “We are winning, big time, against China. Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down,” the president wrote on Twitter. “China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut….”
https://markets.businessinsider.com/news/stocks/trump-lashes-out-at-federal-reserve-crazy-inverted-yield-curve-2019-8-1028447405
““Recession fears are spreading among investors at a time when valuations across major assets are looking dangerously stretched following years of monetary stimulus, the latest Bank of America Corp. survey shows.”
https://gulfnews.com/business/recession-fear-spooks-global-markets-amid-stretched-valuations-1.65791250
What me worry? Come now ….alarmist shrill….
The economy has never been stronger and growth is solid….sarcasm
https://m.youtube.com/watch?v=n7-Ye3BFhnk
The market’s most closely watched part of the yield curve inverted today, and if its record over the last half-century is any indicator, the U.S. could be headed for a recession soon.
Shortly after 6 a.m. ET on Wednesday, the yield on the 10-year U.S. Treasury bond dipped below the yield on the 2-year U.S. Treasury as the 10-year fell 1 basis point below the 2-year. The yield curve inversion has a strong track record of predicting a recession; each of the last seven recessions (dating back to 1969) were preceded by the 10-year falling below the 2-year.
Ahead of the last recession, the yield curve inverted briefly as early as December 27, 2005, about two years before the financial crisis sent the economy into recession.
The Federal Reserve may have hoped that cutting rates in its July 31 meeting would have helped the yield curve steepen, since the shorter end of the curve closely tracks where the federal funds rate is.
From Yahoo Finance
Surprise, surprise, the so called Trump tax cuts are ending for Joe Did Pack….
That should help push it …
Dow down over 700 points, WTI a little over $55.
“I get the impression that Trump’s “on-again off-again” approach to adding tariffs is working beautifully (from the US point of view), for the time being.”
It is? Dow lost a tad over 800 points today after bonds flash recession warning sign:
https://www.apnews.com/5971375c7d6546e692ac3db6b93b0822
In great part why there are so many recent warnings about an impending recession is the effect the trade war is having. It’s reducing trade, which is the opposite direction of economic growth.
“The announcement by Suncorp that it will no longer insure new thermal coal projects, along with a similar announcement by QBE Insurance a few months earlier, brings Australia into line with Europe where most major insurers have broken with coal.
“US firms have been a little slower to move, but Chubb announced a divestment policy in July, and Liberty has confirmed it will not insure Australia’s Adani project.
“Other big firms such as America’s AIG are coming under increasing pressure.”
https://phys.org/news/2019-08-coal-road-uninsurable.html
Except coal is what keeps the world economy going. It seems to be the only fuel with true “net energy,” plus lots of pollution to go with that net energy.
“[Australian] wages are stagnant. Wealth is falling. House prices are down. Consumers aren’t spending. Businesses aren’t investing. Interest rates are at record lows and may be heading for zero. The federal government and Reserve Bank seem locked in an arm wrestle over whether fiscal or monetary policy should be used to generate more stimulus.”
https://www.theguardian.com/business/2019/aug/14/the-no-growth-future-has-australias-economy-finally-run-out-of-luck
“[Australia’s] “retail recession” is getting deeper and is now worse than anything faced by the sector during the global financial crisis, a key survey of the nation’s businesses has revealed…”
https://www.smh.com.au/business/the-economy/retail-sales-drop-to-levels-not-seen-since-the-1991-recession-20190813-p52gn3.html
Not good for Australians or the world economy1
Not good for Australians or the world economy
I can fully appreciate where these articles are coming from. I’ve read this & one or 2 other blogs for many years & told people to expect a slow down but never thought it would hit this fast.
I work in new cars (Pre-Delivery section) where we prepare & send new cars to our dealerships for delivery to the customers & we are DEAD…..I’m spending the weeks lately googling everything from finance to waterbears it’s that slow.
Although the motor trade has always been cyclical I’ve never seen it this quiet & I really don’t know if it will ever pick up.
I know this is only anecdotal but it certainly ties in with the above comments & articles Harry’s just posted.
My post relates to Australia by the way
That must be horribly unnerving, Brendon. I hope the wolf is still a long way from your door.
Thanks Harry, I appreciate that. I’m relatively lucky in that I have some land I own outright up north & no debts plus I live on next to nothing.
I weaved my life into this position because of blogs such as OFW, realizing that this culture based on mass consumption & debt wasn’t going to last forever…………….
Besides the housing industry, what industries in Australia in particular are doing badly? Why are new car sales down so much?
How much of the problem is China related? (not buying houses, not visiting, not buying imports)
Houses have intrinsic value because you can live in them. And falling houses are good news, because they represent a transfer of real wealth from those who own them to those now able to buy them; that is, from richer to poorer. And also from older to younger, another positive move.
But since most modern economists believe that prices should always rise, because the rich should do what they will, while the wage slaves endure what they must, they see this as bad news. The classical economists, from Adam Smith to Samuel Smiles, knew better.
And with negative interest on house loans the owners who chose to see their houses falling in value don’t have to carry the full burden .
Convenient! When they lose their jobs, they still default on the loans, I expect.
Depends on how the loans are set up, how long until next job, and at what salary.
Otherwise its up to the banks to tempt someone to buy the house, maintain it while still expecting the value to fall.
I don’t think falling house prices really work. For one thing, new buyers quickly disappear (except perhaps for commercial buyers, who can rent them out). Why buy something that will decline in value? Renting, and changing places to a new place (even different house for rent) seems like a better option. Let someone else take the falling value.
If buyers do appear, the banks take the loans (perhaps from a commercial buyers of houses), package them up, and sell them as part of packages to pensions and others. Then the pensions get to deal with the fallout from falling values. Privatize the gains, socialize the losses.
Thank you, Gail, a valid point. But then, you are a treasure trove of valid points!
In response: if you buy a house to live in, its value becomes “use value”, not “exchange value” (if I may be permitted to cite Aristotle), so if you intend never to sell the house its market price becomes less of a problem. Secondly, as long as you can service the loan, well, at the end of the day the bank cannot throw your corpse into debtors’ prison.
But on balance you make a good case. That is one reason I bought my present home for cash, and intend it to be my last.
” and intend it to be my last.”
Ah yes, the certainty of death and taxes. Only death may not be as certain as you think.
One of the many ways the Singularity could manifest would be a sudden drop in the death rate. (And perhaps the birth rate as well.)
What would be the effect if people thought they would live a long time beyond what is considered normal?
I don’t know when the Singularity might happen, but I don’t see any way to avoid it.
The beauty of negative interest rates- loans are easy to service.
Not exactly. If a person is buying a home with 20% (or any other percentage) down, there will be a balance payable, over a number of years. The longer the loan, the less the person would have to pay each month, partly because the forgiveness effect of the interest, and partly because of the term of the loan. Give me a 50 year or 100 year mortgage!
Around here we had amortization free loans until the other year, now new loans have to be amortized down to 50% (of initial market value) over 20 years.
Loans running over 30 years.
Amortization free and negative interest doesn’t seem to work without some feedback loop ensuring loan is below the market value.
We seem to end up with a lot of loans above market value, when the market value of housing falls. There are many government agency insured loans with only a 3.5% downpayment, so it is the lender who is on the hook in a downturn.
In other parts of the world you don’t get rid of the debt by returning the house. The bank sells it (probably don’t aim for best price), you own the difference.
The operators of the system must keep market values at least close to the debts, and also not to many to default on their debts.
Perhaps that is why the sub-prime loan crisis was concentrated in the US. In at least some states when real estate prices drop, it is possible to simply give your key to whoever has your mortgage, and walk away. In some other states, it takes a couple of years after a person stops making payments on the mortgage, for the family to be kicked out. I don’t think that even then there is any attempt to collect the loss of value.
The places that were most heavily hit had a high percentage of minority owners, in areas where banks had been encouraged to lessen their underwriting standards, at least in part to encourage more minority ownership of homes.
Wouldn’t supply/demand really drive up rents and down house prices if everyone all of a sudden insisted on renting?
Renters can’t afford very much, so I don’t think rents would necessarily go up. People would start living in rented houses in addition to rented apartments. Some of the rented houses would be subdivided, to accommodate two families, helping to push the number of units available up.
Housing prices, in the scenario we discussed, were already going down. If people were poor and moving in with family more, it seems like the number of separately housed family units would go down. This would help push housing prices down further. If two families shared a home (after division), this would further reduce the required number of rental homes needed.
Thanks for pointing that out.
Still I think it will be hard breaking peoples belief houses are great “investments” in the long term.
“Global motor vehicle output declined last year by 1%, the first annual decrease since 2009 and only the third fall in 20 years, according to data from the International Organization of Motor Vehicle Manufacturers (OICA). But output is on course to drop much faster in 2019…
“Motor manufacturing is one largest and most networked of all global value chains, making it central to the global economy.”
https://uk.reuters.com/article/uk-global-autos-kemp/column-global-motor-manufacturing-slump-hits-oil-demand-idUKKCN1V319Z
“China’s …auto sales have now contracted for 13 consecutive months… Perhaps even more concerning is that NEV (new-energy vehicle) sales, among the rare bright spots in China’s auto demand, fell in July.”
https://marketrealist.com/2019/08/chinas-car-sales-slowdown-fears/
“[India’s] sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers on Tuesday. It’s the ninth straight month of declines and the sharpest one-month drop in more than 18 years.
“SIAM Director General Vishnu Mathur told CNN Business. “This is a very deep sort of a slump that is impacting every segment of the industry,” Mathur said.”
https://edition.cnn.com/2019/08/13/business/india-car-sales-slump/index.html
“Serious auto-loan delinquencies [in the US] – 90 days or more past due – in the second quarter, 2019, jumped 47 basis points year-over-year to 4.64% of all outstanding auto loans and leases, according to New York Fed data released today.
“This is about the same delinquency rate as in Q3 2009, just months after GM and Chrysler had filed for bankruptcy.”
https://wolfstreet.com/2019/08/13/auto-loan-subprime-delinquencies-at-2009-level-biggest-12-month-surge-since-2010/
Of course, this is while employment is at record high levels. Oops!
Good thing few people can think abstractly.
The article says, “China stopped offering subsidies for NEVs in July.” This pretty much assures the NEV sales will drop. The question is, by how much?
Also from Reuters article:
“China’s industrial output slowed to a 17-year low in July as the signs mount that the trade war with the US is beginning to take a toll on the world’s second-largest economy. The 4.8 per cent year-on-year growth in factory output was the weakest since February 2002 and far below economists’ expectations of a 5.8 per cent rise…”
https://www.cityam.com/chinese-industrial-output-slows-to-17-year-low/
“The Chinese government had put plans in place to reduce the high levels of debt in the country’s economy this year, but the negative economic effects of the trade war have put those plans on the back burner and companies are again levering up, in large part with dollar-denominated debt. As the yuan weakens, debts held in dollars get more expensive. That could pose a major problem for China…”
https://www.freshplaza.com/article/9132952/worry-grows-about-china-s-falling-currency-and-rising-dollar-debt/
“China’s central bank will likely roll over maturing debt to ease liquidity in the financial system as the economy slows amid the trade dispute with the U.S.”
https://www.bloomberg.com/news/articles/2019-08-14/china-expected-to-roll-over-maturing-debt-amid-economic-slowdown?srnd=economics-vp
China can’t lower interest rates now, without pushing its currency yet lower relative to the US$. This puts China in a bind as to what it can do.
“The jobless rate in Chinese cities returned in July to its highest level since regular reporting on the data began, as employers turned cautious. Other key economic readings for the month, including factory production, consumption and property investment, came in much lower than expected.”
https://www.wsj.com/articles/chinas-economy-weakens-on-several-fronts-as-trade-war-rages-11565770210
“As China moves toward a more market-based approach to determining the cost of money in its economy, one metric suggests corporate debt is going in the opposite direction. Some 17% of company bonds in the first half were sold at yields at least 50 basis points below rates in the secondary market, according to data from China Chengxin International Credit Rating Co. That’s a jump from 9.9% in the second half of 2018.”
https://www.bloomberg.com/news/articles/2019-08-14/chinese-new-bond-yield-gap-hides-debt-risks-as-defaults-climb
The situation is just absurd:
And how is this supposed to end well? Use the debt proceeds to buy back the debt? Where are auditors in all of this? Do we have any understanding at all of China’s debt risk?
It is totally surreal. Makes me think of the self-consuming uroboros:
https://i.pinimg.com/236x/61/97/90/6197900f9cf4eb0f0eb18eed0cf535a2–esoteric-symbols-next.jpg
Right!
China’s electricity production grew by 0.6 percent.
https://pbs.twimg.com/media/EB6lzWLVUAAqCBQ?format=jpg&name=large
Dreadful! And with the Yuan as low as it is now, it can’t really lower interest rates, only offer more debt at current interest rates.
Good news! Eurozones GDP grew by 0.2 percent.
Well…at least in euro terms…in dollar terms the Eurozone is down some 25 percent since the GFC.
https://pbs.twimg.com/media/EB6OSVVXkAAQtI1?format=jpg&name=900×900
“European banks are facing a make-or-break moment.
“Fears of slowing economic growth, negative rates, and geopolitical uncertainty in Italy and the U.K. have ravaged the Stoxx Europe banks index, pulling it down to a support level touched in 2011 and in 2016. It had not broken below that support since the financial crisis lows.”
https://www.cnbc.com/2019/08/13/european-banks-could-break-down-to-financial-crisis-lows.html
There has always been an intervention when the bank index has touched that support line.
“Matteo Salvini, Italy’s deputy prime minister, could not have chosen a worse moment for both the Italian and the European economies to trigger an Italian political crisis. Global economic policymakers and investors would be ignoring Italy’s deteriorating political situation at their peril since an Italian economic crisis has the potential to have large spillover effects to the rest of the global economy.”
https://seekingalpha.com/article/4285039-italian-debt-crisis-like-greece-steroids
“With Boris Johnson claiming he will take Britain out of the EU by 31 October “do or die”, the UK’s reliance on EU food is a major risk. In the event of a no-deal Brexit, the UK would be obliged under World Trade Organization rules to impose average food import tariffs of 22% and conduct product inspections, leading to delays and shortening the shelf-life of products.”
https://www.theguardian.com/politics/ng-interactive/2019/aug/13/how-a-no-deal-brexit-threatens-your-weekly-food-shop
Rising food prices would be a big deal!
No problem. The US has a huge soybean mountain they will be willing to sell cheap because the Chinese currently aren’t buying. Let the Brits eat soy. The country’ll grow.
“in dollar terms the Eurozone is down some 25 percent since the GFC.”
This is a big deal!
RANDOM THOUGHTS ON “ENERGY”
– Everything is a spirit. Every thought is a spirit. Every thought about a thought about a thought is a spirit. I got this from an East Indian former Google employee. But he didn’t seem as excited about this piece of revelation as I was.
– Everything is energy.
– I’ve been trying to see morality as an energy system of a kind. Whatever service we get from humans, animals, natural, supernatural, forces must be repaid to satisfy the demands of morality. Something like the good of all might be considered, since this all is what has supplied us energetically to get where we are. So we owe something, which, for the system (and our existence) to work, must be repaid. Somehow, I could see this being a law of the “literal Power” (that somebody said the world was run by).
– Slavery is cruel and oppressive, whomever or whatever is enslaved. But slavery was once, as it might be proffered again to be, an indispensable source of energy to run civilizations. Civilizations are what make it possible to congregate large numbers of people together in orderly fashion, using external means of energy to feed, clothe and govern them. It is the means for raising armies, exacting taxes, building cities, creating order. When they run short of energy they fight wars and invade places so as to take their energetic resources for themselves. An added response of civilizations’ energy scarcity is to add complexity, mostly through technology, and this technology has a cost of some sort, leading to en endless cycle of added complexity to keep the system from collapse.
.
– In our current Western version of civilization, the cycle of endless complexity requires endless growth. Since we don’t now use slaves for energy, and use fossil fuels instead, growth and development hinged on fossil fuels continue to grow. And to reinstitute slavery in such an interconnected world would cause more trouble than it would be worth. Our global value system (WHICH TRANSLATES INTO ENERGY) would be unlikely to accommodate it.
– So if we can’t go on with fossil fuels (owing to its lack of marketability, and widespread unpopularity) and we can’t go back to slavery, and we can’t manage an interconnected civilization of 7.5 billion people without external energy, what might we do instead?
– One possibly useful way to consider it is that everything is energy, and energy makes everything possible. It might be said that energy is indivisible (and mostly invisible), and whether energy is used to dream or build a factory, it applies similar rules. To build a factory you might need debt–debt that is calibrated to the future energy supply to repay it with interest. Many people understand the latter kind of debt. Most people fail to understand the debt owed to slaves of all kind–and fossil fuels are often referred to as energy slaves–whose energy was used to keep our system going, but who (or what) received no repayment, much less repayment with interest. And it must be understood that much of this form of repayment has nothing to do with money.
– Can we trace the flow of energy down a gradient like we assess the flow of water down a watershed? I wonder if what we call morality isn’t amenable to scientific discussion? The energy to live that things, ideas, spirits gave you–could this energy operate on a system of dissipation? In other words, does whatever energetic force produce value for you need to be recognized and “replenished?” Could what we call love or gratitude be ways of replenishing those forces? Do the flames have to be stoked? Is more payback “energy” ever constantly to be generated?
– Art, then, is not immune from considerations of energy. And a move toward a new art movement must ground itself in considerations of energy.
Several good points! I think the answer to this question is “No!” “Is more payback “energy” ever constantly to be generated?”
slaves and /or subsistence level servants to serve an elite have always been thought of as ”the natural order of things’
some people were born into a working class, others into an elite class
and there you more or less stayed for life.
fossil fuels changed that, because the delivered so much energy that it became spread around more widely
the working class got their share because obtaining fossil fuels on a vast scale needed vast amounts of labour—the serving classes weren’t having that, so they screwed the elite for higher and higher wages.
that’s where our version of democracy came from.
it was a bargain between the workers and the elite. Really is that simple
our fundamental problem now is that this arrangement was supposed to go on forever.
OFWorldsters will spot the catch there, most don’t.
So most kick off and vote for lunatic despots who promise that it will go on forever. Things are going to get nasty as truth dawns that this time the party (and democracy) really is over.
already average people are noticing that their basic standard of living doesn’t improve, and have to run faster and faster just to stand still.
the next stage down is, like the slaves/servants of previous times, work for subsistence wages. You become effectively an energy support unit.
If you die, you die. This already seems to be the philosphy of the US healthcare system and the current government
The way that this class system changes is when there is a large injection of fossil fuel energy to the system. In the US, this especially happened in the 1960s. Then there is a sudden realization that there is “enough” so that the underclasses should have more. This is when the US ran into a lot of race riots. Also, separate newspaper columns for “Help Wanted – Women” and “Help Wanted – Men” disappeared in that era as well.
Wage disparity among groups didn’t go away as much. Mens’ wages stoped growing in inflation-adjusted terms, as women could be added to the work force, generally at lower wages. Once this trend ran its course, adding China and other developing nations added a new way to substitute lower paid workers for workers earning US wages. Perhaps not a lower class any more. Now the differences were across oceans.
I disagree with the “underclasses should have more” as if this was some kind of voluntary act
It was more that they demanded more, and circumstances forced the surrendering of more because they needed the factories to go on delivering wealth.
the haves never surrender easily to the have nots
Even the ‘have nots’ are tiered—which sparked off race riots because every tier guards its own level jealously–jobs, living districts, schools and so on
Maybe what you are saying is a better way of describing the situation, “The underclasses demanded that they have more.” But I still think that there was a feeling in the air that there were more goods and services available, so it would be reasonable to ask for more.
I suppose I saw the women’s side most. Women had birth control pills; cars were becoming cheap enough that suburban families could have two of them. Electric appliances made housework easier, and prepackaged food made food preparation shorter. Advanced education was open to women. The jobs should be open to women as well.
https://www.zerohedge.com/news/2019-08-13/blowing-texas-energy-costs-hit-record-high-monday-heatwave-strikes
Interesting how issues of the inability of renewables to bridge the energy gap during peak demand, especially now that TX is going through a heatwave continue to nag us.
Interestingly, Texas has its own separate grid- not integrated with the other two major grids, and therefore should be simpler to manage surges in demand, as long as they don’t rely too heavily on renewables! The very thing that is supposed to rescue the grid from oil dependency, in fact, complicates it.
Then the whole issue of global warming- or not. I would expect heat records to be occasionally broken during the summer. The question is are these being broken more frequently? And what about these contradictory record cold temperatures during the summer? I don’t hear as much about them except through sources like David DuByne and his YouTube Adapt 2030 channel and the impending Grand Solar Minimum (GSM). Yet he claims that the temperature data is being fudged.
However, I heard that the outer atmospheric temperatures being recorded by high altitude satellites show cooling in the outer atmosphere, yet there are reports that the lower atmosphere is actually warming, which might even argue for the fact that anthropogenic CO2 induced global warming may in fact be mitigating the cooling caused by this so-called GSM! And of course, the oceanic thermal conveyor belts driven by water temperature, salinity, and surface wind add an incredible number of variables, including DuByne’s cosmic radiation, pole changes, the altered magnetosphere, cosmic radiation levels, volcanic eruptions etc.
For now, all I can say is if the ocean level is rising, that means we have had a past trend of global warming- which may not continue in the future. If the ocean levels are falling, then maybe more water going back into ice, but I have seen no evidence of that- yet. But there is a lag effect to cooling as well, so I just sit on the fence on this issue- for now, watching, and filled with skepticism bordering on cynicism as it is portrayed by the MSM as “climate change.”
A picture is worth 1,000 words.
Texas needs to have enough fossil fuel generation on line to handle pretty much 100% of demand. Wind and solar can’t be counted on.
MERVAL showing a rather steep decline.
Hmm where does that fit in Fibonacci ratios analysis…
“The mood among German investors plummeted far more than expected in August, a survey showed on Tuesday… ZEW said its monthly survey showed economic sentiment among investors fell to -44.1 from -24.5 in July, its lowest level since December 2011. Economists polled by Reuters had expected a drop to -28.5.”
https://uk.reuters.com/article/uk-germany-economy-zew/german-investor-morale-slumps-as-economic-outlook-darkens-idUKKCN1V30R4?il=0
“Germany’s economy shrank in the second quarter as global uncertainty and trade fights took a toll on its manufacturers.”
https://edition.cnn.com/2019/08/14/business/germany-economy-gdp/index.html
The article ends,
“Germany’s contracting economy also bolsters the case for the European Central Bank to take action when it meets in September.
Economists predict that the central bank will move to cut interest rates, which are already at historic lows. The ECB is also expected to signal it will restart a bond buying program designed to spur economic growth.”
Of course, cutting interest rates will push the US dollar higher relative to the Euro. Oil prices will tend to drop further.
One mild solace for us Brits as our Brexit drama reaches its climax, is that these troubles in the Eurozone may prevent the £ from falling more dramatically versus the Euro than it otherwise might have done.
‘Fall Armyworm’ Invades China; Wreaks Havoc On Agriculture Lands
https://www.zerohedge.com/news/2019-08-12/fall-armyworm-invades-china-wreaks-havoc-agriculture-lands
The US has had its version of armyworms forever. Articles suggest that they vary from year to year, based on weather conditions. Cropping practices also make a difference in their spread. We never hear about armyworms being a huge problem in the US because they are a known pest that farmers are equipped to deal with.
I expect that China’s problem is that this is a new pest that they have not had to deal with previously.
“A protest movement that is rattling Russian authorities shows no sign of abating. Quite the opposite: some 50,000 people took to the streets of Moscow on Saturday for what turned out to be the biggest opposition rally in the city in eight years. The demonstration was billed as an act of defiance against the country’s increasingly repressive law enforcement agencies, who have responded to peaceful protests over the past four weeks with truncheon beatings and large-scale arrests…
“That the Putin regime has responded with such aggressive tactics is an indication of its nervousness at a time of widespread discontent over the state of Russia’s economy. ”
https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-protests-in-russia-public-defiance-1.3984181
“At the end of October, Jammu and Kashmir will cease to be a state of India. Last week, India’s parliament approved by a large majority the decision by the federal government to split the state into two union territories – Jammu and Kashmir, and Ladakh. Union territories have much less autonomy from the federal government than states do, and are essentially subject to Delhi’s direct rule…
“The Hindu nationalist government seems to ultimately aspire to assimilate rebellious Muslims in Jammu and Kashmir into a form of Indian national identity defined by its movement’s ideology. This approach is akin to China’s policy towards the Uighurs of Xinjiang…
“The outlook is grim.”
https://www.bbc.co.uk/news/world-asia-india-49316350
“Investors are awaiting stimulus measures from the government as a gloomy economic outlook adds to mounting credit market woes and raises fears defaults will spread. [India’s] government is planning measures to boost the economy…”
https://www.thehindubusinessline.com/economy/as-default-risks-rise-investors-eye-stimulus-to-prop-up-economy/article29040821.ece
It seems like an awfully lot of economies need propping up.
“It seems like an awfully lot of economies need propping up.”
It does feel as if the wheels are starting to come off just a tad. Even the perpetually exuberant, overstimulated stock markets look like they are starting to come to their senses. We may be in for an engrossing autumn.
and gold has jumped another $30 in 24 hours
folks must be reading OFW alla time
https://m.youtube.com/watch?v=PM9CSaqFPSY
Merkel hits the nail straight on
I think the speaker of interest is Helga Zepp-LaRouche.
“Helga Zepp-LaRouche.”
Long ago my ex-wife and I tangled with the LaRouche organization. The report was in the L5 News, Aug 1984. There is a slightly updated version of it here:
http://www.cryonet.org/cgi-bin/dsp.cgi?msg=17720
I wonder if they are still down on power satellites? (They were in the late 70s.)
It’s a humorous piece. ” When Henson was asked about this vituperation, . . . .”
“Long ago my ex-wife and I tangled with the LaRouche organization. The report was in the L5 News, Aug 1984. There is a slightly updated version of it here:
http://www.cryonet.org/cgi-bin/dsp.cgi?msg=17720
I wonder if they are still down on power satellites? (They were in the late 70s.)”
Larouche down on fantasy. Not surprised. Certainly a stick in the mud. So you were hawking power satellites back in 84 the date of the document you provided… I heard Voldemort and Sauron were “down on” power satellites too. Or was it they were down with power satellites? I forget. Oh i remember now. Voldemort said he was down with power satellites and Sauron said he was down on power satellites. More importantly Frodo said it was not his purview.
” So you were hawking power satellites back in 84 the date of the document you provided…”
No. I was involved with power satellites from 1975 when O’Neill connected them as a way to pay for space colonies. Eric Drexler and I wrote a paper on space radiators (needed for some kinds of power satellites) for the 1979 Space Manufacturing Conference at Princeton.
LaRouche was into fantasy, rather elaborate and infectious enough to motive a small movement of sorts.
Spoke too soon – finally a morsel of good news:
“Stocks jump quickly to the upside on the news that China says it will hold trade talks by phone with the U.S. within the next two weeks.”
https://seekingalpha.com/news/3491106-stocks-pop-china-confirms-trade-talks-u-s-within-two-weeks
“Spoke too soon – finally a morsel of good news:”
For me, the more interesting news is the cost of lift to LEO getting to $100/kg or these new metal batteries for $25 per kWh or the new and lightweight silicon and lithium batteries that look to be a good match to electric cars. These effects are larger in the long run than short term economic fluctuations.
“says it will hold trade talks”
What amazes me is that a main point of the talks is intellectual property. If the Chinese had fully paid for what they used, the US businesses would have seen a lot more money over the last couple of decades.
But that is changing fast. The Chinese have or will shortly have more engineers than the US. So it is logical to expect the IP balance of payments in the near future going to China.
“What amazes me is that a main point of the talks is intellectual property. If the Chinese had fully paid for what they used, the US businesses would have seen a lot more money over the last couple of decades.
But that is changing fast. The Chinese have or will shortly have more engineers than the US. So it is logical to expect the IP balance of payments in the near future going to China.”
Well my experience is anecdotal but I disagree for two reasons. Reverse engineering and innovation.
To some extent every good engineer copies successful designs. The Chinese have made this a art form. There is no shame in this. Reverse engineering is a useful skill. They have however completely disregarded IP while reverse engineering products. USA are not reverse engineering wizards so they dont violate IP on that front.
The USA culture is one of innovation. At a hourly salary of $2 for technicians and $5 for engineers Shenzhen certainly provides unsurpassed value. THe USA is very good at innovation. The Chinese are very good at following procedure. They both have their merits. When you come to a gap between A and C the USA engineer finds a way. Sometimes even the best way. Sometimes not. The Chinese engineer not so much. Sometimes not is not a option. When you get put up against a wall and shot for failure you dont take risk. Also I believe this to be because of there somewhat recent transition from a agricultural society. I expect at some point the Chinese will completely surpass the West in terms of innovation if BAU continues. They have become the nexus of technology and manufacturing and that is necessary for innovation skills to be developed. China certainly has a history rich in innovation.
In the meantime hiring three engineers one software one mechanical one electrical for half of one USA engineer certainly is a great deal for most projects. That means those engineers get chances to develop skills and they will most certainly become great innovators. Innovation follows where resources and energy is. I would expect the lion share of IP to be paid to the USA for at least a decade or two while the innovation follows the energy, and technology resources but I could be wrong. They can do things in Shenzhen ghettos that you couldn’t do in silicon valley.
“They have however completely disregarded IP while reverse engineering products. USA are not reverse engineering wizards so they don’t violate IP on that front. ”
I don’t know how much things have changed, but back in the early 70s when I worked for Burr-Brown, about 20% of my job was reverse engineering modules from other companies that made similar products. In those days the modules were potted in epoxy and I had several kinds of epoxy dissolver sitting on the tap shelf of my work area soaking off the potting. Going into the chips was harder. I remember using fuming H2SO4 on an IC covered with something that kept you from looking at the die. Nowadays they use galium ion cutters to investigate the interiors of processor chips
In those days we were looking for IP violations from our competitors as well as reverse engineering.
It was such a part of engineering in those days that it is hard to imagine companies not doing reverse engineering on products from China.
Of course, a big fraction of the engineering going into produces nowadays is the software.
Think of all of the store brands of products. One of my sisters in law worked for a company that made them. They had chemists who worked on reverse engineering brand name products.
Any possible good news is a chance for a big jump up. Dow at +392.
I wonder to what extent energy availability enters into this dispute.
I haven’t been able to figure out exactly what is going on, but I know that Kashmir, with its glaciers, is a source of hydropower. Much of the benefit of the hydropower seems to be distributed to areas outside of Kashmir by the National Hydroelectric Power Corporation (an Indian Hydropower Generation Company). More dams are planned as well.
https://en.wikipedia.org/wiki/NHPC_Limited
But Kashmir is not left with enough hydroelectricpower for itself.
https://scroll.in/article/866058/kashmir-can-generate-a-lot-more-hydel-electricity-than-it-requires-why-is-it-eyeing-solar-power
I am sure that Pakistan would like the hydroelectric power as well.
Incorporating Kashmir into India would give India more control over the hydroelectric situation.
You know? Long ago, USA could’ve swooped in, set up base, and ‘defended’ kashmir as a neutral state rather easily, IMHO. Kashmiris would probably love having ‘hands-off’ defenders and a trading partner. That would make for a pain-free but disruptive presence in the region. Instead, we’ve invaded Afghanistan and can’t hang on to it, and it’s provided nothing but a resurgence of the global opiates market
Muslims and hindus dislike each other. Its much more overt than anyone in the west could imagine. Talking smack about each other reaches proportion many times larger than archie bunker.Hence the formation of pakistan and bangladesh after british rule ended. Yes pakistan and bangladesh were formed because muslims and hindus dislike each other. Jammu and Kashmir really should have gone to pakistan on religious grounds. Geographically its kind of Indias. Hindus are considered infidels too. There is no lack of enmity for hindus in the radicalized muslim world. Consider the terrorist attacks in Mumbai. With radicalized muslim pouring out of pakistan with the government’s blind eye jammu and kashmir certainly have potential to become a war area. Pakistan is not only a safe area for staging for afghani insurgents but live fire is launched from there with impunity. Pakistan government has cease fire agreement with taliban. Lots of gunfights on the pakistan india border. Some with artillery. They both send their special forces there to get tough. High altitude alone is tough. That area has the potential to go hot real fast. Both countries nuclear armed. Probably not war but pakistan would probably be quite amused to see a significant insurgent conflict in Jammu and kashmir and turn a blind eye to the east just as they do to the west.
Very informative!
China Factory Output Weakest In 17 Years, Everything Missed
India’s Car Market Just Crashed, Had Its Worst Month In 18 Years
Wow!
That was an extremely biased article on Kashmir from the BBC—biased against India and the Modi administration.
In the interest of bringing a bit of balance to bear on the issue, here’s one from Israel Shamir extremely biased the other way.
http://www.unz.com/ishamir/the-conflict-in-kashmir/
Daring Narendra Modi, the Prime Minister of India, has killed a sacred cow, called Article 370 of the Constitution, enshrining the autonomy of Kashmir. The consequences could be dire, including the fourth India-Pakistan war, but not necessarily so. It could also be a successful scheme. Apparently, Narendra Modi had been encouraged by his success in recent elections, by his decent relations with the three powerful men of our age, Trump, Putin and Netanyahu; and by the rearmament and modernisation of India’s armed forces. So he decided to go for the root of the age-long Kashmir problem, instead of treating its symptoms, and terminate the special status altogether, giving the people of Kashmir the same rights as all Indian citizens have, not more, neither less.
Kashmir, a chain of pleasant green mountain valleys, was the most cherished patrimony of the Great Mughals, who embellished it with palaces and gardens. Here the Muslims and Hindus have lived together in peace and harmony. A blessed country, if there ever was one, Kashmir could flourish if this peaceful coexistence had survived. Alas, it did not. Frequent riots, separatism and imported Islamic extremism have made life difficult for everybody.
The Hindus were forced to leave Kashmir; many Muslims had left too, rather than having to serve the firebrand insurgents. Their empty, ruined or burned down houses still stick out in Srinagar and elsewhere, though many of the properties were sold for a song during the insurgency.
Ceaseless meddling of Pakistan and political Islamists who refused to accept the results of the Partition is the main reason why Kashmir is in trouble. The majority of Kashmiris are Muslims and were Muslims in 1947, but they did not want to join the newly formed Pakistan. The Islamist textbooks claim that the Hindu Maharaja of Kashmir decided to accede to India against the wishes of the population; however this is propaganda, not a fact. The people of Kashmir were not very fervent Muslims; the idea of living separately in a purely Muslim state did not appeal to them. Ethnically and linguistically they are related to local Hindus, they share the same family names and the ancestry. They wanted to be independent, but facing Pakistani invasion, they preferred to join pluralist India….
The Sikhs in the Punjab and the muslims in Kashmir would overwhelmingly choose to leave India if they were allowed to vote on the matter. Well over 90%. Jammu probably not. This is not only because of religious and political both regions are resource rich. BJP in Delhi will never let those treasures go. They would station 100% of their military there first and everyone knows it. Including Pakistan. So everyone makes the best of it like a bad marriage for better or worst. For that matter everyone to the south speaking the dravidian languages want out too only they are not resource rich. After all they never got conquered by mongols and indoctrinated with a foreign persian sanskrit hybrid language. Such is India. Proud and rich in diversity but troubled by different regions interests. Just like any marriage sometimes its great sometimes times not so much. Divorce is not going to be allowed. Not without casualties that haven’t been seen since Nader Shah, Not going to happen IMO but who knows. Revoking article 370… What was Delhi thinking? Not very nice way to treat a partner. Thats how it goes I guess. How did it go… “as long as the grass grows and the sun shines”?
“This year, those looking around in August for ill omens for the global economy are spoilt for choice. There’s the fact that in the United States the president is at loggerheads with the man running the central bank. There’s the possibility of a general election in Italy that will produce an extreme hard-right government that will shake the foundations of the eurozone. There is, of course, the risk of a no-deal Brexit…
“All debt crises need a trigger to set them off, and this [the devaluation of the Yuan] might just be it, since a devaluing currency makes it more expensive to pay back debts denominated in foreign currencies. And when your debts are as big as China’s, that’s potentially a very big deal.”
https://www.theguardian.com/business/2019/aug/12/could-devaluation-of-china-yuan-trigger-the-next-financial-crisis
“Chinese monetary data for July was weak across the board, suggesting that Beijing’s efforts to galvanise new lending are not having the intended effect… The slump raises questions over the need for additional credit easing.”
https://www.scmp.com/economy/china-economy/article/3022486/chinas-bank-lending-weakened-july-suggesting-beijings
“Singapore’s economy has been tipped to enter recession in the third quarter of 2019 as the fallout from the US-China trade war continues to rock the Southeast Asian nation after second quarter growth was confirmed at minus 3.3 per cent… the worst reported quarterly growth for seven years.”
https://www.scmp.com/economy/global-economy/article/3022526/singapore-economy-tipped-recession-us-china-trade-war-slams
Ouch!
“Hundreds of pro-democracy protesters have staged a new rally at Hong Kong’s airport, a day after a massive demonstration triggered a shutdown at the busy international travel hub.
“Only a handful of protesters stayed through the night, and flights resumed at the airport early in the morning. But by Tuesday afternoon, several hundred demonstrators had returned, responding to a call for a new rally.
“The unprecedented cancellation of all flights on Monday followed the fourth consecutive day of protests at the airport and amid increasingly threatening statements from Beijing. A Chinese official said “terrorism” was emerging in the city, while in Hong Kong authorities demonstrated water cannon for use in crowd control…
“On Tuesday the territory’s leader Carrie Lam warned that violence will push Hong Kong “down a path of no return”.”
https://www.theguardian.com/world/2019/aug/13/hong-kong-airport-reopens-as-trudeau-urges-china-to-address-serious-concerns
“Hong Kong could be the black swan that no one saw as the tripwire for the global economy that could then rock stock markets. I know there’ll be smart Alec critics who one day will ask why ‘experts’ like me didn’t see this coming but Hong Kong and the likelihood of their citizens trying to bully China wasn’t on my list of logical issues that could kill financial markets’ confidence.”
https://www.switzer.com.au/the-experts/peter-switzer-expert/big-black-swan-trouble-in-little-china/
Another bug alert…glad I moved away from Massachusetts….when I lived there Lyme disease was the big news story. Now a new one has surfaced…a little bitty mosquito!
The first case of the potentially deadly Eastern Equine Encephalitis (EEE) virus has been confirmed in a Massachusetts man, the state’s department of public health announced over the weekend.
The man, who was not identified, is over 60 years old and lives in southern Plymouth County, according to a Saturday announcement from the Massachusetts Department of Public Health.
Additionally, 15 communities in southeastern Massachusetts are at high risk for the EEE virus, while another 18 are at moderate risk.
EEE, according to the Centers for Disease Control and Prevention (CDC), is a rare disease that’s spread by infected mosquitoes. EEEV “is one of a group of mosquito-transmitted viruses that can cause inflammation of the brain (encephalitis),” the federal health agency says.
EEE is more common in Atlantic and Gulf Coast states, though the CDC said some cases have been reported in the Great Lakes area. It’s rare; only 5 to 10 cases are reported each year in the U.S.
Symptoms of EEE typically appear four to 10 days after a person is bitten by an infected mosquito. Severe cases of the virus “begin with the sudden onset of headache, high fever, chills and vomiting,” per the CDC, which noted, “the illness may then progress into disorientation, seizures and coma.”
One-third of those infected with EEEV die, while survivors typically have “mild to severe brain damage.”
There’s no specific treatment for the infection, either.
Gail, you are correct, without spraying poisons and other measures capable by BAU we are toast
https://www.foxnews.com/health/massachusetts-mosquito-virus-eee.amp
We also have to keep developing new sprays, because insects quickly evolve resistance to the old ones.
When I was in the jungles of Ecuador years ago, I asked our guides why they didn’t use mosquito repellent, Larium, or treat their clothes with permethrin. He replied : “There really aren’t that many mosquitos here. Only when you live in the areas where they have stripped down the forest to grow pineapples or other crops are the mosquitos a problem,”presumably due to the disruption of the ecosystem.
Of course with increasing population density combined with interconnectivity via air and roads, the more chance there is for spread of disease, and more chance for mutation. It’s a numbers game. Some of the diseases may mutate to less virulent forms, but usually the key is improved transmissibility, but when you get enough numbers, then it is like hitting all three numbers on the doomsday slot machine:
1) greater transmissibility. 2.) increased latent period making quarantine more difficult or ineffective and 3.) lethality – but preferably not too lethal as you don’t want to kill the host off before he has had a chance to spread the disease.
The ability of people to develop immunity or to develop an effective vaccine is often a “ catch up” game, or in the case of flu vaccines a role of the dice whether you have predicted the probable strain for this year’s season.
You are probably right!
Gail, there is a better way. When my father worked for the Ministry of Health in Nigeria, we kept the mosquitos in check by attacking their larvae. Spray palm oil on stagnant water, and it forms a thin film that breaks their adhesion to the water surface, and they drown.
Palm oil is renewable, biodegradable, and pretty harmless to other living things. And since it works using a physical principle (surface tension) the bugs cannot evolve immunity to it.
For almost every natural problem there is a natural solution. One that is usually not used because it is not obscenely profitable.
Unfortunately, all of these fixes for health problems have had the unintended effect of greatly raising population at the same time.
Resource per capita tend to fall, rather than rise.
“The Argentinian peso and government bonds sold off steeply Monday after the country’s center-right President Mauricio Macri performed poorly in primary elections…
“Argentina’s peso shed nearly 25% of its value to around 59 per U.S. dollar shortly after the open of trade. The peso had been at 45.25 at its previous close. According to traders cited by Reuters, the peso then hit a record 65 per dollar to mark a 30.3% loss.”
https://www.cnbc.com/2019/08/12/argentina-election-macri-suffers-setback-as-analysts-warn-of-peso-depreciation.html
Argentina won’t be buying much from the world market, if its value is that low.
Argentina’s top imports are vehicles, machinery including computers, oil, plastics, steel.
Exports are mainly foodstuffs. Also vehicles and gems, precious metals. Also some oil, but it is a net oil importer.
The last time Argentina had a really big crisis in 2001 and its currency tanked, Good Argentinian honey was available at very reasonable prices here in Japan and I stocked up.
“Brazil likely fell into recession in the second quarter according to a key gauge of economic activity that comes as policy makers grapple with high unemployment and weak investments as well as a global slowdown.”
https://www.bloomberg.com/news/articles/2019-08-12/brazil-economic-activity-gauge-flashes-recession-as-woes-mount
That’s exactly not their first doom cycle at least since WWII..
I recall early mid 2000s lot of Argentinians with family connections (returning to Europe).
They usually had to liquidate their assets before they moved and were visibly shaken by being knocked few notches down on their newly reached wealth – social status on arrival..
Boy, Glad I’m NOT a small independent family farmer…is there such a thing now a days!?
American farmers are attacking President Donald Trump in the wake of a new hit from China, which comes as part of the lingering trade war between the countries.
Trump’s “strategy of constant escalation and antagonism” has worsened the situation, Roger Johnson, the president of the National Farmers Union, the nation’s second-largest general farmers group, told Bloomberg. Family farmers and ranchers “can’t withstand this kind of pressure much longer,” he added.
“It’s really, really getting bad out here,” Bob Kuylen, a North Dakota farmer of 35 years, told CNBC. “Trump is ruining our markets.”
https://news.yahoo.com/farmers-trump-trade-war-china-sonny-pe I’mrdu-132616307.html
Winning, the art of the deal….Huffpost story
I’m not well versed in the food markets. Can someone explain to me how China refusing to buy USA produced food negatively effects US farmers ability to sell? Presumably food products are global commodities, and if China buys from different suppliers, the previous recipients of those products would have to turn to USA producers for their food? For example, if China buys corn from Brazil instead of the USA, wouldn’t that create a shortfall for Brazil’s previous customers and drive them to then purchase corn from the USA?
I am guessing that what will happen is that, because of the death of all of the pigs in China, the world as a whole will eat less meat in the next year or so. China will be most affected, with the high price of pork in China. China doesn’t want the Chinese people importing a lot of cheaper meat from the US and elsewhere (thereby hurting the incomes of Chinese farmers), and an import ban on US agricultural is a way of keeping spending more within China.
Eating meat is an inefficient way of getting calories. People can live perfectly well with a lot less meat in their diets than they are currently eating. If people eat less meat, there will be much less grain needed to feed animals, particularly the pigs in China. People will probably eat more grains and soybeans, but not nearly as much as the animals would need to eat to create the meat that people like to eat.
So the world as a whole will be buying less grain and soybeans in the next year. China is trying to push the expected reduction in demand in the direction of the US.
That is just a guess, however. China may really be trying to import a lot of meat from elsewhere.
“American farmers planted a lot more corn than expected this year. But at the same time, they also left way more acres unplanted than analysts predicted. Wait, what? If you’re confused, join the rest of the crop market. The U.S. Department of Agriculture put out two reports Monday that seem to be muddying the waters even more after record spring rainfall in the U.S. created widespread uncertainty over crop plantings.”
https://www.bloomberg.com/news/articles/2019-08-12/head-scratching-u-s-corn-planting-data-is-still-incomplete
https://www.reuters.com/article/us-usa-trade-china-agriculture/u-s-farmers-suffer-body-blow-as-china-slams-door-on-farm-purchases-idUSKCN1UV0XJ
‘U.S. farmers suffer ‘body blow’ as China slams door on farm purchases’
2017 China imported 19.5 billion dollars worth of US AG
2018 down to 9.1 billion
2019 Not sure how much
2020 ZERO
The trouble is our political system is now working against us. The R’s have rule with the prez & Senate, but no R politician is willing to go up against Trump because he has the alt right base solidly in his hand. The Dem congress can’t do anything. Trump listens to NO ONE except himself, so US farmers will be IGNORED. They may get subsidies, but even if the trade war ends, China may have set up new agreements with other countries for the AG they need and then what happens to those farmers if the subsidies stop?
Also, if farmers do not sell their produce/grains they have to store it. There’s only so much room for them to do that, so at some point they will either sell it to a different country or it will have to be destroyed somehow, by burning or in landfill.
Is it possible that the decrease in sales of agricultural products to China is secondary to the loss of half their swine herd?
Dennis L.
No, of course not!
That would be too simple and logical, and would be difficult to blame completely on Trump.
Trump colluded with the Russians to cause african swine flu in China.
You two are trying to blame swine on the complete elimination of China importing US agricultural products? I guess what DaVinci said is true, “Some people see, some see when they are shown and other do not see.” You two do not see or at least you see what you want to see.
News flash: There’s a trade war between Trump and China. They are going tit for tat. China is purposely eliminating importing US Ag products because farmers are a segment of the US population that voted for Trump. Follow the crumb trail…
Historical background: We’ve always been at war with Eastasia. Speaking in civilizational terms, there was never much amiability between between China and the West. On occasion, there has been mutual profitability underpinning cooperation, but mostly it’s been a history of conflict and competition entwined around mutual suspicion, distrust and disgust, with each side trying not to loose face, and worst of all, to kowtow to the other side.
https://www.ammoland.com/wp-content/uploads/2019/05/China-Trade-Talk-Tariffs-Obama-768×549.jpg
Chome Mags, I’m no good at being noble, but it doesn’t take much to see that the problems of American soybean farmers don’t amount to a hill of beans in this crazy world.
Shale oil
Sanchez Energy files for chapter 11 bankruptcy
https://www.houstonchronicle.com/business/energy/amp/Sanchez-Energy-files-for-Chapter-11-bankruptcy-14297152.php?__twitter_impression=true
According to the article:
Sounds fantastic! A buying opportunity?
All we need to do is assume that oil prices will rise and the corrective actions will work, and everything will turn out fine.
Sounds good enough for me. I’m all in!
“assume that oil prices will rise”
Long as there is enough oil to take us into the time when other sources take over, things might work out.
Energy prices in general, combined with efficiency gains, need to keep falling as a % of GDP, to keep the rest of the economy expanding. For all practical purposes, this means that oil prices cannot rise. Perhaps they can stay sort of level. This acts as a brake on getting out as much oil as people would like.
Peak oilers and economists got the story wrong.
“need to keep falling as a % of GDP, to keep the rest of the economy expanding.”
That’s an interesting metric. What it would take to get one cent per kWh power?
If you use a ten-year return on capital, then the system cost can’t exceed $800/kW
I don’t think that can be done on the ground, but, given a ten year lead time, mining asteroids might be possible.
@Gail
Whats interesting is prices performing the rationing of resources for us.
Lower prices means less oil extraction and slower depletion rates.
I think that oil production just goes lower and lower, quite possibly faster than what depletion rates would suggest. The following is my thinking:
Lower prices means less oil extraction. The governments of oil exporting nations get overthrown. In the US, oil exporters keep defaulting on their loans. Perhaps a few oil producers can continue operating, but not very many. The number will keep declining.
As more and more people default on their loan, financial institutions are put in ever-worse position. Many will fail. Unless governments figure out a way to bail them out, they are likely to stop making loans. Oil prices will fall ever-farther, because of declining demand.
I am not sure if anyone (other than a few peak oilers) will care about depletion rates. Quite a bit of oil will be left in the ground, because things as simple as infill drilling become non-economic, or because necessary supply chains are broken. For example, a broken pump cannot be fixed.
In fact, central governments of oil importers (possibly including the US) may fail as well, hastening the decline.
“Long as there is enough oil to take us into the time when other sources take over, things might work out.” Oh and what source might that be? Drum roll. Comedian tells same old joke. cymbal crash, No one laughs.
you have been nominated for the order of the golden pin
only awarded to expert balloon poppers
“Oh and what source might that be?”
The oil that is still in the ground. There is a couple of decades of proven oil left at current consumption. That might be enough to make the transition. Or it might not be in which case drag out your worst predictions.
“Proven” reserves are an illusion, like a lot of other things. They depend on globalization to continue, so that we can obtain replacement parts for oil pumps and do infill drilling. Proven reserves depend on our maintaining roads and schools, as well.
If oil prices keep falling, government of oil exporting countries will be overthrown by their unhappy citizens. They will not be able to get adequate revenue. A recent figure I saw said that Saudi Arabia needs $85 per barrel oil, to (sort of) balance its budget. I expect that it really needs more than that.
The issue we need to be concerned about is the possibility of overshoot and collapse. “Peak oilers” came up with a new “Peak oil” concept, but as far as I can see, it is simply the same problem that has been around for ages. Economies grow (often for 200 to 300 years) and then collapse. Resources per capita fall too low. Systems that have been put in place, like globalization, cannot be maintained. We know that when ancient Bablyon collapsed, its problem was low prices for all types of goods. Revelation 18:11-13
I think we started the downhill economic slide when China cut off recycling of quite a bit of plastics and other materials, January 1, 2018. Before this, ship owners could earn 2-way revenue by filling shipping containers with goods on the way to the US or Europe, and filling the same container with recycling on the way back. Cutting off recycling services deprived ship owners of the needed return revenue, when China sent goods to the US. One-way shipping costs suddenly rose (assuming they were passed on to clients). Other countries soon followed suit and China has expanded its list of recycling it doesn’t want. This, by itself, has a tendency to lead to peak transportation of goods (and recycling) around the world. I am sure that China lost quite a few jobs by eliminating much of recycling also.
Attention..News Alert!!!
Trump’s Top Energy Regulator Invites Execs to Coal Country
(Bloomberg) — President Donald Trump’s chief energy regulator has invited a group of environmentalists, energy executives and other industry leaders to the heart of Coal Country for a summit on “the future of American energy
Held in partnership with the University of Kentucky, the location was chosen because “it’s a pivotal time in the Bluegrass state and a historic moment as we continue to experience changes in our generation mix,” according to the invitation seen by Bloomberg
Chatterjee’s office confirmed details of the invitation, saying in a statement that “the Chairman liked the idea of getting outside of the ‘DC bubble’ to provide a different landscape and format for these important conversations.” Confirmed guests include Tyson Slocum, energy director for advocacy group Public Citizen; Abby Hopper, chief executive of the Solar Energy Industries Association; and Joe Blount, chief executive of Colonial Pipeline, according to a statement
Hope Gail will attend and be heard…..not a chance….so sorry
China’s consumer prices spiralling upwards whilst producer prices slide into deflation:
“Keep a close eye on more data on the health of the Chinese economy this week after deflation reappeared in the country’s huge industrial sector for the first time in three years… The re-appearance of deflation in China in July after being dormant since 2016 is a new worry.”
https://www.sharecafe.com.au/2019/08/12/chinas-producer-prices-prices-drop-into-deflation/
From the Share Cafe article:
This sounds like a recipe for disaster. Individual citizens are experiencing a rise in the cost of living, because of rising food prices. I am sure that this is not helping their interest in buying goods such as vehicles. At the same time the factories and other producers are having to cut their margins, so that they can sell at least some product, so that they can afford to keep hiring their staff.
Meanwhile… “Hong Kong airport has suspended all the remaining flights for Monday due to the ongoing pro-democracy protest in its terminal, according to airport authorities.”
https://www.aljazeera.com/news/2019/08/hong-kong-airport-monday-flights-suspended-protests-190812082346420.html
This kind of thing doesn’t help Hong Kong’s travel industry. Imagine trying to find rooms for all of those people who can’t get out. Also, all of the cancellations of those who thought that they were flying in. All of the cancelled meetings and vacation plans. People making future plans will keep this kind of disruption in mind.
We, the wifey and I, travelled a lot this past year. I’m reaching a point of being sick of it. So much planning, then luggage, rental cars, paperwork to keep track of, itineraries, trying to find good food along the way, taxis and the drivers of them that take the long way, the people with colds you get exposed to, hard hotel beds, loud noises early in the morning that wake you up. If I never travel again that will be fine with me.
I very seldom travel further than to the nearest town 20km away. I can’t remember the last time I slept in a bed other than in my own home but it was probably about ten years ago, and I haven’t travelled abroad for 25 years.
These days I live my travel life vicariously, sharing the experiences, thrills and frustrations of braver, more adventurous souls such as your good self, or watching a video of Hercule Poirot voyaging up the Nile or riding the Orient Express. I’m looking forward to seeing and reading about Greta sailing the Atlantic soon!
But if I never personally travel again that will be fine with me.
“After a decade of extraordinary monetary policies, central banks had started a long, slow march back to normality. They hadn’t got very far before turning back again…
“Are we in for a nasty reckoning? Loose money is raising the risks. As well as encouraging spendthrift governments, businesses have also binged on debt…”
https://moneyweek.com/512668/central-banks-turn-on-the-money-hose/
“Growing evidence of a severe global recession is sure to provoke more aggressive monetary policies from central banks. They had hoped to have the leeway to cut interest rates significantly after normalising them. That hasn’t happened.
“Consequently, as the recession intensifies, central banks will see no alternative to deeper negative nominal rates to keep their governments and banks afloat through a combination of eliminating borrowing costs and inflating bond prices.”
https://seekingalpha.com/article/4284595-deeply-negative-nominal-rates-way
“Central banks around the world are likely to loosen further, keeping sovereign yields very low. But we doubt that will bring about a clear economic improvement as quickly as investors hope. “With that in mind, we think that corporate earnings will fall well short of expectations later in 2019, hitting equities and corporate bonds.”
https://www.livemint.com/market/mark-to-market/in-an-event-of-a-global-recession-monetary-easing-won-t-be-of-much-help-1565585112967.html
Borrowing to fund non-economic projects gets us essentially nowhere.
“Debt markets are flashing recession warning signs as sovereign bond yields slide at their fastest pace in years and the value of those in negative territory climbs to record highs.”
https://www.telegraph.co.uk/business/2019/08/12/slide-bond-yields-deepens-fears-worldwide-recession/
“Investors have flocked to fixed income mutual funds at the fastest rate since the financial crisis, piling in almost $500bn in the first half of 2019 during trade war tensions, recessionary fears and market volatility.”
https://www.ft.com/content/16c1fdaa-b094-3fe6-af7a-eb9883440974
“…the virtuous cycle of easy monetary policy and no inflation in the aftermath of the financial crisis has sucked money into bond funds at an incredible place. As trillions of dollars of cash have been created out of thin air by central banks, a large hoard of bond market holdings via low cost, passive indexed bond funds and ETFs has been the preferred way for both retail funds and many institutional investors to obtain exposure…
The risk is that this virtuous cycle turns into a vicious cycle…”
https://www.forbes.com/sites/vineerbhansali/2019/08/09/who-in-the-world-is-buying-all-these-low-and-negative-yielding-bonds/#7259b5287772
“The economic outlook has deteriorated in all parts of the world over the summer due to an escalating trade dispute between the United States and China, a survey showed on Monday.”
https://www.reuters.com/article/us-world-economy-ifo/global-economic-outlook-darkens-amid-escalating-trade-dispute-ifo-idUSKCN1V20HR
“Global investment banks are shedding tens of thousands of jobs as falling interest rates, weak trading volumes and the march of automation create a brutal summer for the sector.”
https://www.ft.com/content/7341d4f4-bad6-11e9-8a88-aa6628ac896c
Automation removing jobs is not a good trend!
Or perhaps it is due to energy problems that lead to trade disputes.
Bond funds are playing with fire.
This is part of the bank problem that I wrote about a few days ago, that a friend of mine warned about. Big shifts in interest rates suddenly force banks to rebalance their portfolios, if they are somehow involved with these (or similar) things.
See also another article by this same author:
https://www.forbes.com/sites/vineerbhansali/2019/06/17/trading-sardines-the-case-of-currency-hedged-negative-yielding-bonds/#719d6e535f70
The things that seem to make the system work so far for bond funds seem to be (a) the fact that interest rates have been headed down, so asset prices have tended to rise (b) there are other buyers who want to get into this business of hoping for asset gains (c) the big positive interest rate differential to the US$ from the currencies that sell these negatively yielding currencies, and (d) a relatively favorable price for using derivatives to hedge against the possibility of a shift of US$ wiping out these gains.
By the time these negatively yielding bonds are hidden inside bond funds, few realize where they are. As soon a investors see a problem, they start pulling bonds out. But if the bond fund is committed to a certain distribution, it will need to keep buying regardless of how rates are going.
Of course, other parts of the system could break as well. Currency hedges look vulnerable, with the big changes we have been seeing likely, such as the changes in the value of the Yuan. Indirectly, they would seem to affect other currencies as well, since (for example) cheap goods from China would tend to adversely affect European sales of goods.
“Trading sardines.” Love it. 😀
Flight to safety!
Yes, indeed:
“The yen rose to its highest level in more than 1-1/2 years versus the dollar on Monday as investors ramped up bets that the Japanese currency could gain more in the case of a prolonged China-U.S. trade conflict.”
https://www.cnbc.com/2019/08/12/forex-markets-us-china-trade-concerns-remain.html
Although quite why the Yen should be considered ‘safe’ when Japan’s economy has been pretty stagnant since the early 90’s, and its central bank now owns assets worth more than the entire GDP of the economy it is trying to stimulate, is a puzzle.
Perhaps it is because Japan is less overtly teetering on the brink of political mayhem than some nations, although its spat with S Korea may perhaps test those perceptions:
https://www.japantimes.co.jp/news/2019/08/11/national/politics-diplomacy/generational-shift-japan-stands-firm-feud-south-korea/
“Flight to safety” All Mas370. Yes people following the rules of investment. Too bad that the whole thing is based on fundamentals totally alien to the talking heads. They all flunked physics. They got one thing right though, Past performance does not guarantee future performance. How we got past greeces bond defaults without contagion is beyond me.
If returns on investment are truly too low, bond yields must fall!
The dreaded R word has appeared
https://finance.yahoo.com/news/germany-reveal-size-recession-risk-020000288.htmlermany to Reveal Size of Recession Risk: Global Economy Week
(Bloomberg) — Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.
Europe’s largest economy gets a health check this week with German data due to reveal whether it managed to avoid shrinking in the second quarter.
The export-reliant nation is being squeezed by the trade war between the U.S. and China and speculation is mounting that it may be headed for recession. Big-name companies including Continental, Daimler, BASF and Lufthansa have all slashed their outlooks
This link works better: https://www.bloomberg.com/news/articles/2019-08-11/germany-to-reveal-size-of-recession-risk-global-economy-week
“Germany, Europe’s industrial backbone, is stuttering. The unemployment rate has risen for the second time in three months. The UK economy contracted for the first time since 2012, as output fell 0.2% in April to June. Italy’s debt crisis is only being made worse by political uncertainty…
“What’s more, the European Central Bank looks like it’s out of bullets to fire the economy up.”
https://markets.businessinsider.com/news/stocks/germany-italy-uk-are-headed-for-recession-and-ecb-is-out-of-tools-2019-8-1028435638
“…an ultra-nationalist right-wing government in Italy… might just make a push to abandon the euro zone. The fear has arisen after the country’s prime minister, anti-immigrant xenophobe Matteo Salvini (sometimes referred to as Italy’s own Trump) called for snap elections in the parliamentary democracy, as early as October.”
https://www.forbes.com/sites/pedrodacosta/2019/08/11/theres-a-new-systemic-threat-to-the-world-economy/#6a4839a77095
Well, given the ongoing political realignments, Salvini and Lega are not ultra right wing (that’s utter non sense) it’s simply new manifestation of the center-right populist formation – given social conditions. The potential Euro area break out is at the moment the last Italian bargaining chip against Berlin-Brussels, not sure how serious and imminent it is if pressed to going live with that option.. On the other hand, it’s true that in terms of pathway and thresholds breached – Italy is indeed (apart from Greece) the most “collapse trajectory” advanced country within the EU bloc, so the final stages could proceed in relatively very fast order..
During the Yellow Jackets protests, the French state channel (I wonder why? :)) decided to run reports on how dreadful life is in southern Italy, the hopelessness of high, permanent unemployment, etc.
But even in the north, youth employment is a disaster, and – just as in Spain – pay when you get a job is awful.
Pensions, redistributed by the older generation, keep them going, and of course the seasonal huge influx of tourists.
Everyone depends on the seasonal influx of tourists, it seems. When this dries up, there will be a problem as well.
Xabier, I know your question is rhetorical but the diplomatic hostilities between France and Italy earlier this year may have passed some by:
“A diplomatic row between France and Italy has deepened, with France complaining of “unfounded attacks and outlandish claims” by Italian leaders. France recalled its ambassador to Italy for talks on Thursday, saying the situation was “unprecedented” since the end of World War Two.”
https://www.bbc.co.uk/news/world-europe-47161500
I’m not a Brexiteer, but as prosperity leaves Europe as fossil fuel become unaffordable, the Europeean land mass must inevitably revert to its old ways of previous centuries, that of nation states constantly at odds with each other, occasionally flaring into war as means allow it (wars require energy input)
Every state is motivated to self interest. If the group is going broke, then states will withdraw into themselves and try to save what they can
which is exactly why I wrote this piece a year ago.
https://medium.com/future-vision/the-european-union-was-a-construct-of-infinite-prosperity-7a401c225171
Exactly!
It is an excellent article, Norman. Speaking of fossil fuels:
“Portugal’s fuel-tanker drivers voted on Saturday to strike from Monday for an indefinite period, raising fears about the impact on the country’s tourism-dependent economy during the busy summer season…
“The government will ration fuel for the public, restricting drivers to a maximum of 15 litres of petrol or diesel at specially designated stations.”
https://www.euronews.com/2019/08/11/portugal-s-fuel-tanker-drivers-vote-to-go-ahead-with-strike?fbclid=IwAR0N6C5M6U8U-vcpKGWS8LJqV-nCgd7sVo6boY6-HUxeg-GlPpUUt966FbA
I recall in 2001 when that happened in UK
the govt was warned that supermarkets would be empty in a week
it will be interesting to see how things go in Portugal–it wouldnt surprise me to see it happen again, and more widespread
fuel tanker drivers have their thumbs on the jugular, but that includes their own of course
Good example of how the supply chain breaks down!
also a good example of how those in charge of any supply chain will use it for their own ends rather than the common good.
the same applies to tube drivers in London
“Sterling nosedived to its lowest level against the euro since the darkest days of the financial crisis today as the UK was warned that No Deal Brexit ‘talk’ was spooking the financial markets.”
https://www.dailymail.co.uk/news/article-7348357/Sterling-hits-LOWEST-level-against-euro-10-YEARS-experts-warn-No-Deal-talk.html
Then we will have the UK and Italy both leaving the EU. Doesn’t look like a good trend.
Many in Europe will be not too distressed to see the Germans get shaken up a bit: they’ve had too easy a ride at the expense of others: clever manipulation and who can blame them, but due for a salutary correction.
I took a nap today and dreamed that we in the West, enjoying BAU, suddenly realized that we hadn’t heard a word from Europe in a few days. The big puzzle was how supply chains manged to continue when there was no one on the other side of the pond. Surely, whatever caused Europeans to disappear would eventually get to us too. Fortunately, I woke up at that point.
Have you ever thought about the oil and gas industry critical size?. Similar concept to what happened to the western nuclear industry or the space industry. Should we have followed the same investment trends to when the moon was reached, 15 years later we would have reached Mars, now maybe in 30 years time we will see it. Is a matter of when you stop it, is forever. This industry will be as the size it is today or bigger if we want it to deliver what it has to deliver. Thinking on an industry of an smaller size will mean it to disappear in a decade or so. All supply chain will stop R&D to be able to deliver new challenges the industry face, exploration and frontier exploration will stop, incorporation of new resources will be reduced, shipowners will collapse…., maybe gulf oil will be marketed all the rest will cease production. These industries reach a complexity point, such as pharma, that are to keep growing or ceased. Another completely think is if we want to live una completely different world that no one has yet been able to explain how it will look. So this is my argument, as it is today or bigger, if is to be smaller, then a completely different world is to be next door.
I think you are right. Each of these industries must grow or collapse. For example, in the medical industry, they can’t just says, “What we have is good enough. Let’s figure out a way to make what we have cheaper. This will allow other parts of the economy to grow while ours shrinks.”
We really cannot pay an increasing share of GDP for medical care. The situation today is already absurd. But we don’t have a good way to fix it. Even Kaiser Permanente needs to keep up with what everyone else is doing. If everyone else uses way to many medical tests, they find themselves doing way too many tests too, even though they operate more as a self-contained group, because that is what is expected.
It seems to be an accounting problem as well as a human issue. If the invested capital is depreciated correctly then income is correctly stated, the issue is estimating lifetimes and the human tendency to over estimate useful life when reporting earnings to the public, and use IRS depreciation when reporting to IRS. When the tax depreciation is fully expensed , taxable income increases before the capital is at the end of its useful life, time to purchase more capital equipment. The Federal government drives this through tax laws to maintain growth in the economy.
Dennis L.
I cannot speak to medical, but I had extensive experience in dental over 41 years, the last 15 of which were public health. In public health we measured outcomes and fortunately for the patients the number of extractions/fillings per encounter declined over time. As this was government funded there was no to increase income so the revenue per encounter declined along with procedures per encounter. It was all great except with regards to funding the clinic. Dental was simpler than medical and measuring outcomes simpler, but it has been done in medicine and more treatment does not always improve outcomes.
Measuring outcomes is straight forward with modern medical records, cardiac surgery was measured this way in the 1970’s in Milwaukee with results that did not correlate well with the public reputation of the surgeons. Those studies quietly disappeared.
Single payer with measured outcomes would solve much of the cost issue in health care, but please, postpone it until my passing, I like my doctor and I want to keep him.
Dennis L.
Kaiser Permanente is a large organization that basically charges per person, not per medical procedure. So doctors cannot make money by recommending more procedures than are necessary. They also keep an extensive data base of what seems to work in terms of treatments. And they have a very integrated system that uses lots of nurses, physician assistants and specialists, besides primary care doctors.
We have used the Kaiser for years, because I am concerned about the over treatment problem. US healthcare is a lot more expensive than that of other countries, but the outcomes are a whole lot worse. (Part of this is what people eat, and their lack of exercise.) My father was a physician, so I heard stories from him about what other doctors were doing. I also worked in malpractice insurance, as an actuary. I have been very impressed with Kaiser.
This is an article about Kaiser. https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Healthcare%20Systems%20and%20Services/Health%20International/HI08_Kaiser_Permanente.ashx
I used Kaiser (in Hawaii and CA) with good results.
The US is rated in the 30’s (between Costa Rica and Serbia) by WHO, but we spend twice as much as anyone.(actually Costa Rica and Serbia use 1/5 as much).
Does anyone know why? It is really quite simple.
The system is not set up to get patients well; it is set up so doctors can make money. There is relatively little incentive to get the patient well, since a well patient does not use health care services as much.
“The system is not set up to get patients well; it is set up so doctors can make money”
Seems like a good reason to take charge of your own health and not place your faith in those who don’t really care about you. Most modern health problems are caused by poor diet, lack of exercise, lack of sleep and stress; oh, and not forgetting drugs prescribed by doctors, which almost invariably do more harm than good. The remedies are obvious.
When I lived in the US I absolutely hated the health “care” system. Many of the doctors were good, but the accountants kept pushing them to generate more revenue, and the insurance companies kept creating more bureaucracy to inflate the premiums while delivering less outcome. Thankfully, I stayed clear of it by paying privately and taking care of my own health.
But the upper echelons of the medical profession have an even better scam: persuading healthy people that they are sick. The started by medicalising pregnancy and childbirth, so now the US has far far the highest rate of Caesarian births and one of the worst infant mortality rates in the developed world.
Then they medicalised childhood, and started drugging young boys for behaving like boys, in which they were abetted by a primary education establishment dominated by misandrist feminists. Attention deficit disorder used to be called “boredom”, and it was a teacher’s duty to ensure her charges were not bored. No longer.
But they have now found an even more profitable and destructive scam: transgenderism. Every doctor knows that XX means you are a girl, and XY means you are a boy. But there is a lot of money, and potentially a lifetime of treatment, if you can persuade a confused child otherwise. This is child abuse, plain and simple, but it is politically correct, and so immune from criticism.
I strongly agree with what Robert says. This is child abuse. And it goes without saying that a nation that allows its children to be abused and actively connives in the abuse is in for an unpleasant future.
There have also been periods when in both the US and the UK when mainstream medical opinion favored preventive circumcision to reduce the chance of developing genital worts, preventive tonsillectomy to reduce the incidents of sore throats, and preventive appendectomy while the patient is being opened up on the table for other procedures because, well, you never know when you might need one.
Also, Angelina Jolie recently apparently became a poster child for preventive double mastectomy, and children in the US are shot up with so many vaccines these days that the majority of GPs can’t even remember the full schedule.
These days there is also growing craze for medical testing, just on the off-chance that you have something seriously wrong with you—due to following the standard American Diet, not exercising enough, working until you drop, and being worried sick over money, debt, and whether you are still going to have a job next month— so that it can be treated while it’s still treatable.
Of course, if the testing produces an “incidental result” (something that no one was looking for and is producing no symptoms), there is an obligation to follow up endlessly on this. I am being followed for two (almost certainly benign) thyroid nodules, because a CT scan, taken outside of a Kaiser facility, showed these nodules, over a year ago.
In the rare even someone actually does have thyroid cancer, it seems to be easily treatable.
Following up on thyroid nodules seems to be the US medical system’s latest addition to the list of not very necessary things to be concerned about. I just recently had an ultrasound of the nodules, after an ultrasound and biopsy last year. Hopefully, the new ultrasound will put an end to the cycle.
I just got a message from Kaiser. “Thyroid nodules remain stable. Please repeat imaging in 2 years.”
So I guess I am not quite off the hook. Ultrasound is pretty non-invasive and cheap. It should be easily sufficient.
Gail, you are a critical part of the wiring in the global early warning system
German car production has fallen below the GFC level and with no bottom in sight yet.
https://pbs.twimg.com/media/EBrsZ1FXUAE3JM6?format=jpg&name=900×900
It would be nice to see the brake down into segments though.
I guess most of this aggregate fall is due to diesel sales into US, continuous relentless rise of Koreans into formerly German stronghold territory, demographic and income shift both in Germany and S Europe..
From what I read, the new rules will make new cars much more expensive. Europe’s small cars an endangered species
The fundamental problem? The technology required to meet the new regulations will price small cars out of the market.
“New CO2 rules will require automakers to fit thousands of euros of tech to each car,” Max Warburton, an analyst at research and brokerage firm Sanford C. Bernstein wrote in a report this spring. “Big cars have the price points and margins to cover these costs. Small cars simply do not. These segments may soon be abandoned by many manufacturers.”
The European car makers cannot make cars inexpensive enough for people to afford, using these rules. I imagine quite a few are thinking, “I will keep what I have as long as I can.” Or, “I will wait and see.”
Yep, that’s what I described previously, as just few yrs ago the econobox segment (mind you standard mass production car not clown buggy) started near ~8k, since then it climb few thousands up chiefly because of the emission related upgrade mandates..
But you still can get good overall value (family station-wagons) for models made by usual global brands in cheap labor factories (Fiat-Turkey; Koreans-Slovakia) these start roughly at 14k.
Entry level EVs start at 25k incl. gov subsidies, mild hybrids could be a bit cheaper but not very popular, plugin hybrids expensive. Middle class and luxury full EVs 40k and way up (2-3x)..
When given a choice between buying (a) one of these entry level EVs or (b) nothing at all, the choice is easy: nothing at all.
Yep, that’s the endgame, but for now the internal combustion carz are still available on credit for large segments of population severely under water financially already..
In short the system is still sort of freewheeling.
Huh?
https://oilprice.com/Energy/Energy-General/Oil-Needs-To-Be-Below-20-To-Compete-With-Electric-Cars.html
This article is nonsense. EVs can not exist without oil. Only people that think EV materials are created by fairies will think this article makes sense.
you are outvoted
energy fairies can produce anything and everything needed for BAU
you heard it first on OFW
This is from the Mark Lewis model we saw before. Don’t count on it.
Last Man standing
https://finance.yahoo.com/news/china-ex-central-bankers-warn-052125447.html?bcmt=1ormer China central bankers warned Saturday of currency-war risks with the U.S. after an abrupt escalation of trade tensions between the world’s two biggest economies this week.
The U.S.’s labeling of China as a currency manipulator “signifies the trade war is evolving into a financial war and a currency war,” and policy makers must prepare for long-term conflicts, Chen Yuan, former deputy governor of the People’s Bank of China, said at a China Finance 40 meeting in Yichun, Heilongjiang.
Former PBOC Governor Zhou Xiaochuan said at the gathering that conflicts with the U.S. could expand from the trade front into other areas, including politics, military and technology. He called for efforts to improve the yuan’s global role to deal with the challenges of a dollar-denominated financial system
….The U.S.’s move is an “appalling” act to gain an advantage during trade negotiations and is doomed to fail, the Communist Party’s flagship newspaper People’s Daily said in a commentary Saturday.
While markets haven’t reacted too strongly to the weakening yuan this week, it is possible that “the yuan could weaken further on unexpected shocks in the future,” Yu Yongding, a researcher at the Chinese Academy of Social Sciences, said in Yichun
What is overlooked is the financial system itself is set up to fail!
When it is predicted on the Simpsons, I’ll believe it!
https://m.youtube.com/watch?v=-10vg90ZIy8
Hm, that’s going to be a tough one, because the preponderance and over pressure of Chinese elites to escape with their wealth is just mind blowing, it’s like opening a mini tap which in milliseconds changes to a gusher. Nope. So it has to be in a controlled way and that means necessary cooperation on the other end of the story, so US+ will put pressure on Chinese potential partners to tame such biz opportunities. But it seems the cat is out of the bag already, because for example the Gulfies also want to hedge their bets into the future, also wider Asians are torn between past-present Japanese and Chinese forms of imperialism so they would have to vote on that one as well ASAP..
In summary, some sort of formation of regional blocks and balkanization seems more likely than just one hegemonic side (old-new) taking it all..
I’m sure this has been posted before, but stumbled upon it. Was initially going to dismiss this due to some false assumptions/misinformation. But what he did do is highlight the fact that the more green energy we try to introduce, the greater the deficiency introduced by periods where there is no sun or wind during times of peak use, requiring ever more costly battery back up. Price of green energy increases the more we try to rely on it.
I hadn’t seen this. I am glad someone is starting to put pencil and paper to what it would cost to go to 100% (or 80% renewables) with batteries. Maybe at least a few people will start to see the silliness of this whole idea.
Of course, batteries don’t last forever. This presents another challenge not mentioned in the video: How is this accomplished? At this point, less than 5% of lithium in repro cessed, none in the US. We heed to ship all of this material back and forth to reprocessing plants, and use huge amounts of energy for reprocessing.
The cost of electricity becomes more and more outrageous. Of course, this still doesn’t fix all our energy needs. We use oil for a whole lot more than just private passenger automobiles. We will continue to need oil.
And California has a mild climate. Other states would do a lot worse than this.
I think the hype and the noise related to renewables had died down. The peak excitement on renewables was probably in 2015-2017 when eveyone seems to be talking about it. There was nothing then on how bad renewables are. No newspaper will carry it. Now, I think we are past peak hype and there are more rebuttals coming out like this one
https://iopscience.iop.org/article/10.1088/1748-9326/ab2da8/pdf
Are e-scooters polluters? The environmental impacts of shared dockless electric scooters
On your later point, these lite dockless escooters are joke, this obviously can’t compete with streetcars and trolleybuses etc. However, if we look at real scooters, i.e. the classic ClubMed sized proper street scooters ala Italy/Paris/Asian hubs/.. which can be used for longer commutes (incl. cargo for shopping), there should be the overall situation more favorable to them. But this is not US thing culturally..
Yes, We are past peak hype but we have a long way to go. People have not figured out that the more intermittent renewables you add to the grid, the bigger a problem they become. And that batteries are OK for smoothing quick transitions, but they quickly become too expensive for long-term storage. Also, because of the battery storage problem, renewables can’t ever become a very big share of total electricity, much less total electricity.
https://www.youtube.com/watch?v=rYNNsDR6fD0&t=1602s
Rough EROI is at about 22:10, skip the rest. There is no number of solar cells that can do this and these machines work 24/7. Some of these are in Greece and parts manufactured in Germany.
This is an example of Gail’s coal story, very large machines.
For those interested in food, Welker Farms has a YouTube channel and the latest videos are on what I think are Garbanzo beans, notice where they are storing them, no market, no demand. The combine harvesting them is 45 feet across, larger ones are now available.
We grew soybeans this year, China has lost half its pig herd, definite lack of demand there. It is part of the rotation, corn would have been better economically, worse soil wise, ethanol plants are hustling for corn.
Dennis L.
Mining coal gives you wings, e.g. I’ve heard that since their incorporation into the German supplier chain, their living standards in Poland jumped massively (cheap somewhat qualified labor and lot of coal = exporting sub assemblies sold globally inside DE products), so now with the cash inflow even about to build high speed rail network for the country, which kind of makes sense for these distances.. Not sure there is enough time pending recession/GFC2 wise though..
Big Machines: Creating Mars on Earth For Your Little Essentials….
This sort of film should be shown to the teenage Greta fans, and indeed to the girl herself -a nice dose of energy and capital-intensive reality for them.
Songs about mining and machines:
https://www.youtube.com/watch?v=nh3EsEzVvws
You can bet that no one can power these big machines using electricity with batteries. I expect that they are currently oil powered.
I haven’t figured out where the EROI figure comes in. (Didn’t watch enough of the video to find the EROI discussion.) EROI is for trying to evaluate whether a device or process is worthwhile, from a point of view of trying to capture electricity or extract fossil fuels. The part of the video I watched wasn’t about that.
” I expect that they are currently oil powered. ”
Actually, that’s not the case for the biggest. https://en.wikipedia.org/wiki/Dragline_excavator#Draglines_in_mining
“Most mining draglines are not diesel-powered like most other mining equipment. Their power consumption on order of several megawatts is so great[quantify] that they have a direct connection to the high-voltage grid at voltages of between 6.6 and 22 kV. A typical[further explanation needed] dragline weighing 4000 to 6000 tons, with a 55-cubic-metre bucket, can use up to 6 megawatts during normal digging operations. ”
Same with the Bagger 288 bucket-wheel excavator, The 288 Bagger’s operation requires 16.56 megawatts of externally supplied electricity. https://en.wikipedia.org/wiki/Bagger_288
At some point, diesel engines get too massive and electrical motors are a better solution.
Interesting that electricity IS up to the task! Thanks for that Keith.
Now, anyone want to gave a guess at how many solar panels you’d need to supply 16.56 megawatts?
From Suncyclopedia:
A simple rule of thumb is to take 100 sqft for every 1kW of solar panels. Extrapolating this, a 1 MW solar PV power plant should require about 100000 sqft (about 2.5 acres, or 1 hectare).
Multiply that last figure by 16 and you have about 1,556,000 sqft (about 41.4 acres, or 16.56 hectares). This is about 40% the area of Beijing’s Tiananmen Square (109 acres or 44.05 hectares – 880×500 m).
Putting it another way, assuming the average solar rooftop system supplies around 1.5 kilowatts, a back of the envelope calculation indicates that the Bagger 288 bucket-wheel excavator would require something on the order of the output of 11,000 average solar rooftop systems operating in sunny weather, or else a humongous backup battery.
Direct current, connected up, will work. What does not work is batteries!
“Direct current”
These big machines are run on ordinary AC.
There could be batteries in the energy chain, but it’s not obvious that they are needed. It might be more economical to just run the machines when the sun shines.
At timeline 22:10 gives the number of homes equivalent energy to run and the number of homes given output, actually done by city size I believe. Tom Groves has a more exact number below. The ratio is sobering, the size incredible.
You have stated all along the importance of coal, some of the machines shown are in Greece, supply about half the electricity for the nation if I recall correctly. The gear boxes are made in Germany(recall Greece borrowed a great deal of money to purchase things from Germany), lose a supplier of gears and when repairs are needed no spares, again a point you have made over and over about maintenance.
Germany, the source of much of the infrastructure to run the mining equipment has made a choice to close nuclear, coal and go renewable. It is an experiment, being wrong could lose a link in the energy supply chain which might cascade and be a challenge to replace.
The scale necessary to make parts of the economy work is incredible, solar and wind have some growing and maturing to do before they are up to the task.
Dennis L.
Sorry, I didn’t figure out what 22:10 meant earlier. Devices such as these clearly depend on the whole fossil fuel economy operating. You will never make them building up from a few intermittent renewables. If nothing else, think of the roads that need to be in place to ship these devices, or the parts for them.
“Clean, Renewable, Limitless | AT&T
“As one of the largest corporate purchasers of renewable energy in the U.S., AT&T invests in wind energy and the people who bring clean power to the grid. It’s just one of the ways we’re working to help address climate change and create a better, more sustainable world.”
https://www.youtube.com/watch?v=-RnrjGvN26w&feature=youtu.Be
Well, I watched it — none of the crape-hanger-istic stuff on OFW!
Oh, sorry — “crepe” is spelled with an “e”.
Breaking News. Jeffrey Epstein dead in prison.
Raúl Ilargi Meijer at the Automatic Earth predicted he wouldn’t live very long.
https://nypost.com/2019/08/10/convicted-pedophile-jeffrey-epstein-dead/?utm_source=NYPFacebook&utm_medium=SocialFlow&sr_share=facebook&utm_campaign=SocialFlow&fbclid=IwAR3g94zB2QF-5z2fVPsHT8ibLAyZOJD9stOOFx4JvdvezYu72VTteNeqfVw&fbclid=IwAR3-O5cfJUpBAtmwiy5BJbddRQUIDJ1Rj9ZZjFM13TWn9zb8kQ1SeRQY40Q&fbclid=IwAR1z1eGb_6193SCqXTzn2Dlvkr0gv4MQBKRycfUKTC4OytvoC8BMqznz_VA
“Apparent suicide.”
Gotta love it!
I remember seeing a funny cartoon pic of Jeffrey Epstein sleeping in his jail cell with one eye opened and the caption above his head said “on suicide watch”. But the dumb Americans will just about believe anything the News Media tells them.
From what I see on the internet, not one dumb American thinks it was really suicide.
My theory is that Epstein was killed NOTbecause he might “sing.” In fact the reverse. He had nothing to plea bargain with, because the Deep State already knew every pedophile. Epstein was just the ticket collector. Epstein’s “death” is useful insofar as it allows the Deep State to “terminate” the investigation and contain all the damaging evidence. Another public deception.
“Too bad Epstein is dead, because he took all the names of the perpetrators with him to the grave. I guess we’ll have to close the investigation.” How convenient.
I hope not. If Epstein had the sense God gave a tree sloth, he had a large cache of secret documents stashed away somewhere, with instructions that, in the event of his death, they were to be made as public as possible.
I hope that, like a Sumerian king, he had plans for others to follow him into the world beyond. The mills of God grind slowly, but they grind exceeding small.
I tend to agree with you, Hubbs. Too bad that the press still found time to raise smoke about those British saints Prince Andrew and Tony Blair. Mind you, Blair did convert to Roman Catholicism, which is always a bad sign. I thought, tho, that they were trying to get to Trump somehow via Epstein, but evidently they found nothing on him.
Blair became a Catholic because he realized they were a voting bloc.
He’d actually left office before he converted.
Oh. Uh..never mind.
Mea culpa, mea maxima culpa?
Whodunnit?
Could Mr. Epstein have killed himself, either on purpose out of fear of what was to come, or accidentally while practicing the boy scout art of tying knots.
Could someone else have killed him? They say he didn’t have an enemy, but a lot of his friends will be sleeping easier knowing he can’t talk further.
If he has already ratted on the mafia, they would be honor bound to take revenge, although leaving him alive and having to go through years of interrogation, trial and incarceration seems like punishment enough.
The Deep State, the CIA, Mossad, MI6 and others may have gotten rid of him as what used to be called a sandbagging operation.
Some, according to their political stripe, will also suspect the Clintons, Trump, and the Duke of Edinburgh of doing some damage control. However, the reputations of all of the above are so far beyond repair that, to repeat a phrase of Hilary’s, “What difference at this point does it make?”
My own theory, which I only half believe, is that Epstein’s friends have spirited him away from justice and he will be given a brand new face, a brand new identity, and a brand new life drinking cocktails and sunning himself on Mediterranean beaches.
If he was murdered (and I suspect he was) to eliminate any damning testimony against Trump’s pedophilia dalliances, then the US is becoming more and more like Russia. Putin probably called Trump to explain how to do it.
How far off are we from Trump jailing whomever has the best chance against him in the upcoming election? That’s what Putin does.
Do people realize we’ve lost our country to corrupt powers.
On the other hand, POTUS could have had Jeffrey killed at any time with a presidential drone strike. He could have called Obama or Bush to ask them to explain how to do it. There’s a video game consul, apparently, in the White House Situation Room, where the Prez can blast anyone who he considers a serious threat to the nation.
https://www.infiniteunknown.net/wp-content/uploads/2013/07/the-famous-photo-inside-the-situation-room-during-the-osama-bin-laden-raid-is-immortalized-on-his-facebook-timeline.png
Or he could have sneakily arranged to have Jeffrey snuffed out like Seth Rich or Vince Foster and added him to the Clinton Body Count. Or had him buried in the cement when laying the foundations of the latest Trump Tower like Jimmy Hoffa.
If Jeffrey was murdered, and I’m sure he was, I suspect it was because he had been arrested and was in the process of cooperating with the investigating authorities against his former friends. I suspect some of his former friends killed him to stop him from blabbing.
As to who “they” are, it’s interesting that the indictment against Epstein came during Trump’s tenure and not during Obama’s, and that “they” could do nothing to prevent that. “They” killed him because they couldn’t allow him to cooperate with the authorities.
And you may remember that, according to journalist Vicky Ward, former Labor Secretary Acosta’s explanation as to why he went easy on Epstein in 2009: “I was told Epstein ‘belonged to intelligence’ and to leave it alone.”
You may also remember that Trump’s Justice Department under Jeff Sessions began a major effort to finally do something to combat human trafficking—a field of criminal activity that had been sadly neglected by previous administrations. In January 2018, Trump designated National Slavery and Human Trafficking Prevention Month and signed the Combating Human Trafficking in Commercial Vehicles Act and the No Human Trafficking on Our Roads Act, both focused on limiting human trafficking through federal law.
And in February of the same Justice Department began an investigation into how prosecutors had handled the Epstein case in Florida a decade ago. This led in July to the arrest of Epstein and a federal indictment against him brought jointly by the FBI and the New York authorities.
So it doesn7t look like “they” were Trump. It looks more like “they” were sending a message to Trump: “We can take out anyone and you can’t stop us. We got your guy. We got him. You thought you were going to get to the bottom of this sex trafficking. You also thought he was going to tear open the case on the many Hollywood people who hate you.”
More interesting still was that the authorities stashed Epstein away in MCC—they might as well have put him in Rikers Island—rather than in a secure facility where he would have been safely locked away. That looks like a case gross negligence, incompetence, and/or criminal activity on somebody’s part.
Was following a story regarding two teen fugitives that unfortunately lost it and sent on a joyride in the woods of Canada that ended up with them found in the bush and a sad tale .
For those thinking some folks will escape the end of BAU going out in the wild country of Canada, think again !
from the article
https://www.news.com.au/world/north-america/fugitive-teens-told-man-they-were-on-joy-ride-as-he-helped-them-out-of-mud/news-story/58f1aecea296d387c5b61e9b0c9dd3fe
‘THE BUGS WILL EAT YOU ALIVE’
Dave Arama is one of Canada’s leading survival experts.
He knows the dangers lurking in the swampy sub-Arctic boreal forest around Gillam, Manitoba, where the accused teen killers are suspected of hiding out for a week.
If the duo did enter the wilderness and did not find some type of shelter, Mr Arama predicts they are dead or close to it.
It is not the black bears, polar bears or wolves Mr Arama places high on his top 10 list of dangers the teenagers would face.
It’s the insects.
There’s relentless blood-sucking deer flies, mosquitos, sand flies and other bugs.
“They eat you alive,” Mr Arama, owner of the Ontario-based WSC Survival School, told AAP on Tuesday.They won’t stop biting until until your eyes close and you can’t see no more.
“Or, if you get enough bites you can go anaphylaxis and then end up in a serious life-threatening reaction.”
Water might be plentiful in northern Canada during summer but instead of keeping the teenagers alive it also could be highly-hazardous.
“If they drink any water it is likely filled with parasites,giardia and they’d get sick as hell from that,” he said.
“I’ll be honest. With 40 years of experience, if you threw me out there with no knife, no tin can, no flint to start a fire, no tarp, no nothing, I’d rather die.
“This is no Crocodile Dundee movie. This is real
We tend not to consider all of the bad things that can happen in an undeveloped area. I suppose if people had lived in the area for thousands of years, doing hunting and gathering, natural selection would have chosen a population that was more immune to the effects of these pests and parasites.
In the US, we use sprays to keep the mosquito population down. I expect that the population of other insects is down as well, with all of the short grasses we keep. We have no idea of what to expect in a wild state.
As you also pointed out drinkable water is another key issue we take for granted!
Parasites, like the one mentioned in the article can make life not worth living.
Giardia also called Beaver Fever…Giardia is a microscopic parasite that causes the diarrheal illness known as giardiasis. Giardia (also known as Giardia intestinalis, Giardia lamblia, or Giardia duodenalis) is found on surfaces or in soil, food, or water that has been contaminated with feces (poop) from infected humans or animals.
Giardia is protected by an outer shell that allows it to survive outside the body for long periods of time and makes it tolerant to chlorine disinfection. While the parasite can be spread in different ways, water (drinking water and recreational water) is the most common mode of transmission. Very common in North America.
Very good idea to buy a portable water filter for that specific reason!
https://www.rei.com/learn/expert-advice/water-treatment-backcountry.html
If you have the fuel to boil all of your water, as well as a container and a way to start the fire, you can solve this problem, also.
Yes, exactly, read the reason why the Victorian English adopted hot tea drinking was it gave them a reason to boil water! Added benefit was the tea flavor…..and added reason to be an Imperial world power!
The Chinese and Indians drink tea for the same reason. Even boiled water can be an acceptable drink to some Chinese.
The still-prevailing theory among Chinese people with more or less traditional views is that cold water is bad for you, perhaps because it lowers the body temperature.
There are ruins of cities from the Ancient World which actually were abandoned due to excessive malaria making it impossible to function – I went to one in what is now Turkey. All that trouble building a city in fine stone, and then the bugs get yer…… It must have been bad,as humans will usually cling on in dreadful places if there is money to be made.
Yes, exactly, Constantine the Great was thought to have died from malaria in Turkey while planning a war with the Persians. He was about 55 years old and he was upset on how the Christians were being mistreated. If not for Constantine we may be very well worshipping the Sun God , Mars or Jupiter instead of Jesus! Actually, Constantine very well could have merged the Sun God and Christ at first.
Regardless, in ancient times 55 was considered a ripe old age.
Seems we are still warring over things that we consider important
Interesting!
As a revenge fantasy, that’s quite a satisfying end to those two punks. It’s also nice to know that some places in the world are still spared from “human progress” (I just borrowed that from Marty Stauford as he mentioned it on a wild America episode)
This should be easy to verfiy for someone who has done any hiking in Canada. I suspect its BS.
Canada is a huge place–four million square miles. There are surely lots of places where you may not have hiked yet where the bugs will eat an unprepared human alive—just ask any lumberjack.
I’ve heard reports from Siberia of sand flies, horse flies, and mosquitoes as big as dragonflies harassing wild horses to the point where the unfortunate tormented mammals have been observed to jump into rivers, ponds, or bogs in order to avoid being bitten further.
And I’m sure Sir Harry can confirm that even in cosy and comfortable Scotland, there are places along the west coast where people’s afternoon tea on the castle terrace is ruined by gnats and other biting insects. Not even bagpipes will drive these critters away.
And we actually get people in these comments (most of them living in air-conditioned bliss behind screen doors and windows) lamenting the decline of so many nasty vicious insect species!! You folks should be happy you don’t have to endure the torture of having to share your living space with the winged six-legged hordes.
Of course, the article talked interchangably about northern canada and a specific swamp.
I was honestly curious, but mostly skeptical. Earlier when he called himself Fast Eddy he claimed even in scandinavia you would get killed from insects, which “everyone” know isnt true. Here you can hang around in the forest until starvation gets you.
Black flies in Maine….
https://m.youtube.com/watch?v=9FIwsgnAqGY
Been there, done that!
So fishing dude will be dead within a day? Or just itching .
baxk when i used to sport fish, you didn’t bother on windy days with lots of insects on the water. the fish were too full and not biting on lures or bait.
Easy to say when you are wearing a head net!
“And I’m sure Sir Harry can confirm that even in cosy and comfortable Scotland, there are places along the west coast where people’s afternoon tea on the castle terrace is ruined by gnats and other biting insects. Not even bagpipes will drive these critters away.”
I most certainly can. This summer has been pretty good for midges where I am but the little b*stards were out in force this morning when I took the Labrador out.
That should have been “voter roll”. The voters’ role is to cast their vote with a view to electing a candidate, etc., etc.
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This was linked from Drudge today, thought you guys would appreciate it:
“Does China believe that we are on the verge of a major global crisis? The communist Chinese government has always been very big into planning, and it appears that they have decided that now is the time to hoard food, gold and other commodities. Of course in recent days the fact that China is completely cutting off U.S. agricultural imports has made headlines all over the globe, but at the same time China is dramatically increasing the amount of food that it is importing from the rest of the world. The end result is actually a substantial surge in Chinese imports, and this is starting to show up in the official numbers. ”
http://endoftheamericandream.com/archives/is-china-hoarding-food-gold-and-other-commodities-in-anticipation-of-a-global-collapse
Seems more likely China is shafting US farmers in response to Trump’s latest threats of more tariffs. They are purposely targeting segments of the population that voted for Trump in the last election, like rural farmers.
As an aside I don’t think Trump can be beaten in the upcoming election. Not because he may get out voted, but my opinion is the last election was won via hacking election results in swing states a few percent enough to win those states and the election. Even if exit polls show a 5-10% victory for the Dem, Trump will win.
Yeah the Russia thing is a diversion. The hacking started on Wall Street. They probably got some contract tech help from Russia but the plan was all good ole USA .
We got 3-D news now. Deception, Diversion, Division. We don’t need better politicians. We need better writers. And casting needs some serious rework. Trumps isn’t a bit funny.
Come On. We could have George Carlin for president. Someone said he’s dead. Not a problem. They can Photoshop him right in there. Trump ain’t funny!!!
“Trump ain’t funny!!!”
No kidding, the 3D’s have become a propaganda art-form. It’s amazing how easily people are manipulated.
Recently a mock up of a Florida election center was created for young kids to try and hack in to try and change the election results. An 11 year old boy within 10 minutes hacked in and changed the election results. But what happens as a result to try and change the system? Nothing.
https://www.pbs.org/newshour/nation/an-11-year-old-changed-election-results-on-a-replica-florida-state-website-in-under-10-minutes
In the last prez election when some people wanted a recount in certain swing states, that was not allowed by R governors, which means we have no democracy. A democracy can only exit if the election process can be verified to be an accurate count of the votes.
In Japan every registered voter gets a postcard, they bring this to the polling station. If they lose their postcard, they can present a valid ID. With this, they are checked against the voter role. If they are on the list, they are given a pencil and a ballot paper on which is printed the title of the election and the names of the candidates. In order to vote, they are asked to write the name of the candidate they are voting for in the space provided on the ballot paper and then to post it in the ballot box provided. It’s all very low tech, but it works even if there’s a power cut.
When the EU sanctioned Russia, one of the big food businesses there (owned by the family of a friend) simply substituted EU products with those from Brazil, Asia etc.
They made greater profits as the replacements were cheaper. Chinese are no doubt doing likewise, and non-US supplies may be more reliable in the longer term.
It is hard to know how this will turn out. This is a chart of the dollar value of US food, feed, and beverage exports.
https://gailtheactuary.files.wordpress.com/2019/08/us-exports-of-foods-feeds-and-beverages.png
The dollar value of US food exports is already down since 2014, perhaps partly because oil and other prices are down. They also fell during the Great Recession, but this too may have been more of a price than quantity impact.
This year, with production of grain crops likely lower in the Midwest due to wet weather, the total volume that the US has available to sell is likely to be lower. Moving grain imports away from the US may not be a bad idea, for now, because of this issue.
You are correct…”in my opinion” Not worth much
China certainly knows that the country is facing problems and the world is facing problems.
Its coal situation is very troubling.
https://gailtheactuary.files.wordpress.com/2019/06/china-energy-production-by-fuel-plus-total-consumption-to-2018.png
China did a great job of working around this issue in 2018, but this will be increasingly difficult in years ahead, I expect.
“increasingly difficult”
Could be. China, however, has a lot of engineers. And the engineers have support all the way to the top.
Next time, you’ll vote AGAINST Brexit.
“Major power cuts have struck across the UK with homes, airports, traffic lights and trains all without electricity. The blackouts have plunged large swathes of the UK into chaos…”
https://www.dailymail.co.uk/news/article-7342081/Major-power-cuts-UK-hit-airports-traffic-lights-trains.html
UK blackouts. Guardian comment:
Thomas Edward, a consultant at the energy specialist Cornwall Insight, says Little Barford tripped offline at 4.50pm and may have triggered the automatic shutdown of the windfarm.
The key thing about today is that it is very windy. The strength of the system is determined by how many power plants you have running all at once. If there are a lot of power plants running and one has an outage, then the others can pick up the slack.
Windfarms don’t have the same level of stability as a power plant. So, on a windy day when we rely more on wind power thermal power plants, it is more difficult to manage. We need to know exactly what happened from National Grid and the network operators to understand the full cause of the blackout.
Britain will start seeing what goes wrong with adding intermittent renewables, also.
Mediaeval windmills could cope with high winds because the sails would automatically “feather”, ie turn partly away from the wind and so reduce its perceived force.
Modern windmills cannot do that. Some of them, but not all, can be manually feathered, but it is a all or nothing proposition, so once feathered they stop working. The more usual protection is an automatic shutdown, which again can come too late to prevent damage since it is usually programmed to activate only in a prolonged high wind.
But either way the windmill is now offline. In theory, the rest of the wind farm then picks up the slack, but of course if one windmill shuts down the others in the farm are also near their limit, so it often happens that the whole farm goes offline, and that dumps the problem on the rest of the grid, This of course at times of high demand can cause a failure cascade.
To quote me, from a lecture on systems reliability “complexity is the enemy of reliability”.
And, as so often, our modern technology embraces complexity in the false belief our ingenuity can trump the laws of physics. And Hubris is almost always followed by Nemesis.
Very fine points! Thank you.
ah, UK citizens now undergoing the Fast Eddy Challenge…
I suppose that the OFW regulars there can’t post yet about the chaos…
no electricity puts a damper on posting volume…
but…
when it’s restored, let’s hope for some good reporting from inside the UK…
The spread of the UK power cut offers a good lesson in inter-connectedness, as well as grid vulnerability. Here’s betting the reporting will be atrocious and uninformed……
Lot of nations battling political chaos, as declining prosperity and growing wealth disparity push right and left further apart with a kind of splintering in between:
“Italy’s Deputy Prime Minister Matteo Salvini is looking to snatch the country’s top political spot after the crumbling of the populist coalition between his League party and anti-establishment 5-star party. Salvini hopes the no-confidence motion filed against the government today will trigger a snap election and install him as the nation’s new leader.”
https://www.dailymail.co.uk/news/article-7341529/Italys-government-collapses-Matteo-Salvini-tries-seize-power-coalition-failure.html
“Spain’s acting prime minister Pedro Sanchez said on Friday he would meet next month with far-left Unidas Podemos and regional parties including Catalan separatists, in a bid to strike a deal on forming a government and avoiding snap elections.
“Last month Sanchez, whose Socialist Party finished first in an inconclusive national election in April, twice failed to garner a parliamentary majority in support of his administration after talks to form a coalition government with Podemos collapsed.”
https://uk.reuters.com/article/uk-spain-politics-sanchez/spains-sanchez-to-meet-with-podemos-others-to-gain-support-for-confirmation-idUKKCN1UZ11I
“Preparing for the possibility of a no-deal Brexit should be “the top priority” for civil servants, Boris Johnson has told them in a letter. The PM said he would prefer to get a deal but the UK must leave the EU by 31 October “whatever the circumstances”.
“Earlier Jeremy Corbyn had urged the UK’s top civil servant to intervene to prevent a no-deal Brexit happening during a general election campaign.
“It comes amid speculation MPs could back a no-confidence motion in the PM.”
https://www.bbc.co.uk/news/uk-politics-49295556
“Earlier Jeremy Corbyn had urged the UK’s top civil servant to intervene to prevent a no-deal Brexit happening during a general election campaign.”
Civil servants have a constitutional duty to support the government in power and to implement its policies in good faith.
Jeremy Corbyn is therefore suborning treason. Hang him, by the neck, until dead, and good riddance.
this is a must watch especially as it was made in 1984
https://www.cbc.ca/player/play/2678581122/
Never mind that. There’s a new theory of how the dinosaurs died out.
https://media1.tenor.com/images/462b6d76beee0f9501d20535dae9c00b/tenor.gif?itemid=13792633
Wind, solar thermal, hydro, wood burning are all great substitutes for FF in a world that has 50 million humans. A world that uses sail, walking, and ox for transport. A world without jet planes. A world that uses little metal.
We keep asking the wrong question what is the substitute for FF with 8 billion humans? That question has no solution.
“That question has no solution.”
Certainly, it does.
We may not implement a solution but that’s not the same as there being none.
there are many countries in the world… we could wonder why not even one has started building a power satellite system… but anyway…
if power satellites ARE the solution for the world’s energy needs, then what could be the next questions?
will that abundant energy allow the population to rise above 10 billion?
what will 10 billion people do to resources when they have more energy supplies?
when will the overuse of arable land cause food production to drop?
when will fresh water supplies become inadequate in the insanely overpopulated major cities?
when will mining become basically useless when the remaining ores contain close to zero percent of any metal or mineral?
when will the food wars and water wars begin?
so many questions, and so few answers…
“there are many countries in the world… we could wonder why not even one has started building a power satellite system… but anyway…”
You need two conditions for power satellites. One is transporting cargo to LEO for $100/kg. That’s in sight, and at least two companies can provide it. The other is a way to avoid space junk. That’s tentative, not been reviewed and only a few months old
“if power satellites ARE the solution for the world’s energy needs, then what could be the next questions?
will that abundant energy allow the population to rise above 10 billion?”
Perhaps. It might fall if it makes people wealthier.
” what will 10 billion people do to resources when they have more energy supplies?”
Less than they do now. Energy production wastes a lot of the landscape.
” when will the overuse of arable land cause food production to drop?”
There is no reason for food production to drop with a lot more energy available.
” when will freshwater supplies become inadequate in the insanely overpopulated major cities?”
If you have lots of energy, then desalinating water is a snap. I once worked out how much water you could produce with the 5 GW output of one of them. It was a lot. equal to ~4 times the average flow of the Colorado River.
It’s a published paper in a 2010 book put out by American Inst. of Physics. If you want a copy and that book is not in a handy library, I can send you a copy.
I thought current price was $2500/kg to orbit?
“$2500/kg to orbit”
It is, or higher. But they orbital companies think they can get it down to $100/kg to LEO. If they can’t, then power satellites will not work economically.
I am hard-nosed about the physics and economics. Also the ozone damage from a lot of rocket or space plane traffic, and the space junk problem which was (probably) solved a few months ago.
“One is transporting cargo to LEO for $100/kg. That’s in sight, and at least two companies can provide it.”
I would say down to $100 from $2500 or $5000 is quite a long way.
“down to $100”
I agree. But if you look into the economics of highly reusable rockets, they think they can launch 100 tons for ten million dollars. Gets down to where the LNG fuel is a significant cost. Humans may never deploy power satellites, but the engineering and the economics like favorable if people want a long term energy solution.
“I thought current price was $2500/kg to orbit?”
Well SpaceShipTwo will take you up for $250k, which seems about right for 100kg of human and accessories.
Of course, you don’t get anywhere near orbit. The hype says you escape Earth’s gravity and atmosphere, but of course you don’t: the maximum height of 140,000 ft doesn’t even get you into the ionosphere.
It also doesn’t work. The other day I watched a documentary about the destruction of the first manned prototype in 2014. At that time, the project was five years behind schedule; it is now eight years behind schedule. And even if it works, it is useless, except as a way of separating rich fools from their money.
Space flight from the bottom of a gravity well is, and always has been, an absurdity. Unless we can invent Cavorite. And, by the way, the design of the Virgin Galactic system is desperately stupid. The “space ship” is lifted to 40,000 ft by a purpose built jet aeroplane. It could have been lifted to 20,000 ft by an airship as 1/100th the cost, and then an external solid fuel rocket could have taken it the rest of the way at 1/20th the cost.
But hey, since a rich fool is funding the project, who cares?
If the only thing stopping solar satellites is cost to GTO being 25-50x to expensive, I think someone should still have built one just to experiment, more fruitful than another moon expedition.
The reindeer of St Michaels’ Island experienced the solution, though I think Nature found it for them. As did the humans on Easter Island. And as shall we.
Naturam expellas furca: tamen usque recurret.
Excuse me
I have the popular vote on the ‘no solutions’ on OFW
can’t have usurpers muscling in on my spiel or i shall lose all credibility
“Easter Island”
They lacked resources. I have thought a lot about that case, and I don’t know what they could have done to avoid the problems they had even with modern knowledge.
Thank you, hkeith. I also have thought a lot about Easter Island, since I lived on an equatorial island for over 20 years. What went wrong, and was it inevitable?
The big driver of change was the fact that they cut down all their trees. This deprived them of soil cover, so reducing land productivity, but also of timber with which to make canoes, so destroying their fishing industry. They then ate land birds until they were extinct, then moved on (or down) to chickens, rats, and finally each other.
But why did they cut down their trees? To move huge stone statues. And why, …? To enhance the prestige of their chiefs, who vied with each other in erecting ever larger, more expensive, and more useless monuments.
Does that sound familiar? We also are destroying our environment to feed the greed of our “chiefs”, the globalist oligarchs who, covertly or overtly, control most of the world.
The Easter Islanders should have preserved their trees and chopped down their chiefs. And perhaps, so should we.
we showed up and donated all our diseases
“The big driver of change”
Was the fact that their population grew from around 20 to around 20,000.
It is not entirely clear what did in the trees. Some of the people who have investigated think the rats may have eaten all the seeds and that killed the trees. It’s also not clear that the statues were moved on rollers. The locals will tell you that they were “walked” like moving a refrigerator.
“erecting ever larger, more expensive, and more useless monuments.”
I have no good thoughts about where such practices originated, but they are common when humans have the extra energy to build them. Pyramids, Stonehenge, Maya, etc. It seems to be wired into humans along with inventing agriculture (at least twice).
Actually, if you dig into the historical record wind and water mills were periodically very dubious investment, somehow people now tend to remember only the “lucky” series of clam years without floods/river ice, wind-giant hail storms, pillaging/burning armies..
In the same vein, lets rearrange the question into as to whether the world of ~8B is here to stay or not, which could be the question of the first order. Followed by what is my interaction with situation/scenario this number is going abruptly up/down..
Good point!
Excellent article with solid research – which seems to be rare! Thank you for thinking through this issue and posting your findings!
I have two heroes. Gail Tverberg and Tulsi Gabbard.
Me too.
++++++++++++++++++ squared!
I half agree. Who’s Tulsi Gabbard?
A very pretty Hawaiian Congresswomen who’s running for President. She is in opposition to the Deep State and it’s forever wars.
She did a fine job the other day in showing up the hypocrisy of the redoubtable Senator Kamala Harris, which has endeared her to many people.
https://youtu.be/o1-CRrMDSLs
Indeed, CNN was none to pleased with that. Harris was their candidate of choice until Tulsi ruined the party for the both of them.
The problem for Tulsi or any other sincere candidate is that their ratio against the legacy system insiders at various levels of gov is like 1:1 000 000, optimistically speaking.
For one Tulsi you get millions of former, present and future mil/gov rotating contractors who live beyond their means (and want to keep the system running), and it gets worse as out of them say 1/10th is directly involved in mass killings (incl. domestically), and large scale embezzlement of gov funds etc. So, those are directly threatened by capital punishment. Therefore it usually ends up in tears JFK/RFK or derailment (Eisenhower/Carter)..
You can’t reform a hydra..
“The world’s demand for oil is growing at the slowest rate since the financial crisis over fears of a global economic slowdown, the International Energy Agency (IEA) said.”
https://www.theguardian.com/business/2019/aug/09/oil-demand-growth-almost-halves-amid-fears-of-economic-slowdown
The key word is “growing”, for those who missed it.
It really isn’t. We don’t need demand to be falling for problems to ensue, although actually there have been some yoy falls in global demand on a monthly basis:
“The Paris-based agency said that compared with the same month in 2018, global demand fell by 160,000 barrels per day (bpd) in May – the second year-on-year fall of 2019.”
Given the tight correlation demonstrated by Gail between energy consumption and economic growth (see below) and given that the global economy needs to be growing at around 3% p/a (and, until they changed their criteria, was defined by the IMF as being in recession if it fell below this mark), oil demand growth at around 1% “with a greater likelihood of a downward revision than an upward one” is a concern.
Moreover, it is almost solely China that is pulling demand growth forwards and China’s situation is precarious. Oil demand growth across the OECD countries has actually fallen for three consecutive quarters. This is also cause for concern.
http://energyskeptic.com/wp-content/uploads/2017/01/world-GDP-compared-to-energy-consumption-1969-2013.jpg
I agree. We need total energy consumption (including oil) to be rising. The annual increase that I suggested in my most recent post that we needed was 2% per year. https://ourfiniteworld.com/2019/07/10/why-stimulus-cant-fix-our-energy-problems/
This was for all energy products combined, not just oil. Oil might lag slightly behind. But oil should still be growing somewhat, say 1% per year.
German recession fears after big decline in industrial production
https://www.theguardian.com/world/2019/aug/07/german-industrial-production-suffers-amid-us-china-tension
“China’s July food prices jumped 9.1% from a year ago, data from the National Bureau of Statistics showed on Friday, as the country battles soaring pork prices amid the spread of African swine fever.”
https://www.cnbc.com/2019/08/09/china-inflation-july-2019-producer-prices-ppi-and-consumer-price-index-cpi.html
Wow! A 9.1% increase in food prices should reduce demand for other goods. Or people will eat more rise and less pork (and whatever else is spiking in price).