We often hear the statement, “When oil supply is lower, oil prices will rise because of scarcity.” Now, we are getting to see firsthand whether oil prices really do rise, as oil supplies become more scarce.
Figure 1. Figure from the OPEC Monthly Oil Market Report for August 2019 showing world and OPEC oil production by month.
Figure 1 shows that world oil supply hit a peak in November 2018 and has declined since then, mostly because of a decline in OPEC’s production. So, total oil production seems to be down for about eight months, relative to the peak in November 2018.
Despite this big cutback by OPEC in its oil production, prices have not responded as OPEC had hoped:
Figure 2. Average monthly spot Brent Oil prices, based on EIA data.
In fact, as I write this, Brent oil price is currently quoted as $60.48, which is back in the range of December 2018 and January 2019 low prices. Also, reducing production doesn’t seem to be reducing inventories. Figure 3 suggests that they are now higher than they were before the reduction in oil supply took place.
Figure 3. Figure from the OPEC Monthly Oil Market Report for August 2019 showing OECD commercial oil stocks.
Why aren’t oil prices rising and oil inventories falling, if oil production has fallen?
The basic issue is that the economy is very much interconnected under the laws of physics, because energy is required for every activity that is considered part of GDP. Energy is required for any kind of heat or any kind of movement. Energy is even required for electricity. Without energy from the sun, food can’t grow; without supplemental energy of some kind (such as using electricity to heat an electric stove or burning animal dung or sticks), it becomes impossible to cook food or smelt metals.
One strange phenomenon that arises from the interconnected nature of the economy is the fact that the prices of all energy products (including those not listed on Figure 4) tend to move together.
Figure 4. Comparison of changes in oil prices with changes in other energy prices, based on time series of historical energy prices shown in BP’s 2019 Statistical Review of World Energy. The prices in this chart are not inflation-adjusted.
This strange phenomenon arises because energy products are well-buried within every part of the world economy. A person’s job requires energy consumption. The tasks that governments do, such as building roads and schools, require energy consumption. Both transporting and cooking food require the use of energy products. Refrigerating food requires energy products. These energy uses, as well as many other everyday hidden uses of energy, aren’t things that we can easily cut back on.
Consumers often think, “I will drive less, and that will cut back on my energy consumption.” Unfortunately, in the whole scheme of things, whether or not individuals cut back on their optional use of gasoline doesn’t get the world economy very far. Gasoline accounts for about 26% of world oil consumption, or about 8.7% of total energy consumption, based on the most recent BP energy data. Cutting back on the optional use of gasoline would not reduce total consumption very much. If it were possible to reduce gasoline consumption by 10% by voluntary cutbacks, it would still reduce world energy consumption by less than 1%.
The strange pattern of the price changes shown on Figure 4 indicates that there is something affecting energy prices of many kinds, simultaneously. I would describe this as “affordability.” It has to do with how affordable finished goods and services are to the population in general, much more than it does scarcity. (Economists call this affordability issue “demand.”) If finished goods and services are affordable to a large number of consumers, as they were in 2008 and in 2012 and 2013, prices will be bid up to very high levels (Figure 4). If finished goods and services aren’t very affordable, a drop-off in prices, such as that experienced in November and December of 2018 (Figure 2), is likely to occur.
When OPEC decided to cut back its production of oil in response to the low prices in late 2018, this cutback in oil production didn’t help the affordability of finished goods and services. In fact, this cutback probably made the worldwide total quantity of affordable finished goods and services a little lower. This happened because, with the cutback in oil production, the governments of OPEC countries were able to collect less tax revenue on the smaller quantity of oil that the countries were selling. In fact, this smaller quantity of oil wasn’t even being sold at a higher price.
With lower revenue, governments of OPEC countries are being forced to cut back on funding of new projects such as roads and schools. These projects will use fewer energy products, and the would-be workers will have less money to spend on goods made with energy products. Thus, these cutbacks help to lower the world’s “demand” for oil and other energy products and thus help lower the price of oil.
The fact that the economy is interconnected in this strange way makes shifting prices upward much more difficult than if scarcity were the primary issue. In effect, the whole stack of energy prices in Figure 4 must somehow be made to rise. This is difficult to do because it is the lack of wages of the many poor people around the world that is holding back “demand” for energy products. If, somehow, higher wages could be sprinkled on the many poor workers of the world, including those in India and Africa, then oil (and other energy) prices would tend to rise. With higher wages, these poor people would be able to afford items such as nice homes, cars, and air conditioning, pulling world food and energy demand upward.
One difficulty with rising oil (and other energy) prices: They don’t translate into rising wages.
Rising oil prices tend to cause recessions and layoffs. We can see this from historical data. Average wages, considering layoffs, tend to fall rather than rise during times of spiking oil prices. In fact, the chart seems to suggest that the big increases in average wages tend to occur when oil prices are under $40 per barrel. A growing supply of cheap energy thus seems to be the magic ingredient that shifts wages upward.
Figure 5. Average wages in 2017 US$ compared to Brent oil price, also in 2017 US$. Oil prices are from BP’s 2018 Statistical Review of World Energy. Average wages are total wages based on BEA data adjusted by the GDP price deflator, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.
Because of this difficulty with spiking energy prices, high energy prices tend not to last for very long. One issue is that regulators quickly raise short-term interest rates to solve what they perceive as “the problem of rising food and energy prices.” Once recession sets in (gray bars in Figure 6), regulators find that they need to lower interest rates and raise the level of debt to stimulate the economy again. With lower interest rates and more debt, major purchases (such as homes, cars, and factories) become more affordable, because purchases bought on credit have lower monthly payments. With greater affordability, food and energy prices again rise, to again encourage more production.
Figure 6. Three-month and ten-year interest rates through July 2019, in chart by Federal Reserve of St. Louis.
So we end up with an endless seesaw of energy and food prices. In fact, the peaks have tended to fall lower and lower since 2008, as can be seen in Figure 7, showing monthly average prices.
Figure 7. Monthly average Brent Oil prices since January 2000, based on data of the US Energy Information Administration.
Monthly average peaks started at $132.72 in July 2008. More recently, peaks have fallen as follows:
- Peak of $125.25 for the month of March 2012
- Peak of $109.54 for May 2014.
- Low month average price of $30.70 in January 2016.
- Most recent average peak was $81.03, for the month of October 2018.
From this pattern of falling peaks, we can see that the stimulus being used recently (which includes Quantitative Easing in some parts of the world) has become less and less effective at stimulating demand for food and energy products.
It looks as though growing debt at ever-lower interest rates is becoming a less effective workaround for the economy’s real need, which is a need for a rapidly growing supply of under $40 per barrel oil and other low-priced energy products.
Oil prices can be a problem in two different directions: (a) Too high for consumers or (b) Too low for producers.
From the Point of View of the Consumer. Many people have had the “Ah Ha” moment, in which they have figured out that high oil prices are a problem from the point of view of consumers. In part, they have deduced that these high oil prices may mean that we are “running out” of cheap-to-extract oil. Processes are becoming more complex, and as a result, consumers need to pay more to cover the higher cost of extracting and refining the oil.
But there is a related issue: Higher oil prices are likely to cause recession. If oil prices rise, the prices of many different types of goods and services (such as food, goods transported by truck or airplane, and vacation travel) rise at the same time. Wages don’t rise as quickly, in part because it is the true energy content (measured in Btus, barrels of oil equivalent, or something similar) that the economy requires. If the economy needs to dedicate a larger share of its resources to producing energy products, this is an issue that is akin to growing inefficiency. There are fewer resources remaining (such as human labor, metals, fresh water, and energy products) for investment that might provide goods such as new homes, cars, clothes and air conditioning.
With fewer resources to use, the economy reacts by shrinking back. I think of the situation as being akin to the way a chemist might “make a smaller batch,” if the quantity of one necessary reagent is low. An adequate supply of energy products is what makes the economy operate as it does; if buying an adequate amount of energy products becomes too expensive for consumers, a cutback in the buying of discretionary goods is forced on the economy (Figure 8). Lowering interest rates tends to make the debt repayment portion on new purchases lower, helping to alleviate the squeeze.
Figure 8. Chart made by author in 2010, to illustrate a talk called Peak Oil: Looking for the Wrong Symptoms.
From the Point of View of the Oil Producer. There are oil producers of many kinds, including:
- Tight oil producers from shale operations,
- Heavy oil producers in places such as Canada and Venezuela,
- Producers of oil from deep water such as Brazil and Angola, and
- Middle Eastern oil exporting countries that seem to have a very low direct cost of oil production.
Strange as it may seem, Middle Eastern oil exporting countries are among the most vulnerable to problems associated with continued low oil prices. The reason why these countries are so vulnerable is because their entire economies are oriented toward oil and gas production. They often have large populations with inadequate income unless the government provides them with handouts or with programs that provide jobs. If these governments need to cut back too much, there is a real danger that the governments will be overthrown. In fact, the population may break down into warring factions. Oil production may stop because of internal disorder.
It is because of issues such as these that the OPEC countries have cut back on oil production, in the hope that prices would rise to more acceptable levels for their countries. Fiscal Breakeven prices, relating to the level of oil prices that are needed so that each government can collect sufficient taxes for its budget, are published from time to time.
Figure 9. Chart published by the Arab Petroleum Investments Corporation (APICORP) giving Fiscal Breakeven Prices estimated to be needed for 2013.
Now that oil prices have been low since late 2014, Middle Eastern countries won’t admit to the true level of oil prices that are needed to operate their countries in the way that they have in the past. Their populations have been rising faster than their oil production, so it is hard to believe that the oil prices that the countries truly need, if they do not cut back on programs, are any lower than the amounts shown in Figure 9. At about $60 per barrel, the current Brent Oil price is clearly far too low for the major oil producers of the Middle East.
Shale and heavy oil producers are often less vulnerable than Middle Eastern producers, because the entities funding their operations (that is, buyers of shares of stock and providers of debt) believe that “of course” oil prices will rise in the future because of scarcity. Because of this, they are willing to provide additional funding, even when a recent owner has gone bankrupt from low prices. Middle Eastern oil producers have less of this benefit. If the money isn’t available for major programs, they are forced to cut back. Growing debt is unlikely to cover more than a portion of the shortfall.
There are other producers in the energy price “stack” in Figure 4 that are vulnerable to collapse or bad outcomes from continued low energy prices. One example is coal producers in China. China seems to be experiencing Peak Coal because of continued low coal prices; while new mines have been opened, they do not act to increase the total quantity produced, because so many mines needed to be closed because they were losing money at current low prices.
Figure 10. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.
If the world economy is hoping for China’s increasing demand to pull the world economy forward in the future, it is likely kidding itself. China cannot expect imports to make up for its lack of growth in coal production. China’s lack of adequate energy supplies likely underlies the tariff issue that we hear so much about. There is a need to pull back production of goods from China, if China doesn’t really have the energy resources to continue in the role it has been playing.
The big question is how high oil prices will be in the future
The contention of the IEA and many others is that energy prices can rise arbitrarily high. For example, the IEA showed the figure I have numbered Figure 11 in its World Energy Outlook 2015 .
Figure 11. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much non-OPEC oil can be produced at various price levels.
The big groupings in Figure 11 are
- Conventional Crude (such as from the Middle East and perhaps deep water like Brazil),
- Tight Oil from Shale, and
- Extra Heavy Oil and Bitumen (such as from Canada and Venezuela).
Evidently, in 2015, the IEA believed that $300 per barrel oil prices were not too high to show as a possibility on a chart. With $300 per barrel oil, there would certainly be enough oil. At such a high price, it might be possible to move the city of Paris, France, out of the way and extract the tight oil from shale underneath it!
Unfortunately, in the real world, prices cannot rise this high. Market prices are set by the laws of physics. The economic limit we reach is a price limit that pushes the economy back into recession. We have seen in Figure 7 that this price limit seems to be dropping lower and lower, over time. In fact, I am one of the coauthors of an article published in the journal Energy called, An Oil Production Forecast for China Considering Economic Limits. This 2016 article makes the point that the economic limit we are reaching is a limit on how high oil prices can rise. I am the lead author of Section 2, which discusses this issue at length. If prices cannot rise high enough, the vast majority of the oil that seems to be available based on published reserve amounts and geological surveys cannot really be extracted.
Whether there are ways to raise oil and other energy prices higher than they are now remains to be seen.
Why don’t standard models forecast low oil prices in the future?
Economists have put together a simple model of how the economy works. In their model, there are always substitutes. The only thing that goes wrong seems to be that prices rise, if there isn’t enough supply. These rising prices encourage greater supply and substitution. The type of chart a person typically sees is a Supply and Demand curve as shown in Figure 12.
Figure 12. Supply and Demand model from Wikipedia.
Attribution: SilverStar at English Wikipedia CC BY 2.5 (http://creativecommons.org/licenses/by/2.5)], via Wikimedia Commons
They have never considered a situation where energy products are deeply buried within essentially all goods and services that are made. If there isn’t enough supply, a “smaller batch” of the world economy is made. We think of this as recession, but it can take on other forms as well:
- Depression
- Wars
- Epidemics
- Defaulting debts; falling prices of assets
- Failing governments and intergovernmental organizations
- Collapse of the central government of the Soviet Union in 1991
- UK’s decision to leave the European Union
- Increasing conflict between political parties and between countries
- A reduction in globalization
- Ultimately, the collapse of a civilization
Economists have not understood the connection between physics and the economy. There is a need for a sufficient quantity of affordable energy products every moment of every day. In fact, we seem to need a vastly increased quantity of inexpensive-to-produce energy supplies right now if we are to fix the world economy’s problems from an energy point of view. The “lower interest rates and more debt” way of hiding problems seems to be reaching an end point. If nothing else, interest rates today are close to as low as they can go.
Is the economy approaching a singularity?
In physics and math, a singularity is a point at which a function takes an infinite value. We end up with a situation that seemingly cannot exist. It is like dividing the number 1 by the number 0. No matter how many times that the number 0 is added together, it will never equal 1.
The economy seems to be reaching an equally strange situation. It is not a situation where we are running out of oil; it is a situation of too much wage disparity, and this wage disparity makes the prices of many commodities too low for producers of these commodities. For example, farmers cannot afford to pay their mortgages. And prices for all fossil fuels and many metals are too low for companies extracting these materials to make an adequate profit for reinvestment and taxes. The problem is not simply low oil prices.
This situation of excessive wage disparity is related to globalization, with many workers around the world earning very low wages, so that they cannot afford goods such as homes and cars. It is related to the increased use of robots substituting for manual labor. It is also related to wage disparity within countries as jobs become increasingly specialized.
As this situation plays out, energy prices fall when common sense would seem to suggest that they should rise. In fact, the problem of falling prices extends to more commodities than fossil fuels and food; it extends to minerals of many kinds, including copper and aluminum.
In such a situation of falling commodity prices, we can expect many related problems. For example, governments of countries that depend on the revenue of these exports may fail, leading to Balkanization of these countries in some cases. A wide range of debt defaults can be expected, leading to failing financial institutions that need to be bailed out. Rapidly changing relativities among currencies are likely to put markets for derivatives at the risk of failing. Needless to say, stock markets are likely to be adversely affected. So-called renewables will quickly fail because they are currently dependent on fossil fuels for repairs and the electric grid. In fact, it is hard to see any aspect of the world economy that can continue unaffected.
How does what appears to be an approaching calamity play out?
Perhaps it is fortunate that we don’t really know. Collapses of early economies seemed to take many years, typically over 20 years. Today, the world economy depends on global supply chains and the electric grid. The financial system is also very important. It is hard to believe that the overall system can stay together for many years, but perhaps, in parts of the world, it can. We just don’t know.
Given how connected the economy seems to be, and how widespread the problems seem to be at the singularity we are reaching, it almost appears that there is a plan behind what is happening. From what we can observe, there seems to be some literal higher power behind all of the energy flows that we observe in the universe. This literal higher power seems to have put into place all of the laws of physics. This literal higher power seems to also be behind all of the self-organizing elements within the universe, including humans, ecosystems and economies. I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.
NAR: “Pending Home Sales Decline 2.5% in July”
https://www.calculatedriskblog.com/#cbeUilXgVQBY5cZG.99
( a very conservative source)
Decline occurred in all four regions, with the West having the greatest decline.
WASHINGTON — U.S. economic growth slowed in the second quarter, the government confirmed on Thursday, but the strongest consumer spending in 4-1/2 years amid a solid labour market threw cold water on financial market expectations of a recession.
-REUTERS-
https://www.nytimes.com/reuters/2019/08/29/business/29reuters-usa-economy.html
Hmmm, interesting story on Bloomberg….Shale running out of steam….surprise…surprise…
High decline rates….imagine that! Now they tell us all!
Bloomberg) — Texas oilman Jeffery Hildebrand became a billionaire by shunning the shale revolution taking place in his home state. Now, he’s making his biggest bet yet — Alaska — just as shale producers run out of steam.
Hildebrand’s Hilcorp Energy Co. is buying a collection of old wells and pipelines from BP Plc for $5.6 billion as the oil major chases fast-growing shale production that has transformed global energy markets over the past decade. Meanwhile, the Alaskan wells have been in decline for years.
“Hilcorp is somewhat uniquely following a counter-cyclical strategy, really going after these legacy assets that public companies are selling at pretty attractive price points,” Andrew Dittmar, a senior analyst at Enverus, said by phone. “They will generate cash flow for decades.”
It’s an unpopular strategy but one that has made Hilcorp the largest private producer in the U.S. and Houston-based Hildebrand, 60, America’s 100th richest person with a fortune of $6.1 billion. And it may be particularly timely.
After attracting hundreds of billions of dollars of capital over the past 10 years, investors are beginning to sour on shale because of wells’ high decline rates.
https://m.youtube.com/watch?v=Xs3C9QKxXV4
Oh, it’s all based on Science!
The existing WTO treaty as signed by U.S. and China allows for balanced trade. It allows a country to raise tariff until balanced trade is restored. Keynes went to Bretton Woods and argued for balanced trade and a fine to be place on countries that ran a surplus to be sent to countries that ran a deficit to help them grow. That would be tax China and send the money to the U.S. to help it develop.
“Keynes went to Bretton Woods and argued for balanced trade and a fine to be placed on countries that ran a surplus to be sent to countries that ran a deficit to help them grow.”
Ah yes: tax the successful and productive to subsidise the unsuccessful and unproductive. And then confess yourself baffled why the end result is collapse. But the Keynesian remedy that has sent trillions in aid to Africa has not helped that continent grow, because it was all diverted into offshore bank accounts or into absurd vanity projects.
“Tax the successful and productive to subsidise the unsuccessful and unproductive.”
You are right. This isn’t a good strategy. Countries that are running trade surpluses have citizens who cannot afford enough goods and services to “make up for” the goods they are exporting. They are not the successful countries, even if some people assume that they are.
The ego based mind is always in a “deficiency” mode. Have you noticed how the richest people are always in sex scandals, hoping another ‘extreme’ will do it. Point being that we are already complete beings, we don’t need to consume everything like termites. It’s aberrant.
Fully mature humans are guardians of earth (our extended self).
One way or another the rest will be forced to evolve to this end – pain is a great teacher, when wisdom fails. Consciousness doesn’t care how long this takes, it (us) is infinite.
Taking yourself to be solely your form-identity is a necessary and natural part of growing up as a human being and navigating through the physical realm.
Unless you are one of the rare ones favoured by grace, it takes a life-time of spiritual work to know yourself as the universal intelligence dreaming a temporary dream of personhood, or as the ocean rather than the wave, if you prefer, so it is not really a prescription for man’s current ills. And in any case, almost all of us now depend for our survival on a complex system, which cannot by its nature be reversed, no matter how spiritually mature we may become.
Given the destruction we have caused and given our inability to live in balance with the natural world, aberrant is not an unfair word to describe our behaviour – but I don’t imagine that the universal intelligence makes mistakes. It [we] seems to delight in variety and novelty and our brief era has certainly been a supernova of creativity. The planet has never been this interesting…
Book – Beyond Darwin, the Program Hypothesis – Miguel Ribeiro
” Darwinism came to influence all science because evolution by random mutation implies a purposeless and random universe – a view irreconcilable with the increasingly popular theories of the universe as information (like a computer, a hologram or a simulation) since the transmission of information is impossible by chance. Accordingly, ” complexity cannot be achieved by chance” is the core premise of this thesis of the universe as a computer, in which the finely tuned laws of physics and constants of nature are set parameters of the proposed program rather than a phenomenal string of coincidences. Highlighting the analogy, our brain converts patterns of atoms and radiation into the world of our perception – like a computer program converts patterns of “zeroes and ones” into audiovisual animation. The book focuses on presenting a model of the emergence and evolution of life consistent with this information view of the universe – accordingly, adaptive mutation, a functional junk DNA, sentience and life as algorithms uphold the notion of the genome as software. The author clearly outlines the rationale that sets the program hypothesis apart from intelligent design and religion. ”
https://www.amazon.de/gp/product/9892095448/ref=ox_sc_act_title_6?smid=A3JWKAKR8XB7XF&psc=1
P.S.:
https://www.electricitymap.org/?page=country&solar=false&remote=true&wind=false&countryCode=PT
Miguel Ribeiro is a Portuguese screenwriter ..
https://www.miguelribeiro.net/about
… with a degree in political science. However, he is very good at recycling the fairy tales of the Artificial Intelligentsia.
And while mutation might be random, natural selection is definitely not. As Darwin himself took great pains to point out. Evolution is guided almost entirely by the biological environment, or by Gaia if you are so inclined. If there is an ecological niche for a pack hunting predator, one will evolve, as did the wolf in Laurasia and the thylacine in Australia.
Convergent evolution is a pervasive phenomenon, and it decisively refutes all this drivel about “randomness”.
And Nature does indeed have a purpose: the systematic creation of dissipative structures far from thermodynamic equilibrium, or, more commonly, “life” (Thank you, Ilya Prigogine and Erwin Schroedinger)
I agree with you. The best adapted of the random variations survive, and this changes the result very significantly from random results.
Either we adapt or Gaia shoves down the adaptation down our large, soulless and by BAU spoilt mouths.
Another misconception about evolution is that it is a dominance scheme, where in fact it is a collaborative and competitive scheme which ultimately creates an enormous amount of biodiversity.
Our role as humans is to continue Gaia’s intelligence endeavor and push for the stars. But first we must sequester the carbon trapped in sedimentary rocks to put an end to the cooling of earth.
I also find the “universe is a computer” as garbage. Universe is process, yes, but what is even ”computation” supposed to mean in a setting beyond the realms of universe?
From nothing something arose spontaneously, because why not. And that something is boundless and timeless. We are fooled by the limitations of our monkey brains.
There’s an easier explanation in the book, The Theory of Opposite Sub-Verses, which suggests an energy exchange is occurring. Equal amounts of opposite forms of matter, mass (3rd dimensional) & consciousness (5th dimensional), with consciousness utilizing lifeforms to ascend to higher, more energetic thought levels, in successive lives and more evolved species, in the direction from whence it came, peaked energy, to once again release a thought at rest into the minimal thermal energy black hole it overlaps to initiate yet another Big Bang.
In that scenario, each and every lifeform has two layers of evolution occurring at the same time. Darwin’s physical evolution along with a companion bit of consciousness for that lifetime. Every bit of consciousness has to make its way up the thought level ladder to more evolved species beginning by fusing with a microbe. If you look at all life-forms that way you come to understand that the form of matter their consciousness is composed of is no different than ours, just at a lower thought level.
Opposite sub-verses is a theoretical way mass & consciousness compress & expand from Big Bang to Big Crunch in this oscillating universe. Both forms of matter have parallel, constant forces, that in the Big Bang spread out over space-time to form the 4th dimension fabric of space-time. Thus, all layers in the spectrum of intellect are all around us. We need only ask the right questions and tune in to those layers to discover new understanding, and compress our consciousness to a slightly higher thought level. So there is nothing new under the Sun, but it can be tapped into.
Haven’t you ever noticed that when having an orgasm it seems like a pressure has temporarily lifted, only afterwards to sense that pressure being applied again? That pressure is constantly being applied to each individual consciousness, because not only is mass effecting a distortion in the 4th dimension, so is consciousness. That’s because both forms of matter contributed to the generation of the 4th dimension. So when we understand new information integral to the spectrum of intellect, a small compression occurs to a higher thought level, just as when mass compresses it releases energy. This is referred to in this Theory as the differential energy expression of mass & consciousness, or simply an energy exchange.
Now on the surface this would seem improbable since we’ve only detected life on Earth, but on the other hand it could indicate consciousness exists in the Universe on a scale never before fully understood. And there ways to prove both the existence of consciousness & opposite sub-verses from that book. To prove a 5th dimensional form of matter, consciousness, the prediction is; thought level is proportional to WLD (weight loss at death). We all know the controversial experiments of Dr. Duncan MacDougall in 1907, but his equipment was inadequate and he had no scientific prediction, but he hoped some day someone would carry on his initial tests. What is needed is an extremely sensitive gram scale (available at herbscales.com) a KG-10, good to .01 grams up to 22 ,lbs. This means any life form tested must be less than 22 lbs. Based on the prediction, an opossum should have a lower WLD than a raccoon, and so on. If numerous animals being euthanized for reasons like cancer or whatever, and the hierarchy of WLD’s fit the prediction, then it would provide supporting evidence of another form of matter and since it would be in all life forms, we could conclude evolution is a two layered process, but more importantly proof suggestive of a universe with an energy exchange.
To prove opposite sub-verses the prediction is; Increasing number and size of black holes is proportional to accelerating universe expansion, and it must be precisely proportional. You’d need to read the book in detail to understand that better, along with the other 11 proportional events. Essentially the idea in the Theory is that when mass compresses into a black hole, it doesn’t compress into infinite density/zero volume, but rather switches states into an opposite sub-verse with extreme density and some volume, albeit tiny. Near absolute cold maintains the volume in that state until extreme heat (the opposite temperature gradient) from the release of a thought in the form of thermal energy into the overlapping mass (One black Hole), and each expanding atom presses on the others to effect the expansion, into the sub-verse we now experience. The energy exchange in the Big Bang reduces all those bits of consciousness that came together for the Big Bang to the thought level of a microbe, a barely perceptible wavelength. But that’s not a bad thing, because it will be billions of years before it can fuse with a microbe in a shallow pool on an early evolving planet.
Or the Sufi expression, that ‘Understanding comes when the Wave of Possibility breaks upon the Unseen Shore’.
Many planes of existence and many interactions, perhaps…..
This is also why one need not ever completely despair.
Big bangs, black holes, multiverses and quantum esotericism is all the same jank born out of mathemagical thinking where zero division apparently in some mysterious way becomes defined and arithmetic sums of all positive integers become -1/12 and can be used in physics equations.
To which any sane person must conclude that it is about time for a paradigm shift from formulae to actual experiment and observation.
It is sad when this fairy tale world enters culture through the megaphones of MSM. It is ripe of total confusion and misinterpretation by various pundits with no real scientific acumen in the field.
https://youtu.be/8DGgvE6hLAU
“Credit analysts are keeping a watchful eye on signs of stress in Indian household debt after unemployment rose to a 45-year high and as lenders grapple with the worst soured debt levels of any major economy.”
“Weakness in India’s investment and consumption activity worsened in July, with economic growth showing little signs of recovery from a five-year low.
“A gauge measuring overall activity moved one notch toward weaker territory, as six of the eight high-frequency indicators compiled by Bloomberg fell from the previous month. Car sales slumped the most in almost two decades and latest data showed infrastructure sector output grew at the slowest pace in more than four years.”
https://www.bloomberg.com/news/articles/2019-08-27/animal-spirits-get-worse-as-india-slowdown-spills-over-to-july?srnd=economics-vp
This doesn’t sound good at all:
I don’t think we get real numbers on China’s soured debt. If we did, I wonder how its problems would compare to those of India.
If I recall it correctly Steve Keen estimated it as fluctuating between 150-250% GDP.
But these nominal official stat numbers are useless as we know the various other forms of debts must be added (corp, private, gov off balance, ..) so it totals anywhere in the ~500-800% level for each major industrial country.
Therefor it’s very strange we did not have significant debt jubilee for the consumers so far.. Assuming other things not being a problem (rising cost of energy appropriation).
Wow! I suppose when you are reporting what you want to, and there isn’t a huge amount of external debt, these problems can be hidden for a long time. Just extend and pretend.
Meanwhile in Norway: Kitemill.
http://kitemill.com
At least a few get a income for a while but the money wasted could have bought food for many more …
Ugo Bardi has been a big fan of the possible use of kites for a long time. I wonder how we keep them in place. Could they “get away”?
“…the UN Conference on Trade and Development reported a fall in overall global flows of foreign direct investment (FDI). The funds amounted to $1.3 trillion, which is the worst level since the last global financial crisis in 2008.”
https://intpolicydigest.org/2019/08/29/unstable-global-economy-makes-investors-flee-emerging-markets/
“The shadow cast over the global economy by the US-China trade war seems to darken by the week…”
https://www.ft.com/content/8e0d9372-c8be-11e9-af46-b09e8bfe60c0
“China’s economy slowed further in August as weak domestic conditions, intensifying tensions with the U.S. and worsening global trade all combined to undermine the outlook.”
https://www.bloomberg.com/news/articles/2019-08-28/china-s-slowdown-deepens-in-august-early-indicators-show
“Rising fears about the health of the global economy have prompted talk of recession, spreading anxiety about jobs and growth. The US-China trade war is casting a shadow over the world economy and warning signs of a looming downturn have flashed on financial markets.”
https://www.bbc.co.uk/news/business-49403710
which probably accounts for gold jumping over $100 oz in about a week
China making conciliatory noises today though. Will Trump perceive this as weakness and ratchet up hostilities or will he be glad for a temporary truce with 2020 elections looming? US consumers seem none to happy about paying the tariffs on imported Chinese goods.
Market are rallying after China’s government officials tried to calm the trade war with America. In a potentially significant move, Ministry of Commerce spokesman Gao Feng has suggested Beijing will not immediately retaliate to America’s latest tariffs, when they kick in on Sunday.
Gao told reporters that China was focused on ending the trade war, not escalating it, saying:
““China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war,”
““China is lodging solemn representations with the U.S. on the matter.””
https://www.theguardian.com/business/live/2019/aug/29/trade-war-brexit-crisis-eurozone-france-growth-us-business-live
The “Trump-Bannon” maneuver against China is not a mere diversion from domestic agenda, the power faction behind it means it. To simplify, the recently more visible US gov faction supported by digital barons and such courted China for near-midterm business gains only, they did not operate much in geopolitical terms in that vector, at most they sought of nuclear deterrent and the existing naval force as given, enough said, lets forget it – in their mode of operation. Very likely Europe and Russia was the primary perceived threat and or concern anyway.
While the other more radical faction realized that the awaken synergistic forces in gargantuan China are now leapfrogging basic drudgery manufacturing phase of past decades into qualitatively higher level at which US would be in terms of war-toys and dual use infrastructure suddenly several generations behind and obviously outdone on the sheer volume out of it anyway. And that clearly happened in many sectors of IT-telecom already, kinetic warfare closely following these capabilities.
At certain threshold you can’t twist Chinese arm anymore (as for example Japan or Germany) with old proven meddling tool set, now what.. Their specific national financial scam is deliberately (on strategic purpose) based on non directly convertible currency and running non vulnerable gov deficits from the outside, there are few transaction hubs to outside world, chiefly like HK. The domestic clinch on msm incl. internet can not be penetrated and the country is relatively very homogeneous.
So, the only remaining tool is to desperately play for time, kicking ankles ala tariff war, plus optional attempted threats via weaponizing some of the top corruption.
In a way it’s a rehash of the following:
The loss of Baltics, Ukraine/-Crimea/E Ukraine and some outer -stans to EU/NATO orbit cost Russia-proper enormous development resources (needed to repatriate – design JITs from scratch etc) and most importantly the lost time factor, not able or having to pause doing other more pressing or desirable domestic priorities. US and West got perhaps 15+ extra yrs in the lime light just out of this active meddling program in Russia only..
Lessons observed and learned, Chinese will play it calmly as far as possible, but the blood drawn recently at HK meddling must have made them beyond furious – so the retaliation will be served one day in kind, most likely at the most inconvenient day for the other side.
Time is short. We must change or perish. Time runs out. We seek commonality or perish. The nuclear weapons must be destroyed or they will be used. Mutually assured destruction is not a sane operational plan.
If we insist on having the ability to destroy most or all life on the planet how about this? All currently nuclear armed countries keep 100 weapons. Build them as dirty as possible. Forget about delivery. Keep them home. Take all the plutonium from the dismantled nuclear weapons and place it with the active weapons not to uncrease power but to increase toxicity. If designed correctly ten nuclear weapon detonations will end life on the planet. Think of the jobs that could be created building the Homeland Nuke sites.
Mutually assured destruction is considered a valid way of living. The above is no different but it allows the end of 95% of the resource use associated with the idea of “winning” a nuclear war. Homeland nukes could be achieved unilaterally while still keeping the deterrent of mutually assured destruction. Military expenditures could be focussed on conventional weapons training and new technologies such as drones. Sovereign right of defense does not need to be abandoned to return to sane policies. One might also hope that the distaste of nuclear weapons would become more palatable and lessen the desire for non nuclear armed countries to take on the economic burden of homeland nukes.
Mutually assured destruction or “winnable” which is it? Yes these are mutually exclusive philosophies but we don’t treat them as such. The current trend of smaller “tactical” nukes would clearly indicate to me that Mutually assured destruction is being partially replaced with the idea that a limited small yield exchange could occur without mutually assured destruction. (wow mucho mutiallity words 🙂 )
Neither mutually destruction or planning for a limited exchange is sane. THe only sane path is to acknowledge resource depletion and to not allow old paradigms destroy our planet. While homeland nukes does not abandon mutually assured destruction it would allow significant resource depletion decreases by the country that implemented it. it would acknowledge the truth of our situation of a interconnected planet and possibly allow for even more appropriate policies in the future.
This is a World Bank chart of total Foreign Direct Investment through 2018. It hasn’t been doing well for a long time.
https://gailtheactuary.files.wordpress.com/2019/08/foreign-direct-investment-through-2018.png
“The rich have cut their spending on everything from homes to jewelry, sparking fears of a trickle-down recession that starts at the top.
“From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top. While the middle class and broader consumer sections continue to spend, economists say the sudden pullback among the wealthy could cascade down to the rest of the economy and create a further drag on growth.”
https://www.cnbc.com/2019/08/28/the-rich-arent-spending-signaling-a-possible-recession-ahead.html
“From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top.”
Again, reasoning I do not understand, as usual from an economist. I would say that this behaviour makes these people the *strongest* segment of society, because they understand that the most effective safeguard against uncertainty is thrift. And they are employing that safeguard.
Thrift in physical resources is one thing; thrift in printed promises is something else.
I am certain that a lot of the wealth in past times was stored up in extra provisions for winter and similar things. I know that there are quite a few people now (or at least, recently) storing up physical goods, figuring out that if the world economy hits a bottleneck, at least they will be physically prepared. They hope to outlast the others. They hope for a rapid drop in population, so that resources per capita will suddenly reach a more reasonable level.
I think wealth can come in the way of relationships, as well. When health problems arise, it is helpful to have relatives or friends to call upon. If rough times are ahead, they perhaps can be easier to handle with the help of a group, working together.
Once again, your views accord with my experience. i have met “doomsday preppers”, and they mostly seem to believe that whoever dies last wins. So they have no neighbours, only rivals and, one presumes, rivals destined to become enemies.
Having lived in Pennsylvania, I believe one of the most successful, prudent, and happiest of communities is the Amish. They understand well two key lessons: first, that we are all in this together; secondly, that if you live with Nature, you may survive, but if you live against Her, write your will.
They are captives of their own dominance mentality. Strong cooperation has a competitive aspect. But not in a detrimental way, since it eradicates hopes and delusions in favor of truth and tractable solutions.
Science is such an collaborative and competitive endeavor.
The problem for “doomsday preppers” is straightforward math.
How much do you need to store for as long as you estimate living? It is a depressing amount. Human food production and distribution is close to JIT. It is interesting to see how historical Western Europe broke out of having local famines with the railroad.
There is nothing wrong with storing a couple of weeks of water and food. I do it myself. It’s highly recommended in places such as California where a big quake could screw up food distribution while roads and railroads are reopened. But years? Just not feasible.
Surprise…we have a contest …which State is in worse financial mess!
Winner…where I was born New Jersey!
Bloomberg) — New Jersey’s Senate president said credit-rating companies may be underestimating the severity of the state’s financial strains by giving it the second-lowest grade after Illinois.
“We are in worse shape than Illinois,” Senator Stephen Sweeney, a Democrat, said in an interview. “We are not investing in education, we are not investing in the areas that we want because all the money is going to pensions and health care.”
The comments underscore the persistent fiscal pressure on New Jersey, a high-tax state contending with massive debts to employee pension funds after years of failing to set aside enough to cover the $212 billion of benefits that have been promised.
All the money is going to pensions and health care!?
Translation…old people are targets for major cuts!
Clearly more promises have been made that it is possible to deliver on. Seniors got an awfully lot of these promises. A rich society can afford to give a lot of benefit to the elder members of the economy; a poor society can afford much less.
What about the literal trillions of untaxed money that sit in offshore accounts? The panama papers were released and nothing even happened. Contrary to what the rich and their republican slime proponents yell, constantly, the rich need to be taxed and their wealth needs to be re-distributed
Only problem–the vast majority of their wealth is paper wealth that disappears as soon as the economy goes over a bump. Otherwise, you can take their large homes, and break them up into apartments, as the Russians did. But it doesn’t get you a whole lot. Breaking up companies that they own shares of stock in isn’t terribly productive either.
I do not have trillions, by a long way. But I do have money in offshore accounts. Money I have saved, over more than 20 years, out of legitimate and fully taxed income. And I have the naive belief that, having worked my whole life for it, that money is mine.
No, I am not rich; but I respect the rich that have earned their wealth through free trade, offering value for value. As did Apple, whose computer I a using to type this. And why should “the rich” pay taxes to a government that did nothing to enable them to become rich? What is the value government offers, in exchange for this exaction?
Ayn Rand called this the creed of the looters. You have just proved her right.
The rich are not special at all. They successfully gamed the system to their wealth advantage, but they offered little-to-nothing to the operation of civilization that wouldn’t already occur in natural order. Of course, the way things currently are ensures that targeting the wealthy may be similar to pulling plugs and sinking a ship, but I say that it’s a necessary act that is needed to give civilization any chance of making it beyond the 2000s, coupled with competent and brave leadership.
Civilization is dead once people can no longer be civil to each other. And blaming the rich for gaming the system is loser’s logic.
Soak the rich, liquidate the middle classes, pulverize the poor, deprive the destitute of their park benches—it’s all the same. We’ve reach the end of more and we must embrace the beginning of less. Less for you, less for me, less in perpetuity.
When we can say without a hint of envy or resentment, “My means are modest, but I have more than most billionaires because I have enough,” then we are well on the way toward curing ourselves of that most notorious of life-stealing modern diseases, consumption—as in the addiction to consume more more more.
https://youtu.be/RlJGrIyt-X8
Well-said!
“addiction to consume more more more”
I think the consuming aspect is a relatively small part of the story. If you dig into the work of Gregory Clark, what happened over as much as 20 generations was the persistent survival of the children of the (relatively) wealthy. This seems to have selected for the characteristics that cause a person to accumulate wealth.
If you understand evolution, this is some of the best work on the subject in the last 40 years.
What do u got that I want? Maybe I can vote someone in to “redistribute” it to me? Once property starts getting “redistributed” all bets are off.
How do you define propaganda? I generally see a trend in propaganda. First of all it is emotional in nature. Second of all a villain is created. Third of all a victim of injustice is created.
What is this cost of this propaganda. Hate. I dont know how else to put it. Whenever resources are redistributed hate is created so there is no moral price to pay for the theft. Like say the theft of the USA from the native people.
What is the cost of hate? There is no longer any reason for personal accountability and to seek constructive solutions. The cause of all problems has been identified as an enemy. This allows our species to indulge in our habit of engaging in and believing in destructive behavior as a solution. Very convenient.
Hate as a tool to justify theft can work, It only works if the hate is directed at a social class that is not needed for the society to function. Maybe old people are there now but i dont think so. You see when you attempt theft from a part of society that is needed you are cannibalizing. This idea that the wealthy are responsible for our ills of our society attacks people who have been productive. My perception is that younger abandoned the idea that consumption is entitled by productivity. We just create debt so everyone gets nice things. The rich are to blame. Anyone who critiques this philosophy is a characterized as a racist and a fascist. This is the largest cost of hate IMO. A community polarized and unwilling to help each other.
Anyone that know me knows i am very generous with my modest resources. I have spent over 5000 hours volunteering for various activities that benefit community harmony. I blow peoples mind with resource generosity all the time. When i see someone trying real hard but failing i help. Its only right. That’s the community i want to live in. What enables that behavior on my part is not seeing the people i help my community not as enemies. Seeing them as another human. My BEHAVIOR establishes what I stand for. that is called PERSONAL RESPONSIBILITY. BEHAVIOR establishing peoples rewards is the cornerstone of EQUALITY. Ah i forgot… Some are more equal than others .
I don’t have a lot but i did work my whole life to get it. From age 15. I worked all through college. They were not nice jobs. I didn’t have a car. My quarters and food was stark at best. Now I hear younger people deep in debt from their idea of entitled consumption declare that wealth needs to be redistributed. molon labe. I was setting choke chains logging before you were born. good luck. You call that bravery? IMO whats brave is understanding that there are not demons responsible for our problems that we have all contributed to them and doing your best to help in your community instead of indulging in hate.
“have selected for the characteristics ”
In less capitalistic scandinavia it is said we come from people who didn’t think supplies for two winters was good enough.
“supplies for two winters ”
Exactly. If it is a regular winter, nothing lost. If it was one of the rare long and hard winters, then the neighbors froze to death and your kids (with the two winter genes) will take their place.
Indeed DJ, in Scandinavia it was not selection from dominating others by wealth generation. It was all about surviving the winter and that means hard work, collaboration and trade in a sparsely populated area.
Well, until the madmen, the associated inbred sect members (Götar and Svear), and various enabler crazies started showing up with increasing population pressure, and then claiming power to dominate. Just look at the offspring from these despots and their lackeys, oh yes, I’m writing about these pretentious bourgeois Potemkin village manufacturers in Stockholm. What a sh17-show of unfettered soulless boredom cranked to 11. Who are these people actually trying to impress? Their own little club of envy and fakery kept alive by debt fueled consumerism perhaps?
Bad genes apparently need to be purged and squashed out by ramming their delusions into the inevitable wall of diminishing returns and thermodynamic reality.
It is inevitable; the brutalist architecture of (Swedish) BAU and their nihilistic perpetrators will be smashed to pieces into a distributed jigsaw puzzle of rail, computation and fibre optic interconnectedness.
MSGA
(Make Stockholm Great Again)
We all know that eventually, whatever wealth we have we will need to leave behind. Or perhaps it will leave us behind first.
I was brought up in a very religious household. Wealth wasn’t deemed to be important. I might perhaps be considered (by some standards) to be wealthy now, but that is because my husband and I live modestly. We do go on some nice trips abroad, but we live in a modest neighborhood and drive not-terribly-new cars. We fly in coach class. I consider my health more important than my wealth.
I have known about the likely pension problem from practically the first time I heard about pensions, simply because future compounding at a high interest rate seemed impossible. Bank accounts, and the ability of governments to guarantee them, have seemed iffy to me, for a long time. And if a person has money anywhere, there is a chance that some government will figure out a way to get their hands on it. Or substitute a new currency, giving no value to the old one.
About all I can suggest is diversification. Also, if you have people or charities you would like to support now, this is the time to do it.
Thanks Gail – very enlightening points; I didn’t take consideration of how parasitic governments currently are… parasitic, maybe since the dawn of organized government ! I should’ve mentioned that I’m targeting the super-wealthy, that group of .01% that own everything. Of course, they I can’t denigrate them all since I believe some are genuinely altruistic. Brazil could stand to have a Ted Turner buying up the amazon to save it, for instance, and Rex Tillerson seems like a good Christian in spite of whatever knocks he recieved for running Exxon (oil/gas companies always recieve criticism for existing) and for the State Dept gig.
I agree about pensions and the need for being kind and helpful to others. It’s sad to say, but it takes courage to help the vulnerable in this day and age.
Centralized governments will be a thing of the past in our lifetimes.
Nature has no centralized governing organ. Except the laws of nature which does not care for one microsecond about our ideologies and dogmas.
Now, are we going to oppose what brought us about in the first place or is it about time to comply with the fundamental principles of this universe and reject domination and subjugation.
When it comes down to it, government is simply an abandonment of responsibility on the assumption that there are people, other than ourselves, who really know how to manage things. But the government, run ostensibly for the good of the people, becomes a self-serving corporation.
To keep things under control it proliferates laws of ever-increasing complexity and unintelligibility, and hinders productive work by demanding so much accounting on paper that the record of what has been done becomes more important than what has actually been done. The Taoist moral is that people who mistrust themselves and one another are doomed.
-Alan Watts
“I’m targeting the super-wealthy, ” Propaganda always identifies examples that have no commonality to hate to institute policies that affect entire populations. lets compare two statements that could be used to institute the same policy.
We are going to commense military operations in country x. This wiill result in total obliteration of the countries infrastructure. there will be many civillian casualties. Families will be destroyed. There will be millions of displaced refugees. How the political vacuumn will be filled is uncertain.
The leader of country x is a despot a tyrant and a hitler. He kicks dogs. He is a racist. his actions have caused much suffering to country xs population. He must be removed.
This is an example of how propaganda only identifies isolated figureheads that justify policies that effect much much much much much wider populations. The technique is so prevalent that IMO any argument that selects isolated villainous examples to institute policy is inherently suspect. Once again. How to identify propaganda.
1 emotional in nature
2 villain is created ( Using peoples reluctance to possibly associate themselves with despicable individuals, open discussion ended.)
3 victims are created( using peoples reluctance to not have sympathy and compassion. open discussion ended)
When you see these techniques being used to end open discussion you are encountering propaganda.
Gail, my heartfelt thanks.
“Whatsoever thy hand findeth to do, do it with thy might; for there is no work, nor device, nor knowledge, nor wisdom, in the grave, whither thou goest.” (Ecclesiastes ix:10)
The chief treasures I shall leave behind are my children and grandchildren, but I hope also to leave something to help them on their own journey. Which is why I followed, as best I could, that admonition, to work with all my might.
However, if it is permitted, I hope to take my memories with me into the world beyond, and to lay them in gratitude at the feet of the gods.
As a mother, my work always shared time with my family. So most of my life I worked part-time. It didn’t maximize my earnings, but it fit in with my priorities.
I have many fine memories as well. I also have children, but no grandchildren. I share in your hope for the future.
Hope? Well, let’s carefully study what the late Alan Watts have to say about hope.
Hope is the fundament of despair and disillusionment. It is about time to let go of the delusions and grow up as a species.
https://i.ytimg.com/vi/ZIZErkuSHR0/maxresdefault.jpg
There is two sides to this coin. If a government can’t provide retirement then it can’t justify high rates of taxation. How can anyone prepare for retirement at a 30% tax rate?
In the history of the world, pensions are a fairly modern idea. Before pensions, person had to work as long as he or she was able. Then, perhaps one of the children would take the person in, to help where he/she was able.
I think we all need to consider the idea of working as long as we are able. Health-wise, people tend to do better while they are working. Men, especially, with nothing to look forward to often go downhill pretty rapidly after retirement.
You are not supposed to retire as a wage slave.
Ah, the delusions, “hopes” and dreams of industrial civilization and exponential growth has spoiled us beyond belief.
https://pics.me.me/i-dont-want-to-be-controlled-by-war-hungry-politicians-indoctrinated-11370321.png
“You are not supposed to retire as a wage slave.”
I certainly agree with some of the statements that follow this statement. “Wage slave” is using loaded emotional content at its worst. We are dependent on energy and resources. We consume resources. We enjoy resource consumption that even kings did not in the past.
Money is a proxy for energy and resources. We need energy and resources to live. This has always been so.
Retirement is a relatively new concept. Historically we worked all of our lives because if we did not the things we needed to live were not provided.
The idea of slavery has become very different than the practice of slavery. The idea of slavery is one of the most effective in propaganda usage because the practice is so repugnant. Wage slaves are very very very lucky. They enjoy a standard of living that very few enjoy. A job the shackles of a wage slave is an increasingly rare commodity and much sought after.
Which is not to say that there isn’t much truth in your statements. When propaganda is used open discussion is however ended. Propaganda is not conducive to healthy open discussion and constructive solutions. When two apposing propaganda streams meet their can only be conflict. One form of conflict is war. If you are apposed to war you are apposed to propaganda. If you are apposed to war you resist the urge to indulge in propaganda. Its tempting because it can be effective but it is by nature a destructive technique. Stand up tell the truth from your heart. That is the only path. lies can only exist in the dark. You can not work for the light and practice the dark.
You are mistaking all work as wage slavery. However, most work IS wage slavery to keep BAU cranking along.
Real artisans never cease to work. It’s their soul, their work is aspects of things which defines them. It is them that drives this world forward together with enabling capital.
If you fail to see this. Well, enjoy your shackles, “job”, loans, cars, houses and lame 2wk vacation to a foreign land.
To your defense it must be said that you probably was born into this system and lived with little exposure to completely radical and controversial aspects of the existence and life. It is not your fault, it is how group psychology manifests itself in a populace easily manipulated by government and media.
https://www.azquotes.com/vangogh-image-quotes/37/44/Quotation-Alan-Watts-This-is-the-real-secret-of-life-to-be-completely-37-44-21.jpg
True of the US as a whole; the “entitlements” owed to seniors can never be paid. But New Jersey found their own route down the Seneca Cliff. They lavished on the public sector unions a host of empty promises about their future benefits, to buy their support and, of course, the votes of their members. Both pensions and health care for retirees are now billions in debt.
First, because the promises were never fully funded, so immediately became growing liabilities. Secondly, because while unrestrained by Federal guidelines, the State made hopelessly optimistic assumptions about future growth, so reducing on paper the cost of their contributions. When finally forced to adopt modestly more conservative (but still too optimistic) accounting standards, their estimated liability doubled overnight.
The only solution currently on the table is to force new hires into very disadvantageous reward schemes, which is both morally repugnant and unworkable, because the current debt will keep compounding until most of the retirees are dead, which will take a long time given the absurdly low retirements age (almost all state worked can retire at 57 on 95% of the full pension, which is a great deal if you don’t expect to live after age 216 (do the math).
The only viable options are default or a Federal bailout. But since more than half the States are in similar leaky boats, the latter would simply hasten national collapse.
There are pension plans everywhere that are in a similar boat. I know that the pension plan that I am in was spun off (so it gets no new funding) when the company I worked for merged with another company. So there are no new contributions coming in, and it is clear that the funding will run out. My husband is in a state plan that sounds like the one you describe.
Most young people don’t have pensions plans. Back quite a few years ago, companies mostly because to switch to “defined contribution” plans instead of “defined benefit” plans. Actuaries figured out that they couldn’t really figure out how much the amount put in today might be worth in the future. Let the individuals take the risk themselves.
Social Security and other similar plans in other countries are almost entirely “pay as you go.” Even when there was an attempt to pre-fund the US Social Security plan somewhat to compensate for the big bump in post-World War II babies, the money got spent for other purposes, because the US budget is on a “cash basis.” Non-marketable US debt was substituted in its place. Medicare is pay as you go, also.
The problem is that, in a real sense, we cannot save up for the future. All we get is “promises,” and those promises are dependent on the interconnected global economy being able to continue to work. Each year (and each month), we will need to share in the goods and services available in our area, either through direct production or through trade. Any goods and services going to seniors will not be available to pay to workers. Clearly, the economy needs to pay today’s workers adequately for their services, or the system will collapse. Non-working seniors pretty much have to get the left overs.
Actuaries did not understand that the high interest rates and high inflation rates of the 1960s and 1970s would not last and built models as if they would continue to take place. Everyone thought that a free lunch was available. Now we are discovering that there is no free lunch. It really doesn’t make sense for today’s young people to pay for the free lunch promises made long ago, that really aren’t available.
The whole concept of pensions is very questionable in a finite world. The amount the economy has available to distribute rises over time, flattens, and then falls. Making promises based on wishful thinking models creates problems.
Gail, as ever a post full of insight and thoughtful commentary. Especially this: “we cannot save up for the future”.
But the history of civilisation teaches exactly the opposite lesson: we must save up for the future, else we shall have no future. And I don’t mean hoards of gold. The Library of Alexandria saved for the future, and saved the most important of all wealth: knowledge. The Parthenon, and Notre Dame, and even Stonehenge, saved for the future: it saved the understanding of who we are and why we are who we are. The Royal Society of London saved for the future: it saved the scientific method, and all its subsequent insights into our place in the Cosmos.
Setting aside my maverick economics, this is to me our true source of wealth, and the bedrock of civilisation. True wealth is whatever can be shared without being consumed, and whatever can be preserved without decay. How far have we fallen, and how long and hard will be the road back!
it is possible to write and keep a textbook on how to build a tv set, or fly to Mars
but without an industrial complex as backup—it won’t happen
The ability to keep knowledge is not as easy as it looks. If everyone is a subsistence farmer, there is not time for books or school, for that matter. There is not transportation to school either. If the materials to make fancy devices are no longer available, writing about them is not helpful. We think what we have learned is important, and it is, to those of us who have learned it. But it quickly loses relevance in a totally different world, with virtually no surplus energy.
I never cease to be astounded at how poorly our use of academic literature and the peer review system works. It seems to cast into stone many wrong ideas. Common sense and getting a little information from other internet users seems to be more helpful, in many regards. Our economic models are largely wrong, for example. Common belief that wind and solar can save us is wrong as well. We have way too many people living in ivory towers, looking at what people said in the past, without checking in the next tower over regarding whether there is new information that would lead to a totally different model of where we are headed. Also, financial incentives seem to skew findings. Research grants in particular lead to a lot of papers that prove what those providing the grant wanted proven, whether the findings are correct or not.
“our true source of wealth, and the bedrock of civilization”
Well put.
As the available resources dwindle, so must the population in order to keep the relative prosperity and production per capita up.
It is simply no other way. Unless we are planning on entering an Orwellian world government dystopia of endless misery, oppression, overpopulation and slavery which in comparison makes PRC and the Soviet Union look like paradise.
Only idiots vote in a rigged system. That is true specially in the brain washed and social engineered Gretaland.
https://www.mkwtees.com/pub/media/catalog/product/cache/image/700×560/e9c3970ab036de70892d86c6d221abfe/f/u/funny_voteamazonf.jpg
Things have always been changing and it may be hubris to think we as humans are always responsible. Could a voyage across the Atlantic in a sailboat have prevented this?
https://www.youtube.com/watch?v=Z0_Of0WGkEs
It seems to me that this was a true example of a climate change and if the data is accurate, occurred in the recent past of human civilizations. Most likely all the efforts of central banks would have been futile. Where did the people go?
Dennis L.
That is a very interesting video about the Sahara being a lush, tropical paradise, perhaps as recently as 5,000 years ago. Thanks!
There seems to be evidence that climate was very different, not very long ago, elsewhere, as well. The Garden of Eden seems to be set in the area of Tigris and Euphrates River, for example. This would strongly suggest that this was a well-watered area back then.
And apparently Australia was covered with an ancient forest, before it became desert.
https://www.quora.com/Why-is-the-continent-of-Australia-mostly-a-desert-now-given-that-in-recent-geological-time-it-was-covered-by-a-profoundly-ancient-forest
Also: https://instaar.colorado.edu/news-events/instaar-news/arid-australian-interior-linked-to-landscape-burning-by-ancient-humans/
What happened, when? The myth that climate stays the same, and only fossil fuels changes it, leaves a whole lot to be desired.
North Africa was the granary of Rome, and also the source of the many large wild animals they imported for the games. It is also where Hannibal recruited elephants interested in Alpine mountaineering.
It became a desert because of technology: intensive irrigation that raised productivity in the short term but in the longer term rendered the soil salty and infertile. A classic “technology trap”.
On the southern side of the desert, I saw the dynamic myself: slash and burn agriculture, that cleared the brush well enough, but allowed the sand to invade, by perhaps 5 to 10 km per year. Not much: but that was 60 years ago, so now the damage is a belt several hundred km wide.
Where did the people go? In North Africa they are starving, so killing each other and embarking on rubber boats for Europe, where they will kill us.
Importing of elephants from northern Africa by Hannibal must have happened fairly recently–about 218 BC. That would seem to be more recently than the film suggested that the land had turned to desert (although the date of desertification is really unknown).
This Livescience article seems to suggest that the animals were, in fact, from northern Africa, as you say.
https://www.livescience.com/62265-hannibal-alps-crossing-mystery.html
Sahara is greening.
“Using satellite images, Venter et al. 2018 found an eight percent increase in woody vegetation in sub-Saharan Africa over the last three decades, underscoring the global “greening trend”.”
https://notrickszone.com/2019/01/16/700000-square-kilometers-of-added-green-vegetation-climate-change-shrinks-sahara-desert-by-whopping-8/
Burn, baby, burn more Coal.
The earth is Eternal, the universe is eternal. Creation myth: Obsolete.
https://www.lionsroar.com/wp-content/uploads/2018/06/enso-featured.png
Supercomuters….breaking all records…..
https://finance.yahoo.com/news/the-number-of-americans-who-super-commute-is-on-the-rise-184529879.html
The number of Americans who “super commute” (travel 90 minutes or more to work each day, each way) is on the rise.
According to county-level data compiled by Apartmentlist.com from 2005 to 2017, the number of “super commuters” grew by 32%. That is more than triple the 9% growth rate for those with commutes shorter than 90 minutes.
The survey found that people with the longest commutes live in coastal metro areas such as New York City or San Francisco. However, Apartment List housing economist Chris Salviati told Yahoo Finance that there are some patches in more rural parts of the country
“In places like New York and San Francisco, where generally super commuting tends to be a symptom of really rapid economic growth — where there’s tons of jobs being added, but there’s not enough new housing. And so housing costs get really expensive, and folks get pushed out to the peripheries of the metro,” he explained. “In the Midwest region, what you’re seeing is really almost the opposite, where it’s kind of a region that’s seeing a long term decline economically. So folks are driving further and further to get to the opportunities that are left
What’s gonna happen when folks can’t spend 3hours a day going to a from “work”?
Yellow vests in FR were to large degree reaction of commuters to fuel taxation hike.
While FR was one of the pioneers of long distance fast travel many regions still lack the local connecting services.. which are important especially for the commuting workers.
The problem for US is the horrible fuel (in)efficiency of the personal car fleet as people recently over reacted to the alt oil rise derived fuel availability by selecting even more bigger gas guzzlers.. So, depression linked weakened fuel prices will be thus eaten through faster anyway..
Even in Britain, private cars are most important to poorer workers, who have to go some sizeable distances at very unsociable hours when there simply are no trains (often too expensive anyway) or buses. Cleaners, guards, factory shift workers, etc.
Speaking of which:
“The British car industry has witnessed its worst period of decline since 2001, as rising global trade tensions and Brexit uncertainty combine to provide a dire operating environment for manufacturers.
“UK car production was down more than 10% year on year in July and has now fallen for 14 consecutive months, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). The decline is now longer than the 13-month downturn between October 2008 and October 2009 at the height of the global financial crisis.”
https://www.theguardian.com/business/2019/aug/29/british-car-industry-suffers-worst-period-of-decline-since-2001
Although, isn’t it funny, that lot of people (perhaps incl. me) would still prefer buggy-quality yet somehow artsy-crafty brand like *LR/RR over Chinese box on wheels import (not common yet anyway).. Unfortunately, to your main point the affordability trap is closing on us fast.
*same for the Japanese and even SKorean production in terms of subliminal touch of inner vibe..
Not good at all!
A good point. But not always so. Over sixty years ago, in the industrial North, the factories would hire buses; they would go to the streets full of row houses where the workers lived, and ferry them to work.
And in Africa the same: buses from the (nascent) factories to the (traditional) villages, except the buses had no doors, and not many windows, and carried chickens, goats &c. But they worked. They even allowed a (white) teenager to ride them from the new block of flats to the local library, wishing him “gwana lafiya”
The automobile was a classic technology trap: good in the short term, disastrous in the longer term, and essentially irreversible.
Another example of how the way things are will not change until the bitter end. Rat-racing will become more and more grueling and sadistic in the meantime. Another thing is this – why do people hate free-time so much?
Moving right along……
The ultra-rich are illegally buying cheetahs as pets and it’s leading to their extinction
Hargeisa, Somaliland(CNN) Three tiny balls of fur huddle together for warmth inside a cardboard box. The baby cheetahs are just a few weeks old, but they’ve had a traumatic start to life.
A smuggler was attempting to spirit the cubs out of Somaliland, a breakaway state from Somalia, when he was caught red-handed by the authorities.
The cubs, who will soon be taken to a safehouse, are the lucky ones. Some 300 young cheetahs are trafficked out of Somaliland every year — around the same number as the entire population of adult and adolescent cheetahs in unprotected areas in the Horn of Africa, according to the Cheetah Conservation Fund….
While many of these states — including the United Arab Emirates and Saudi Arabia — ban the private ownership and sale of wild animals, enforcement is lax.
The overwhelming majority of these cheetahs end up in Gulf Arab mansions, where Africa’s most endangered big cats are flaunted as status symbols of the ultra-rich and paraded around in social media posts, according to CCF and trafficking specialists.
Humans …pretty much always disappoint….
Oh, sorry the link to the source and article above…
https://amp.cnn.com/cnn/2019/08/28/africa/somaliland-cheetahs-gulf-intl/index.html
Oh, another article….this time about BAU on the ropes
The Trade War’s ‘Second Wave’ Will Be More Painful, Says Indonesia Finance Minister
https://finance.yahoo.com/news/trade-war-second-wave-more-221805576.html
The global economy could be hit by a second wave of damage from the U.S.-China trade war — and it will be much more severe than the first, Indonesia’s finance minister said.
The outlook for global growth already was cut amid the dispute between the world’s two biggest economies, but the escalation in hostilities since then has “created a point of no return,” Sri Mulyani Indrawati said in an interview Tuesday. Damage from this second wave “is not quantifiable at this moment” but will be significant, and could thrust the world into “a totally uncertain era.”
“No one now has the trust or belief about how international disputes must and should be settled,” Indrawati said. “I think this secondary damage is going to be much, much more long lasting beyond a certain political regime.”
Policy Jumble
Since the International Monetary Fund cut its global growth forecast in July, tensions between the U.S. and China have ratcheted up and a deal appears more distant. Volatile markets, together with the brittle state of the world economy and new flash points such as Hong Kong, have fed fears of a global recession.
“This is something that needs to be addressed globally by all the leaders, regardless of their short-term interests,” Indrawati said. The type of coordinated policy response seen during the global financial crisis a decade ago could help counter the threat, she said, but right now “it seems like the world is heading in a direction that nobody wants.”
“The policy action is not coherent,” she said. “That’s creating very weak confidence among many economic players in the world in the ability of leaders or decision makers to actually avert or avoid this recession.”
Maybe trade in Cheetah kittens will be hurt…sarcasm
“The ultra-rich are illegally buying cheetahs as pets and it’s leading to their extinction.”
Which triggered a wonderful fantasy of the ultra rich being eaten by cheetahs until none was left. But I fear you meant it the other way round.
Nope, from the article and I KNOW you know what was meant!
The ultra rich extinction is already baked in the cake…for ALL of us here in BAU land.
Best practice banging two stones together and the Fast Eddie Challenge. Robert!
True story…lived on island alone for 20 years…lost fortune and is “sick of money”
https://m.youtube.com/watch?v=hxHWyyCpeYs
It will likely take more ordinary steps, genuine left is gaining in the US of all places (demography and ethnicity 3rd/4th turnings eventually bite back), funnily I even noticed they now increasingly invite on msm Prof. Wolff on decline ahead (class – structural marxist as opposed to identity politics wannabees).
The pendulum simply swings, I’m not looking forward to it, as lot of collateral damage is to be expected as in any similar longer cycle crossroads in history, moreover this time no or very few material reserves around.
Quite right: the Left might get their dream and the end of Capitalism, but find that their Utopia is built in a depleted wasteland…….
“Boris Johnson will ask the Queen to suspend parliament from mid-September until just two weeks before the 31 October deadline, reports suggest. The explosive move will be seen as an attempt to stop MPs from stopping the prime minister forcing through a no-deal Brexit.”
https://www.independent.co.uk/news/uk/politics/brexit-parliament-suspend-prorogue-boris-johnson-queen-no-deal-latest-a9081546.html
“Sterling slides on reports of parliament to be suspended… You know things are getting serious when MPs are tweeting graphics of the pound-dollar exchange rate…”
https://www.theguardian.com/business/live/2019/aug/28/recession-fears-us-yield-curve-inverts-brexit-stock-market-bonds-looms-business-live
“Boris Johnson is heading into the crunch period for Brexit negotiations with the UK economy potentially on the brink of recession and as global economic growth falters.”
https://www.theguardian.com/business/2019/aug/28/uk-economy-falters-as-slowing-global-growth-adds-to-recession-risk
He’s perhaps quite right to do that, as opposition plans to prevent ‘No Deal’ undermines the UK negotiating position fatally.
The EU has to be forced to compromise and engage in proper negotiations.
I am inclined to agree, Xabier. The EU has been inflexible and disingenuous throughout.
Theresa May failed thrice to get the only deal they would agree to through parliament. Without the threat of no-deal Boris Johnson is impotent to improve on that deal. What else can he do?
Which isn’t to say, of course, that the increasing likelihood of a no-deal is not highly alarming.
Exactly, Xabier. We learn in “Negotiation 101” that you must never walk into the room without a BATNA: Best Alternative To a Negotiated Agreement. Without that, the other party will walk all over you.
But Treason May did that deliberately, to betray the will of the people, the manifesto promise of her own government, and the country she was elected to serve. And now another bunch of traitors want to pull the same trick.
Boris is right. Except that Parliament does not need to be suspended: it needs the equivalent of Pride’s Purge. (December 1648: look it up)
Take a look at eureferendum.com updated daily.
you might like this comment from
https://thesaker.is/moveable-feast-cafe-2019-08-27/#comment-688284
‘You Will Not F**k With my Children’s Future’: Hugh Grant Slams UK PM Over Parliamentary Suspension
https://sputniknews.com/europe/201908291076666709-you-will-not-fk-with-my-childrens-future-hugh-grant-slams-uk-pm-over-parliamentary-suspension/
“You will not f**k with my children’s future. You will not destroy the freedoms my grandfather fought two world wars to defend. F**k off, you over-promoted rubber bath toy. Britain is revolted by you and you [sic!] little gang of masturbatory prefects,” Grant tweeted Wednesday.”
I’d say that is a fairly accurate description of johnson.
I wouldn’t attach too much weight to any of Hugh Grant’s opinions:
https://thoughtcatalog.files.wordpress.com/2015/10/hughgrantdivinebrownlapd.jpg
Ad HG the entertainer, Giga lol perhaps Terra lol ensued, thanks.
Isn’t it interesting, how these “silver surfers” of the established order and determined gate keepers of morality, democracy and other values are usually and demonstrably the worst swamp material themselves.. Similarly, the former staunch commies make later the most zealot capitalists, the ideal family figures are revealed later as Epsteinian Islanders, and look what’s now going on the Catholic church cadre the rise of heretics (lets drop Jesus and replace him with feelgood mass population experiments) etc..
An amusing tirade from Hugh Grant, tilting at windmills though he may be. A difficult man to warm to, although I’ve generally enjoyed watching him as an actor.
Cirus Cross, I read the most recent article on that site and it is sensible.
I have been reading Richards blog for about a year he seems to have a good grasp of eu laws and regulations it is worth reading the older stuff. He also has a poor view of our MPs and PM as do I.
And I would say that it is a fairly accurate self portrait of Hugh Grant.
I saw this in the news today. It struck me as strange, not understanding what powers the Queen has. In the US, the House and Senate could vote to take a vacation break, but I don’t think we have an equivalent provision.
Gail, the Queen’s powers are very limited here. Her role in this is basically procedural and she is not in a position to stymie Boris. Gone are the days when she could put his head on a spike on London Bridge.
I’d much rather be a ‘subject’ of Her Maj than a ‘citizen’ of many another state…..
“…The [banking] industry argues that higher capital requirements for trading in general — more than three times pre-2008 levels — will prevent a repeat of the financial crisis…
“Consumer groups and some regulators see the Volcker rule change quite differently. The new version cuts the pool of financial instruments covered by the rule by at least one-quarter, according to a regulator who voted against the change. It not only frees banks up to take more short-term bets but also reduces the documentation requirements, opening the door to more risky trading.
“Critics also point out that if banks find ways to trade on their own account, rather than for clients, it could reawaken the poisonous conflicts of interest that flourished ahead of the 2008 crisis.”
https://www.ft.com/content/df55ff14-c8ad-11e9-a1f4-3669401ba76f
“So much time has passed since the Great Recession of 2007-2009 that many adults haven’t experienced an economy that’s contracting rather than growing in their working lives. But slowing global growth and the U.S.-China trade war, among other strains, have flamed fears that the next recession is around the corner. Is a recession inevitable? Eventually, yes…”
https://www.bloomberg.com/news/articles/2019-08-28/what-to-know-about-recessions-including-the-next-one-quicktake
“…the regulators’ efforts to rescue the financial system were incredibly broad. By March 2009, the Fed had deployed $US7.77 trillion, more than half of US GDP, to lend to financial institutions on the brink, buy assets plummeting in value, or otherwise forestall disaster…”
https://www.afr.com/policy/economy/why-the-fed-will-struggle-to-respond-to-the-next-crisis-20190827-p52l9y
“In 2008 to 2009, the Fed cut rates by five percentage points and it was not enough. Today, there’s far less room to respond to a recession. And elsewhere Japan and the European Union are headed toward a recession with their central bank rates already below zero.
“So, what happens then?”
https://business.financialpost.com/diane-francis/diane-francis-when-the-next-recession-hits-well-have-a-hell-of-a-time-clawing-our-way-out-of-it
“A key part of the U.S. yield curve, a closely-followed recession indicator, inverted further on Wednesday while 30-year Treasury yields fell to a few record low on growing concern about the fallout from a bitter global trade conflict.”
https://uk.reuters.com/article/uk-us-markets/u-s-yield-curve-inverts-further-30-year-yields-hit-new-record-low-idUKKCN1VI0O8
“Perhaps nobody was more surprised to hear that China had called President Donald Trump’s administration to restart trade talks than the government in Beijing itself. … It all made for splashy headlines and momentarily boosted stocks, but nobody in Beijing officialdom appeared to know what he was talking about.”
https://www.bloomberg.com/news/articles/2019-08-27/wary-of-trump-s-flip-flops-china-prepares-for-worst-on-trade
“China’s total debt ratio continued to grow in the second quarter of 2019 as the government continued to emphasise support for the economy over efforts to reduce excess debt and risky lending.
“Even as China’s debt-to-gross domestic product (GDP) ratio surged in the first six months of the year to nearly 250 per cent, there are growing calls among academics and Beijing policy advisers for the country to further loosen its purse strings further to counter the headwinds from the trade war with the United States.”
https://www.scmp.com/economy/china-economy/article/3024572/china-debt-ratio-jumps-first-half-beijing-abandons
Helps US stock market, though.
Difficult for banks to make money with inverted yield curve. They tend to cut back on lending, shrinking the economy.
Well, it’s one way to raise commodity prices:
“A federal appeals court on Tuesday revived lawsuits by aluminium purchasers that accused Goldman Sachs, JPMorgan Chase, mining company Glencore and other companies of conspiring to drive up prices for the metal by reducing supplies.”
https://www.aljazeera.com/ajimpact/conspiring-raise-aluminium-prices-cases-banks-return-190827183308496.html
Here again, there is a question if cutting back aluminum supplies really raises prices. This is a 30 year price chart I found for aluminum.
https://gailtheactuary.files.wordpress.com/2019/08/aluminum-prices-30-years-to-aug.-2019-infomine.png
It has the same price run-up in the 2001 – 2008 period as does oil. Prices drop dramatically in late 2008. There is another spike around 2012. Prices were low about 2016. Prices tend to be heading down again.
This is the price chart for copper from InfoMine.com
https://gailtheactuary.files.wordpress.com/2019/08/copper-price-30-years-to-aug-2019-infomine.png
It even more closely follows the price of oil, with the pre 2000 prices lower. But notice how similar the charts for aluminum and copper are after 2000.
Live long and prosper? On half your current income? And that based on an optimistic official projection. Retirement in the “post-retirement” period is going to be quite an adventure.
Gail has long doubted the sustainability of pension schemes. Now the Japanese government is giving a clear indication that it agrees with her.
Japan’s government unveiled estimates on Tuesday that showed public pension benefits steadily declining during coming decades, as it prepares to open up a debate on social security reforms needed to support an aging population.
Curbing bulging welfare spending is a vital step toward fixing the industrial world’s heaviest debt burden, which is currently more than twice the size of Japan’s $5 trillion economy.
While Prime Minister Shinzo Abe’s government has made welfare reform a top priority, it has moved slowly due to fears that it could alienate the public.
Japan has one of the oldest populations in the world, due to a low birth rate and people’s longevity, putting pressure on its pension system.
In its pension estimates – which are issued every five years to gauge health of public pensions – the government estimated monthly pension benefits at 220,000 yen per model married couple, worth about 61.7% of pre-retirement income.
This pension-to-wage ratio is projected to fall to about 51-52% by the late 2040s, with the possibility of sliding further to around 45% in the 2050s, depending on growth and population outlook.
By some estimates, the ratio would fall below 40% in the 2050s, assuming the national pension fund dries up while the economy contracts mildly and labor participation stalls.
https://japantoday.com/category/politics/japan-estimates-cast-doubt-over-public-pension-sustainability
Unfortunately, government pension plans almost have to be pay as you go. There aren’t enough securities in the world to fund government pension plans.
The estimates discussed in these report are most likely based on estimates of how many young people there will be compared to old people and how much it will be possible to tax these young people to pay for the benefits of the older people.
I understand that the retirement age is gradually being raised from 60 to 65. It seems like it needs to be higher than this, if people live as long as they seem to in Japan.
The tour guide when we visited Japan two years ago told us that there are some people who are not really covered by the pension plan. These are contract workers, who find at the end of the year that they don’t have enough funds to pay the mandatory Social Security fee for the year. As a tour guide, he was a contract worker. I understand that at least some of the people hired to clean up Fukushima were contract workers.
It was my understanding that if these people had the funds saved up at the end of the year, and contributed the required amount, they could be covered. But if they missed (too many?) payments, they were left out. I had the impression that contract jobs generally did not pay as well as the lifetime jobs.
I remember this was discussed late last year and my own reply was that here in Canada I work in the oil and gas industry and guess what it is about contract work. Can you imagine Canada of all places. I didn’t understand contract work when I first learned of it but visiting this blog has educated me believe you me. It actually blows my mind we are taking our cue from the Japanese. Just one more nail in the coffin I guess of the coming collapse. And it is all so slow really, just like a frog in a kettle being boiled to death and oblivious to what is happening to it. It’s all just so clear to me now. thanks Gail
Well, at least the Japanese blown the money on nice toys for the people, fine fleet of bullet trains and what have you. Contrasting in Merkelstan as we speak trains don’t arrive on time anymore, and in the US they have none (serious ones) ..
In the US, we have lots of railroads used to haul heavy freight. This seems to be a good use for trains in a part of the world where distances are longer and population is less dense. The few long-distance passenger trains that we have come at strange times of the day or night. Because the system is primarily freight, there is little attention to punctuality. Maybe the train arrives on time, and maybe it is two hours late. It doesn’t matter if it is coal being transported, but people waiting at the station get more than a little upset.
Having trains for people seems to depend on concentrations of people wanting to go roughly the same places, at sort of the same time. Thus, many older cities do have commuter trains, and there are trains for passengers in the densely populated NorthEast. But trains don’t work well when there aren’t enough concentrations of people going the same place. Jobs in Atlanta are generally not in the center of the city, for one thing. Once you get to an end point (even on a bus), there generally are not sidewalks for walking from one place to the next. (Building sidewalks is energy intensive.) So a person ends up weaving around bushes, walking through parking lots, and following a trail that has grown up over time, made by fellow walkers.
I know that you well know how the already existing vast US rail (and other public transport) was pro actively dismantled by corp interest (Detroit, Oil, Tires, ..) after the WWII.. It was simply hostile market takeover executed very “efficiently” in few yrs time, the US gov (infiltrated by that time) did exactly nothing, well they wrote check for the highway system (only)..
In normal mixed economy, at least both the US coastal train networks, plus some light train system in urban areas would have survived or be slowly expanded-upgraded to some degree (perhaps bit less enthusiastically) in comparison to the rest of the world..
The core issue of interest here – because this is part of these overall studies in doom/civilization rise and fall – it’s simply “show and tell” what the industrialization / enviro destruction, and never to be repaid debts brought to the table after-all.
There were clearly different approaches taken, and the correlation between more “antsy” organized societies, typically Asian vs. “pirate” individualistic model is very strong especially on this area of public infrastructure. I don’t idealize the first one, there are obviously many dark facets to it as well.
The existence of two such broadly diverging models have still huge implication for the near, midterm and longterm future.
In the US, we needed “demand” for our vast oil, coal, and natural gas resources. We also had long distances to cover and a spread out population. Different solutions were found in Europe and the US, but I would argue that the solution that was optimal for the US was not the same one as for Europe. There was too little concentration of traffic to support train service, apart from in the densely populated older cities. If trains would really have worked, I think that they would have been encouraged more. Even with big subsidies, US long-distance passenger trains don’t seem to make much sense.
the original concept of a pension was to have enough kids to share the cost of looking after you in old age.
The flaw in that idea is pretty obvious in hindsight
In reality in Britain the burden of keeping an old codger only ever fell on one child, usually a married daughter.
But many elderly were left entirely on their own in old age and lived in misery if their strength failed, or went into a public institution.
This was also true of peasant families ( those who owned their own houses) in Europe, with the arrangement being that the retired couple would have their own room in the farmhouse, and guaranteed meals until death. Retirement came before 50, as they were worn out by then.
“Retirement came before 50, as they were worn out by then.”
Interesting point. Our bodies need exercise, but I assume the intensity of the effort expended over time just wore out the joints, etc. Cardio may have been good, depending upon the diet. But what to do about the arthritis pain? Aspirin, alcohol (addictive, liver problems), then ultimately morphine, probably hard to get and also addictive. Is this why opium was a hit in Europe?
The Romans had their hot spring bathes all over the place, in Germany, France and Britain. Everywhere you go, it’s Baden this, baden that. They were a practical lot, so I doubt it was just to be social.
Part of the explanation was that they did not work hard from their 20s till 50s – instead they had very short childhood and early responsibilities: around age ~6-7yrs it was not enough to do light work around the household and keeping eye on younger siblings it was time to start heavier physical labor and by 13-15yrs they often had to join the real adult hard labor themselves.. So, that’s like 35++ yrs of hard physical labor career before “retirement” (if they were very lucky).. all that in the prevalent conditions of the time period.
if houses still had chimneys it would solve the child labour problem
Mesolithic (~5k BC) peoples have been found in ~8m mining pits (for stone tools) of the dimension fitting only way smaller adults, then they found buried skeletons of very short yet unusually muscular women in the bottom as well as skeletons of kids-youngsters.. most likely the laborers..
Yes, the slave laborers of old where children. It is also a fantastic source of fresh manpower for the despots and their war waging ambitions.
Today’s prevalent delusion is that the youth will pay for the bills of the elderly is totally flawed since most drudgery has been removed by the introduction of industrial civilization.
I mean, even useless jobs of some random frippery operation apparently creates real wealth which will be at the disposal of the elderly, or so does the feeble minded believe.
When in fact it is the machine that pays for it all by converting energy into real, tangible wealth.
Also eyesight – especially in the days not so long ago before opticians were so widely and readily accessible along with their wares.
Actuaries didn’t stop to think that people would have fewer children, if they could depend on the state, rather than their children to support them. The system as a whole still needs the children to fund the cost, even if they don’t pay the amounts directly to the parents.
Do you think this has affected how parents treat their children? In the inner city there is often almost no parenting, in the middle classes after public school kids are on their own to borrow money for education. Even in high school it sometimes appears as though the children are there to provide non paid sports entertainment for their parents. If people need their children they might treat them more like valued members of the family.
I have often said, “I will know how much you love me when you write me a check.” We are not writing many checks for our children. Looking at progressives, it may be more a generational issue, there isn’t much left for them after entitlements are paid.
Dennis L.
Part of the reason there is so little parenting of children is the need for both parents to work, often a combination of low-paying part time jobs. The mother is often raising the children alone. Many parents have drug problems as well.
All of the media plays into this as well. The television becomes a baby sitter at an early age. It is hard to think seriously, when the television is blasting away in the background. And even when parents are around, they may be paying more attention to a screen than the children.
And you are right: parents don’t really need the children the way they did when the children worked and contributed to the family finances. They don’t value them as highly.
Also, the parents aren’t providing good role models. They often have little education themselves. (Those with advanced education tend to have few children.) The concept of a family eating together and doing things together may be lost. Not a good situation.
The “Elders” as Fast Eddie called them or the elite have a strong incentive to discourage people from having children, which is why feminism is mentioned almost every where in the media constantly, and lgbt,people are constantly being patronized .
The Elites are surely a confusing bunch. Less children, but more people by mass immigration of inhabitants of third world countries to (post) industrial nations with their huge resource footprint. Empowering females to consume more than their already huge ratio of 70-85% of all consumption.
Why not simply just say what’s up:
“You know, guys, it has been a wonderful time living well beyond the means of this planet, but now it is all coming to an end. Yes, the oil soaked party is soon over”
Would that ruin their insanely boring business model of accounting frippery, debt and theft perhaps? The same holds true for the pretentious and envious offspring from lackeys and tyrants of old times, degenerates which they pay to do their bidding.
You seem to believe the elites have a plan.
DJ: Only the plan that a self-organizing system gives the elites. Glorifying all of the new-found leisure and the value of entertainment. Pushing ahead the ideas of economists. Allowing politicians to be elected, because the future will only get better and better.
Gail,
The Elites, and by which I mean the despots of new and old, undoes the self-organizing nature of emergent organization among people. Thus sowing the seeds of their own destruction, eventually and inevitably bringing down the whole thoroughly corrupt enterprise which they only are capable of creating.
However, the surviving offspring in the form of lackeys and other henchmen continue to perpetrate the garbage genes through their ambitions for power, prestige expressed as their soulless lives; stealing, scamming, plotting and scheming.
This is why the rule of law, the bill of rights and an ever growing vigilance towards a reduction in liberties is absolutely necessary to make this final push to make our civilization eternal and can not be allowed to fail.
Exactly. Why take on the trouble and expense of your own children when you can live off other peoples’?
Like almost all other economists, they performed a “static analysis”: we change one variable, and assume everything else stays the same. So more taxes = more revenue, because people won’t just buy less, or stop buying at all. Which, of course, is why luxury taxes always fail, because luxuries are by definition optional purchases.
I was astonished at Carnegie Mellon (as so often) to learn that the economists did not teach basic game theory.
It is not the children that covers for aging parents. The machines do. Working day an night to produce an enormous amounts of goods and services to be consumed by the elderly.
It is time to put an end to the belief that the offspring finances the parents. The machine does. And the machine needs power.
The machines need a working economy. Without enough energy, the economy collapses. Governments are particularly prone to collapse. What you are writing reflects wishful thinking.
The machine IS the economy. You are the user – the beneficiary of the device.
It is machine all the way from enabling the production of enormous quantities of goods and services to the computers and planetary information sharing networks used for all economic transactions and storage of corresponding records.
Yes, the machine is indeed the economy. And the machine needs energy. Only that part is right.
Why should the machines work for elders, or other useless eaters?
The machines of industrial does not care for whom they work. As long as they are fed energy they will get the job done.
Machines will be built for and work for whoever pays them.
In a world with falling properity per capita, with high automatisation and lots of outsourcing and ruled by corporations…
A vote won’t be worth next to nothing .
In effect the machine is used for shifting back the helicopter money to the useless eaters which produces nil and back into the owners of this joint.
Well, as long as there is still energy sloshing around in the tank. Which is becoming a bit problematic as the process of depletion advances.
For now workers are needed and must be rewarded more than non workers.
If minimum living standards doesn’t shrink fast enough there won’t be enough to keep workers motivated.
The owners is not interested in sharing. Or being taxed .
“Workers” is a broad term. Everybody in the Soviet Union had a “work”. Busywork proves nothing.
The people who deserve compensation for their efforts is the productive part of the work force which through their ingenuity create new business opportunity and drive technology forward. The true artists and artisans.
words fail me
eyerolling is the only comment I can manage on that
Do you think that you and your offspring produce anything of value for mankind by going to a “job” of meaningless frippery? Now, is that frippery supposed materialize prosperity out of your collective delusions and into a mature age? Of course not. You are at the mercy of the real men and women who keeps this joint lit.
It is the ingenuity of businessmen, engineers and scientists together with an abundance of cheap energy which “pays” for the pensions.
Believing it has something to do with the wages and economy is truly eye-rolling. Money, taxes and the national debt is merely an accounting scheme which you believe signifies real prosperity.
It is the machine that does the real work and enables the production of an enormous amount of goods and services.
Come on; wake up and smell the morning coffee. 👍
i was born of generations of miners, from whom the fundamentals of our society derived
I married a nurse and sired 3 more (one of whom still practices.)
Is that sufficient to meet your high ideal of social worth?
That’s a reasonable analysis.
The industrial civilisation and its global economy is the machine.
it might sound over simplistic, but it is the energy available to the machine.
Before we had cheap surplus energy, no civilisation could move faster than hoof and sail.
DaVinci might have developed the fundamentals of flight, but that had to wait 500 years for a viable engine
which is why I wrote this piece:
https://medium.com/@End_of_More/the-day-that-made-your-life-possible-42f6a56c0705
Economist Steve Keen says, “labour without energy is a corpse, and capital without energy is a sculpture.”
This is a graphic of his that illustrates this point.
https://gailtheactuary.files.wordpress.com/2019/05/s_keen-correct-way-to-view-energy.png
And it is mostly automated. That specially holds true for the stock market/finance/transaction systems with banks and institutes laying off people en masse and instead installing computer/AI systems.
The delusions people have about the book keeping representations and operations inside these machines and networks is bewildering. Attributing almost mystical power to it envisioning total co11apses and chaos to emerge from a convoluted book keeping operation.
It just does not happen.
Artificial yes, intelligence not so much.
At some point banks could no longer afford having people haggling for mortgage rates when an algorithm with three datapoints input could do it way better.
Same thing with investment advice, if half of advisors are worse than average, why not invest average and get the fee as an edge.
yes but you are talking about moving electrons around to provide information
the problem we face is the shifting of goods around, not the same thing at all
@Norman
Isn’t that typical; the offspring from the semi-slave and owner of nothing laying claims to prosperity which ultimately could be used to propel mankind into the stars.
You will most likely receive some form of UBI in your life as a thanks for the efforts. So just stop being a crypt0 c0mmie desiring more than the productive and intellectual capacity which you and your offspring have, as I have done a long time ago.
the convolutions of your mental process is way beyond my limited means of processing to a sufficient level of coherent response.
Next time you need medical attention, no doubt you will dismiss the care giver as a semi slave and thus not worthy to attend to your needs, however base and menial they may be.
one can only hope that she is above ‘leaving you to get on with it’
Indeed it is the combination of human ingenuity, British foremost, as is still ongoing with the example of ARM microprocessors and Googles AI initiative located in the Queens back yard, plus cheap energy, coal, and the machines of industrial civilization which enabled this enormous transformation.
That is the source of all prosperity, pensions, hopes, overpopulation, delusions and ultimately the eventual demise of mankind. And why not. What a ride it has been.
https://images-na.ssl-images-amazon.com/images/I/51xXiMRUa9L._SL1005_.jpg
@Gail,
Where does energy enter into the economist equations?
Answer:
https://images-na.ssl-images-amazon.com/images/I/51xXiMRUa9L._SL1005_.jpg
Something is going to happen before the end of this year.
Microsoft
https://pbs.twimg.com/media/EC_Gu1zWsAI76gE?format=jpg&name=large
Germany
https://pbs.twimg.com/media/EC-zAhiVAAAe2cC?format=jpg&name=large
Does look scary.
Yep, that’s me buying some more MS and AMD stock. Let’s all bow down to our semiconductor and software overlords.
https://6lli539m39y3hpkelqsm3c2fg-wpengine.netdna-ssl.com/wp-content/uploads/2019/05/Frontier-cabinets-feature-image-700×393-675×380.jpg
Better to buy gold, silver coins and lead in the form of bullets capped onto high explosives, to keep your doomer creds.
Watching these technical analysis graphs of some random stock always gives me the urge to:
https://pics.me.me/no-just-no-memegenerator-net-patrick-stewart-facepalm-meme-50165380.png
In WSJ: “U.S. Glut in Natural-Gas Supply Goes Global”
In a blow to producers, prices in Europe and Asia plummet to historic lows
https://www.wsj.com/articles/u-s-glut-in-natural-gas-supply-goes-global-11566907200
Natural gas is almost as bad as electricity for not be storable. There is a little bit of storage built, but that is all. It also needs pipelines or ships to go the entire way, end to end. This is why prices bounce all over.
And people don’t use more of it, just because it is cheap–not very quickly anyhow. A whole set of new uses need to be built. New electric power plants, if nuclear is being taken off line, for example. Or a manufacturing plant that uses it. Or vehicles powered with natural gas, if there is a whole system of storage and refills available. All of this takes years to implement. If nothing else, pipelines take time and are very expensive. Building natural gas peaking plants to go with wind and solar sounds like a good idea, until one adds in the cost of the natural gas pipelines and storage.
And Nord Stream 2 is in its final phase of construction.
Lolz, yep that’s unfortunate development indeed – one would hope the Bear put it in writing somehow, i.e. long term price fix not only spot in the contract..
…and a ban on U.S freedom gas…
Not needed since it’s way more expensive when all costs (new / upgraded terminals) are taken into account.
Lots of natural gas for Europe. A part of the article I didn’t copy said, “Though processing and shipping costs can vary by exporter and destination, $2 per million BTUs is typical, analysts say.” I read earlier about a typical shipping cost of natural gas to Europe being in the $2 range. I would be willing to bet that it would be $3 or more to China and Japan.
It is hard to get a high enough price in Europe to make the high shipping cost work. Pipelines are generally cheaper than LNG (although they can be expensive, if long enough, also).
Natural Gas to save the day!
(Bloomberg) — A deal that will save Mexico $4.5 billion has been reached with with three pipeline companies to carry natural gas throughout the country, according to President Andres Manuel Lopez Obrador.
Carlos Slim’s Grupo Carso SAB was the first to reach agreement with the country’s Federal Electricity Commission, or CFE, Lopez Obrador said during his morning news conference on Tuesday. Sempra Energy’s Mexico unit IEnova and Canada’s TC Energy Corp. then “acted responsibly” by also agreeing to contracts, the president said.
The highest profile project — IEnova and TC Energy’s $2.5 billion Sur de Texas Tuxpan marine conduit — will be the first in operation, CFE Chief Manuel Bartlett said at the news conference. Lopez Obrador said it would come online in about a week. The tariff rate on the pipeline was reduced by 33% to 38%, while the rate reduction for some of the other contracts was between 19% and 32%, said Miguel Reyes, a director at CFEnergia. Fermaca Enterprises is still in talks with the state-owned power company.
“In the end, the silver lining of this is there’s an improved level of communication” with business leaders, said economist Rogelio Ramirez de la O, who advised Lopez Obrador in his 2006 presidential campaign. What’s changed, he said, “is that contracts need to have the best interest of Mexico….
The future is certain…..
…The agreement extends the contracts for the Guaymas El Oro and Sur de Texas Tuxpan pipelines by 10 years and “puts an end to the international arbitration processes of the designated pipelines,” IEnova said in a statement.
Sempra “is pleased that IEnova was able to reach a mutually agreeable resolution to the contracts with CFE on these important pipelines,” the company said in a statement. “The Sur de Texas-Tuxpan and Guaymas-El Oro pipelines are among Mexico’s most important infrastructure projects.”
Carlos Salazar, the head of the CCE business group, said that the deal gives certainty to investors. The conflict had attracted the attention of business groups concerned that it could set a precedent for the government to change any existing contract that it sees as unfair.
And that’s one thing in the forefront of human dealings…being fair! Sarcasm
I found a related article:
Mexico’s AMLO Sees $4.5 Billion in Savings in Pipeline Pacts
https://www.bloomberg.com/news/articles/2019-08-27/mexico-s-amlo-says-a-deal-is-reached-with-pipeline-companies
A person wonders whether the contract really gives enough money to all of the players in the system. Is there enough funding for the pipeline builders, for example.
Ex NY Fed Dudley thinks that the Fed should stop Trumps re-election in 2020.
https://www.bloomberg.com/amp/opinion/articles/2019-08-27/the-fed-shouldn-t-enable-donald-trump?__twitter_impression=true
Excellent news. This idiot has just handed Trump a free noose with which to throttle the Fed. Pull it tight, Donald!
https://www.youtube.com/watch?v=wfG0USvDTew
Sorry if posted before, but this (Q1-20019?) docu suggests there is an additional (factor) explanation for the coal production lull in recent years, here they show they first needed to prototype new system of low(er) sulfur content coal power plants sitting just nearby the coal seams in the western deserts of the country, which are run on new system of passively cooled towers.. Hence mass build up phase of this project is just starting..
Could be a near/mid term technofix only, but it also could bring about at least support for the plateau of their past hockey stick coal production, so further rapid decline as predicted by some might not happen overnight..
Interesting video! The part about the coal mines, hoped for air-cooled power plants, and new long distance transmission is in the first 20 minutes of this 49 minute video.
One thought I have had was, “What happens when there are earthquakes in the area?” These high-tech ultra high voltage long distance transmission lines would be difficult to fix, in my opinion.
Another thought is, “Is the project really doable, at a low enough cost?” The cost of electricity cannot be very high, when it is being used to make goods for international sale. At least with coal-fired generation, the wires that are put in place will be used 24/7/365. When it is solar panels that are put in place, the long-distance transmission is used only part time, making its cost per kWh much higher. Then there is the problem of trying to balance the intermittent electricity.
Another issue is whether the economy will hold together well-enough, long-enough for this to all to happen. Some of the high-tech equipment shown in the film must use supply chains from outside the country. Things could go wrong in many ways.
I am sure that the push toward electric cars is intended to use China’s self-produced coal, instead of imported oil.
Well, I guess determined researcher could untangle the details rather quickly, the video at some point shows ~200MW at the control panel, not sure, but this could be output of the one coal thermal burner-cooling tower combo (it sort of corresponds size-wise), there were 4x at the site, that’s .8GW per site (~older gen NPP output equivalent), also the drone footage showed the mine was surrounded by several such sites across the horizon, moreover these desert coal installations could be easily spotted from sat images. Hence getting the napkin calculation of the overall capacity they envision for it, perhaps they even provide it publicly somewhere, actually they mentioned xy tons of coal capacity per one HV line (out of many planned) in the video as well..
The other segments of the docu show Q2/2017 date..
“difficult to fix, in my opinion.”
Transmission lines generally do not fail in earthquakes. If they do, they are not particularly difficult to repair.
“at a low enough cost”
The metric usually used for rough calculation is a cent per kWh per 1000 km. That is how the James Bay hydro power gets sold in New York.
Look at the movie. It looks like we need a whole interconnected world economy to keep the system up, at the scale that they are doing things.
“whole interconnected world ”
I rather think that China could maintain its high voltage power lines without help from the rest of the world.
The only way to build truly resilient systems is to make them distributed and self-healing.
Centralized systems are subject to catastrophic failure due to their close proximity to each sub system.
The benefits of centralized systems is their capability to effectively shuffle information/energy over short distances. It is why today’s data centers are a thing of the past. However, still relevant for exascale real-time super-computation that is not really used in the transaction systems of the economy.
Nvidia recently bought Mellanox, which develops high speed networking gear because they clearly understand that the time of centralization is coming to an end.
Block chain technologies are a relatively new development in order to provide a traceable record of cryptographic transactions.
The planetary information processing systems and supply chain networks are currently hardening up as it becomes more distributed with every day. Information will be everywhere and nowhere at the same time. Any amount of redundancy can be built into such systems.
It is no longer possible to erase information, as the saying goes: “The Internet Never Forgets”
http://www.quickmeme.com/img/40/402846fa33d4f4545cdebbc75a15766e9870435023a575b60c76122444ad4d13.jpg
Anything that depends on our financial system and our fossil fuel system is not self-healing. Calling wind, water and solar “renewables” is a fraud, because they are as dependent on the rest of the system as anything else.
Self-healing things are dissipative structures. They depend on energy consumption as well. Hurricanes are dissipative structures. Plants and animals are dissipative structures. We are already overusing biomass. Forest cover keeps falling.
Yet it does not collapse, because it is an networked information processor entity. The bits and bytes of monetary book keeping inside a computer does not care a single thing about what they represent.
You make book keeping entries real, when they are merely an accounting scheme. Fictive entities does not collapse, they are either relevant or irrelevant. In the case they become irrelevant, other representations will take their place, such as the Dollar in Venezuela.
Dissipative or not; we have no clue of the inner workings of Earth, the universe and the sun in particular. We can, however slap an artificial control volume around an entity and make thermodynamic calculations which makes them true and accurate in the bounds on which we impose and call them dissipative and entropic.
But on a grand scale, we are totally clueless what powers this whole thing. The arrogance and hyperbole of science apparently can explain the workings, the grandeur of galaxies, the sun and even cl1m@te change. When we even can’t get hydrodynamical models numerically stable without ad-hockery to explain large scale phenomena over vast amounts of time and space.
“China’s coal consumption expected to peak in 2025, to fall by 18% from 2018 to 2035, by 39% from 2018 to 2050, according to CNPC Economics and Technology Research Institute” Yuan Talks
Thanks, that would suggest they indeed (plan) want to keep the coal ~plateau till late 2020s, meantime replace the most polluting metro area ones for the low sulfur desert ones; and hope for the NPPs in the 2035 and beyond..
Well they will likely achieve some of it, but what they will do with the onset of demand destruction struck consumers they try to sell the output of their economy is an open question.. Vendor credit model can go only as far..
CNPC is China National Petroleum Corporation. This is consumption, not production. This is concerning.
Back in 2013, I was the co-author of a paper published in Energy Policy called “An analysis of China’s coal supply and its impact on China’s future economic growth.” Our conclusions were fairly similar.
We said production would peak between 2025 and 2030. We also found that imports could not be relied upon much at all, because China is so huge compared to the rest of the world. It would quickly exhaust imported coal supplies elsewhere.
Confirms what Gail commented on before!
NEW RULES
Heavy Oil Premiums Shrink as Asian Fuel Oil Profits Collapse
(Bloomberg) — A plunge in fuel oil margins driven by impending environmental rules for shipping is beginning to take its toll on heavier grades of crude.
The value of sludgier varieties of oil, typically used to make dirty products such as fuel oil to power ships, is eroding before the standards that take effect in January. International Maritime Organization rules, known as IMO 2020, will mandate the use of cleaner alternatives like gasoil or very low-sulfur fuel oil.
IMO 2020 has spurred a plunge in profit margins from turning Dubai crude into fuel oil in Asia from a premium of $5.47 at the end of July to a discount of $10.16 on Aug. 14. That’s translating into waning demand for viscous oil, with Iraq selling an October-loading shipment of Basrah Heavy, a heavy-sour grade, on Wednesday at a premium of only a third of the last sale a week earlier
https://finance.yahoo.com/news/heavy-oil-premiums-shrink-asian-050128498.html
That black goo just don’t cut it like the sweet stuff!
https://m.youtube.com/watch?v=aRT-H9dbOlQ
I wonder what this does to diesel supplies, however. You need a certain proportion of black goo in the total.
I wonder how much shipping will be cut back, because of the indirect higher prices required. This new rule will likely also put downward pressure on oil prices.
“I wonder what this does to diesel supplies, however. You need a certain proportion of black goo in the total.”
I have worked in a refinery and understand the processing that goes on in them. That’s actually not the case. Heavy oil takes more processing equipment, particularly a catalytic cracker and more cokers, to make the mix of products in demand.
But if you are willing to pay the capital costs, then diesel can even be made from natural gas. That’s what Sasol does in their plant in Qatar.
Thank you for sharing your refinery experience. Hope to hear more about those processes. How high is the capitol cost to have a versatile refinery that can use multiple
and less than desirable grades of oil? Time to pay off investment? Flex fuel refinery :).
Let us put it this way:
Fuel costs are very important for those shipping goods by water. Using the goo at the bottom of the barrel has been the cheapest fuel possible.
Now regulators are trying to force shipping companies into using higher cost products: products that have been refined to a greater extent. Companies operating refineries, especially with cracking facilities have been thinking, “Great, higher demand.”
But it isn’t working that way. No one is asking for more Dubai crude to refine. Margins are collapsing, meaning that Dubai production is likely to decline. Dubai is the kind of crude oil that, when it is refined (after cracking), produces lots of diesel. Hence my comment about a possible decline in diesel production.
The issue isn’t what “can” be done, but what really is happening. Businesses are aiming for the cheapest solution. If they were simply simply adding filters on the ships, this would not affect demand for the Dubai crude. If other sources of diesel are cheaper than those from cracking Dubai crude, this would likely make a difference. It is all in the details. If there is really a big cutback in shipping, partly because of higher costs and partly because of growing recession, not as much oil in total will be needed.
Good points, as usual. But perhaps we have slight;y different ideas about “the cheapest fuel possible”. Here’s mine:
https://render.fineartamerica.com/images/rendered/medium/canvas-print/mirror/break/images/artworkimages/medium/2/cutty-sark-hulton-archive-canvas-print.jpg
It depends if time has any value. Also, the possibility of lost ships.
Lovely ship. I keep looking for a breakthrough for sail ships, but always run aground. One ship builder closed his company–he was incessantly tinkering to find the most efficient technology. Then he started working for other companies doing other things. Someone else had a small sailboat that he took long voyages in, and that really DID run aground. The prospects for sailing vessels aren’t what I would have hoped for.
i don’t know anything about sailing and sailing ships, but basic physics and what I call “look at” logic would seem to point to an upper weight limit
5000 tons equates to a manageable mast height, 100k tons does not.
Yes I recall kite sails a few years ago, , theoretically possible, but again kite size must increase to match ship weight, and the wind must be in roughly the right direction and kite sails wouldn’t withstand a severe storm
Then there’s the other thing the mathematicians fail to factor in—the old cargo sailing ships were all loaded by hand by dock workers—figure that out in today’s dock conditions with a modern cargo ship.
and then there might not be sufficient cargoes to warrant big ships, after all, cargoes must be shipped with a purpose, and that purpose is either commerce or war. I think we can forget cruises here.
Finally, you run into the problem of shipbuilding—wood or steel
wood has an upper limit in size, steel needs vast heat input which won’t be available. (Also a large wooden ship might need 3000 trees to build it.
Arithmetic will always deliver a solution, until practicalities kick in.
Sorry to reply to my own post, but the comments below don’t permit it.
The Cutty Sark (the ship depicted) had a top speed of 17.5 knots (nautical miles per hour), about 5 knots faster than today’s big cargo ships. And since she sailed mostly with the Trade Winds behind her (driven by the Coriolis Force, and so 100% sustainable and about 85% reliable), she could pretty much be relied on to get the cargo home in a timely manner. On her journeys she often averaged 15 knots per day, noon to noon.
Modern bulk cargo ships indeed burn the cheapest fuel: bunker oil, which is also by a large margin the most polluting.
but—-
if you equate a 5k ton sailing ship to modern ships, you need 20 of them, plus crews (start counting 100+ I dont know, has to be that many)
and 17.5kt speed might be an optimum, but it cannot be consistent
though to be honest I’m not quite sure what the argumentative point is here
“China’s yuan is headed for a record monthly plunge as an intensifying trade war with the U.S. damages investor confidence. The currency has plummeted 3.9% this month against the dollar, the biggest loss since January 1994, when the modern exchange-rate regime was adopted.”
https://www.bloomberg.com/news/articles/2019-08-27/yuan-poised-for-worst-month-on-record-after-7-barrier-broken
“…trade barriers are near a level which could tip the global economy into recession, according to Chetan Ahya, chief economist at Morgan Stanley. “We view risks of further escalation as meaningful,” Ahya wrote in a note to clients published Sunday evening.””
https://www.marketwatch.com/story/why-the-global-economy-may-be-just-one-more-round-of-tariffs-away-from-recession-2019-08-26
“There are three negative supply shocks that could trigger a global recession by 2020. All of them reflect political factors affecting international relations, two involve China, and the United States is at the centre of each. Moreover, none of them is amenable to the traditional tools of countercyclical macroeconomic policy.”
https://www.neweurope.eu/article/the-anatomy-of-the-coming-recession/
“…monetary policy has run its course in a world where interest rates have reached the limits below which they can decrease much further. As for fiscal policy — the realm of governments — it is not nimble enough in case of severe crisis because it depends on lengthy political debates and its impact takes time to materialise.”
https://www.fnlondon.com/articles/its-not-about-when-the-next-economic-crisis-hits-its-about-how-20190827
“Is deflation on the horizon?”
https://www.thetimes.co.uk/edition/business/in-what-amounts-to-a-currency-war-the-bond-market-will-be-the-winner-2xmr2pst9
“A major gold-buying spree by central banks is likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd., which flagged the potential for further purchases by nations including China.”
https://www.bloomberg.com/news/articles/2019-08-27/central-bankers-new-found-love-of-gold-seen-bolstering-demand
The bond market is only the winner if there are not too many defaults.
I suppose that lowering the yuan increases the possibility of selling goods to countries without tariff changes, such as those in Europe.
Lowering the yuan also helps keep imports (such as oil, coal, and copper) out of China. It therefore tends to lower the world price of these commodities. If China is trying to encourage the use of its own resources (that is, keep coal mines open; make oil prices a little higher to encourage local production), this is likely exactly what it wants.
Nice quote from Adrian Orr, Governor of the RBNZ:
“”There’s always been a concept: too big to close,” Mr Orr said.
“”[But] Nothing’s too big to fail.
“”And so with the large banks, the four major banks in NZ are the four large Australian banks.
“”And if any one of those closed it would bring the rest down.””
https://www.afr.com/world/pacific/nothing-s-too-big-to-fail-warns-rbnz-governor-20190826-p52kr1
“India’s government will receive a 1.76 trillion-rupee ($24.4 billion) windfall from the central bank, which it may use to cut borrowings and recapitalise banks to help spur economic growth…
“The transfer, which rivals the stimulus that some Group of 20 nations pumped into their economies during the global financial crisis, comes amid a slowdown in the growth of India to a five-year low, depressed consumer spending and reports of tens of thousands of job losses in the auto industry.”
https://www.thenational.ae/business/economy/india-s-central-bank-gives-24-billion-back-to-government-to-fuel-growth-1.903043
“Indonesia has a raft of emergency stimulus options available to bolster Southeast Asia’s biggest economy if global conditions worsen, Finance Minister Sri Mulyani Indrawati said. The government is prepared to boost spending and “re-activate” measures used during the global financial crisis to shore up domestic growth if necessary…”
https://www.bloomberg.com/news/articles/2019-08-27/indonesia-has-additional-stimulus-plans-ready-indrawati-says
“There is mounting speculation the BOJ may be forced to join other major central banks in expanding stimulus as early as next month to protect economic growth as the U.S.-China trade war continues to drag on Japan’s export-reliant economy.”
https://uk.reuters.com/article/us-japan-economy-fsa/japans-regulatory-chief-urges-boj-to-consider-impact-of-easing-on-banks-idUKKCN1VG0PV
“Singapore’s government cut its forecast for economic growth this year to almost zero, and weak export data have stoked fears of a recession.
“The nation has already been rocked by the high-profile collapse of water treatment firm Hyflux Ltd. “We could see a tide of distressed debt in Singapore,” said Shaun Langhorne, a restructuring lawyer and partner in Singapore at Hogan Lovells Lee & Lee…”
https://www.aljazeera.com/ajimpact/singapore-faces-rising-tide-bad-debt-record-bonds-mature-190827014736379.html
The text talks about “no need for stimulus yet,” but when a person reads about the shrinking economy and rising debt defaults, it is hard to see where this belief is coming from.
12 hungry wolves circling. Two bullets left. You hold off. Hope the cavalry shows even though you know they are 200 miles away.
Hey, I remember Hyflux! The ran a water recycling and desalination company, producing “NEwater”, which by the way tasted terrible and so was mostly peddled to companies that needed “pure” water. Good thing, because water without key trace elements, such as calcium and magnesium, is not healthy.
But their collapse was not entirely their fault. They diversified into electricity generation, which in Singapore is done mostly by natural gas. But the gas market was heavily distorted by a ridiculous government project to turn the place into a Natural Gas Hub, which basically meant importing the stuff and then reexporting it, making money by arbitrage. An insane idea, because LNG has high carrying costs and cannot be stored longer term because the stuff tend to boil (especially on a tropical island).
But under the new regime of old Lee Kuan Yew’s son, the government of Singapore is no longer run by informed technocrats, but mostly by toadies recruited from the senior ranks of the armed forces. As the saying goes: the son of a good emperor is a bad emperor, and his son causes the fall of the dynasty.
Thanks for your insights. I agree that water from desalination needs to be combined with the proper minerals for drinking, sending its costs up. People can’t afford such expensive water, unfortunately.
And an LNG hub on a tropical island doesn’t make much sense either.
“proper minerals for drinking”
The cost of adding calcium and magnesium to desalinated water is a trivial fraction of the energy cost involved.
Cost maybe. Logistics and planning are not trivial. Agreement to pay the higher price is an issue as well. An increase in the price of a non-discretionary item reduces demand for discretionary items. In some sense, going from cheap pumped water to desalinated water with minerals is another way the economy is becoming less and less efficient. We need to become more efficient.
Gas powered desalination is an unnecessary use of energy in a region where it rains almost every afternoon. Much cheaper, smarter and more efficient to just pipe in fresh water from Malaya or even across the strait from Sumatra, even if the locals charge a hefty price per ton for it.
The narrow fiscal deficit goal of 3.3% is not going to help, however.
“Optimism across the UK’s dominant service sector fell sharply in the three months to August, according to a new survey, in news that will worry policymakers as Britain flirts with recession…”
https://www.cityam.com/optimism-across-uks-dominant-service-sector-tumbles-in-second-quarter/
“Germany’s economy is on the brink of recession after business confidence plunged to its lowest level in seven years. The ifo Institute, a Munich-based research group, said: “Worry lines among German business leaders are getting deeper and deeper.””
https://www.theguardian.com/world/2019/aug/26/german-recession-fears-business-confidence-europe-economy
“Wieland, one of the world’s largest copper product makers, said on Monday it would reduce working hours at a German plant from next month because of the slowing global economy.”
https://uk.reuters.com/article/copper-germany-wieland/german-copper-products-producer-cuts-hours-due-to-global-economic-slowdown-idUKL5N25M3LD
“Italy was again last for growth in the Organisation for Economic Cooperation and Development (OECD) in the second quarter, the OECD said Monday. Italy showed zero growth both with respect to the first quarter and with respect with the second quarter of 2018, the OECD said.”
http://www.ansa.it/english/news/business/2019/08/26/italy-last-for-growth-in-oecd_ac72cbd6-54b5-4ef5-b69f-a9d658e92273.html
We hear about “Dr. Copper” being a foreteller of economic problems. If less copper is being used, the economy is likely not doing well.
The Germans need a good shock: it may moderate their awful, patronising, smugness. They have cruised along for too long at the expense of others….
“Simply put, easy money has created multiple bubbles that have been blowing in all directions.
“Meanwhile, easy money has undermined the old strategy of asset allocation, setting investors up for a nasty surprise when the bubbles burst.
“”In excess of $13 trillion of global bonds have negative yields; in effect, investors are paying issuers to take cash investments,” says Iain Wilson, Advisor at NEM Ventures. “As we embark on another round of Central Bank interest rate cuts, possibly combined with more radical QE programs, we should consider the knock-on effects of ultra-low rates on asset prices. Globally, a whole range of traditional asset classes, such as stocks, bonds, property, and credit have seen huge price appreciation and history tells us that asset price booms rarely end well.”
“……the hunt for yield is much more aggressive than before.
“”Meanwhile, central bankers are running out of “bullets,” ie policies to cope with the situation, as the global economy gets divided by trade and currency wars.”
https://www.forbes.com/sites/panosmourdoukoutas/2019/08/24/a-nightmare-scenario-for-global-financial-markets/#580f9f49183a
“The leaders of Corporate America are cashing in their chips as doubts grow about the sustainability of the longest bull market in American history. Corporate insiders have sold an average of $600 million of stock per day in August… August is on track to be the fifth month of the year in which insider selling tops $10 billion. The only other times that has happened was 2006 and 2007…”
https://edition.cnn.com/2019/08/26/investing/stock-market-insider-selling/index.html
Another sign that corporate earnings will be lousy. This might lead to a drop in stock prices.
For decades, OPEC basically controlled oil prices because they were the only organized group of producers of something for which there was no substitute. They could set the oil price, and depending on how much oil they agreed to produce, the oil price went up or down. Like when the Saudis and Reagan decided to bankrupt the Soviet Union by pumping so much oil, that the price went way down. That artificial control of the oil price accounts for the wild swings in Figure 4. OPEC has lost control today because so much oil is being produced outside OPEC member countries like the USA, and because they can’t agree to cut production enough to create an oil shortage. That might last another decade or so, but not much longer than that.
Recessions also affect the price of energy products. A relatively small group of people set the price for energy commodities, so a herd instinct can move the price much further than is justified by actual surplus or shortage. Remember how they just discovered that a handful of traders were manipulating LIBOR each day, which affected tens of trillions of dollars in loans and financial transactions. Energy, and some commodities are about as far from true free markets as you can get. A small number of people can affect the price. Remember when they bid up the oil price to $140 a barrel?
Interest rates, and the supply of credit can also cause big price swings. So I would be careful looking at any graph and drawing some profound conclusions about the entire economy from it. There are just too many factors at work in the economy to figure it out.
Actually, when a person looks at the data, OPEC looks a whole lot more like “price takers” than anything else. When prices are high, OPEC does tend to pump more. This indeed does tend to lower prices.
When oil prices are low for an extended period, OPEC has no choice but to cut back production, in an attempt to force prices back up. The catch is that this doesn’t work nearly as well as adding more production when oil prices are very high.
When oil prices are high, the problem is that demand is very high. Adding a little more supply helps satisfy this demand. Prices are likely above the cost of production for quite a few producers. They can live with a little lower prices. Lower energy prices help stimulate demand for discretionary goods. Governments are likely to cut interest rates to help this process along. In fact, this may be the main stimulus. The lower interest rates makes goods bought on credit more affordable.
When oil prices are low, OPEC can be shown to ignore the problem for quite a while. But eventually, the problem affecting their governments is that their tax revenue is way too low. They have to cut back programs and raise debt (most likely both). To the extent that they have to cut back programs, this cuts back demand within their own countries. But the problem was low worldwide demand to begin with. Cutting back their own demand makes it worse. A big part of the problem is relativities among currencies, based on US interest rates relative to those of other currencies. Also availability of credit. OPEC can do nothing about these.
OPEC being able to fix things is pretty much a false belief.
Well, it’s increasingly more like OPEC+ as other countries try to coordinate with them, plus there is the increasing talk to move pricing into basket of currencies instead of just USD. Yes, this has been floating around for a very loooooonng time, that it seems almost as joke, but it will likely materialize at some future GFC_xy junction.. the world is continuously in snail-pace motion moving away from dollars (and its related fin ecosystem – recycling) on many fronts..
Your arguments are self defeating. On one hand you state that OPEC can not effect the price of oil with massive supply changes but then state “A small number of people can affect the price. Remember when they bid up the oil price to $140 a barrel?” We are witnessing events that don’t fit models like supply and demand. When that happens you can can call the data bad. You can say there are things distorting the model but the model is still valid. You can look for a new model that is valid. It is hard to discard a model that has served you well. It should not be done casually when the model is based on physics. Supply and demand is not based on physics. We have these models some are based on physics some are not. Mixing and matching will indeed cause poor analysis results. Rules that are economic in nature are artificial constructs not the same as say coefficient of expansion of materials. We treat supply and demand modeling like it is based on physics and refusing to accept that valid data that radically contradict it sticking to a model that no longer applies is very damaging. My belief is Gail models are the only one that fit the events we are witnessing. I regard her work as pivotal. Her work is disregarded because of its implications and that indicates a high degree of dysfunction.
Yes, the clarity of Gail’s articles, especially this one, are beyond exceptional, unfortunately what is likely going to happen the next wave of GFCs will muddy the waters enough by various reboot and realignment attempts, so the proper recognition might not be granted to her..
OPEC didn’t bid up the price of oil to $140+ per barrel. That was China, India, and the rapidly growing Asian countries. For quite a while, the US was in the game as well, with subprime loans at very low interest rates, and everyone refinancing their house to buy a new car or fur coat.
“A small number of people can affect the price. Remember when they bid up the oil price to $140 a barrel?” Why doesn’t Saudi just leverage up and bid up oil to oil to where they want want it then sell what they want? Why mess around with supply if it could be done with money and leverage? Saudi is not exactly poor they certainly don’t lack the money to change price if “A small number of people can affect the price. “.Well that’s certainly true with financial instruments. Its even true with physical commodities if the consumption of the commodity is very low. Yes even $100,000. can radically change the relationship between turkish lira and thai bat at 3am on a friday. Thats one artificial construct affecting two others they live in the same world.The relationship in between oil and price dances to a very strange beat where the most artificial of constructs, money, meets the most powerful resource on the planet. Notice I said powerful not valuable. Those two adjectives are not transposable all though we believe they are. To regard the relationship that is oil price to be the same as the relationship apple stock price is a profound misanalysis.
Whatever it takes to keep it rolling along…
SAN FRANCISCO, Aug 26 (Reuters) – Central bankers in Europe and Japan have used negative interest rates to try to boost their economies and lift sagging inflation expectations, but Federal Reserve policymakers have been generally skeptical of doing so in the United States.
New research from the San Francisco Federal Reserve Bank published Monday is likely to increase their doubts.
When the Bank of Japan announced its plan to move to negative policy rates in 2016, inflation expectations actually fell rather than rose as policymakers had hoped, researchers at the San Francisco Fed wrote in the bank’s latest Economic Letter.
Although the decline might have been a response to the deteriorating economic conditions that prompted the BOJ’s move rather than to the move itself, “the reaction stresses the uncertainty surrounding the effectiveness of negative policy rates as expansionary tools when inflation expectations are anchored at low levels,” they wrote.
Fed policymakers have struggled with low U.S. inflation, cited as one of the reasons why they cut rates last month for the first time in more than a decade. Monday’s research may add to arguments for “preemptive steps” to avoid allowing rates to fall near zero levels in the first place, the economists wrote.
Helicopter is warming up…..
As a recent resident of Mexico, things are not what they seem, especially from a US perspective.
I’ll second that, Duncan, we all will State that very soon indeed! In for a rude awakening!
https://m.youtube.com/watch?v=zNKtIHqP1pk
Hope some here will get a laugh over it all
Tell us more. Inquiring minds. Always like to get perspective other than the telescreen narrative. Your awfully quiet nowadays. As I remember the fictional idaho was not real shy. You wernt either in the past…
More unintended consequences from “green energy” https://www.bloomberg.com/news/articles/2019-08-26/sometimes-a-greener-grid-means-a-40-000-spike-in-power-prices?srnd=premium
This is a very good article. Some excerpts:
Maybe the adverse impacts of wind and solar are starting to hit the press.
Gail, I agree it’s a good article, but it also seems to have a major flaw: its author does not understand physics.
An unreliable supply of almost anything, from turnips to toothpicks, can be mitigated by keeping more inventory as a buffer. People don’t do that much anymore, but as the global supply lines fray and break they will rediscover the habit. Ad Dmitry Orlov pointed out, the huge inventories most soviet companies kept was instrumental in helping people live through their collapse.
But electricity cannot be stored cheaply and effectively; by physical necessity, it is a “just in time” commodity. Which makes its supply inescapably vulnerable to intermittent sources. Most electricity grids have a peak capacity only 5% or 10% greater than peak demand. Therefore, if renewables provide more than that 10%, disruption is near enough inevitable.
I do not think any amount of cleverness can overcome the laws of physics, hence my conclusion that you can have renewables, or you can have the grid, but you can’t have both. Not all the green propaganda in the world can change that, as I fear we shall soon discover.
Spot on, that leads to the possibility that at some point renewables will be simply unplugged permanently in order to keep the base load operational and stress free (for longevity)..
You make a good point. Some people are looking at batteries and other are looking at natural gas peaking plants as work arounds for these problems. I think that they both quickly become too expensive. Batteries have to sit idle more and more of the time, as more are added; the same with natural gas peaking stations. The natural gas peaking stations require pipelines and storage, besides the cost of the generation station. It is the pipelines and storage that are expensive.
Cheerleader story of how transitioning away from oil is easy peasy
Mexico Is Solidly Middle Class (No Matter What Trump Says)
Noah Smith
BloombergAugust 26, 2019, 7:30 AM EDT
For a poor country, this would be disappointing progress. But while plenty of poverty remains in Mexico, the country as a whole is now firmly within the echelons of what the World Bank calls upper-middle-income countries. After adjusting for purchasing power parity, according to the International Monetary Fund, Mexico’s per capita income in 2018 was about $20,600 — just ahead of Argentina. And inequality, though still high, is declining:
Mexico’s performance becomes even more impressive once the country’s structural shifts are taken into account. In 2006, Mexico was the world’s sixth-largest oil producer. But its biggest petroleum deposit, the massive Cantarell field under the Gulf of Mexico, went into a steep decline around the middle of last decade. By 2018, Mexico’s total crude oil production was down by about half, and there are reports that the country may already be a net oil importer.
The loss of the oil industry would be a huge challenge for any economy. It means the government must search for alternative sources of revenue, and Mexico must seek different products to exports in order to secure foreign exchange. Most of all, it means retooling much of the economy from the capital-intensive business of pumping oil out of the ground to the labor-intensive business of making goods in factories and providing services in office buildings.
Sure, Mexico just needs to import affordable oil and export cheap products, like the Chinese, gotcha!
https://finance.yahoo.com/news/mexico-solidly-middle-class-no-113008168.html
I was talking to someone from Mexico about the situation there (about a year ago, someone involved with energy issues), and he compared the situation to Venezuela. In his view, the country has been doing much worse with the loss of oil exports. These oil exports are part of what made the country middle class.
Trying to find any solutions at this point is almost impossible now that there are two heads to this monster. One – the rising costs for raw material and energy acquisition and the other being increased in consumer, sovereign, and corporate debt, with even Junk bonds, (below BBB “rated” and that rating is being kind (or S&P, Fitch, and Moody agencies being bullied, according to some like Danielle DeMartino Booth) some now going into negative interest territory and growing in amount now to what, 12 or 13 trillion USD equivalent today from barely around a trillion at the beginning of the year?
Trying to solve this problem is reminds I went to go change the water pump on my old 2000 Ford Merc Mountaineer and I brought my English system of socket wrenches and then found after what I thought appeared to be the correct size and fit snuggly, nevertheless stripped the bolt head because the bolts are metric! Dumb ass me. Almost as dumb as the FED (or are they intentionally destabilizing the system as they appear to have done so since1913 according to some.)
We don’t even know which tool kit we need. And no one is willing to go back and read the manual, which is what I should have done. Grrrr.
it was probably you in charge of that Mars mission where some were working in metric, some in imperial measurements—it missed
nobody talked to each other
i always wrote manuals on the basis that nobody would read them till the machine broke down
“Trying to find any solutions at this point is almost impossible now that there are two heads to this monster. One – the rising costs for raw material and energy acquisition and the other being increased in consumer, sovereign, and corporate debt…”
I quite agree, but would say “is impossible” rather than “is almost impossible”…
it recently dawned on me (a slow mental process, but that’s me), after reading many months of comments about debt, that Debt Itself is not the problem…
Debt is relative to the energy flowing through an economy…
existing debt is easily manageable with increasing net (surplus) energy…
even increasing debt is manageable with increasing net (surplus) energy…
but all debt is becoming less manageable because net (surplus) energy is decreasing…
the big question that remains is if the downslope of energy will cause world economic collapse or will cause a less catastrophic stairstep economic decline…
2020 may give us the final answer…
Ford started going metric in 71. Chev in 78. SAE told pretty much useless, except for that one bolt they kept sae. ARRRGH. Not that you can hardly wrench on what they make nowadays, Chip cars.
No one thinks something bad will happen to them that is also how countries act. It is not going to happen here is a constant story. It all comes down to Gail’s basic argument there is no growth and without growth there is collapse. If you look at all the numbers the truth comes out; the U.S is able to play this strong economic growth because no one questions the numbers there. Unemployment way down…but you you have 10,000 baby boomers retiring every day? Trump has been successful at look “what I have done” statements when it comes to the economy but when people start to look too close he shifts the focus to some social meme…the Talking heads would rather talk about that than the deficit and how it keeps growing….most people think you can cut spending to make things come into balance but they don’t understand if you cut 50,000 jobs here and there they start to add up….the only question now is how long do you keep this going until someone sees and panics and makes a run for the door!
Where is this door? No one told me about a door… I read the manual. 🙂
“No one thinks something bad will happen to them that is also how countries act.”
though Creeping Collapse is happening right now in various weaker peripheral countries…
soon enough it will creep into every country…
“… the only question now is how long do you keep this going until someone sees and panic and makes a run for the door!
this is perhaps far off the radar of economists, but Panic may be the final push that topples the world economy…
wow…
we live in such very exciting times!
Creeping Collapse! I love it. Perhaps we could also refer to the Crawling Chaos, ie Lovecraft’s demon Nyarlathotep.
“The index of European bank stocks fell to an all-time low this month. The decline reflects poor earnings prospects for European banks, in particular German banks. If the fall continues at its current rate, there is an increasing risk that European governments may be forced to nationalise parts of the banking system.”
https://www.businesspost.ie/business/existential-crisis-europes-banks-near-point-no-return-450678
“The name of the next Italian prime minister is the main hurdle in talks between the anti-establishment Five Star Movement (M5S) and the centre-left Democratic party (PD) as they scramble to form a new government by Tuesday and avoid early elections that could put Matteo Salvini at the head of a far-right coalition.”
https://www.theguardian.com/world/2019/aug/25/italy-parties-scramble-to-form-government-by-tuesday-deadline
“Boris Johnson has said the £39bn Brexit divorce bill would not “strictly speaking” be owed to Brussels in full in the event of no deal, insisting: “It’s not a threat. It’s a reality.”
“…His intervention came after Tusk warned Johnson against going down in history as “Mr No Deal”.”
https://www.theguardian.com/politics/2019/aug/25/boris-johnson-no-deal-uk-brexit-divorce-bill
“[Ireland’s] Business Minister Heather Humphreys has told Irish firms to “prepare for the worst” Brexit outcome, admitting: “We don’t know what’s going to happen on October 31.”
https://www.irishexaminer.com/breakingnews/ireland/prepare-for-the-worst-minister-tells-irish-companies-946209.html
Oh, dear!
They have to set an example. Italy must know that there will be lots and lots of pain if they Italexit. If Italy goes, a mainland european country, with incredible economic cultural and historic value not a island peripheral its finito. UK must be made to suffer and the pain has to be approaching catastrophic in order to provide an effective deterrent. EEU is going to leave a really really really bad hangover after the part is over.
In the end France, Germany and the banking mandarins of tax heavens in Luxembourg and such will have to evaluate the Italian case on economic and geopolitical grounds.
For example, how much sub assemblies for European mil-industrials are made there, what does it mean that even the whole current gov (not Salvini alone) is luring China to put there the final outpost for their silk-road project, naval ports, railway hubs..
There could be case made (they already did) for attempting even closer union of several key countries FR+DE+Benelux inside the EU, and in such scenario loosing Italy or keeping it on a bit more distant orbit is not the end of the world.. Remember, it’s still better to be smaller kingdom (mini empire) holder than destitute former member of the elite.. That’s human nature.
Historically, these loose-tight groupings pulsed up and down around Europe for past 1000+ yrs, so nothing new under the sun.
Very interesting! Isn’t it a bit different this time? This isn’t simply an alliance this is a neo liberal experiment done like only europe can do. With a big heaping of superiority. what seems to be clear is that the wonderfully diverse cultures of europe are not suitable for such a close affiliation. IMO. And now they just cant let it go because too much is riding on it philosophically. Not to mention a few members were allowed credit that they shouldn’t have got. That’s not going to be easy to work out. My impression is brexit is not casual. THe metaphor would be a relationship that ends threatens your ego so much that negative feelings are externalized for the ex. Plus they owe you 50k 🙂
The healthy mature expression is you go your separate ways but still wish happiness for each other IMO. I see brexit as closer to the former than the latter. I also feel the issue is in large part disastrous immigration policies dictated from berlin and that brexit brings attention to this. EEU doesnt want that attention by other members. Taboo topic. So it gets nasty, Am I wrong on either count? You seem very informed.
The early next budgetary cycle talks in EU suggest the Commission wants to allocate ~10B for incoming immigration, and to get this money lets shaft some of the few old ~successful projects like subsidies to local farmers. Understandably, people got furious when this trickled out..
Apart from the clearly insane ideology-theology running wild in NW Europe as of lately – I’m afraid this must have some quasi rational basis as well, and that could be putting support floor under the falling demographics and hence aggregate demand in the economy.
Nationalizing parts of the banking system sounds an awfully lot like “bail-out.” There was an agreement a while back to push the bad outcomes off on the bondholders first. I suppose that might still happen. But somehow, there is an expectation that the countries will themselves avoid collapsing.
“Investors are piling into bonds at a record pace as economists warn that the risk of a damaging US recession has hit its highest level in a decade.
“More money was invested into fixed income funds than ever during the week of Aug 12 – an increase of 25pc, or almost $2bn, on the previous record, according to Bank of America Merrill Lynch. It was the second consecutive week of record inflows into the funds.”
https://www.telegraph.co.uk/business/2019/08/25/record-numbers-seek-safety-bonds-recession-looms/
“Most public and private pensions in the United States are underfunded, many severely so… Ultra-low interest rates have pushed pensions into riskier assets such as corporate equities and bonds.
“Pension demand for corporate bonds has facilitated a surge of debt-funded buybacks. What happens when pensions are no longer able to keep up their massive procurement of corporate debt?”
https://seekingalpha.com/article/4287825-blame-fed-coming-pension-fund-crisis
It is striking that the time when pensions are shown as being fully funded is 2001. This was when oil prices were very low. There has been growth in the world economy since 2001 (the year China joined the World Trade Organization), but to a significant extent it has bypassed United States and other countries with big pension plans. It has been growth primarily in services, not a growth in direct energy use. Wage disparity has gotten much worse as workers increasingly compete in a world economy.
The global money supply is contracting. A credit event has started.
https://pbs.twimg.com/media/EC4WO5wWsAEw_nq?format=jpg&name=large
I have not run into the Bloomberg Proxy for Total World Money supply before. I suppose it takes into account different currency relativities, in addition to the amount of Money Supply of various currencies.
The drop in October-November 2018 was not terribly great in this chart.
There has been a run-up that stopped July 1. Now it does seem to be down.
“The global money supply is contracting. A credit event has started.”
now that is some fine Doomer News!
after all the feeble little hiccups of 2017 and 2018, we’re really starting to see the pace accelerate greatly…
2019 has about 127 days to run, so that’s not much time for the slightly wobbling world economy to fall over, but who knows?
2020 looks like a sumptuous Doomer feast…
where have all the heavyweight OFW Doomers gone to?
will they start to reappear?
They are looking for high prices. The result will be low prices, or collapsing financial systems, or both.
It seems logical to me that sinking supply or sinking EROI of unconventional oil causes recession and thus lower wages. I dont see why higher prices should create recession and lower wages: Higher extraction expenditure will also commit to GDP and create jobs. If we spend income more on complicated extraction methods than on fridges, health, education, food and products though, living standards fall – that is the political problem in the European Union at the moment with its nearly ungovernable mayor members, and maybe also in the US. If we spend more on extraction the economy will contract on the one hand because there is less income left to buy, but on the other hand economy will expend by exactly the same value in the extraction business (assumed all is within the same country).
What effect now could cause lower wages? Losses by powerful companies? If the workers that do the fracking live in oil exporting countries the gain will leave the country – but they are customers too on the world market. Is the export deficit overstretched, so the extra work of extraction cannot be imported? That would mean to reduce other imports as energy is a leaveraging item. A psychological effect as people mistake the loss of living standard with a recession and prepare for it?
Of course: If the income of the potatoe buyers fall, they buy turnips, however scarce the potatoes might be. I suppose behind all is falling EROI of unconventional oil that is neither visible in the extraction diagrams nor in the GDP.
If we assume a connection between oil production and economic growth a (hidden) decline in production (or EROI) should be the cause, not falling wages. Let’s say stagnating or declining net energy production causes stagnation or recession and thus governments drop wages. Now people buy turnips: They heat only one room instead of four. Granny moves in and the kids stay longer. They sell the second car and wont fly on holiday. In poor areas in Eastern Europes they cant afford to renovate the houses, which fall apart, and they cant afford the bus for school, so they wont go. They eat less and get extremely slim. They migrate, which turns down wages in the receptive countries. Now Saudi Arabia says, lets try to scarce the potatoes – but the buyers already left the market.
There are different ways of seeing the problem.
1. Not all investments are equivalent. What we need is Btus of energy to operate the economy. Early investments were very productive (had high EROI). If oil prices are $120 per barrel in inflation adjusted prices, we are asking the economy to spend approximately six times the resources to extract oil as when it was $20 per barrel, with equivalent results.
If we divide the economy into energy products and everything else, we want the everything else to rise, to raise our standard of living. But if we put a larger and larger share of our resources into producing energy products, it leaves less for operating the rest of the economy (to produce everything else). The energy share of World GDP must constantly shrink, for the rest of the economy to grow. With higher prices (higher than permitted by rising productivity), the world can afford less and less energy consumption. This by itself pushes the economy toward contraction, because it is growing supplies of Btus of energy that act to increasingly leverage human labor.
2. Another way of seeing the issue is that fact that “prices” and “cost of extraction with wide boundaries” are not at all equivalent. Back when oil was $20 per barrel, oil companies were making lots of money, and paying lots of taxes. In fact, to the extent that oil direct costs of extraction have been low in countries like Saudi Arabia, the vast majority of the oil price dollar has gone into taxes, rather than into paying direct expenses. I think of these taxes as being very much like “net energy.” The way that a large part of net energy is remitted to the rest of the economy is through the payment of taxes, as I see the situation.
Also, now oil prices and energy prices in general are lower than the cost of extraction. In fact, this has been true at least since 2014. So temporary workarounds of more debt and more shares of stock issued are needed, to try to keep the system from collapsing. This can go on only for a while. Thus these higher costs are not really being paid. They are only being shoved off into future promises. These promises will almost certainly never be paid.
3. Another way of seeing the issue is the fact that central banks very quickly recognize that high energy prices also quickly translate to higher food price. With rapidly rising food and energy prices, voters will quickly be very unhappy. Because of this, they take quick action. They raise interest rates. In this way, they force the economy to shrink back, to get back to affordable food and energy prices, and to try to push the problem over to another part of the world: oil exporting nations.
—-
The EROI story is not really very adequate for understanding what is going on. It doesn’t recognize that prices and costs are two different things. Calculations don’t have consistent boundaries. They make wind and solar look far better than they are. The energy issue is primarily a “growth in quantity” issue, and EROI is too far removed from this issue to tell very much.
The story that economists have been telling is not very adequate for understanding what is going on either. They made bad models years ago, and stick with them through the peer review process. Also, politicians find models that say, “The future will be like the past,” appealing.
In the same vein, it struck me you mentioned in this article (2019/08/22) that should the US slash gasoline consumption by ~10% it would make only tiny dent in the overall (BTU) equation. I guess this is not very ambitious number (or scenario) either for long term gov emergency program or volatile consumer shock reaction to severe supply problem (or demand drop under heavy depression)..
What about ~75% gasoline elimination scenario?
The time for planned mitigation (gov) program likely lapsed in the late 1970s, it was technically doable then and now as well. So, we are probably left with waiting for the other more destructive options.
I discuss it as merely short/mid term extension BAU scenarios, which are vein, yet important from single human lifetime perspective.
We have pretty much equivalent problems with all of our sources of energy. Oil, coal, and natural gas all have too low rates of return. The subsidies given wind and solar are driving all of the other types of electricity producers off the grid. Wind and solar look good, until a person realizes that they are not stand alone resources. The electric grid goes down, as wind and solar drive the other types of backup off the grid.
The subsidies given to wind and solar have to be matched elsewhere. This drives the system to bankruptcy. See this article about the mess that all of the subsidies are causing for grid prices. The biggest and mostly watch US power auction has been delayed indefinitely, basically because wholesale electricity prices are falling ridiculously low with all the subsidies. (Each subsidy calls for a need for more subsidies for other providers.) The figure below shows the path of wholesale electricity prices.
https://gailtheactuary.files.wordpress.com/2019/08/bloomberg-pjm-fair-value-price-for-electric-power.png
PJM is a big northeastern area that covers Pennsylvania, Ohio, New Jersey, Delaware, Virginia, and parts of Illinois, Indiana, Kentucky and West Virginia.
https://www.ferc.gov/images/market-oversight/mkt-electric/reg-maps/pjm_elect_map.gif
Thanks for the response and repeating this important point, which leads me to believe that in terms attempted post crash response scenario would be to put much of these renewables aside on purpose and push them off the grid not to cause further damage. And where (small tech feasible fraction) possible merely island them into some local dedicated seasonal activity, like grinding, milling stored produce, pump pond-to-pond etc. simply the way it used to be..
In short and counter intuitively this industry goes bust pretty quickly.
What I was hinting above with “easy” ~75% gasoline delete was actually more of an expectation that the US is going to be forced on day to similar Cuba/Venezuelan transport arrangement where one heavy duty truck is towing large wheeled passenger coach..
The more “luxury” alternative was light trolley bus service upgrade on the existing near suburb high way system, which is the only light and cheap enough add on ever feasible, also to be easily mass manufactured state side. For example, long three coach in series trolley bus with two running axles demands ~400kW, it seats ~50x people (disregarding for now extra standing people – hey this is opulent America), that’s way bellow 10kW per passenger in full occupancy..
Now, every larger metro area would have to run hundreds or rather thousands of these on key routes and arteries, yet the aggregate energy demand would be relatively negligible, could be covered by conventional natgas, coal, hydro and other base-load.
The upkeep and service of the vehicles and trolleys above is mostly low tech affair and is tied to good pool of employment.
Yes, it’s could have – would have – should have, but not much other options were/are on the table given the peculiar US path dependency (high way system, suburban sprawl, .. )
Once a not-very-dense pattern of homes and businesses is put in place, it becomes almost impossible to keep commuting times and costs reasonable without using small vehicles. People don’t have three or four hours a day to commute. If only one person in a family had a job, the problem could perhaps be solved by moving closer to the job. But with multiple jobs in a family, frequent layoffs by employers, and mortgages or long leases, moving is not much of an option.
the purpose of ‘work’ is to convert sufficient energy into a means to live or at least survive. Everybody is aware of that, in a way. I sometimes think the problem is the awareness of how it happens.
When hunter gathering morphed into ’employment’, very few forms of work could be beyond walking distance… the exceptions were : ‘journeyman’ mason. carpenter etc….men who travelled from job to job with very specific skills. He was a journeyman as opposed to a static man.
otherwise. workers lived close to where they worked. My g/parents/parents walked to work, they lived within sight of their workplace.
Mine owners built cheap cottages close to the pit, weavers built them close to the mill.
it wasnt until transport became cheap that workers moved away from their work, because even with long distance travel, they could still convert enough surplus energy to derive a prosperous living. They were not content to live within sight of the factory or whatever.
That was the bit that was supposed to last forever, so the suburbs spread out, along with great expectations.
That has now left many workers effectively stranded, though most of them don’t know it yet. The spread is such that no form of public transport is viable in general terms. I don’t see how a ‘light trolley’ can accomodate 000s of workers from spread out homes and delever them to spread out factories.
And don’t forget the equally spread out schools and shops–they always used to be within walking distance too
You describe the issue exactly in Atlanta. Everything is spread out. Kids need to go to different schools and need separate trips home if they are in after school activities. (If they are in “charter schools” or private schools, they likely need transport both way.) Doctors’ offices are all over. Stores are scattered around. It is hard to find a store that sells exactly what a person needs, especially if it is a special size or replacement part. A person checks on Amazon, out of frustration, as much as anything else.
Yes, I know that and the suggested antidote above is the only rational practical “low cost” solution I’ve found so far.
The actual speeds on US highway system and the frequent stop and go traffic as these arteries get overwhelmed makes such HOV lines even at their top ~50mph speeds viable solution.. How many US workers daily commute 2+2 (in/out) hours by car? That must be marginal %.. otherwise for shorter distance of say upto 50-80mi radius, the light trolley should be good enough..
Light trolley doesn’t work when there is no concentration of workers or jobs. You need concentration for these to work.
Well, that’s debatable.
Assuming the ongoing current BAU model of the majority of commuters heading towards the office centers and or large campuses/hubs around the hw system it could work. As I mentioned above it’s about providing major arteries with the light trolley upgrade, plus this system now even works partially off the trolley for expensively furnished segments of the route..
Assuming severe depression and or apple cart upside down transition of BAU (teleworking, UBI, half/third only work day, etc.) it makes little sense. And the Latin America system of trucked mega buses would be enough for basic food supply distro etc..
https://www.youtube.com/watch?v=bjGzweC5pB4
Here is suitable example for NA conditions, especially around the 2:55 time mark, the very basic infrastructure for trolleys on possible longer hw HOV line stretches becomes very apparent. Simply, there is nothing other competing on all the parameters: price for such road upgrade, low running costs, local labor..
Mind you, this video is kind of 1970s vehicle offshoot of a system, nowadays you can get 3+ longer buses like that (three coaches in series – multiple power driven axles). Also in terms of the video topic – quick upkeep also possible in severe weather – icy conditions is managed by running service vehicle first through the route (the socalled Mr. Orange/Yellow).. as in the train world.
The division of economy into producing energy products and everything else and the productivity point seems a good start to me. If we think of an economy where 25% produce all the stuff needed for 75% to be free and able to pump out oil it would obviously never work. So there should be a relation or quota. Where is this quota, like 5% (cost factor of energy in products)? Or 3% (productivity growth)? I know it is hard to measure. But if we look at economy now there are a lot of esoteric explanations like Trumps trade war with China or Hard Brexit or lower wages or too little neoliberalism. Probably a lot contributes to recession. But there is no real tool to connect economy to energy. We are at the level of plausability only. If we believe that humans are able to use their brain and dont fall into a malthusian trap like rats or mice or reindeer, there must be hard facts.
What we can say for sure is, that higher efforts to gain energy or to reduce C02 will lead to a shrinking standard of living – and that alone is a destabilising factor. It should also be considered that the world population still grows.
Pricing is already in energy units. The petrodollar is such a device.
The world’s present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.
The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed.
Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and according to one of its most fundamental rules, it must continue to grow by compound interest.
-M King Hubbert
TIP/TLT pointing at an oil price crash…and this time all support levels are broken.
https://pbs.twimg.com/media/EC3VSO3WwAArFXy?format=jpg&name=large
“The triangle of doom” of ever lower swings in oil price must eventually reach some sort of epic conclusion, it could be well around now linked to GFCv2 ..
But one can not underestimate these guys, more likely than organic unhinge (kaboom) is some sort of globally forced new cunning plan forward, they can for instance force bucket index of energies and key raw materials lumped together, ant tell the shorties (and derivative trades) to go home without a ball.. Obviously mop it up in the background by further stealth support for the largest banks. And deal with the inter – national quarrels and new trade (war) arrangements later in following steps.. Media would blame the initial spark on Italy, Brexit, HK, whatever..
Newly rearranged zombie system good enough for another decade or two.
Well… you have actually been right…this far. Nothing seems to matter. Boeing crashes and is grounded…and its stock price rose last week on future projections. The Chinese are fighting over pork and the Chinese government slaps tariffs on U.S pork. The euro falls by 10 percent against the dollar…and the Eurozone grows by 10 percent in dollar terms….and it goes on…
Chinese see eating meat as high class and eating no meat as ghetto. A meal without meat is considered demeaning and or insulting.
Good point about Boeing. The stock rose because their glorious leader promised the 737 Max would resume flying “real soon now”, and a lot of people believed him. Won’t happen, not least because unless the FAA gets the prior consent of other regulatory bodies, they won’t “unground” the plane, and those bodies are going to be far harder to cajole or coerce than the FAA.
My take is that the plane will never fly again. It is aerodynamically unstable, and (sorry to sound like a broken record) you can’t trump the real physical world with virtual software.
We seem to “lose to physics” on many fronts at the same time.
Most high-performance aircraft is aerodynamically unstable and require feedback control in the form of a digital computer. It is nothing new to introduce a computer into the control loop, shifting the poles into the meta-stable regime to allow for a better performance/dynamics. This is also the case for the closed loop engine FADEC, which can operate the engines in a broader region without causing compressor stalls.
https://youtu.be/n9iVccL751E
This isn’t something I have been following. TIP seems to be the ETF following Treasury Inflation Adjusted Securities, presumably reflecting current inflation expectation. TLT seems to be the ETF following government Treasury Bonds. It will presumably have some inflation expectation priced into bond yields. And TIP/TLT is a ratio of the two ETFs. I suppose it is believed to be giving some sort of an indication of where inflation is headed. In fact, your chart indicates that the TIP/TLT ratio seems to move with oil prices, suggesting that they are headed down.
If you can explain what is going on better, it would be helpful.
Thanks for the explanation! It was more than I understood.
It looks as we are headed for deflation not seen before? Zero rates and QE is coming?
The Fed is looking at the TIP/TLT ratio?
Rates of return on investment are falling. GDP looks likely to fall because of cutbacks in oil and coal production. These things would tend to make GDP (not inflation adjusted) turn negative, partly because of deflation. Under such circumstances, it would make logical sense to have zero or negative interest rates and deflation, for a brief period.
I cannot see how the whole system could last very long without collapsing, however. It seems like governments would quickly collapse.
“China’s currency slid on Monday to its weakest point in more than 11 years as concerns over the US trade war and the potential for global recession weighed on markets.”
https://www.businesstimes.com.sg/banking-finance/chinas-yuan-sinks-to-weakest-in-11-years-amid-trade-tension
“The foreign debt built up by Chinese companies is about a third bigger than official data show, adding to the pressure on the country’s currency reserves as a wave of repayment obligations approaches in 2020.”
https://www.bloomberg.com/news/articles/2019-08-25/china-s-companies-have-unseen-foreign-debt-that-s-maturing-fast
“There is one fundamental cause behind the turmoil that has been shaking global markets since the beginning of the month: China. As growth in Asia’s largest economy slows, the rest of the world finds itself in the throes of its first China-induced economic downturn. And investors fear that matters will only worsen…”
https://asia.nikkei.com/Spotlight/Comment/As-China-s-economy-slows-overreliant-world-exporters-start-to-hurt
“…after three months of anti-government protests, the semi-autonomous Chinese city [of Hong Kong], a shopper’s paradise and gourmet destination for millions of tourists each year, is facing an existential as well as an economic crisis.”
https://www.euronews.com/2019/08/26/battered-hong-kong-faces-economic-recession-existential-crisis
“Macau has entered into a recession after data from the government showed a second consecutive quarter of economic decline… “Given the incessant increase in external uncertainty, it is expected that the local economy will continue to experience recessionary pressure during the second half of this year,” the Office of the Secretary noted.”
https://macaudailytimes.com.mo/macau-enters-economic-recession.html
Protests in Macau are up next?
A person wonders if all of China is headed into recession, and these are just the canaries in the coal mine.
The article points out that Australia is particularly tied to the health of China’s economy. In fact, China is now Germany’s third larges export market as well, so an ailing China hurts Germany.
According to the article:
But don’t these steps simply make it harder for these entities to “roll over” their debt. If they cannot roll over debt owed in US$ with new debt in US$, what are they going to do. China was not lending enough to them previously. Will it suddenly be able to lend a great deal more to the entities?
“The authorities have taken steps to prevent risks.”
You can stop right there. That statement is way beyond “idealism”, it is insanity:
“We can ignore reality, but we cannot ignore the consequences of ignoring reality.”
Keeping the yuan low helps offset the impact of tariffs, but it makes its imports more costly. Indirectly, it helps make the price of oil lower.
Gail, I suggest that the most comprehensive short (ish!) statement of Tom’s Big TOE, together with some demonstration of its actual applicability in vital life situations, such as healing illness, is still his weekend presentation at the University of Calgary, in 2011:
https://www.youtube.com/watch?v=T1vYHOPFgcg (et sequitur; several videos)
You’ll need to gird loins and set aside about fifteen hours of total viewing time – preferably in bits, to allow digestion time for each video. Quite demanding; but revelatory and transformative, and worth every second. As Christopher Clavius, the papal astronomer, said so resignedly after interrogating Galileo: “He is right!”
No-one else, to my knowledge, comes anywhere close to Tom’s deeply-satisfying solution of the intractable conundrum of the – constantly replicated; always the same – ‘impossible’ results of the double-slit experiment in quantum mechanics. Savouring Tom’s solution, you can see why theoretical scientists speak with such affection of ‘elegance’ in a hypothesis; and why they like Occam’s Razor so much. 🙂
But be advised: If you join this band-waggon, you’ll be signing up for the current – rather long-overdue – pendulum-swing away from the extreme philosophical-materialism position of current physics orthodoxy, towards yet another reiteration of some flavour of the philosophical-idealism positions, in the centuries-long ding-dong between those two philosophical positions. Exactly what we need, I’d say, as we dive unpreventably into the Synergising Global Crises of the 21st Century…
I listened to the first few minutes of the you tube video. It looks interesting. I will try to listen to the whole introductory tape.
My father was a general practitioner physician who used hypnosis a lot (delivering babies, sewing up patients after accidents), instead of pain medicine. In a way, this would seem to fit under the umbrella of the things that Tom Campbell talks about.
Thank you, Rhisiart. Christopher Clavius is one of my heroes; he deserves his big lunar crater. Even though often wrong, he was honest, courteous, and prudent. Unlike Galileo, who is not one of my heroes.
He led, and led most nobly, the long retreat from the Ptolemaic system. For example, he confirmed the phases of Venus, which refute Ptolemy’s geocentric astronomy tout court. Of course, it had been known since Antiquity (thanks to Hipparkhos of Nicaea) that the “dolphin stars” (Mercury and Venus) revolve around the Sun; it had just been conveniently forgotten.
He also confirmed the existence of Jupiter’s Galilean satellites, which made it impossible to restructure the solar system around any single centre of rotation. The best alternative at the time, which his persuasion caused the Church eventually to adopt in 1616 (four years after his death), was the Tychonic, in which the other planets revolve around the Sun, but the Sun revolves around the Earth.
At the time, that “saved the phenomena”, the visible appearance of the celestial spheres, but preserved the immobility of the Earth. Alas, in 1619 the publication of Kepler’s Third Law, in his Astronomia nova, blew that one also to fragments. But no good man should be faulted for supporting a cause he believed in, just because it was ultimately lost.
“Central bankers debated for a second day at the Kansas City Federal Reserve’s annual policy retreat in Jackson Hole, Wyoming…
In the closing session of the conference, Reserve Bank of Australia Governor Philip Lowe told the audience that central bankers have limited ability to cushion the global economy from the headwinds of mounting political uncertainty.
“We are experiencing a period of major political shocks,” Lowe said, citing developments in the U.S., Brexit, Hong Kong, Italy and elsewhere. “Political shocks are turning into economic shocks.”
https://www.bloomberg.com/news/articles/2019-08-24/curse-of-the-commodity-boom-bust-experience-jackson-hole-update
“Warning flags are flying: The world economy is heading into a slowdown, and possibly a recession… If a recession arrives, international cooperation could — with luck — make it shorter and milder. But what happens if the United States no longer wants to lead in that effort? Under Trump, we may find out.”
https://www.latimes.com/politics/story/2019-08-23/the-world-economy-is-slipping-toward-recession-and-trump-isnt-helping
“Europe and Japan are currently caught in what might be called a monetary black hole – a liquidity trap in which there is minimal scope for expansionary monetary policy. The United States is one recession away from a similar fate…
“…there will not be nearly sufficient room to cut interest rates when the next downturn comes. And with 10-year rates in the range of 1.5% and forward real rates negative, the scope for quantitative easing and forward guidance to provide incremental stimulus is very limited – even assuming that these tools are effective (which we doubt).”
https://www.theguardian.com/business/2019/aug/26/central-bankers-conventional-tools-no-longer-working
This (conventional tools no longer working) article seems to be by Larry Summers and a grad student. I liked the quote:
“The saviour could be the Fed, which might cut interest rates back toward zero, allowing indebted companies and households to breathe a sigh of relief. That said, it will only kick a final reckoning down the road, to the moment when bad debts reach levels that neither banks nor government can cope with.”
https://www.theguardian.com/uk-news/2019/aug/25/is-a-global-recession-coming-here-are-seven-warning-signs
“…banks have a way of failing us when we need them most and that is a big part of why liquidity is generally the first casualty in a financial crisis. A huge part of the problem is rooted in the economic tool known as leverage. The same massive gains leverage brings, also showers us with huge losses that rapidly paralyze both individuals and financial institutions.”
https://seekingalpha.com/article/4287751-liquidity-often-first-casualty-financial-crisis
I always wondered why Jackson Hole was more like Malibu than Wyoming. Never been to Davos.
I thought the observation the new role of dollar denominated debt was interesting in the Jackson Hole article.
Wow! Two economists, and Stanford economists no less, coming as close as they dare to admitting that the only safe store of value is gold. A small straw in the wind, but perhaps the beginning of a move away from monetary philosophical idealism (bits of paper or bits in computers) to philosophical realism (heavy stuff you can hold in your hand). And perhaps the post that follows (by Rhisiart Gq) is a classic example of synchronicity.
And of course, gold is only a store of value if you can actually exchange it for goods and services. If the goods aren’t really there, or they are available in such limited supply that the producers insist on sharing the goods only amongst themselves, then there is a problem.
Excellent point, Gail. But the main advantage of gold as a store of value is that it retains its value even when the issuing government has disappeared from the world stage. The value in intrinsic, not perhaps to the gold, but to a human nature that seems always to have valued it.
All our energy problem solved, using the obesity epidemic and gravity; never mind space satellites!!
This truck travels empty uphill, and carries a load down the hill. The net effect is a surplus of power at the end of a day.
So buy a house at the bottom of the hill, shop/work at the top of the hill, and ride-share with your biggest friends on the downhill run only! Then you can run the house overnight!
Too easy!
‘Here’s how it works: The dump truck, itself, weighs 45 tons and ascends a hill at a 13 percent grade, in one scenario. On the way back down, it’s more than twice as heavy, carrying 65 tons of ore. To rectify that scenario, the truck’s “regenerative braking system” actually recaptures the energy created by going downhill, refilling the battery’s charge for the next time the truck travels uphill.’
https://www.popularmechanics.com/technology/infrastructure/a28748306/worlds-largest-electric-vehicle-dump-truck/
The way science and technology is reported on, It might as well be gossip.
“Are there any self-driving cars ready to be used by humans? Experts say yes but they just need to work out the kinks. In the meantime, professional drivers can kiss their careers goodbye!” I made that up but the idea that society needs to start radically reorganizing for a potentially disruptive technology that doesn’t even work yet is common on media coverage of r&d.
Naturally, the article was written by a woman with no scientific background whatsoever, People are less likely to question claims made by someone they perceive as disadvantaged in society.
I do believe in fairies
I do
I do
I do believe in technology
I do
I do
I do believe in economic justice
I do
I do
We went off gold standard in 73. Not that gold standard was all that or a solution. Pretty much everyone under 50 has had systems based on things that are largely imaginary provide sustenance and abundance to them their whole life. These things are denoted with words and these words are used to create relationships in which we find meaning.
Is it any wonder that younger people put such a absolute value on money, debt, technology, the power of “like” and other imaginary things. not at all IMO. It has been the water they have swam in their whole life. No one really likes having core beliefs examined.
Yes, that’s excellent point, I frequently try to ask (and evaluate) younger folks in terms of basic energy flows mostly with regard the infrastructure they are daily using and interacting with. And their non curiosity driven reaction is very interesting, I don’t blame them, as their own (grand) parents help to cook this mess in the first place. But I’m certainly not expecting (to depend) for the future on any rational response to challenges ahead from them either..
Ah the irony of a gold standard advocate typing furiously on his technological marvel of fiat currency, debt, innovation, computation and information sharing network which is the Internet.
Money is computerized book keeping. Gold is only if use as a raw material, such as plating printed circuit boards and making other corrosion resistant surfaces.
Technology is distilled intelligence and progress. Energy powers all human endeavors.
It is all real. Going back to a gold standard is nothing else than a pipe dream, a hallucinogen for the simple minded.
Totally agreed. Mainstream science reporting is about as useful as the astrology column on the next page, especially when it is quoting someone who has a major financial stake in having their quotes believed.
But I am far more concerned about the way science and technology are done, which has become an almost totally mendacious endeavour designed to please the paymasters rather than determine the truth. So, for example, we have medical scientists (paid by tobacco companies) telling us smoking is healthy. We have biologists (paid by agribusiness) telling us glyphosate is not a carcinogen. We have geologists (paid by oil companies) telling us fracking does not cause earthquakes, doesn’t pollute the water table, and won’t turn your kitchen faucet into a flamethrower.
And of course automotive engineers (paid by a company that has never made a profit) telling us safe self driving vehicles will be on the market “real soon now”. I also remember at Carnegie Mellon how proud the institution was of their famous “Robotics Institute”, which sucked up eight figure amounts of government money and never produced a single working robot.
And I remember by old tutor, Paul Dirac, cycling down Corn Exchange Street on a rusty old bicycle wearing a shabby old overcoat, and become horrified all over again at how so little money has created so much corruption in what was once my chosen profession.
The truck might actually be somewhat helpful, if all it does is drive empty uphill to a mine, and then take the full load back down the hill to be processed.
It would work much less well if the mine were down in a hole. Then the truck would have to drive back up with a full load, after coming down empty.
anyone with an interest in the economics of warfare, and access the UK BBC radio, should catch up on this series
https://www.bbc.co.uk/programmes/m0007qdp
Thanks! The audio recording is available in the US and is a little less than 14 minutes long.
It is indeed interesting. Japan was much more industrialized than China at the time that Japan set out to try to take over China in 1937 (to try to get access to China’s resources such as coal), but China was much larger and had more resources. Japan depended on swift victories, but China could hold out longer. Eventually China won, and Japan joined in World War II instead.
it is a series of 14 minute records, 1 each day for a week. You can listen to them all together if you want.
well worth catching up on
We listened to them all in sequence in a single session, that way they seem to link up better
Thanks!
Doomsday Preppers are bailing out!?
How long and how many locations they try before they hang it up?
Just ask Fast Eddy…too many LOL
https://news.yahoo.com/doomsday-preppers-thinning-across-us-150000916.html
Doomsday preppers are thinning out across the US, and it may be because President Trump quiets their fears
Hilary Brueck
Business InsiderAugust 25, 2019, 11:00 AM EDT
Doomsday preppers — people who prepare and stockpile for society-upending disasters both natural and manmade — have been on the rise in the US in recent decades.
British criminology professor Michael Mills travels throughout the US, meeting and staying with preppers to find out more about their motivations.
Preppers have various reasons for their stashes, but Mills told Business Insider that “prepping’s a mostly kind of right-wing culture.”
Preppers and prepper businesses say sales are down in the Trump.
More like we know now it’s hopeless!
In terms of realistic doom vector expectations stumbled on this older ~2003 German documentary about “forgotten” village somewhere in the southern Urals mountain range. Mind you these people still receive token pension, the fuel and grains are available-cheap, school + post office + shop are running, and “low tech” machinery around..
Somehow, they have an unused mountain that provides grass for their animals to graze.
Yes, but the point is more about this is still ~BAU soaked reality.. at the point in time slowly picking up from decade+ lasting partial collapse related to the fall of the USSR. They are connected to the grid, have access to gov subsidized grains and other goodies.. like $30 pension at that time. All of it could be much worse in post BAU proper collapse..
Obviously, we can find other examples across the world in much densely populated areas and more depleted environments. But I gather this example is also very telling..
I’m sorry, I didn’t look at more than the first couple of minutes of the video.
I agree that there would be a lot worse environments.
Interesting, the implication that ‘prepping’ is a ‘criminal’ culture – what on earth has it to do with a ‘criminologist’?! (A fake ‘scholarly discipline’ if ever there were one).
And that only ‘Right-wing’ people think ahead and do not trust naively themselves entirely to the Government as they should. What a dangerous attitude, not wanting to starve!
My chorizo stash must make me quite dangerous in this academic’s eyes then……
Repeat after me: ‘Government will always look after me and care for me and make all pain go away….’
Thank you Xabier.
I hadn’t thought about peppers being conservative. I have heard gun sales are down as well.
STRIKE STRIKE STRIKE HO HO HO
https://strikewithus.org/?fbclid=IwAR1Ea6ycMDNQO7G7_Gg3g-sMfJ-tiJ8fDsBsow8ucQDSbNipqtGr0Op2llE
“The demands set forth by the youth coalition will be released soon.”
Can we say manufactured opposition?
Can we say manufactured opposition?
We can, but it really doesn’t matter much.
«It looks as though growing debt at ever-lower interest rates is becoming a less effective workaround for the economy’s real need, which is a need for a rapidly growing supply of under $40 per barrel oil and other low-priced energy products.»
How did you arrive at $ 40? If i remember correctly i think you have talked about $ 20 in another post?
20 is under 40.
I was looking at the chart of when recession hit, relative to high prices, and decided you could make a case that $40 per barrel was acceptable:
https://gailtheactuary.files.wordpress.com/2018/08/average-wages-compared-to-oil-price.png
The catch, however, is that the $40 price was only possible when interest rates were being lowered at the same time. (We have been lowering interest rates most of the time since 1981, and can’t lower them much further.) I am doubtful that $40 is a price that can really be acceptable on long term basis.
Whether the acceptable price is $20 or $40, it is definitely lower than $60 dollars.