Rethinking Renewable Mandates

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.


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.)


[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.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,461 Responses to Rethinking Renewable Mandates

  1. It's different this time around....NO says:

    From roll please….
    More “Good News” for Doomers…

    (Bloomberg) — More than two decades since the Asia debt crisis gripped the region, global consulting firm McKinsey & Co. is warning that signs of a rerun are “ominous.”

    Increased indebtedness, stresses in repaying borrowing, lender vulnerabilities and shadow banking practices are some of the concerns cited by McKinsey in an August report. Whether building pressures are “enough to trigger a new crisis remains to be seen” but governments and businesses need to monitor potential causes, authors Joydeep Sengupta and Archana Seshadrinathan wrote.

    McKinsey’s warning shot comes as a slowing global economy puts pressure on earnings at Asian companies, and the U.S.-China trade war makes debt investors more risk-averse. Still, fund managers point to improved credit metrics of Asian dollar bond issuers in recent years, and Moody’s Investors Service said last week it expects most Asian economies can offset the domestic impact of the global slowdown through monetary and fiscal policy measures.

    McKinsey examined the balance sheets of more than 23,000 companies across eleven Asia-Pacific countries, and found firms in most of Asia face “significant stress” in servicing debt obligations. In countries such as China and India, those pressures have risen since 2007, while falling sharply in the U.S. and U.K. during the same period, according to McKinsey.

    The analysis looked at the share of long-term debt at corporations with an interest coverage ratio of less than 1.5 times. At these levels, corporations are using a predominant share of their earnings to repay their debt, according to the study. In 2017, in China, India and Indonesia, more than 25% of long-term debt was at by companies with a ratio of less than 1.5, it said.

    Can it get any worse…..?????

    • Perhaps if they resort to the debt we read about a few days ago. They issue more debt than is really needed, then use part of that debt to help bu the new debt. In the process, they bid down the interest rate that the rest of it is sold at.

      I think that the practice of one company guaranteeing another company’s debt is quite widespread as well.

  2. Yoshua says:

    The euro has been following the oil price as well. I really don’t know why the euro has been following the oil price.

    The euro has now formed a death cross and is just about to break down from its support line.

    Just in time for a new stimulus package.

    • A high euro makes oil cheaper for those buying goods and services in the euro. Thus, we expect that the higher the Euro, the higher the oil price.

      • Harry McGibbs says:

        More political ructions in the EU:

        “Giuseppe Conte has resigned as Italian prime minister after blasting Matteo Salvini, the leader of the far-right League, as an “opportunist” for triggering a government crisis that could have “serious consequences” for Italy.”

        • How much of governmental activity can go without a prime minister? How disruptive will this be?

          • Harry McGibbs says:

            As with Brexit, it seems to open a multiplicity of scenarios. I found this overview of the possibilities. My understanding of the situation is not deep but from what I can gather, an October election is the likeliest of them:


          • Gail, the context is that Salvini feels now powerful enough to call new swift elections and become PM himself, while Conte was more or less a truce placeholder of today’s coalition consisting of 5Stars movement and Salvini’s Lega party..

            Basically, Italy is now almost in phase two of revolt, when the strongmen gets to have all the levelers of power to play with ..

            The idea (his hope) is that as PM he could go hands off on several topics:
            – try to blackmail Germany-France hard on the ECB/Euro currency – loans / debt levels
            – immediately impose strong anti migration policy calling in army and police squads not only on the incoming but also the various existing quasi legal hide outs across the country
            – revision of social – tpolitical – cultural laws related to previous point plus also various domestic minorities

  3. Harry McGibbs says:

    “This is rather astonishing.

    “Germany’s government is planning to auction €2bn of new 30-year government bonds tomorrow, with a zero coupon. That means Berlin would not make any interest payments to bond-holders during the lifetime of the bund.

    “Instead, it would simply take your money and promise to return it in 2049 – by which time inflation could have eroded much of its value.

    “This highlights how bond yields have plunged to record lows, as investors have driven prices to new highs. Existing German 30-year bunds are currently changing hands at a negative yield, of -0.15%, in the bond market. So, Berlin seems to be pricing its bond correctly. But it’s still A Moment.

    “Such low yields imply pessimism over long-term growth prospects, and a real appetite for capital preservation… but it makes it very hard for pension funds, insurance firms, and fund managers trying grow their clients’ wealth.”

    • Harry McGibbs says:

      “Proposals to increase the state pension age [in the UK] to 75 have been branded “chilling and immoral” by former pensions minister Ros Altmann.

      “Baroness Altmann condemned the idea put forward by Tory think-tank the Centre for Social Justice (CSJ) this week to raise the current pension age of 65 to 70 by 2028 and 75 by 2035.”

      • I am afraid that countries in general will need a 75 year pension age, very soon, or perhaps even now. The plans that were given out were way too generous, relative to what governments can really afford, given our low energy prices and likely declining energy supplies. If there are less goods and services produced in total, there will be less surplus over what workers themselves need. The economy cannot share this surplus very widely, if any reasonable amount is given out.

        The whole idea of retirement is fairly new. It depends on having energy surpluses to share.

        • Harry McGibbs says:

          Call me a pessimist but I suspect that not having a pension would be the least of my worries three decades hence.

          • DJ says:

            Sometimes I worry about my neighbour eating my intestines as I slowely die. But mostly I worry about my pension not covering my netflixx subscription.

    • Xabier says:

      Return of part of the capital, then, rather than return on one’s capital.

      The Fourth Reich isn’t up to much.

      Desperate times.

      We can consider Capitalism dead and buried (half alive, but the earth is being shovelled on) : the Left can rejoice, but it won’t be as pleasant as they’ve always imagined it would be – Equality (Fraternity, Liberty, etc) rather sucks when you are, in fact, destitute……

  4. Harry McGibbs says:

    “The US central bank should consider cutting interest rates by one percentage point and introduce “some quantitative easing” stimulus measures, president Donald Trump has said…

    “The remarks came hours after the president said the US economy is not falling into a recession.

    “The economy is doing “tremendously well”, he said.”

  5. Harry McGibbs says:

    China cunningly attempting to lower its rates, as you suggested, Gail, without weakening its currency:

    “China lowered its lending reference rate through a new market-oriented pricing mechanism on Tuesday, providing a modest easing of monetary conditions to help support the world’s second largest economy.”

    • Xabier says:

      A part of me longs for all the Chinese tourists who submerged this town to go away, it’s almost impossible to walk in the centre in high season – but I know that this would not be a good sign in other ways…..

    • Anything that sort of works!

  6. Harry McGibbs says:

    “There’s been a lot of talk about inverted yield curves over the past few days.

    Specifically, last week’s inversion of the two-year and 10-year U.S. Treasury notes has raised the spectre of recession, sending tremors through U.S. stock markets. Financial market analysts are poring over their historical data for clues as to how likely and how severe a global contraction might be.

    Those who follow the copper market, however, will know that “Doctor Copper” with his honorary degree in economics got there first. London Metal Exchange (LME) three-month copper has slumped from above $6,600 per tonne in April to a current $5,800.

    Global economic weakness is being led by the manufacturing sector with activity contracting or slowing just about everywhere. That includes China, the powerhouse of industrial metals demand…

    The financial part of the copper market is betting there’s worse to come.

    World mine production actually fell by 1% in the first four months of 2019, according to the ICSG. Smelters are having to accept extremely low charges for converting mined concentrate into refined metal.

  7. Harry McGibbs says:

    “After years pouring funds into the shale boom, bond buyers are getting increasingly selective as defaults rise and many explorers continue to burn more cash than they make.

    “While Exxon Mobil Corp. and Occidental Petroleum Corp. have recently sold a combined $20 billion of investment-grade debt, junk rated issuers are getting a far different market reception.”

  8. Chrome Mags says:

    “If there is any further pushback from the U.S. on any of these Chinese projects in Iran, then Beijing will invoke in full force the ‘nuclear option’ of selling all or a significant part of its US$1.4 trillion holding of U.S. Treasury Bills, with a major chunk of the paper due to be sold in September on this basis. This massive holding of these bonds – through which the U.S. finances its economy and is an important factor both in the value of the dollar and therefore in the health of U.S.”

    Should be an interesting situation to keep tabs on.

  9. It's different this time around....NO says:

    (Bloomberg) — HNA Group Co. repaid a dollar-denominated bond on Monday amid a report China’s provincial government offered to help the debt-laden conglomerate meet payments to its offshore creditors.

    HNA Group International, a unit of HNA Group, repaid a $300 million bond due Aug. 18, a company spokesperson told Bloomberg, saying “we remain committed to meeting our financial obligations.” REDD reported last week that the Hainan government would provide 1 billion yuan ($142 million) to HNA Group to help it repay that bond.

    “It is noteworthy that distressed conglomerates like HNA continue to honor their offshore USD debt,”said Owen Gallimore, Singapore-based head of credit strategy at Australia & New Zealand Banking Group Ltd. “Given the deluge of other problems to deal with, a major conglomerate offshore bond default appears to be something the government is keen to avoid at present

  10. milan says:

    attention this is very important and shocking info to mull over:

    from Bronte Capital:

    Pre-warning: this series of posts is called “thinking aloud about…” because I do not know where it ends. I am genuinely exploring things that I do not understand very well – but are central to how the economic world and how markets will turn out over the next year or two and maybe the next decade. I do not know the answers and maybe this blog series will not end or will fizzle out….

    Also I will be on the road for six weeks. Expect the posts to be sporadic at best.

    The most interesting thing I have seen in the past three months was an interview on Real Vision by Shannon McConaghy of Horseman Capital entitled “Prepare for a Japanese Banking Meltdown?”.

    The title on the interview has a question mark. I am not sure that Shannon would include the question mark.

    But the argument is pretty simple really. Japanese regional banks have – for decades – had excess funds. They have found it extremely hard to lend at adequate rates as excess funds is the Japanese condition. Rates the banks can achieve on loans are very low.

    The result is that Japanese banks (especially regional banks) have very low returns on equity and generally trade below book.

    As an extreme example about fifteen years ago I asked Bank of Kagoshima why they could not achieve their four percent ROE target and they said that it would “put too much strain on the local community.” That bank is gone now – but the problem remains right across Japanese banking.

    Shannon McConaghy’s thesis is that “Abenomics” has made the problem much worse. He states that the average interest rate achieved on a loan by a Japanese regional bank in the first half of this year was about 79 basis points. The rate was 62 basis points in May but there may be some seasonality.* He thinks it costs about a percent to run the bank. There are staff and systems to pay and the like. So he thinks that Japanese regional banks will be loss making before they have any credit losses. Then of course they have been rolling credit losses in zombie businesses for decades and so after the credit losses settle there won’t be any equity left to earn any return on anyway.

    • I’m afraid “Real Vision” is some sort of perma bear libertarian ideology outfit, which makes you in the world of global CB-gov cabal bankrupt in very short order.. Their actionable predictions are useless.. on timing and not specific enough on details.

      On the other hand if you followed Harry’s links over here, you would have known what to short specifically at least since Q3 2018 (e.g. Chinese raw material suppliers started to wobble) and make some decent return on it.. apart from other good info and conversations.

  11. It's different this time around....NO says:

    Oh my, just came across this by accident…
    10 things you need to know about the massive new oilsands mine that just got a green light
    Surprise, surprise
    Environmental concerns flagged by the panel include the removal of old-growth forests, the destruction or permanent alteration of fish habitat, the release of a large amount of carbon pollution and the loss of wetlands and areas of “high species diversity potential.”

    But, overall, the panel found these impacts were outweighed by economic benefits, saying “the project is in the public interest.

    Alberta’s oilsands North of Fort McMurray.
    10 things you need to know about the massive new oilsands mine that just got a green light
    A review panel found the Frontier Mine would have ‘irreversible’ impacts on the environment and ‘significant’ adverse effects on Indigenous peoples, but recommended it be approved in the ‘public interest’ anyway
    Sharon J. Riley Jul 26, 2019 9 min read

    On Thursday, a joint review panel — representing the federal and Alberta governments — released its recommendations on whether a massive new open-pit mine in the oilsands should proceed.

    It recommended Teck’s Frontier Mine get the green light, despite finding it will have significant and permanent impacts on the environment.

    The decision now moves to Minister of Environment and Climate Change, Catherine Mckenna, who has until February to issue a decision.

    Environmental concerns flagged by the panel include the removal of old-growth forests, the destruction or permanent alteration of fish habitat, the release of a large amount of carbon pollution and the loss of wetlands and areas of “high species diversity potential.”

    But, overall, the panel found these impacts were outweighed by economic benefits, saying “the project is in the public interest.”

    Here are 10 things you need to know about this proposed new mine.

    [Sorry- Too long a quote – I removed part of it. Gail]
    Got to love BAU…they wouldn’t lie, would they?

  12. Tim Groves says:

    When are you going to come down, Sir Elton?
    When are you going to land?

    Sir Elton John leaps to Harry and Meghan’s defence, revealing he supplied couple with private jet for Nice getaway

    Sir Elton John by his own admission counted Princess Diana as “one of my dearest friends” and famously and movingly sang at her funeral.

    On Monday, the rock star leapt to the defence of her youngest son, in an attempt to shield the Duke of Sussex and his wife from “relentless and untrue assassinations” amid allegations of hypocrisy over private jet flights taken by the couple.

    In putting a metaphorical arm around the Duke and Duchess, Sir Elton disclosed that he had paid for Prince Harry and his wife to fly on a private jet to his home in the south of France. He said Prince Harry, his wife and their son Archie needed the “safety and tranquillity” offered by his palatial villa on the French Riviera.

    Sir Elton insisted he and his husband David Furnish had made “an appropriate contribution” to a company that specialises in offsetting carbon emissions. The flights, said Sir Elton, were as a consequence carbon neutral.

    It was, according to reports, their fourth private jet flight in 11 days – they had previously flown to and from Ibiza to celebrate the duchess’s 38th birthday – prompting cries of hypocrisy. The couple have campaigned on green issues and earlier this month the prince said he and his wife would have “two children, maximum” as part of their contribution to saving the environment.

  13. Chrome Mags says:

    Seen it before, but last evening watched ‘The Running Man’ 1987 with Swarzennegger. At the beginning of the video it states:

    “By 2017 the world economy has collapsed. Food, natural resources and oil are in short supply. A police state, divided into paramilitary zones, rules with an iron hand.”

    It’s interesting that movies don’t look too far off, like the above in 1987 or Blade Runner, Los Angeles 2019.

    • It's different this time around....NO says:

      Yes, just recently the actor, Rutger Bauer, who co-starred in the 1982 original Blade Runner film as the complex Android, Roy Batty, died after a short illness! Coincidence?
      Some think not!

      Maybe there is a plan as Gail alluded to….

      • Duncan Idaho says:

        That is some of the most classic dialog of film.

      • Tim Groves says:

        I don’t think Rutger is dead. He’s moved to the offworld colonies.

      • Chrome Mags says:

        He sure did as that link shows. That is coincidental and kind of weird timing. I saw him in a movie where he stars and it was kind of a switcheroo from Blade Runner, as he plays a cop chasing down some killer with a gun that doesn’t look too much different than the one Harrison Ford used in Blade Runner. I thought, wow now he’s (Rutger) is doing the chasing. But also the movie is set in a futuristic London that has flooded and has that dark dystopian type feel of Blade Runner. He’s out for revenge because the killer he’s after took out his partner. What he does a good job of is being on edge all the time, but in a comedic way. It works and I highly recommend the 1992 movie, ‘Split Second’. The movie works if you can laugh along with it.

  14. Another sign of recession, in the WSJ: An Economic Warning Sign: RV Sales Are Slipping

    Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions.

    “The RV industry is better at calling recessions than economists are,” said Michael Hicks, an economist at Ball State University, in Muncie, Ind. Mr. Hicks says softening consumer demand for RVs coupled with rising vehicle prices due to tariffs suggests the economy is either in a recession or soon headed for one.

    RVs are definitely a type of discretionary purchase.

  15. It's different this time....No says:

    30 miles north of Pittsburgh, Pennsylvania, in a township adjacent to a state forest, oil and gas giant Royal Dutch Shell is building a sprawling new plant to support what it sees as the future of its business: making millions of tons of new, virgin plastic

    Virgin plastic pellets are the biggest pollution disaster you’ve never heard of

    President Trump visited the facility last week, highlighting the 5,000 construction jobs it has created. The plant is just one of more than 300 new plastic facilities proposed or permitted for the US in the near future. Shell, along with other major oil and gas companies like Exxon, sees plastic as one avenue for growth as natural gas prices plummet—and, longer-term, as a way to weather the world’s slow rejection of fossil fuels as an energy source.
    rely on a process known as “ethane cracking,” where ethane gas, once seen as an unusable byproduct of gas extraction, can be molecularly “cracked”—its carbon and hydrogen atoms rearranged—to form ethylene, the main building block of plastic.

    will pump out 1.8 million tons (1.6 million metric tons) of plastic each year. In a world where buying virgin plastic is often cheaper than using the recycled stuff, the new product will likely find an eager manufacturing market. The vast majority of that plastic, like the vast majority of all plastic made up to now, will likely not be recycled. And it will exist virtually forever, crumbling into microplastics that show up most everywhere scientists look for them.
    little research exists to quantify how many of these pre-production pellets end up in the environment. Available estimates tend to be locally isolated; one recent study found that production facilities in the UK lose between 5 billion and 35 billion pellets a year, for example. In 2017, two shipping vessels collided, spilling 49 metric tons of pellets into the sea and coating 2,000 kilometers (1,243 miles) of South Africa’s coastline with nurdle.

    Interesting article on how a seemingly inert product may not be so harmless….a lot more to read in the link….

    • The first two paragraphs sort of tell the right story, but I think that they are confusing:

      For now, if Shell can’t make money selling its plentiful natural gas, it can certainly make plastic with it. As a whole, the oil and gas industry aims to increase plastic feedstock production by at least 33% by 2025.

      The Shell plant will rely on a process known as “ethane cracking,” where ethane gas, once seen as an unusable byproduct of gas extraction, can be molecularly “cracked”—its carbon and hydrogen atoms rearranged—to form ethylene, the main building block of plastic.

      Yes, indeed, ethane can be burned as a not very valuable fuel, dumped in with natural gas. If natural gas prices were sky high as a fuel, there would be no question of making it into plastics. The issue is trying to make something that the market values more highly than natural gas.

      A related issue:
      By the way, pipelines are the big cost with natural gas. (Also the wells themselves, and the fracking.) People assume that natural gas peaking plants are cheap, but they aren’t when all of the backup costs are included. The people looking at the cost of using peaking plants to provide backup power for wind and solar generally look only at the cost of the little plant that burns the natural gas. In fact, these are cheap. If all the costs surrounding having the peaking plants are included, including the little-used pipelines, it is not cheap.

  16. Yoshua says:

    The Russian ruble doesn’t like low oil prices. The ruble fell with the oil price crash in 2014 and is now breaking down again.

    With mass protests in Moscow, Russia is becoming more and more politically unpredictable.

    • At least with a lower ruble, the sales of exported oil will be “worth more” to the local economy.

    • Yes another attack on their currency, country which is balancing budgets and not over printing on regular expenses – comparatively speaking to others, interesting isn’t it.

      There are no “massive” protests in Moscow as of lately, people have been burned by the color revolution chimera enough (+ 1990s chaos memories are still strong)) and are somewhat immunized. Obviously, the mood is not exactly joyful, understandably it’s very tiresome to be several third/fourth turnings on the receiving end of incoming invasions again and again (both militarily and via global debt regimes of the West)..

      Could it snap at some point into regime change proper, anything is possible, but very low probability..

  17. Harry McGibbs says:

    “…as things stand the question is whether the global economy is heading for a slowdown or a recession. On average, there has been one serious downturn per decade since the early 1970s. One is due.”

    • Harry McGibbs says:

      “Before the 2010s, it was common for one in every five economies to be growing at 7 percent or more annually. Now, among the world’s 200 economies, just eight, or one in 25, are on track to grow 7 percent this year. Most of those are small economies in Africa.”

      • Harry McGibbs says:

        “The trade wars and a breakdown in international economic diplomacy cause businesses around the world to pull back. This leads to further tumbles in markets and job losses, prompting American consumers to become more cautious. High corporate debt loads create a wave of bankruptcies. And central bank policy proves impotent, combined with fiscal policy that is nonexistent.”

      • After logging in, I figured out that one major issue the writer is writing about is falling population growth in the developed economies. Also, we now need lower targets, for all of the economies.

        • the 7% figure, taken as a broad overall base, coincides neatly with the average input growth of fossil fuel energies during most of the 20th c

          this is why those kind of promoted numbers now are nonsense because we no longer have that kind of energy input world wide

          if china, for example, wanted to grow at that rate they would eventually suck in all the energy available on world markets.

          And think themselves economic geniuses, but there would be no economic infrastructure available to sustain China’s growth.
          So they would bring about their own collapse, and blame everybody else.

      • Denial says:

        Right leaning blogs are all saying that it is a left wing conspiracy that the economy is going into recession. They believe that the left is trying to make trump look bad with fake news about the economy. Even taking all that out the fundamentals say otherwise; it does not matter who is in control there is just too much debt in the system for it not to be bogged down. Crazy how any news that you don’t want to hear becomes a conspiracy or fake news…..the left wants to hear that the economy can just switch to alternative energy…..

    • The title of the Guardian article is, “If global markets are unsettled, they have good reason to be so.”

  18. Harry McGibbs says:

    “Japanese exports fell for an eighth straight month in July, weighed down by shipments of auto parts and semiconductors, as slowing economic growth and trade battles raise fears of a global recession.”

  19. Michiel van der Zee says:

    Hi Gail, great article as always. As a Dutchman I do have a bone to pick with your characterisation of Dutch historic windmill usage.
    Windmills were definitely not just used to keep polders (reclaimed land either from water or fens) dry. In fact, the incredibly widespread use of windmills lead to what has often been characterised as a proto-industrial revolution. Windmills were used in an enormous variety of ways: from traditional milling of seeds (wheat, mustard, linseed etc.) to using complex mechanical engineering that turned the circular motion into a vertical or horizontal motion. This way, wood could be processed into planks faster than in other countries, which led to the Dutch outproducing other countries in maritime construction, among other things. Near where I grew up, there was a paper mill that used its wind power to grind wood into dust, and mix dust with water into pulp for paper production.
    Windmills were one of the things that led to the Dutch Golden Age, when the Dutch economy was by far the most prosperous in the world. Average household income in the Province of Holland was around $6000, converted to 1990 dollars. Literacy in cities was around 85%. Two-thirds of urban households owned a work of art, such as an ornamental vase or a painting. The urbanization rate in Holland was over 55%.
    Other ingredients were cheap thermal energy through peat, a near-monopoly on the Baltic grain trade and a dominant position in the trade of Far Eastern spices and other goods (though I suspect the latter was a result of the other factors).

    If you want to get an idea of how extremely widespread the use of windmills was in the Netherlands, visit this map:
    It maps all historical windmills, of which there were many thousands. Many of these were used well into the late 19th century, and some even into the 20th. I don’t mean to say that you can run a modern industrialized society on wind power, just that traditional windmills, used in clever ways, can help support a fairly complex economy from a pre-fossil perspective. Thanks for the posts and I hope you appreciate this extra tidbit of information.

    • I know that peat moss played a huge role in the Netherland’s rise to, at least temporarily, becoming a world power.

    • Lizzie says:

      Very interesting, Michiel. Have you read the wonderful book by Michael Pye, The Edge of the World ? Shows how the inventiveness and brilliance of people living in NW Europe – especially the Netherlands – developed modern civilisation.

      • People forced to extremes are driven to creative forms of survival.

        NW Europe wasn’t very hospitable post ice age, and the people of the Netherlands in particular were forced into survival mode by the conditions in which they found themselves—much like the Venetians later—survive or die.

        it was a harsh place to live but they got very good at it, and very tough

        that mindset is reflected right through to our own time, northern Europeans dominate economically, while southern europeans are not so ‘driven’

        • ssincoski says:

          Norman, just wanted to let you know that Kunstlers latest post sounds a lot like what I had read from posted excerpts from your book ‘End of More’. And I happen to agree with his post and your writings that we are just going to have to get used to it.

          • thanks
            most people writing on this subject tend to say much the same thing—just regurgitated in different word combinations

            Almost impossible to say something new

            Back in 2011 Noam Chomsky and I both wrote independent pieces (at least he never asked me) that said “A Trump” was inevitable for 2016 or 20–a certain pattern of thinking and outside circumstances tends to throw up the same conclusions i guess
            Now everyone jumps on the ‘fascist’ bandwagon.

            One point of general disagreement though—I don’t we will ‘get used to it’ at least not for a very long time, until we’ve forgotten what we are used to right now

            • ssincoski says:

              I concur. I think most people will not get used to it and find various ways to exit early and a much larger number will just disappear due to circumstances they find themselves in. I guess what I was implying and should have made clearer is that there is just not anything that can be done about it.

        • hkeithhenson says:

          “that mindset is reflected right through to our own time, northern Europeans dominate economically, while southern europeans are not so ‘driven’”

          That’s both a racist statement and true. Its origin is genetic selection in historical times. You may be familiar with the tame Russian foxes. Northern Europeans were subjected to roughly the same level of selection for traits related to economic success over the same number of generations. There is no doubt the psychological traits of the foxes was changed, why should humans be any different?

          Google Gregory Clark Genetically capitalist for the paper.

          In the current social matrix, “racist” is bad. It is an assumption that the average characteristics of different groups are the same. But groups of humans who have been subjected to different selection pressures, obviously, differ between groups.

          As humans gain control over our genetics, this will become moot.

          • we all live through the munificence of the sun’s energy

            southern peoples get more of it than the northern peoples, hence northern people learn to use alternative success strategies to make up for it.

            Southern people can lie back and pick fruit off the vine, Northern people have to work harder for it.

            I could cite other examples—but that would get reeeeeely racist.

            typically, much of Italy’s industry is in the north, in the south they are more laid back

            in UK, the scots are looked on as the best working engineers—even in starship Enterprise, the chief engineer was Scottish

  20. Harry McGibbs says:

    “The problem is, central bank policy isn’t what’s holding back the global economy, and more monetary stimulus won’t help, according to Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The Fed doesn’t have the cure for what ails us, just as the [European Central Bank] and the [Bank of Japan] don’t at this point,” he told me.

    “Cheap borrowing really isn’t the problem.

    “”There’s no business investment that’s being held back because of where rates are,” Boockvar said.”

  21. Harry McGibbs says:

    So, Trump does know a global recession is underway:

    ““I don’t see a [US] recession,” Trump said, preparing to fly to Washington. “We’re doing tremendously well. Our consumers are tremendously rich. They’re loaded up with money. Walmart is through the roof. We’re not going to have a recession – the world is in a recession right now.””

  22. Harry McGibbs says:

    “Despite outrage from the banks, president Cyril Ramaphosa signed the Credit Amendment Bill this week.

    “While the details of how it will be implemented still need to be finalised, it is estimated that some 9.5 million South Africans may have their debts written off completely.”

    • The devil is in the details. If the write-off can be done in a way that leaves the banks “whole” (a new form of QE, perhaps), perhaps it will be helpful. Or the level of South Africa’s currency could fall further.

  23. Grant says:

    In the UK there is an organisation called “Extinction Rebellion” that believes only totally and immediately (within 5 years) abandoning the current BAU and Carbon based economy will ‘save’ humanity and the planet.

    Here is one of it’s founders (I think) being interviewed.

    Who would agree with him?

    • Tim Groves says:

      I for one, wouldn’t agree with him.

      Firstly, I think we should be totally unconcerned about what he refers to as “our carbon emissions”. Indeed, we should rejoice in them because “our carbon emissions” are benign.

      Secondly, I think a lot of people are either willfully not telling the truth on this globbly wobbly issue and many others are badly misinformed, absolutely clueless, and/or taken in by the propaganda.

      Thirdly, I think people who deliberately break the law of the land should suffer the legal consequences of their actions. There are millions and millions of people who are passionate about all sorts of things. Imagine if they all went around selectively breaking the laws they didn’t like while claiming they were serving some higher moral calling. There would be anarchy, social chaos, and sooner or later—within a couple of months probably—”we” would have to start guillotining “them” by the cartload or “they” would have to start guillotining “us”. It would be worse than Chicago or Detroit on a Saturday night. It would be more like Bosnia or Rwanda in the early 1990s—or if “they” got power, it would be a replay of Cambodia in the 1970s.

      So no, I wouldn’t agree with him. I think we should all BURN MORE COAL!

      • Davidin100millionbilliontrillionzillionyears says:




        brings back fond memories of Fast Eddy and 2018…

        • It's different this time....No says:

          Dr. Guy McPherson agrees to burn more coal because of the areosol effect that produces a cooling in the atmosphere. He claims we are in a Catch 22 predicament….burn more coal and heat up or stop and spike the
          His new book, “Only Love Remains…Dancing at the Edge of Extinction” is a read that I can identify with as far as personal experience. At least I know how there was another (others) that reacted as such! Poor us…LOL

        • Lizzie says:

          Come back, FE…

    • yes that’s the guy—and I thought I was doom merchant!!!

      basic if we all stop what we’re doing, we can pull back from the brink, unlike wile coyote.

      of course, we won’t stop what we’re doing.

      that’s the problem, because we all like our jobs and wages and food, as well as everything else, lights, transport heating and so on. Hallam says we can stop all that nonsense and still have a viable civilised existence.

      Maybe I’ve missed something, and we can, but so far my observation of human nature would indicate otherwise.

      The planet doesn’t need ‘saving’–it managed perfectly well before we arrived, and will get on without us after we’ve departed, we’ve only been around in our present form for about 1m years (ie fire using), which in earthtime is the blink of an eye.

      Our problem is we invented gods to tell us we were here forever.

      • Chrome Mags says:

        “of course, we won’t stop what we’re doing that’s the problem, because we all like our jobs and wages and food, as well as everything else, lights, transport heating and so on.”

        Exactly, and the corporations are geared for production and the investors set up for an income stream and so on. Civilization as it stands is so colossal it’s mind bending to even begin to imagine trying to change it very much. We’ve all accepted our reality and don’t for a moment want to lose any of our current luxuries.

        Which means of course we can’t stop anymore than a chimp can stop taking in cocaine until it dies. (tests on chimps showed they could not resist cocaine and stopped eating food, so they died). We are no different as we are hooked on the high brought on from high tech living. Sure there are side effects to the environment but we ignore those for the most part at our own peril because we simply cannot stop.

        So in this case LOSS has to be FORCED upon us by limits that cannot be breached. As we speak we ignoring feedbacks, rushing headlong towards those limits. Will be fascinating, stressful and dangerous. Beyond that is the interesting question; What tech and people survive the inflection point.

        • Yorchichan says:

          “tests on chimps showed they could not resist cocaine and stopped eating food, so they died”

          This might be correct, but I very much doubt it. Links please.

        • Xabier says:

          Also, refineries, factories, processing plants, power systems, distribution networks, etc, can only actually function at a certain level, constantly maintained.

          It’s all or nothing, at this level of complexity.

      • I don’t think gods tell us we are here forever. Gods tell us we are somewhere else forever, although I suppose there are a few that thing that somewhere else is on earth.

        It is pretty clear that the current system is unsustainable.

        • I think if you told Pence and his chums that humankind’s time on earth, as a species, was imminently finite, he would find some bit of scripture that said it isn’t.

          admittedly it might involve bending the laws of physics out of shape, but it would bring him a comforting certainty that the rest of us don’t have

          Trump, of course, remains convinced that money will buy him immortality. Any volunteers to freeze his head?

          • Tim Groves says:

            You need some churchin’, Norman. There’s lots of Pence-approved scripture that states unequivocally that humanity’s time on earth is finite. Read your Bible all the way to the end and I’m sure it will be a Revelation to you! 🙂

            Pence undoubtedly knows and agrees with this verse from the Epistle of Peter that predicts globbly wobbly on steroids:

            But the day of the Lord will come like a thief, in which the heavens will pass away with a roar and the elements will be destroyed with intense heat, and the earth and its works will be burned up.

            And this one from the Gospel According to Matthew:

            “At that time many will fall away and will betray one another and hate one another. “Many false prophets will arise and will mislead many. “Because lawlessness is increased, most people’s love will grow cold.

            And Peter again, prophesying the appearance of Dawkins, Hitchens and Harris and friends:

            Know this first of all, that in the last days mockers will come with their mocking, following after their own lusts, and saying, “Where is the promise of His coming? For ever since the fathers fell asleep, all continues just as it was from the beginning of creation.”

            And lastly, here’s one from TImothy, a man before my own name. Doesn’t this sum up the view of Sodom you get through your Internet window on today’s world?

            But realize this, that in the last days difficult times will come. For men will be lovers of self, lovers of money, boastful, arrogant, revilers, disobedient to parents, ungrateful, unholy, unloving, irreconcilable, malicious gossips, without self-control, brutal, haters of good, treacherous, reckless, conceited, lovers of pleasure rather than lovers of God, holding to a form of godliness, although they have denied its power; Avoid such men as these.

            • I am afraid that it is the politicians of today (the liberal ones at that) and the economists who are saying that people can live forever on earth. They are claiming that we could even have power over the climate, if we would just change our evil ways.

            • I genuflect to your holy knowledge Tim, a part of my upbringing that was missed out on obviously. It wasn’t till much later that I figured out why mom and dad packed me off to sunday school regularly to have free sunday mornings without me around. And ignored my protests against it.

              A new church has opened 1/4 m from me, in what used to be a car sales building. A sign of the times maybe?—I think I should get myself over there.

              I have read the prophesies. I think those old guys were just very good seers. I’ve seen that in RL, and there doesn’t seem to be any explanation for it. Which I suppose is why the god-tag was attached to it.
              Really scary when you have politicians who want to hasten all this stuff, while at the same time remain convinced that they will have eternal life somehow. (which is what I meant about the forever thing. I didn’t put it over very well)

            • I find it interesting that the book of Revelation talks about the collapse of ancient Babylon, with its falling prices, even for slaves, which were the energy products of the day. Seems to do better than today’s economists. Revelation 18:11-15

              11 “The merchants of the earth will weep and mourn over her because no one buys their cargoes anymore— 12 cargoes of gold, silver, precious stones and pearls; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble; 13 cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and human beings sold as slaves.

              14 “They will say, ‘The fruit you longed for is gone from you. All your luxury and splendor have vanished, never to be recovered.’ 15 The merchants who sold these things and gained their wealth from her will stand far off, terrified at her torment. They will weep and mourn . . .

              I find the Bible interesting just from the point of view of how a self-organized religion changes over time, as more energy consumption per capita comes along.

              Too many people read this stuff as a one time for all, declaration of how God says we should live. Instead, it really represents the collective wisdom of the people of the day as to the best way to live, given the available energy supplies per capita, the need to keep population from falling, and a need to sort of get along peaceably with each other. These collective insights change over time, as the Old Testament unfolds and the New Testament is added and as conditions change. At the same time, insights from other religions around the world intermix with Judaism and vice versa.

              Of course, an issue that seems to get people upset is that as the world changes, cultural practices need to change. So blindly following prior religion/cultural practice misses turning points. For example, any group that allows multiple wives per husband is likely to have a very high birth rate because rich men can marry multiple wives, and the children of these wives have a reasonable chance of living to maturity. Poor men can never afford a family. This seems to be why world population growth continues to rise.

              I never remember seeing any Biblical directive that says, “OK now stop having so many wives.” Without any directive stopping the practice of multiple wives per husband, Moslems (who probably lived where a higher birth rate was needed) could continue to allow multiple wives per husband. Muslims also seem to encourage large families.

            • Harry McGibbs says:

              Re Sodom, I was amused to see in July that it was the location of Israel’s new national record for heat:

              “The heat wave that swept Israel on Wednesday reached its peak at Sodom, near the Dead Sea, where the mercury hit 49.9 degrees Celsius (almost 122 degrees Fahrenheit). This is the highest temperature ever recorded since Israel was founded in 1948.”


    • Xabier says:

      He has the face of a fanatic. Such types will only proliferate, unfortunately. Rising tide of irrationality and violence.

    • Tim Groves says:

      We have to ask, why is this guy on TV? Why is the BBC giving him the oxygen of publicity and the stamp of respectability?

      After all, they wouldn’t give this degree of airtime to sensible realists such as Gail or to Norman, for instance, whose views, while deserving of a wide audience, simply don’t fit with the narrative the Beeb is pushing.

      And if we rummage around a bit, we find that Extinction Rebellion are funded from high up in the globalist firmament by billionaires out of their small change—including some Big Oil money, which is just what I would have expected.

      A group of wealthy US philanthropists and investors have donated almost half a million pounds to support the grassroots movement Extinction Rebellion and school strike groups – with the promise of tens of millions more in the months ahead.

      Trevor Neilson, an investor and philanthropist who has worked with some of the world’s richest families, has teamed up with Rory Kennedy – daughter of Robert Kennedy – and Aileen Getty, whose family wealth comes from the oil industry, to launch the Climate Emergency Fund.

      Neilson, who has worked with figures such as Bill Gates and Richard Branson, said the fund was inspired by Swedish teenager Greta Thunberg and the Extinction Rebellion protesters in the UK in April.

      Neilson said the three founders were using their contacts among the global mega-rich to get “a hundred times” more in the weeks and months ahead. “This might be the single best chance we have to stop the greatest emergency we have ever faced,” he told the Guardian.

      The new fund has the author and environmentalist Bill McKibben, who set up, and David Wallace Wells, who wrote international best seller Uninhabitable Earth, on its advisory board.

      Now that ER have declared themselves set on criminality, perhaps Attorney General William Barr will launch an investigation, seize the assets of the funding “philanthropists”, and send these enemy combatants to Gitmo.

      • Xabier says:

        Will they become Maoist action groups of vigilantees?

        Best get away as far as possible from the mad, sick, apes of the cities…….

      • thanks for your nice words Tim.

        while Hallam may be wild and wacky in his outlook, he does make statements that are broadly, if loosely, based on unpleasant reality.

        He quotes Gandhi’s salt march, and the civil rights marches, as if they were somehow compatible with what we face right now, and if we take imminent action of collective disobedience, things will change as they changed in the past.

        Gandhi’s salt march, in the grand scheme of things, was of no consequence to the rest of the world. The British left India to get on with life. They split the country who now threaten war with each other. Both nuclear armed, overpopulated and running out of water.
        So much for the importance of salt.
        That might be said to be the final consequence of the salt march. Hallam doesn’t go there.

        The British did bring in a certain rule of law based on common sense.

        Climate change, on the other hand, is of deadly consequence to the rest of the world. It’s in our collective face, up close and personal.

        We MUST do something. Hallam rants that governments are lying to us, so we must protest violently. Change our government. But governments have no more idea what to do than we do.

        Governments are not lying to us, we are lying to ourselves and to each other, constantly. Babies keep getting born.


        Because humankind cannot resist the urge to reproduce. Moms and Dads might read about global warming and stuff, but the face of a healthy baby overrules everything.
        It will be OK….2100 can’t be as bad as all that, it will be the same as now but a bit warmer maybe.
        Famines happen to other people 000s of miles away.
        I’m witness to that–my Grandkids ignore what I write, and enjoy life.

        As to big time spending—the need to do that can be equated to restoring Notre Dame—$100m in a week. Sinners consciences have always been a cash cow.

        Billionaires are as terrified as the rest of us, so support ER as a way of ‘doing something’. though they know not what. They know that bunkers are ultimately useless.

        Extinction rebels go home and cook food, switch lights on like everyone else. What else is there?

        $billions won’t change that

        This isn’t a problem that can be solved with money, because money is just a token of energy exchange, the stuff that got us into this mess in the first place. Neither can it be solved with votes. Trump is your mark of desperation, symptomatic of our predicament.

        I read today that Singapore is spending $70bn on flood defenses—what they are really doing is spending $70bn worth of fossil fuels in order to counteract the effect of——fossil fuels.
        genius or what? And Singapore is just a dot on the planet.

        But if we cease, as Hallam says we must, there will not be a bit of pain like the salt marchers got, but total breakdown of civil society as we know and live in it.

        Even Hallam refuses to acknowledge that, even though he is aware of it–he seems to be calling it a bit of pain and discomfort.

        • Are you volunteering to go to Africa and explain to these folks the problem with having so many children? How about the Moslem countries that are having a lot of children? For instance, Iraq. I don’t think the problem is fixable.

          Education of mothers doesn’t seem to help. I think it mostly teaches the mother how to help her children survive to adulthood.

        • Tim Groves says:

          Norman, I agree with so much of what you say about the inevitable as laid out in The End of More (which is on my bookshelf right next to Malthus’s Essay on the Principle of Population and a short 1997 book called Standing Room Only—Our Overcrowded Planet by Douglas Ashmead), which is one of the reason’s I like to poke you in the ribs from time to time. My feeling is the ideological divide between us is but a fishpond beside the village green and that we both sit back and laugh or at least smile at a lot of the same people on the other side of the Grand Canyon.

          One of the areas you and I do disagree on is whether fossil fuel burning is causing sea level to rise. There are a lot of links in the chain of logic that claims they do. I think some of those links are broken. I don’t deny sea level is rising and that lots of coastal cities are going to need better defenses if people are going to continue living there.

          However, I am going to gently poke you in the ribs again now by suggesting that it is interesting that even as the sea level is rising overall, on the average, in many places sea level is or has been falling. I don’t know if the link to the map below will be reproduced, but it shows sea level has fallen along almost the entire Pacific coast from southern California to northern Chile. This is absolutely not what we would expect to see if sea level was rising at a ferocious rate.

          It’s a NASA map, and the caption says was satellite data of changes in sea level rise from 1998 to 2003. The yellow and red colors indicate areas of rising sea level and the green and blue colors show areas of falling sea level. This shows how in some areas sea level will fall, although the majority of regions are facing rising seas.

          • as far as a poking is concerned–always feel free. I only pretend to know everything, when pressed I readily confess that I don’t. There are just so many variables in everything that gets discussed, rib poking punctures my dogma balloon which can easily get over inflated if you don’t do that.

            As to sea level rise, warming water increases in volume.

            the seas are all interconnected, so one might expect, in a 24000m circuit that there would be slight anomalies of a few cm in certain regions. Why I don’t know. Different gravitational forces in the earth’s crust maybe?
            The only other explanation would be that the American landmass acts as a dam, counteracting the spin of the earth, thus forcing water to ‘pile up’ from time to time, then level out again. On the earth scale this would take decades probably.

            Certainly, the California-chile line coincides with known earth movements along exactly the same line. Too much so to be mere coincidence I would have thought.

            So that’s 2 explanations, offhand I cant think of another one.

  24. Dennis L. says:

    Assuming the useful accounting life of the plant was the additional 15 years of license time, the previous lifetime of the plant should have been expensed at a greater periodic rate which means there was less return on investment than originally reported.

    Apparently this plant is being closed secondary to cheap natural gas which is secondary to shale drilling which appears to be unprofitable at current prices. Exc stock is down which is not consistent with other utilities as it pays a dividend so here is a possible source of some shale drilling funds. The wealth exists in the form of the power plant, the cash flow to support the investment is not there. It is possible we are sacrificing wealth for current cash flow, bringing the future cash into the present at the expense of installed wealth. The actions of a prodigal child as it were.

    If this is correct, it leaves our children with even less than assumed. A guess is most of the cash is going into pensions which require close to a 7 percent return to even operate, the old are literally taking from the young which one could hypothesize is the real reason for the progressives being resentful for want of a better word. In an earlier time, the old never got mature as our current population and worked until they passed; I am old, bummer.

    Interesting connections Gail has pointed out between finance and energy – it seems to be more in the rate of extraction than the absolute amount of energy available.

    Dennis L.

    • I imagine the pricing of intermittent wind and solar is playing a role as well. This pricing drives nuclear out of business, even when the plant is producing much better quality electricity.

  25. It's different this time....No says:

    Fox News proclaims…

    The health of Europe’s largest economy is in trouble as Germany teeters on the edge of a recession.

    A decline in exports dampened the German economy, which shrunk by 0.1 percent in the second quarter of 2019.
    “Germany is in terrible shape with negative GDP this week and with their expectations looking for another negative GDP in the third quarter, the Germans are going to be forced to open up their pockets and do fiscal stimulus,” NatAlliance global fixed income head Andy Brenner told FOX Business’ Liz Claman on Friday.
    “In Europe, its crisis mode.”
    NatAlliance global fixed income head Andy Brenner
    Concerns over a recession have the German government reportedly under pressure to ditch its self-imposed balance budget, or Black Zero rule, and finance more fiscal stimulus with new debt. The country’s 10-year Bund yield, which hit an all-time record low earlier in the day, responded to the stimulus, bouncing up slightly

    It’s got to be true

  26. It's different this time....No says:

    Doomers and preppers here is your plan….3 car batteries and generator powered by makeshift bicycle power and a couple of solar panels and items found in the local town dump.
    Police: Fugitive hiding out in wooded bunker for 3 years

    You can run and hide, but eventually you will be found!

    Nice video and a good plan for those in the woods of Wisconsin bioregion.

    • I agree, this is a nice video. It takes a nice land fill and fair amount of knowledge about wiring, construction, and other things to pull this off.

      • Harry McGibbs says:

        “In theory with oxygen, food and water there’s nothing stopping you from living for years underground – it just depends on how large your food supply is, not to mention dealing with the psychological effect of confinement and no sunlight.

        “…as our volatile world spins into an increasingly uncertain future, more and more people are forking out for disaster-proof homes…”

  27. It's different this time....No says:

    President Trump states we have no choice to re-elect him to a second term to save our 401k plans and retirement….I beg your pardon, Donnie…
    Trump on 401ks: Vote for Me or It’s ‘Down the Tubes’
    President tells New Hampshire campaign rally crowd Thursday, “you have no choice but to vote for me” or your 401k will crash along with the stock market

  28. Jan says:

    I’d like to put attention to the EU modellings of future energy use
    They assume an uncoupling of GDP and energy use due to technological development and ecodesign regulations. From my point of view they ignore that energy intensive industry is more and more outsourced to China and mistake that for efficiency gains. But that’s hard to prove.

    • Duncan Idaho says:

      “The #US Gross National #debt has jumped by $363 billion in the two weeks since President Trump signed the law that suspended the debt ceiling. That’s up by $1.01 trillion from 12 months ago. ”
      A trillion? Why not?
      I guess it doesn’t matter.
      Party on!

      • denial says:

        Can you provide a link to that?

      • Davidin100millionbilliontrillionzillionyears says:

        I guess it hasn’t mattered for many years…

        under Obama, the national debt went up $8 trillion in his 8 years…

        do the math…

        party on!!

        BAU tonight, baby!!!

    • The devil is always in the details.

      If a person sets out to prove something as true, there is a pretty good chance he/she can reach the desired conclusion, especially if there is a funding agency who wants a particular result. After being around a while, a person gets a little cynical. I learned a sort of actuarial word very early: “uncalculate” What is the desired result, and how does a person work backward to get it? For example, when working with detail data, there is always a lot of variability. So if someone is wanting a rate increase of, say 10%, there is very often a way to get to that result by the correct choice of number of years in the experience period, how much “credibility” to an individual territory’s data vs. state data, and the trend factor. If you don’t really know the answer, there is usually a tendency to select factors that will give what appears to reasonable indications.

      Obviously, when a person puts together a report, a similar approach works. This is especially the case, when someone is being paid for the report.

      • Rufus says:

        I work in an insurance company in the IT department. Someone told me this joke :

        You ask “how much makes 1 + 1 ?” to an IT engineer, an accountant, and an actuary”

        The IT guy answers : “1 + 1 equals 1.99999999999”

        The accountant (not sure about the translation in English) : “Notwithstanding any errors or omissions, 1 +1 makes 2”

        The actuary answers : “How much do you want it to be ?”

        • I once saw an actuarial article that started with the humorous statement, “One plus one equals three, for sufficiently large values of 1.”

          There is a lot of judgment that goes into actuarial assumptions. It is hard for what the employer or client wants not to at least somewhat affect selections. It is nearly always possible to give quite high weight to “selected last time,” so as to not move the indications too far.

          I think also that there is also the issue of how self-organizing systems work. Suppose that all of the pension actuaries around the early 1980s were forecasting a combined real GDP and inflation growth rate of 10%, and because of this, rates of returns on invested assets of about 10%. They also looked at the recent past, and saw bonds with 10%+ interest rates. Even home mortgage rates were up in this range. (I am not a pension actuary, and I don’t know the real values.)

          Suppose, too, that some actuarial firm had the foresight to see that these high interest rates could never last. Suppose that instead, it was advising its clients that the interest rate they should assume on investments needed to be a whole lot lower, say 6% or 5%. This would mean that pension funding indications would need to be a whole lot higher. It would also mean that pricing of long term care policies (one of the things GE is having trouble with) would need to be a whole lot higher. If this were an independent actuarial firm, how many clients would that firm have, once it radically lowered its interest rate assumptions, relative to what other actuarial firms were showing? I would guess that the clients would all move to the firms that gave more acceptable indications. And peer pressure within a company would act the same way. So the high interest rate assumptions would tend to win out over the low interest rate assumptions.

    • Well, that personal aggregate consumption could be slashed down profoundly is obvious, e.g. electric bicycles used to consume ~1:10 vs electric cars, now it’s thanks to low cost hightech more like ~1:25 ratio.. if large segment of population uses it as the “last mile” transport solution the savings or extending fossil fuel endowment potential is remarkable.

      Now, completely different question and usually not modeled as Gail mentions is sudden change in aggregate demand from such disruption, the old dying industries (employers, employees, suppliers, and financing angle of it, ..) can’t just vanish into the night without nasty feedback loops..

      • Our problem is inadequate demand to keep prices up.

        Slashing personal consumption doesn’t help. In fact, it works the wrong direction.

        Even the so-called renewables need the fossil fuels, if they are to be available. Collapsing fossil fuel prices cause the whole system to collapse, including renewables.

  29. Tim Groves says:

    When BAU ends, I expect it will go out with a bang or a loud thump, not a whimper, and with very little advanced warning, once the plunge protection team can no longer stop the plunge. A bit like this guy.

    Spanish extreme sports YouTuber Ruben Carbonell tragically died last Wednesday after his parachute failed to open while attempting a daredevil 150ft jump. The 29-year-old sneaked into a cement factory in Alicante, Spain, intending to jump from the factory’s giant chimney, but his risky stunt turned out to be fatal when his parachute failed to open.

    Spoiler alert: The splat isn’t shown in this video.

    • It's different this time....No says:

      Parachutisme Adrénaline in Trois-Rivières, Quebec.
      A Canadian woman survived a 5,000-foot fall from a skydiving plane after her parachute failed to open in Trois-Rivières, Quebec, on Saturday.
      The 30-year-old woman hit trees as she landed in a wooded area and is now recovering in a hospital with several fractures, including a broken vertebrae, CBC News reported. Police said her life is not in danger.
      It’s a miracle,” bystander Denis Demers said. “I don’t know how a person can survive a fall from an airplane like that.
      Skydivers freefall at a speed of 110 mph, which is approximately 1,000 feet every six seconds, according to the United States Parachute Association.
      In 2018, the association recorded 13 fatal skydiving accidents in the U.S. out of around 3.3 million jumps, which is the lowest number in the sport’s history. It equals one fatality for every 243,669 jumps.

      RIP Ruben Carbonell

    • doomphd says:

      there are no old bold base jumpers.

    • Chrome Mags says:

      When you watch parachutists, you’ll notice once they pull the rip cord it deploys but doesn’t slow the person’s descent until suddenly it fills with air, making an audible sound, slowing the fall. Essentially it becomes a question of; will or will it make that sound on shorter falls? In this case it didn’t. But at 29 years old? Why would someone take that chance? Oh, because it was such an adrenaline rush!

  30. Harry McGibbs says:

    “Donald Trump is reportedly worried an economic collapse could dent his chance of re-election in 2020 after a change in a major market indicator sparked fears of a US recession.

    “The US president has spoken with a number of business leaders and financial executives this week to gauge their thoughts on the market’s volatility, according to White Housesources.”

  31. FEDERICO ARTES says:

    The world is flood with easy money generated during the last decade due to the inefficient monetary policy. Useless money with no clear investment horizon to create wealth. This easy money is lacking of ideas to create wealth and just more and more inequality. Is just about a race to see who holds more money and a perfect excuse to avoid increasing wages. Is all about a big lie, where sovereign states have lost their ability to control anything.

  32. Harry McGibbs says:

    “With entering Myanmar, African Swine Fever is continuing its spread through South East Asia. In addition, Russian authorities have reported that the virus has been found in frontier cities close to the border with China. Myanmar is the 4th country in South East Asia to have reported ASF, after Vietnam, Cambodia and Laos and the 8th in the whole of Asia, if also Russia, China, North Korea and Mongolia are taken into consideration.”

    • This virus looks like it is very difficult to stop. I expect that the amount of soybeans and grain needed to feed pigs worldwide will fall. Diets will tend to move away from pork. To some extent, more chicken and fish will be substituted, but “using less” or “going without” is another option. Meat-stretcher recipes will become popular.

      With a virus like this, we don’t know where it will stop. Will it somehow make its way to Europe? or to the US? In the US, we have so many pigs in indoor units that, as long as electricity is available, can continue to operate. Of course, if electricity becomes interrupted frequently, it seems like US pork supply will fall.

      • Harry McGibbs says:

        It has already reached Europe. I have no idea why the article I posted didn’t mention this:

      • Xabier says:

        More dogs will be tortured and eaten in China, no doubt. Pet kidnappings will increase.

        • TIm Groves says:

          The Chinese may even start eating each other!

          If reports in today’s Mirror and Mail are to be believed, Chinese police are training at sticking terrifying giant forks in protestors a***s and turning ’em over until they’re done.

          • Chrome Mags says:

            More like a 1/4-1/3 curve and a great idea for security forces to maintain distance yet control of an individual.

          • Xabier says:

            Very droll. And a third copper takes the organs out and sells them?

            I think the Met should get them in London, it would add to the farcical nature of almost everything in Britain now.

            Rather like the tools used to bring knights down off their horses invented by the Flemings in the Middle Ages.

          • DJ says:

            How do you get the concerned citizens to lie down? Is it electric pitchforks?

            • Chrome Mags says:

              “How do you get the concerned citizens to lie down?”

              All they have to do is use the 1/4 prong to pull on the lower part of one leg (knee or calf) and whoosh, the person goes down. There’s a move in Tai Kwan Do and other martial arts to do the same by taking a foot and pulling on one lower leg. It works either way. I knew a guy and that’s how he won tournament and street fights. He’d use a foot to push on the back of a knee, then when the person got off balance he’d pull on a leg and down he’d go. Once a person is down he usually gives up fast because its a very vulnerable position. Remember, these are Asians – they know these tactics.

  33. Harry McGibbs says:

    “New Zealand’s manufacturing activity contracted in July for the first time since 2012, a survey showed on Friday, as new orders and employment conditions worsened.”

  34. Harry McGibbs says:

    “Mexico’s central bank on Thursday cut its key lending rate for the first time since June 2014, citing slowing inflation and increasing slack in the economy, and fueling expectations that further monetary policy easing could be on the way.”

    • Harry McGibbs says:

      “Argentina’s historic market collapse has sparked fears that South America’s second-largest country is on track for yet another default.”

      • Surprise!

      • its as well to bear in mind that when Argentina went into a state of collapse , Galtieri started a war to divert people’s attention away from the problem

        Its a familiar tactic by nutcase presidents

        • War is a tried and true way to increase government debt and provide employment to young people. I was utterly amazed at how much the US’s GDP rose when it entered WWII. All of the newly employed women helped a lot too!

          • Rodster says:

            There’s some truth to the saying: “All wars are Bankster Wars”.

          • HDUK says:

            I read or watched (but can’t remember where) that the US used a third of its oil reserves in WWII which would explain the huge increase in GDP also. Increasing use of cheap energy per capital as always is the driver of ‘real’ economic growth. It may have been in the ‘Crude Awakening’ film but I have watched and read so much about energy since I realised its importance I have lost track. It was one of the reasons why chemical farming became so prominent as all those chemical industries had to be maintained due to the jobs and profits they created. TNT became Fertiliser.

            • Interesting!

            • doomphd says:

              That’s an amazing amount of oil resources to use, when the USA was not even attacked save for Pearl Harbor. I think it shows the value of education and creativity that the Germans once had, to scare others to consume so much of their valuable resources in defense. Principally the A-bomb, but they were also working upon intercontinental ballistic missiles to deliver, and almost got them. The Japanese had a few innovations as well, in submarine warfare.

            • Consuming all of these resources, by putting a lot more people to work, was what as needed to get the US out of the depression.

              US field oil production was as follows, in thousand barrels per day:

              1943: 4,125 (about the same as 1940)
              1944: 4,584
              1945: 4,695
              1946: 4,749

              Crude oil imports were very low:

              1943: 38
              1944: 122
              1945: 204
              1946: 236

              Instead, it looks to me as though US coal mining increased, and oil production very gradually increased. The capability to increase coal production was already in place; all that was needed was the higher prices that war would offer. (Production had dropped during the Depression because of low demand.) Oil needed a lot more infrastructure to increase by much.


            • Jan says:

              There are ideas that WW2 was influenced by resources. Reportedly Hitler started march on Stalingrad in winter because of declining oil delivery from Romania. Stalingrad failed on logistic problems, they partly used horses. There is a guy on youtube working on this. Of course energy shortages might have helped to the disastrous situation of unemployment that got Hitler to power. Generally people following such ideas are suspicious to be exculping Hitler.

            • I pointed out earlier that Britain was facing Peak Coal at the time World War I broke out. Germany was facing Peak Hard Coal when World War II broke out. They both had problems with prices too low to support more extraction.


        • neil says:

          Relax. Argentina has a crisis and a currency collapse every few years. That’s when it’s not having them more than once in a year.

          • Tim Groves says:

            Quite correct. Argentina is one of the more financially volatile nations. They get a right wing government and money flows into the country. Then they get a left wing government and the money flows out again.

            By the way, Leopoldo Fortunato Galtieri Castelli was in power for just under six-months, but he will be remembered long after many of Argentina’s more illustrious leaders are forgotten because he came up against the Iron Lady, aka Attila the Hen. She was only a grocer’s daughter but she taught Sir Geoffrey Howe.

          • Duncan Idaho says:

            Last time I was Fly Fishing in Argentina, nobody noticed.
            Good wine, beautiful women, and great fishing.
            Plus, small population. Going back the States was a drag.

            • hkeithhenson says:

              “small population.”

              Which brings up a question: how big a population must we have for a civilization of our level or higher?

              I suspect the population required is rather high, at least if you want things like computers. There are only 3 large semiconductor fabs in the world, which indicates that a world with a billion people in it might not be able to make computer chips.

            • the one we have right now

              if you can’t understand that, then imagine a population decreased by, say half, just for the sake of discussion. A few million won’t have any effect (ref. world wars)

              to do that you have to get rid of 3.5 bn people over the next (say) 25 years.

              Which means there will have to be some kind of ’cause’ to make that happen.

              When that ’cause’ kicks in, (Methane release–rapid overheating most likely), then the level of panic, and wars of denial will finish off civilisation altogether, because the infrastructure that holds it all together will cease to exist under those conditions.

              I call it scrambling towards the stern of the Titanic

              You might be left with 1–2 bn, but they will not have the technical infrastructure to rebuild any kind of civilisation as we know it.

              After that, disease will reduce numbers to roughly pre-industrial levels. (basic healthcare –old age care will become impossible)

              I’d like to be proved wrong—but it would have to be more than just saying so, and not bouts of wish science

            • If population can be greatly reduced, and the globe is much warmer, perhaps coal in Alaska and elsewhere in the Arctic Circle will become economic. Then the world economy can perhaps grow again. It is hard to understand how a self-organizing economy really works. This is the way I can see more fossil fuels being extracted.

            • hkeithhenson says:

              Gail, perhaps I have missed something. Fossil fuel requires extraction to make it worth something in the economy. But it will not be extracted unless it costs less to extract than what it can be sold for.

              Re Alaska, the coal mines in the US have a shipping advantage and there is a lot of coal left.

              Also, looking into the future for conditions for a rebirth of coal . . . . that seems really unlikely.

            • We know that there is a lot of coal in Alaska, but it has never been economic to mine.

              If the world becomes a very different place (much fewer people in total, much warmer in Alaska) it may possibly make sense for a new reorganized economy to take place. If there are actually more people in Alaska, raising more food there, they may need the supplies (which are now local coal supplies, instead of high-cost distant supplies).

              Coal can be very inexpensive, if it is close to the users and no one worries too much about fighting the pollution it causes.

              Sorry I wasn’t very clear.

            • hkeithhenson says:

              “they will not have the technical infrastructure to rebuild”

              Why? Back in the 1970s, Herman Kahn figured out how fast the US could recover from a nuclear war that killed the cities. He considered the industrial capacity outside the cities as “B” country and the cities as “A” country.

              Looking at the history of “A” and “B”, “A” grew from “B” size in around 20 years (as I recall, it has been a really long time since I read this).

            • as you so often prove beyond any shadow of a doubt

              (and I mean that in a genuine sense)

              it’s possible to calculate a proof of just about anything—provided you don’t factor in everything.

              luckily I was hopeless ar arithmetic

    • Oil exporters need high oil prices. Mexico is struggling with both low oil exports and low prices.

      • Denial says:

        Yes but how is the Bakkaen and Eagle ford shale able to make money? Those both seem like intensive and expensive areas to pull oil out of….

        • You don’t have to make money. You just have to convince money that the price of oil will (of course) go up, and that at a high oil price, the reserves/resources you have in the ground will make a lot of money. So people will buy newly issued shares of stock, or bonds, even if you have recently filed for bankruptcy. It is crazy. Banks may even lend you more money.

  35. Harry McGibbs says:

    “Government bond yields in the euro area hovered near record lows on Friday, reflecting heightened expectations for European Central Bank easing soon and concern about global recession risks… ECB policymaker Olli Rehn on Thursday flagged the need for a significant easing package in September, sending yields across the bloc to new lows.”

    • Harry McGibbs says:

      ““Negative yielding debt has quickly become a new normal, which is a staggering place to find ourselves,” said David Absolon, investment director at Heartwood Investment Management, the UK asset management arm of Sweden’s Handelsbanken.”

      • Harry McGibbs says:

        “Two decades ago, well over half of the global bond market boasted yields of at least 5 per cent, according to ICE Data Indices. The post-crisis splurge of central bank bond buying and rate cuts lowered this to under 16 per cent a decade ago, but investors could still find plenty of higher yielding debt. Today, a mere 3 per cent of the global bond market yields more than 5 per cent — the lowest share on record.

        “Indeed, truly high-yielding debt is now almost an endangered species. Bonds with yields of more than 10 per cent amount to just 0.4 per cent of the global fixed income universe, according to ICE.”

        • I’ll bet that return on investment was a whole lot higher two decades ago as well. The price of oil two decades ago was very low. It didn’t take much investment to buy the equivalent of a barrel of oil. Now the price is something like 2.5 times as high (I didn’t actually calculate this–it might be a little off.)

      • Just remember to pass the negative debt around quickly, in the hopes that the negative yield will fall even lower, sort of like the can of sardines in the link a couple of days ago.

  36. Harry McGibbs says:

    “Negative interest rates, toppling bond yields, greater regulation and rising recession signals have wiped out most of the value of European banks, with their shares now at meltdown prices approaching the days of the Berlin Wall…

    “That means the banks are worth now what they were when Greece, Ireland and Portugal needed bailouts, Cyprus ordered its banks to seize some deposits and Spain’s banks were saved from collapse only by a government rescue.”

  37. Harry McGibbs says:

    The risk of damage to supply-chains in financial crises/recessions rarely get a mention in the press:

    “In a recession, manufacturers have to be careful about the impact of slowing down payments to key suppliers. If you slow down how fast you pay them, their financial integrity may be impacted. Many global supply chains rely on Chinese suppliers and contract manufacturers. China’s industrial output slumped 4.8% in July, for its’ weakest reading in 17 years. Paying small suppliers more slowly in at risk economies could tip them out of business.”

    • I don’t think the issue is just slowing payments to key suppliers.

      The issue is that key suppliers likely are hitting turbulent times as well, because all of their customers are cutting back on order. Doing this more quickly than others sounds good, but it pushes the bankruptcy time of the supplier forward. Or the supplier will have its credit rating downgraded, and not be able to get Letters of Credit.

  38. Harry McGibbs says:

    “The worry I have is not so much the vagaries of the stock market, but rather the perception of the future direction of the stock market and its impact on hiring… When the CEO and upper management believe that the economy will slow down, they will hit the brakes. This entails laying off employees, instituting a hiring freeze and—through attrition—when people leave, they won’t be replaced. When enough companies do this, it becomes a self-fulfilling, downward spiral.”

    • Harry McGibbs says:

      “Truckers have for months been sounding the alarm about a “bloodbath” in their $800 billion industry… Trucking is often looked at as a leading indicator of where the rest of the economy is headed. As 71% of America’s freight is moved on trucks, companies foreseeing needing fewer trucks is typically an omen of an economic downturn: If manufacturers are producing less and people are buying less, there’s less of a need to move goods.”

      • It wasn’t very long ago that the trucking industry ramped up demand by the implementation of a rule that trucks needed to have a monitoring system that would record accurately how many hours truckers worked. When this happened, there was a big demand for additional trucks, because truck drivers had been driving more hours than safety standards allowed. So many more trucks were built and truck drivers hired for these trucks. Needless to say, this raised shipping costs.

        Working in the opposite direction was the inability of customers to really afford higher shipping costs. They would use rail instead, for example. Also, China and other developing countries increasing ban on recycling is reducing truckloads of recycling that need to be shipped. They were sent to a local dump instead (my guess).

        And recently, I read about a proposed change in the law that would let truck drivers drive more hours. Many of the trucks are operator-owned. With the reduced hours, the truck drivers were covering fewer miles, so they were getting paid less by their employers. The truck drivers were having trouble making their monthly payments on their trucks with the more limited hours they could drive. Of course, if truck drivers can drive more hours, then we are back to the situation where fewer trucks are needed in total.

        So everything is conspiring to reduce truck demand.

      • Few day ago there was averted (for now) national shutdown strike of truckers – somewhere down there in the ClubMed area, Portugal?

    • Right. There is a problem of self-fulfilling prophesies.

  39. el mar says:

    The whole so called civilisation is like an indoor firework. Both are powerd by finite explosive, flammable substances. They start and they end – like any dissipative structure powered by finite high density energy. First like “musical chairs” with fights about the usable remainders, later like a seneca cliff. At last, there is nothing you can do about it!

  40. It's different this time....No says:

    This is a classic from Ibon at Peak Oil News that I like to share with my fellow OFW readers

    “Considering what this site is about may I remind everyone that an extended global recession will result in demand destruction and scale back consumption and CO2 emissions a zillion times more effectively than your most enlightened international climate accord.”

    Exactly! Unfortunately, that isn’t the whole picture and I suppose there are many other spin offs that could be applied…like human suffering, international conflicts, government, financial, societal collapse, ECT, ECT …

  41. denial says:

    Maybe so the last time feels like we are in 1930 all over again…. here is the last time we did tariffs

  42. Denial says:

    No worries CNBC and Bloomberg both saying everything is ok panic is overblown! Everyone back in the boat!

    • If people weren’t on edge already, it would be easier to believe that everything is OK.

    • Harry McGibbs says:

      CNBC are talking about the US economy though:

      The Eurozone, Australia and NZ, the emerging markets + China, oil producing nations and most of the third world are telling a different story.

      • Harry McGibbs says:

        This article on CNN takes a more bearish tone:

        “…This is a very tricky environment for investors to navigate through. History suggests there is time to take advantage of future rallies to prepare for the next recession and raise cash before a major market downturn does unfold. But global economic data suggests a global recession may come a lot sooner than anyone anticipated.

        “And this reveals an uncomfortable truth: We’ve never faced a recession with so much debt and so little Fed ammunition available and with negative rates still in effect in many countries. There’s no playbook for this. Historic data may be of little predictive use.

        “A sudden end to the trade deal may be imperative — without it we don’t have much time before the next recession begins.”

      • Jan says:

        That is not the case, Germany is in a technical recession and people all over Europe are facing a backlash in lifestandards. Great Britain is more or less ungovernable, so is Italy and Spain, Germany needed half a year to form a government, Austria has an expert government, France only covers up problems with Macron. Belgium and the Netherlands could fall to pieces and Eastern Europe is on the authoritarian path.

        • when economic systems have a surplus of energy input, the government could be a troup of performing monkeys and most people wouldn’t be aware of the difference.

          Problems only arise, in any serious critical sense, when there is a period when energy is in short supply for a prolonged period of time.

          It is then that politicians run around like headless chickens because they do not know what to do about it than aforesaid monkeys would–or you and me for that matter.

          in the past fluctuating economic conditions have caused disruption (eg 1974 Arab oil embargo) but then the oil pump is reprimed and things get back to normal;

          this time it’s different.

          there’s no cheap surplus oil to reprime the pump with, and governments are fully aware of it—but ‘growth promise’ is all they know, so they keep repeating that with fingers crossed, while people sense that the system is screwed up.
          fracked oil will keep the system going, but fracked oil is produced at a net loss, Few can accept that.
          UK oil costs $53 bb to produce, but current market price is only $55–so that’s a dead loss.

          Europe (EU) is falling apart because it was created on the promise of infinite prosperity (as opposed to centuries of war)
          All our glorious leaders believed that–and almost everyone else. The lightbulb only flashed over my head about 5 years ago when I figured out what was wrong.
          (After all–why couldnt we all love one another?)

          Right now the masses are listening to petty fuh rers because, just like last time, there are no other leaders offering solutions.
          The last one sold the Germans a Ponzi scheme.
          This time will be no different

  43. GE Is New Target of Madoff Whistleblower
    Harry Markopolos releases report on GE’s accounting, claiming its cash situation is far worse than disclosed and GE needs to boost insurance reserves

    Harry Markopolos, who warned securities regulators about the Madoff investment scheme, is taking issue with how GE accounts for its long-term-care insurance holdings and for its Baker Hughes oil and gas business.



    GE shares tank more than 13% after Madoff whistleblower calls it a ‘bigger fraud than Enron’

    170 page download report with allegations is available at this link.

    The report is titled, “General Electric, a bigger fraud than Enron.”

  44. Volvo740 says:

    Lately I’ve really been enjoying interviews with Tim Garrett. Here are a couple:

    It seems like his views are really in line with yours Gail, and in his analysis he is comparing humanity with a heat engine, an organism, or a growing child at time. Usually with one foot in thermodynamics.

    Highly recommended!

    Here is a link to one of his papers on this topic as well:

    “In what we might call the economy, energy consumption sustains all of civilization’s existing internal circulations against a continuous dissipation of heat at rate d and a material decay at rate jd. Civilization radiates heat to space while we and our physical infrastructure fall apart.”

    • Thanks for the tip!

      • Bob Lapsley says:

        You may already be familiar with Matthias Ruth. If not I think you might be interested.

        • I associate Ecological Economics with Robert Costanza and the idea that it is possible to be able to put a dollar value on the ecological services of, for example, the Gulf of Mexico. When the BP oil spill occurred, there estimates by related researchers that said that the gulf would never recover (or only over a very, very long period) and that the environmental cost would be astronomical. I refused to run these article on The Oil Drum when I was editor there.

          I hope that Matthias Ruth is better. The Biophysical Economists (the EROEI economists whom I have been loosely associated with, but disagree with) and the Ecological Economists have not gotten along well, for quite a long time. We shared a conference once in Vermont.

  45. Yoshua says:

    “ECB’s Rehn makes big promises. Says stimulus package in Sep may beat expectations. “When you’re working w/ financial markets, it’s often better to overshoot than undershoot,” Mr. Rehn said.”

    The European bank index dropped to that critical support line that has always led to an intervention…

  46. Harry McGibbs says:

    China is seizing upon Trump’s vacillation on some tariffs and the weakness in the the stock markets he so values, to reassert themselves:

    “China on Thursday threatened retaliation if Washington steps up their war over trade and technology by going ahead with planned Sept. 1 tariff hikes on additional Chinese imports.

    “Beijing will take unspecified “necessary countermeasures,” the Cabinet said in a one-sentence statement.”

  47. Harry McGibbs says:

    “Deutsche Bank’s recently announced restructuring meant to correct its decadelong financial woes could ultimately make matters worse. Indeed, it could become even more of a threat to taxpayers, the financial system and the global economy…

    “Reducing capital to increase short-term returns for shareholders is grossly irresponsible. Deutsche Bank is essentially diverting its critical loss-absorbing capital buffer — that would otherwise be available as a source of strength to weather an economic downturn — to placate its angry shareholders.”

    • Harry McGibbs says:

      “A Danish bank has launched the world’s first negative interest rate mortgage – handing out loans to homeowners where the charge is minus 0.5% a year.

      “Negative interest rates effectively mean that a bank pays a borrower to take money off their hands, so they pay back less than they have been loaned.”

    • The title of this article is “Deutsche Bank Shows it Learned Nothing from the 2008 Crisis.”
      In fact, I think it did. The last paragraph says,

      Deutsche Bank’s latest plan proves, yet again, that privatizing gains and socializing losses at too-big-to-fail global banks is alive and well.

      This is the way it always works.

      • Robert Firth says:

        “This is the way it always works.”

        As so often, Gail, a short message that goes to the heart of the issue. Thank you again.

        I would differ only with the word “always”. That is not how it always worked, but rather only how it has worked since 1718, when John Law persuaded a bankrupt French government to issue the first fiat currency of modern times.

        It lasted until June 1720, but Law was a pioneer. Today’s corrupt bankers can spin out the scam for much, much longer.

        “History is indeed little more than the register of the crimes, follies, and misfortunes of mankind.” Edward Gibbon.

      • Xabier says:

        In a declining civilization, vested interests will always be served -and serve themselves -first. No surprise in that!

        Other policies could have been implemented in 2008, but, realistically, the rich were always going to be protected from real losses.

        At some point, however, it all spins out of their control. Somehow, that feels like it is in the air now…..

  48. Harry McGibbs says:

    “When assumptions about how the world works are shattered, a global downturn is often the result. The world learned in the early 1970s that the era of cheap oil was over, in the early 1980s that countries could default, and a decade ago that American mortgages and global banks aren’t safe.

    “Today, a similar rethink of globalization is under way. From Washington to Buenos Aires, nations’ mutually reinforcing commitment to open markets is disintegrating.”

    • Harry McGibbs says:

      “What should worry risk managers is that we are in unchartered territory. According to Sven Henrich, founder and lead market strategist for NorthmanTrader, “We’ve never faced a recession with so much debt and so little Fed ammunition available.” I agree with him that “With negative rates still in effect in many places, there’s no playbook for this. Historical data will be of little use.””

      • Harry McGibbs says:

        “The recession alarm bell ringing in U.S. government bond markets sent investors rushing once more to haven assets, pushing the world’s stockpile of negative-yielding bonds to another record. The market value of the Bloomberg Barclays Global Negative Yielding Debt Index closed at $16 trillion Wednesday…”

      • Robert Firth says:

        “So much debt!” LOL: not as much debt as Septimus Severus, Philip le Bel, or Louis XVI racked up. And we know how well that ended.

        A few home truths. Sovereign debt is never repaid; it is rolled over until it can roll no more, and then it is repudiated. Fiat money has no intrinsic value; it is accepted on faith until that faith has been betrayed too often. Even land is not a safe haven because you can’t take it with you while escaping the revenuers.

        The only safe store of value is what it has been for 4000 years: gold. That is where we are now, and the economists and their forecasts are men and bits of paper, whirled by the cold wind.

        • Except that gold can’t buy what isn’t available in the marketplace. Perhaps you can buy used furniture with gold. Everyone will have more of similar things that they don’t want or need any more. But if there is not enough food to go around, I doubt that gold can put the supply chains in place to provide much food. Also, I expect gold coins will go quite quickly when buying food. Perhaps they will work for the first month, but how about the second and third month? (Or maybe you are like quite a few peak oilers, hoping for a quick die-off of competitors for food.)

          • Robert Firth says:

            Thank you, Gail, for an excellent point. Say’s law says that the market offer comes first, and creates its own demand. But there is also experience that demand, when backed by hard currency, can create supply. The Silk Road was largely driven by demand, backed by the silver mines of Spain.

            And growing up in Africa I saw supply lines created by the traders, backed again by silver (Maria Theresa thalers, as it happens), and for some two hundred years this had supported trade across the Middle East and much of Africa. So perhaps if there is gold, traders will appear who will barter for that gold, because they will have confidence that the same gold will be accepted at the other end of the supply line. Traders paid in yuan, however, will have difficulty buying US farm produce.

            As for me, I have enough saved to feed me for well beyond my probable life span, thanks to 20 years of following Samuel Smiles’ advice. At present in Euro on deposit on Singapore, but that’s a free port, so I could convert it all to gold with one email.

            I don’t hope for a quick die off, but that is up to Nature, not me. However, I do believe that, rather soon, buyers with coin will be given preference over buyers with pieces of paper. Did not exactly that happen in prerevolutionary France?

            • Xabier says:

              Things can get topsy-turvy, certainly.

              I have cited earlier a true tale from the Peninsular War: rich British officers were bored eating meat and more meat from slaughtered oxen, and desperate to eat fresh bread and anything not ox, so one of them hailed a passing Spaniard who had bread and other provisions on his mule.

              The officer proffered a gold coin which was worth far in excess, obviously, of the value of all his load.

              The farmer thought a while, and turned it down:

              ‘Sorry friend, but that gold won’t buy food for my family. Go with God’.

              Being honourable, the officer let him go on (the common soldiers would probably have murdered him, a big problem at the time which was cured by summary execution).

            • I think that they would very much prefer traders with something of true usefulness, such as rice or apples, to traders with gold coins.

            • kesar0 says:

              Barter – sooner than later – will become standard model of trade. My advice: store long lasting goods in this order – food, medicine/drugs, fuel (coal, diesel, gasoline), stimulants (alkohol, cigarettes, etc.) – in safe location and you will be reach man, when the sit hits the fan.
              Just my two cents. It is my plan for the mid-term future.
              best, kesar

          • adonis says:

            it just depends if there is a viable plan in place by the powers that be that will be driven by gold and it does not matter what anyone desires about a quick die-off so they can survive at the end of the day we all know that a less populated earth will have a better chance of surviving to see another 100 years.

          • Volvo740 says:

            maybe white rice, or cans of chicken soup is the new currency?

        • It's different this time around....NO says:

          Not as much as Septimus Severus!??
          Pardon, sorry but the Roman Empire did not have the ability to run account deficits like Uncle Sam. Now, there were debts, for sure, but nothing like we have today. The society back then did not have the technology (computers) or concepts (Fractional currency, fiat money, or accounting methods). Actually, the one practice the Emperors put was debasement of the coinage, confiscation of property, or as in the case of Marcus Aurelius, the sale of Imperial properties. For the most part, the Ancient world was an agricultural solar society. Remember reading the Emperor Trajan expanded the borders to include Dacia for it’s rich precious metal resources. Later on, after they were exploited, it was abandoned to the barbarian hoards
          There was a good supply of gold and silver after Constantine adopted Christianity and ordered Pagan temples and shines to be stripped of their silver and gold to be minted into coin.
          He even created the denomination that was the standard for centuries there after in the Mediterranean world named the “Solidus”, 1/72 to the Roman pound. That was too later chipped away in debasement by later Byzantine Emperors. As Winston Churchill pointed out…”Money Melts”.

          • Xabier says:

            One of the Byzantine emperors in the late 11th century also had to raid the temples for gold and silver during a crisis (to pay troops and pay political bribes I think) only they were of course Christian by then. Handy that Christians still liked a little bling with their worship….

            • It's different this time around....NO says:

              In regard to Septimus Severus his final advice to his son’s was to enrich the soldiers and despise everyone else!
              His one son, the nortorius Caracalla, murder his own brother, Geta, in the arms of their mother, Julia Donna while in a truce meeting to divide the Empire! Later in his sole reign, he was hard pressed for monies after doubling the pay of the army and introduced a new denomination that was to be a double denarius, which only had the silver content of 1 1/2!
              It was shown with a radiate crown instead of a Laurel wreath on his portrait.
              To raise more funds he granted citizenship to all provincials, thus taxing them as such, raising more funds!

          • Robert Firth says:

            The emperors issued the equivalent of “fiat” money by minting coins of base metal and pretending they were precious. The denarius ended up with about 5% silver, a 95% devaluation. But Constantine and others went even further: they refused to accept their own coins in payment of taxes, but demanded payment in bullion. This was the infamous “chrysarguron”.

            Only one ruler in modern times has done anything like that: Franklin Delano Roosevelt, who in 1933 had Congress decree that the very gold coins it had ordered minted as late as 1927 (designed by Augustus Saint Gaudens), were no longer legal tender. And which were then stolen. They say that Satan was the first Whig, but FDR runs him a close second.

            • It's different this time....No says:

              No, it was not on par with “Fiat ” money at all. You are correct in regard to the debasement of the denarius , actually after the reign of Gordian III circa 249AD, it was rarely minted and the double denarius…known as the Antoninanus was the main denomination. During the crisis reign of Gallienus it dropped to finesse from 35% to less than 5%, a silver wash. During this period the State broke up in three parts, the Gallic provinces under a ruler named Postumos, the Eastern provinces under the care of the Palymra rule of Queen Zenobia and her young son. Gallienus boasted that he could very well do without silk from the East, so suppose it cut off trade somewhat. The army decided enough was enough and elected two capable emperors in succession Claudius Gothicus and Aurelian both Illyrian
              and set things right under one rule after various campaigns.

              As a matter of fact Aurelian “reformed” the coinage and brought about revolt in Rome
              “The workers of the mint in Rome had been engaged in adulterating the coinage and Felicissimus was held responsible and executed. An uprising of the mint workers followed; it is reported that 7,000 soldiers were killed during this revolt (Aurelius Victor xxxv 6; Historia Augusta, Aurelianus, xxxviii 2-4), although it would not be surprising if this were an exaggeration. It is possible that this uprising was somehow connected with the senatorial and equestrian classes, as Aurelian executed several senators.

              Aurelian struck a radiate aurelianianus of increased weight (84 to the Roman pound) and fineness (5% fine) that was tariffed at five notational[clarification needed] denarii (sometimes called “common denarii” or “denarii communes” by modern writers, although this phrase does not appear in any ancient text). The coin carried on the reverse the numerals XXI, or in Greek κα (both meaning 21 or 20:1
              Some scholars believe that this shows that the coin was equal to 20 sestertii[clarification needed] (or 5 denarii), but it is more likely that it was intended to guarantee that it contained 1/20 or 5% of silver, and was thus slightly better than many of the coins in circulation
              During this period most all Eastern provincial city coins ended and eventually the Government demanded payment in either in goods or services or actual silver or gold.

              That was under Diocletian , who again attempted a currency reform, caused hyperinflation and issued the first price controls in his famous futile attempt to stop it by listing every conceivable product, service and how much could be charged.
              There just was enough gold and silver to enact a tri metal system of exchange.

              Hyperinflation reared its ugly head many times thereafter.

              Could write a book, which there are a number, along with many scholarly articles.
              Oh well, looks like History is set to repeat itself again!

    • Clearly globalization has to reach a limit. People didn’t realize how soon it would come.

  49. Harry McGibbs says:

    I have not seen such widespread pessimism in the on-line press vis-à-vis the health of the global economy since I started keeping close tabs on it around the time oil prices crashed in 2014/5.

    I think we have to hope that the Fed cuts aggressively this autumn and the trade war mellows significantly or we are in trouble. We may be in trouble regardless. There are a lot of articles saying more or less the same thing; this being a typical one:

    “Another day, another round of bad news highlighting the risk that the global economy is headed for a serious downturn.”

    • Harry McGibbs says:

      “Five big economies are at risk of recession. It won’t take much to push them over the edge… Germany, Britain, Italy, Brazil and Mexico each rank among the world’s largest 20 economies. Singapore and Hong Kong, which are smaller but still serve as vital hubs for finance and trade, are also suffering.”

      • Harry McGibbs says:

        “During the global financial crisis, I regularly called a close friend in NYC to comment on then-daily economic events that were shocking. Bear Stearns went bankrupt; Lehman went bankrupt; the economy shed 600,000 jobs per month. While the build-up to the crisis was amazingly slow, once the bottom dropped, it dropped hard.

        “That event stands in stark contrast to the last 12 to 18 months when there’s been a continual grinding lower in the global economic data, primarily centered in the manufacturing sector.”

        • Harry McGibbs says:

          “…events this month signal that the problems facing the world economy are more complex and intractable than the immediate reaction to President Trump’s trade war de-escalation might suggest. A tactical retreat here and there won’t solve the deeper problems hanging over the world economy.

          “Once chaos has been unleashed into the global economic system, it can be hard to reel back in.”

          • Chrome Mags says:

            “Global Economic Trouble Is Brewing, and the Trade War Is Only Part of It”

            Momentum always begins with a nudge, and Trump’s forced trade war has generated enough negative momentum to initiate the early stages of a global recession. It was a veneer thin recovery anyway, so why did he risk a trade war? There’s an old saying, “If it ain’t broken, don’t try and fix it.”

            I remember a friend of mine didn’t quite like the sound of his car’s engine, so he started tinkering with it and later that day it was so out of tune he couldn’t even drive it. He gave up and had it towed to a shop to fix it at a very high cost. That’s Trump – he tinkered with the world economy and now it’s going out of sync.

            • Or perhaps Trump’s tinkering is simply a symptom of an underlying illness in the world economy. If this same kind of thing (flight to tariffs) hadn’t happened when resources were constrained, many times before, your view would be easier to believe.

    • The WSJ has an article up called, The Earnings Outlook for S&P 500 Companies Looks Bleak.

      Analysts’ latest revisions show the S&P 500 faces a 3.15% contraction [Emphasis added] in third-quarter earnings from a year earlier, according to FactSet. And for the fourth quarter, the S&P 500 is now on track to increase profits by less than 4%, down from the nearly 10% growth rate analysts expected at the beginning of the year.


      Tariffs aren’t the only factor to blame for the weaker outlooks. Second-quarter profit margins across all S&P 500 sectors are down from a year earlier, according to FactSet. Rising labor and commodity costs, as well as a strong dollar, have helped to dent profits.

    • Xabier says:

      Thanks again Sir Harry, I hope your watch is not getting you down: better to be a vigilant and informed observer than just vaguely worrying I suppose!

      • Harry McGibbs says:

        Bless you, Xabier, for checking in. I am in excellent spirits. Just as the tree-bound monkey likes to keep eyes on the approaching snake, so it is my preference to keep tabs on the economic drama as it unfolds.

        And of course trying to make sense of it all through the prism of Gail’s insights is an intellectually stimulating and very enjoyable hobby. I am not losing sleep.

        I trust life is treating you kindly and your secret chorizo larder is well stocked?

        • Xabier says:

          Acquisition programme accelerating, Sir Harry: preparing for siege is quite entertaining in its purposefulness – only the thought of an Iberico chorizo dearth makes one’s blood run cold.

    • Mark says:

      Here in Merica, we phrase things differently. Like “Thanks for piss-ing in my cornflakes Harry” 😉

Comments are closed.