Our Energy and Debt Predicament in 2019

Many people are concerned that we have an oil problem. Or they are concerned about recession and the need to lower interest rates.

As I see the situation, we have a problem of a networked economy that is not functioning well. A big part of this problem is energy-related. Strange as it may seem, energy prices (including oil prices) are too low for producers. If debt levels were growing more rapidly, this low-price problem would go away.

The “standard way” of encouraging more debt-based purchases is by lowering interest rates. But we are running out of room to do this now. We also seem to be running out of economic investments to make with debt. If expected returns on investment were greater, interest rates would be higher.

Without economic investments, demand for commodities of all kinds, including energy products, tends to stay too low. This is the problem we have today. Our debt problem and our energy problem are really different aspects of a networked economy that is no longer generating enough total return. History suggests that these periods tend to end badly.

In the following sections, I will explain some of the issues involved.

[1] Our problem is not just that oil prices are too low. Prices are too low for practically every type of energy producer, and in many parts of the globe.

Oil: OPEC oil producers have cut back production because they view oil prices as too low. OPEC reports a cutback in production of 2.7 million barrels per day between November 2018 and July 2019 (from 32.3 million bpd to 29.6 million bpd).

In the US, there has been an increase in bankruptcies of oil producers during 2019, relative to 2018. There has also been a reduction in the number of oil drilling rigs of 17% since the week of November 16, 2018, according to reports by Baker Hughes. These are signs of producer distress.

Natural gas: While recent US natural gas prices have bounced up off their recent lows, as recently as August 8, 2019, we were reading:

U.S. gas futures this week collapsed to a three-year low, while spot prices were on track to post their weakest summer in over 20 years. In other markets, such lackluster pricing would cause investment to retrench and supply to contract.

But gas production is at a record high and expected to keep growing. Demand is rising as power generators shut coal plants and burn more gas for electricity, and as rapidly expanding liquefied natural gas (LNG) terminals turn more of the fuel into super-cooled liquid for export.

Analysts believe the natural gas market is not trading on demand fundamentals because supply growth continues to far outpace rising consumption. Energy firms are pulling record amounts of oil from shale formations and with that oil comes associated gas that needs either to be shipped or burned off.

When we look worldwide, we see that the Wall Street Journal is reporting, “U.S. Glut in Natural Gas Supplies Goes Global.” A chart from that article shows falling natural gas prices in Europe and Asia, almost to the level of US natural gas prices.

Coal: The US Energy Information Administration writes, “More than half of US coal mines operating in 2008 have since closed.” USA Today writes, “Is President Trump losing his fight to save coal? Third major company since May files for bankruptcy.”

China has also been closing coal mines in response to low prices. Its coal production ramped up quickly after it joined the World Trade Organization in 2001, but since the 2012 to 2013 period, production has been close to level. An academic paper talks about a “de-capacity program” undertaken in China in 2016 in response to plunging coal prices and overall financial loss of coal enterprises.

Figure 1. 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.

Uranium: A recent article says, “Plummeting global uranium prices hit Namibia hard.” Another article talks about the huge amount of capacity that has been taken off-line because of continued low uranium prices. The article estimates that 25% to 35% of global uranium production had already been taken off-line by the time the article was published (May 20, 2019).

Ethanol: According to the Wall Street Journal, the ethanol industry has been losing money since at least 2015, and is now closing ethanol plants in three states. The trade war has exacerbated its problems, but clearly its problems began before the trade war.

[2] The general trend in oil prices has been down since 2008. In fact, a similar trend applies for many other fuels.

Figure 2 shows that oil prices since 2008 have been trending downward.

Figure 2. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

Figure 3 shows that other energy prices have been following a similar price trend to that of oil. This situation happens because energy products are primarily used in finished goods and services of many kinds, such as cars, homes, vacation travel, and air conditioning. If demand for finished goods and services is high, prices for all commodities can be expected to be high; if demand for finished goods and services is low, prices for all commodities can be expected to be low. Thus, it shouldn’t be too shocking that the problem of prices that are too low for energy producers is very widespread.

Figure 3. 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. They are annual averages, so smooth out quite a few smaller bumps.

[3] The situation of prices being too low for many types of energy producers simultaneously is precisely the problem I found back in December 2008 when I wrote the article Impact of the Credit Crisis on the Energy Industry – Where Are We Now? 

The article mentioned was written in December 2008. If we look back at Figure 2, this was a time when oil prices were very low. I had first noticed a cutback in credit of various kinds (including credit card debt and mortgage debt) in the middle of 2008, about the time oil prices crashed. Later in the year, additional financial problems emerged, including the collapse of Lehman Brothers. Banks became less willing to offer credit to buyers who were deemed insufficiently creditworthy.

In my December 2008 article, I wrote about suppliers in various supply chains not being able to get credit. Without credit, supply chains could not operate. Businesses depending on supply chains were forced to cut back on their purchases. In fact, some suppliers went bankrupt. Workers were laid off in this process; these layoffs added to the lack of buyers for finished goods and services. Energy prices of many types crashed simultaneously because of the lack of demand for commodities used to make finished products of many kinds.

The fix for the problem back in late 2008 was for the US to begin Quantitative Easing. Quantitative Easing lowered longer-term interest rates and allowed more credit to get back to supply chains. By 2011, oil prices had risen to a level that was more tolerable for producers. These higher prices slowly slipped away, especially disappearing when the US discontinued its Quantitative Easing program in 2014.

If a person looks at the late 2008 situation, it is clear that a lack of debt availability indirectly led to low commodity prices. Prices dropped almost vertically when the debt bubble popped. This time, the situation is a little different. We arrived at low prices through the long diagonal black dotted line on Figure 2; this time other factors besides an obvious lack of debt have been involved.

One issue that seems to be involved this time is a shift in relativities between the dollar and other currencies, making energy products more expensive for those outside the US.

A second contributing issue this time is growing wage disparities, as goods are increasingly manufactured in low-wage countries. Low-wage workers (both in developing countries and in advanced economies trying to compete with developing countries) are less able to buy finished goods and services. This contributes to the lack of demand for finished goods and services using commodities of all kinds, including energy products.

[4] In the right circumstances, a rapidly growing supply of cheap energy products can help the world economy grow.

If we look back, there was a period of rapid growth in the world’s energy consumption between World War II and 1980. This was a period of rapid growth in the world economy.

Figure 4. Average growth in energy consumption for 10 year periods, based Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects (Appendix) together with BP Statistical Data for 1965 and subsequent.

In fact, both population and energy consumption per capita were growing. This growing energy consumption per capita allowed living standards to grow as well (Figure 5).

Figure 5. Energy growth amounts shown in Figure 4, divided between amount that supported population growth (based on 2019 world population estimates and earlier estimates by Angus Maddison) and all other, which I have called “living standards.”

Most people would agree that a major increase in living standards took place between World War II and 1980. New buildings were constructed to replace those destroyed or damaged during World War II. Many people were able to buy cars for the first time. Interstate highway systems were built. Electric transmission lines were built, and oil and gas pipelines were laid. In rural areas, homes were often electrified for the first time. With the aid of energy saving appliances and birth control pills, many women joined the workforce. The US, Europe, Japan, and the Soviet Union all saw their economies grow.

[5] It is striking that the period of rapid energy consumption growth between World War II and 1980 corresponds closely to the long-term rise in US interest rates between the 1940s and 1980 (Figure 6).

Figure 6. Three-month and ten-year interest rates through July 2019, in chart by Federal Reserve of St. Louis.

If interest rates rise, it becomes more expensive to borrow money. Monthly payments for homes, cars, and new factories all rise. Evidently, the US economy was growing robustly enough in the 1940 to 1980 timeframe that US short term interest rates could be raised without much economic harm. The big concern seemed to be an overheating economy as a result of too rapid growth.

The huge increase in interest rates in 1980-1981 put an end to any concern about an overheating economy (compare Figures 6 and 7). Oil prices came back down once the world economy was in recession from these high interest rates.

Figure 7. Historical inflation-adjusted Brent-equivalent oil prices based on data from 2019 BP Statistical Review of World Energy.

[6] Starting about 1980, the US economy began substituting rapidly growing debt for rapidly growing energy supplies. For a while, this substitution seemed to pull the economy forward. Now growth in debt is failing as well.

Figure 8 shows how the ratio of total US debt (including governmental, household, business and financial) has changed since 1946. It becomes clear that once the big “push” that the economy received from rising consumption of energy products began to fail about 1980, the US moved to the addition of debt as a substitute.

Figure 8. Ten-year average increase in US debt relative to GDP. Debt is “All Sectors, Liability Level” from FRED; GDP is in dollars of the day.

I think of debt as being one of many kinds of promises. Figure 9 illustrates that while the total amount of goods and services has been growing, debt levels and other kinds of promises have been growing even more rapidly.

Figure 9. Promises of future goods and services tend to rise much more rapidly than actual goods and services. Chart by Gail Tverberg.

Many things can go wrong with this system. If the growth in added debt slows too much, we can expect to start seeing financial problems similar to those we saw in 2008. Also, if the level of debt (such as student debt) gets too high, its payback interferes with the purchase of other needed goods, such as a home. If energy providers decide prices are too low and stop producing, then promised Future Goods and Services can’t really appear. Huge defaults on promises of all kinds can be expected. This happens because the laws of physics require the dissipation of energy for physical processes underlying GDP growth.

[7] Since 2001, world economic growth has been pulled forward by China with its growing coal supply and its growing debt. In the future, this stimulus seems likely to disappear. 

Figure 10. Figure similar to Figure 5, with bump that is primarily the result of China’s accelerated growth circled.

China has been financing its rapid economic growth since 2001 with growing debt.

Figure 11. China Debt to GDP Ratio, in figure by the IIF.

We know that low prices for coal have led to flattening production since the 2012 – 2013 period (Figure 1). In fact, part of the reason for the flattening of non-financial corporate debt in recent years in Figure 11 may reflect swaps of uncollectible coal mine debt for equity, removing part of coal mine debt from the chart.

The failure of coal production to grow rapidly puts China at an economic disadvantage because coal is a very low-cost energy source. Any substitution, even imported coal, is likely to raise its cost of making goods and services. This makes competition in a world economy more difficult. And China’s debt level is already very high, putting it at risk of the problems discussed in Section [6].

[8] The world economy needs much more rapidly growing debt if energy prices are to rise to a level that is acceptable to energy producers. 

Debt acts like a promise of future goods and services. Growing debt, plus increases in other types of promises of future goods and services, helps to keep energy prices high enough for energy producers. There are at least three reasons that growing debt helps an economy:

First, increasing debt can be used to build factories, and these factories hire large numbers of people. The factories utilize various raw materials and energy products themselves, raising demand for goods and services. Furthermore, the workers hired by the factories, with their incomes from their jobs, also raise the demand for goods and services. These goods and services are made with commodities. Growing debt thus raises demand for commodities, and thus their prices.

Second, increasing debt levels by governments are often used to hire workers or to raise benefits for the unemployed or the elderly. This has a very similar effect to building new factories. These workers and these beneficiaries can afford more goods and services, and these goods and services are made using commodities. Governments also use some of their funds to build schools, pave roads and operate police cars. All of these things require energy consumption.

Third, consumers can afford to buy more of the output of the economy, if their debt levels are increased. If debt can be structured so that anyone who walks into a car dealership can afford a new car (such as longer durations, lower interest rates, and no down payment), this added debt allows increasing demand for new cars. It also allows increasing demand for the energy products used to make and operate these new vehicles. Furthermore, if new homes can be made more affordable for young people, this works in the direction of adding more mortgage debt.

The Institute of International Finance (IIF) reports that the ratio of world debt to GDP (red line on Figure 12) has been falling since 2016. This falling ratio of debt to GDP no doubt contributes to the low-priced energy problem with which energy producers are now struggling.

Figure 12. IIF figure showing total world debt and the ratio of total world debt to GDP.

Non-debt promises of many types can also have an impact on energy prices, but it is beyond the scope of this article to discuss their impact. Some examples of non-debt promises are shown on Figure 9.

[9] The world economy seems to be running out of truly productive uses for debt. There are investments available, but the rate of return is very low. The lack of investments with adequate return is a significant part of what is preventing the economy from being able to support higher interest rates.

In a self-organizing networked economy, market interest rates (especially long-term interest rates) are determined by the laws of physics. Regulators do have some margin for action, however. They can raise or lower certain short-term interest rates. They can also use their central banks to purchase existing securities, thereby influencing both short- and long-term interest rates. In addition, they can indirectly affect the system by raising and lowering tax rates and by adopting stimulus programs.

Market interest rates, in some sense, tell us how productive investments truly are at a point in time. Years ago, investments that the economy was able to make were far more productive than the investments we are making today. For example, the first paved road in an area had a huge beneficial effect. New roads were able to open whole areas up to commerce. Once an area had been developed, later investments were much less beneficial. Fixing up a road that has many holes in it takes energy and materials of many types, but it doesn’t really add productivity to the system. It just keeps productivity from falling.

After a point, adding new roads or other infrastructure doesn’t add much of anything. This is especially the case if population is level or falling. If population is falling, it would likely make sense to reduce the number of roads, but this is difficult to do, once there are a few occupied homes along a road.

As another example, a car that gets a person from home to work is a great addition if the vehicle allows the person to take a job that he could not otherwise take. But added “bells and whistles” on cars, such as air conditioning, a musical system, sturdier bumpers, and devices to reduce emissions, are of more questionable value, viewed from the point of view of allowing the economy to function cheaply and efficiently.

Another type of investment is education. At one point, a high school education was sufficient for the vast majority of the population. Now additional years of schooling, paid for by the student himself, are increasingly expected. An investment in higher education can be “productive,” in the sense of helping to differentiate himself/herself from those with no post-secondary education. But the overall level of wages has not been rising enough to compensate for all of the extra education. It is the growing complexity of the system that is forcing the need for extra education upon us. In a sense, the extra education is a tax we are required to pay for having a more complex system.

The need for pollution control might be considered another kind of tax on the system.

Our hugely expensive health care system is another tax on the system. After paying the cost of health care, workers have less funding available for buying or renting a home, raising a family, food and transportation.

[10] Since 1981, regulators have been able to prop up the economy by reducing interest rates whenever economic growth was faltering. Now we have pretty much run out of this built-in source stimulus.

Many observers have noted that central bankers are running out of tools to fix our economic problems. The lack of room to take down interest rates can be seen in Figure 6.

Figure 13 shows that long-term patterns of reductions in interest rates (darker bands) have happened previously. These reductions in interest rates came to an end because they couldn’t go any lower, given inflation expectations and likely levels of defaults. We seem to be facing a similar situation today.

Figure 13. Chart from the Financial Times showing historic interest rates and periods during which interest rates fell.

According to Figure 13, there have been three periods of falling interest rates in the last 200 years:

  • 1817-1854
  • 1873-1909
  • 1985-2019

In the gap between the first two periods of falling interest rates (1854 to 1873), the US Civil War took place. This was a period of very poor return on investments. Somehow it ended in war.

Immediately after the second two periods of falling interest rates (after 1909), the world entered a very unstable period. First there was World War I, then the Great Depression, followed by World War II.

Now we are facing the possibility of yet another end-point for the take-down in interest rates.

[11] The total return of the economy seems to be too low now. This seems to be why we have problems of many types, ranging from (a) low interest rates to (b) low profitability for energy producers to (c) too much wage disparity. 

All of the problems listed above are manifestations of an economy that is not producing sufficient total return. The laws of physics distribute the problem to many areas of the economy, simultaneously.

A person wonders what could be ahead. We seem to be reaching the end of the line regarding the takedown of interest rates, as shown in Figure 13. If a takedown in interest rates is possible, it acts as a relief valve for some of the other problems the economy is facing, including too much wage disparity and energy prices that are too low for producers.

In Section [10], we saw that when the relief valve of lower interest rates had disappeared, wars and depressions have taken place. We can’t know the precise outcome this time, but our current situation doesn’t look good. Will we encounter wars, or a serious depression, or financial problems worse than 2008? We can’t know for certain. Or will we somehow find a way around serious problems?

 

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,324 Responses to Our Energy and Debt Predicament in 2019

  1. It's different this time around....YES says:

    Global Climate Strike kicks off with thousands skipping school or work for demonstrations across the world
    Lucia I. Suarez Sang By Lucia I. Suarez Sang | Fox New
    The worldwide climate protest partially inspired by Swedish teenager Greta Thunberg kicked off Friday in major – and smaller – cities around the globe Friday with hundreds of thousands of students hitting the streets.
    “I have basically been told that because it is not a valid reason to be missing school — it is not a medical reason or anything — I am going to get a zero on the test if I don’t actually sit it,” Sutton said.
    Thunberg, who has staged weekly demonstrations under the heading “Fridays for Future” over the past year, has been calling on world leaders to step up their efforts against climate change. She is expected to speak at the U.N. Climate Action Summit in New York City on Monday
    Are they connected? Or just a coincidence?

    The creator underestimated the allure
    Matty Roberts was just joking. He didn’t believe anyone would take him seriously when, on June 27, he created a Facebook page for an event entitled “Storm Area 51, They Can’t Stop All of Us.”
    But Roberts may have underestimated the allure of Area 51, the highly classified US Air Force base in southern Nevada. It’s long been a topic of fascination for conspiracy theorists and paranormal enthusiasts who believe it to be the location where the US government stores and hides alien bodies and UFOs. Just this week, the US Navy acknowledged that some videos of UFOs are indeed images of objects that can’t be identified.
    Roberts said he came up with the idea for the meme page after podcaster Joe Rogan interviewed Area 51 whistleblower Bob Lazar and filmmaker Jeremy Corbell. Lazar claims that he worked with an alien spacecraft while he was employed in one of Area 51’s underground facilities
    https://www.cnn.com/travel/article/area-51-raid-weekend-event-trnd/index.html

    • Hubbs says:

      She reminds me of the coached ambassador’s daughter who testified abou all the babies being pulled out of their incubators in Kuwait as a reason to go to war with Iraq. But what do I know? not only are they excellent actors, but they are also professors.

      • It's different this time around....YES says:

        The Nayirah testimony was a false testimony given before the Congressional Human Rights Caucus on October 10, 1990 by a 15-year-old girl who provided only her first name, Nayirah. The testimony was widely publicized, and was cited numerous times by United States senators and President George H. W. Bush in their rationale to back Kuwait in the Gulf War. In 1992, it was revealed that Nayirah’s last name was al-Ṣabaḥ (Arabic: نيرة الصباح‎) and that she was the daughter of Saud Al-Sabah, the Kuwaiti ambassador to the United States. Furthermore, it was revealed that her testimony was organized as part of the Citizens for a Free Kuwait public relations campaign, which was run by the American public relations firm Hill & Knowlton for the Kuwaiti government. Following this, al-Sabah’s testimony has come to be regarded as a classic example of modern atrocity propaganda.[

        The ambassador has stated that his daughter had witnessed the atrocities she described and that her presence in Kuwait could be verified by the United States Embassy in Kuwait.[53] He also stated “If I wanted to lie, or if we wanted to lie, if we wanted to exaggerate, I wouldn’t use my daughter to do so. I could easily buy other people to do it.”[69]

        Pegado was the acting Vice President of Hill & Knowlton at the time of Nayirah’s Testimony. It was later confirmed within the Kuwaitis investigation that Pegado was responsible for coaching Nayirah in what was proven to be her false testimony.
        Kuwaiti officials do not discuss the matter with the press.[44] In order to respond to these charges, the Kuwaiti government hired Kroll Associates to undertake an independent investigation of the incubator story. The Kroll investigation lasted nine weeks and conducted over 250 interviews. The interviews with Nayirah revealed that her original testimony was wildly distorted at best; she told Kroll that she had actually seen only one baby outside its incubator for “no more than a moment.” She also told Kroll that she was never a volunteer at the hospital and had in fact “only stopped by for a few minutes

        https://en.m.wikipedia.org/wiki/Nayirah_testimony

        Fascinating extensive writeup about it all in the above link.
        I’m remember it very vividly, The Bush Administration pandered it a great deal as a cause for US intervention.
        It worked!

    • Today it sounds ridiculous but..
      The fourth turning concept calls them (their generation archetype) the hero generation, they surely fit many of the specifications calm, focus oriented, comunitarian..

      For now in their late teens they adhered to dubious theory pushed on them by msm/govs prefabricating the narrative for other hidden motive (smoothing the attempted degrowth/collapse phase). However, that doesn’t negate what they are likely going to do as they age into their 35-50s.. and possible wise up a bit also due to forcing of very changed world and personal circumstances by that time.

      • Xabier says:

        Maoist and Bolshevik mass murderers were also focus-oriented and communitarian in principle: they often killed quite calmly, too. These are not necessarily admirable qualities.

        What I do not like is that their brains are being messed about with by propaganda from a very tender age: what happens when they realise they were sold a false paradigm?

        Possibly they will lapse into drug addiction and despair; maybe they will look for scapegoats. The record of humanity is not very good regarding profoundly disillusioned and frightened masses.

        The sweet, determined, little child carrying a ‘Save the World’ placard might well be the torturer of 2035.

        • This particular generational archetype is supposedly not drugs friendly nor prone to scapegoating violence.. Perhaps counterintelligence they will be good “back to landers”, despite their initial lack of experience and today’s fixation on cell phones, social networks etc., this could be to a large degree easily re-mediated in public space on the public square daily interactions so to speak.

          Instead I’d be worried more about the generation who currently and in next ~15yrs will have access to the doom console, actually as of now they produce the smoke screen of theories and operational doctrines that nuclear strikes are kind of mellow event taking only few% of pop down etc.

  2. DB says:

    Here’s a self-interested justification for shortening the lifespan of solar panels and boosting production/sales:
    “A new study shows that, contrary to widespread belief within the solar power industry, new kinds of solar cells and panels don’t necessarily have to last for 25 to 30 years in order to be economically viable in today’s market.”

    http://news.mit.edu/2019/short-lived-solar-panels-economic-0919

    I imagine this change in use would definitely make solar panels energy sinks (in the crude sense of more energy used in manufacture than produced during operation).

    • The title of this is

      Study: Even short-lived solar panels can be economically viable
      Research shows that, contrary to accepted rule of thumb, a 10- or 15-year lifetime can be good enough.

      One big issue with all of this stuff is “What do you do with the solar panels, later in their lifetimes?” With longer lifetimes, the “plan” such as it has been, seems to be to send the stuff off to some less-developed country, and let the poor folks there get a little use out of them. Then they can deal with the pollution problems associated with trying to dispose of these device.

      If we talk about shorter lived panels, then we are talking about two to three times as much waste from used panels. There is also less opportunity to dump them in a less developed country. So one needs to deal with the mess that they cause for waste/recycling oneself. (Not a topic in the article.) When I looked up Perovskite-Based Solar Cells, I found this ScienceMag article. It lists the most common molecule used as triiodide (CH3NH3PbI3). Not being a chemist, I don’t know much about this, except that it seems to include both iodine and lead. I don’t think I would want either of them in my water supply? Does this compound leach off the panels, if they should happen to break? I know that this seems to be an issue with other panels, when they break.

      I found an article called More solar panels mean more waste and there’s no easy solution. Recycling is not economically viable for the long-lived panels. I can’t imagine it would be for the shorter lived panels, either. No one in EROI analyses has paid attention to end-of-life issues. If these things are to be kept out of landfills, there must be a system set up at the front end, to charge more for them, to include the cost handling the end-of-life issues. I wonder what adding a charge for these issues would do to the financial viability of these shorter-lived solar panels?

      • Robert Firth says:

        Thank you, Gail. Solar panels were advertised as investments that would pay you back over 25 years. That was wrong, because the payback was denominated in money, not energy: it ignored the (huge) energy cost of their manufacture and counted only the monetary cost in third world countries with dirt cheap labour and no control over pollution.

        And now, as many sane engineers had predicted, they don’t work that long. The calculations were done for large arrays with permanent maintenance teams on site, and then applied to the panels on your roof.

        The decommissioning costs, of course, were ignored, and now they are beginning to bite. So, dump the problem on countries with a lot of landfill and no environmental protection, and pocket the money.

      • Kowalainen says:

        Solar panels and wind turbines is a cute gimmick for the feeble minded. And similar to the other frivolous gizmos and trinkets in our empty lives – they are fun for a little while. Then they end up in the garbage heap leaking out all sorts of poisonous juices from which they are made out of.

        • True, however it’s still the most plug&play ready “alt energy” solution known to little guys – as micro hydro, biomass burning for electricity or wind are even more complex in terms of installation, upkeep and financing, not mentioning seasonality swings..

          In terms of the small scale, the only workaround is simply to go without electricity completely (doable-possible) or to limit it for such tiny tasks that only very small PV array is necessary, hence the future trade off in leaching a bit of lead and various acids after few decades is bearable (speaking about the silicon type not the more toxic thin film)..
          Moreover it’s even possible to prepare on your property small diy long term storage depot which would stabilize-absorb the leaking stuff at lest till the next severe ice age terra forming age (or similar scale event), so good enough in my book.

          But 99% humanoids don’t think in above terms, at least for now as several past centuries of continuous techno massage (and dependency) completely changed the narrative of core believes/needs/wants/..

          • Robert Firth says:

            Once again, I agree completely with your post. (I seem to be agreeing a lot. Either i’m getting old and uncranky, or this really is one of the most intelligent discussion fora on the net. Many thanks, Gail.)

            Yes, you can downscale your energy use if you decouple from the grid, and then replace unsustainable solutions with sustainable ones. And yes, micro hydro is far less expensive (in terms of energy) in both construction and maintenance. That’s why the Middle Ages could grind corn with water wheels.

            • Yes, we have to be thankful for sanctuaries for discussion like OFW/Surplus and few others to some extent as well. I hope mil-industrial contractors don’t milk it for easy idea$ too much, lol.

              Now on the topic, apart from doing without, in terms of energy downscale concept through energy savings it’s really overspecialization at hearth. For example, the current megatrend in electronics is small energy sipping parallel processors able to displace most of the traditional high wattage PCs functionality, basically a mid segment mobile phone can do it today already (running-editing multimedia, accounting spreadsheets, lab simulations etc) and lowend phone could do it tomorrow..

              But as in every pointy peak driving “ecosystem” it’s a very fragile situation afterall. When these JITs and factories don’t suddenly churn out anymore the complexities of achieved energy savings are so huge it becomes non repairable junk after the lifetime of the device concludes (~10-20yrs).. and then it drags down everything connected/affiliated with it.

            • Kowalainen says:

              Well, the complexity isn’t in the manufacturing steps. It is (E)UV lithography with semi-advanced software for optical control systems to align the multi-layer plumbing inside a modern SOC.

              The complexity is in the design, validation and manufacturing software as I have been reiterating. A software system isn’t prone to the same inherent flaws as a corruptible, decadent, error prone and forgetful humanoid centered organizational structure.

          • Kowalainen says:

            Yeah, the they are plug ‘n play for sure, still crap though. At least compared with proper industrial mega-scale installations. The reliability and robustness of gigawatt sized nukes and hydro power stations is spectacular.

            I can not remember the last time I had a power outage in Sweden. It just does not happen with nukes as thermal base load and large scale hydro as dispatchable power. Still they are centralized single points of failure. Sooner or later inevitably stuff will go horribly wrong. It’s only a matter of time.

            • It is the above ground distribution lines that fail most often in the US. We have a lot of wind storms that lead to outages. But there seem to be other problems as well, including transformer problems.

      • JeremyT says:

        The study did suggest “They used NREL benchmark parameters for U.S. solar systems and a variety of assumptions about future progress in solar technology development, financing, and the disposal of the initial panels after replacement, including recycling of the used modules”
        Some hazy figures no doubt, but they did take recycling onto account.

        • I am not sure what the new studies assumed. I know that older studies tended to assume that the panels would have enough salvage value at the end of some period so that there would be no problem.

          All of these studies are based on models of what might happen over the life of the panels. In fact, the system acts on a calendar period in and out principle. So, how much is spent upfront becomes very important. You are basically digging a big hole with energy consumption and trying to get out of it. With batteries, you never get out.

  3. Harry McGibbs says:

    “The Federal Reserve added liquidity for a fourth straight day to a vital corner of the funding markets, helping further stabilize rates as investors remain concerned that fresh bouts of stress may be felt in the weeks ahead.”

    https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2019-09-20/fed-injects-cash-for-fourth-day-as-funding-markets-stabilize

    • Chrome Mags says:

      Ever since the 08 mortgage meltdown there has been intervention to stabilize this, that and the other. The fear of another meltdown apparently necessitates the financial adjustment valves turning when needed. I liken it to a wave that just keeps cresting higher (rising debt) and we know what happens to those eventually.

      • Robert Firth says:

        “What cannot go on for ever must eventually stop”

        A lesson modern economists repeatedly fail to learn.

    • Davidin100millionbilliontrillionzillionyears says:

      it is planned to continue through October 10…

      https://news.yahoo.com/ny-fed-pump-75-bn-money-markets-daily-154943871.html

      After October 10, the New York Fed will “conduct operations as necessary to help maintain the federal funds rate in the target range, the amounts and timing of which have not yet been determined.”

      “Federal Reserve Chair Jerome Powell this week downplayed concerns about the money market’s cash crunch, saying it was not a sign of problems in the wider economy or a concern for monetary policy.”

      see? this is not a sign of any economic problems…

      Keep Calm and…

      BAU Tonight, Baby!

      • Harry McGibbs says:

        The way it has stretched out from a “glitch” to a prolonged injection of emergency liquidity is unsettling.

        The more I read about the origins of the crunch the more confused I get. There are so many competing theories out there.

    • Tango Oscar says:

      Now this is concerning! 4 days in a row of asset purchases in order to stabilize the overnight repo market. How is this different than Quantitative Easing and almost 300 Billion in a week is a ridiculous sum of money?! Did a derivative debt bubbled collapse or something? Why would banks need hundreds of billions of dollars in funding over a few day period?

  4. Duncan Idaho says:

    “Stop paying the warlords, leave the country and forget about it.”
    https://www.moonofalabama.org/2019/09/cia-celebrates-18-years-of-war-in-afghanistan.html

  5. MG says:

    The shortage of workforce in Austria leads to another creative idea: the truck driving license for 16 year olds:

    https://www.etrend.sk/ekonomika/kuriozny-napad-rakusko-navrhuje-znizenie-veku-pre-vodicov-kamionov-na-16-rokov.html

    • Interesting. The work pool of CEErs and Balkaners is after several decades suddenly drying out for Austria’s advantage as next gen Turks or newly incoming Africans don’t desire though working jobs anymore.. And Musk is still late with his AI trucking schemes..

  6. CTG says:

    For those who are interested in Eurodollar, repo, etc, this guy Jeff Snider is good.

    https://www.alhambrapartners.com/commentaryanalysis/

    • CTG says:

      My bad, this is an overnight loan. So,m the amount is fixed. The question is – why did it happen? Is it because of a much bigger issue that is not being told?

  7. It's different this time around....YES says:

    See, it’s working….
    More than 2,300 companies around the globe from a variety of industries, including law, tourism and technology, have joined the Not Business As Usual alliance and pledged to support their workers to strike with students on Friday.
    Thousands of tech workers joined the protests in the middle of their workdays, showing a renewed level of political activism in Silicon Valley, where software engineers and other employees traditionally haven’t spoken up in public against their bosses.
    https://www.nbcnews.com/news/world/global-climate-strike-protests-expected-draw-millions-n1056231

    Just because I want it so, make it so!
    Easy Peasey….just like magic…

    Amazon Employees for Climate Justice said it expected more than 1,600 employees would walk off their job sites to protest what they called the company’s lack of action in addressing the climate crisis.
    On Thursday, Amazon CEO Jeff Bezos offered a prebuttal to the strike, pledging that the retail giant would get 80 percent of its energy from renewable sources by 2024, up from 40 percent now.

    And Jeff will colonize Litter Space too!
    L.O.L.

    Well, we shall see, we shall see….said the blind man!

  8. It's different this time around....Yes says:

    Trump is a SOCIALIST!.
    !Trump telling American companies to stop doing business in China is the “type of edict that might come from the leadership of the old Soviet Union, Cuba or even today’s communist China,” he said. “It is the ultimate in government interference with the free market.”
    His belief that he has the right to direct American commerce “is a startling blunt exercise in socialism,” Gregg added. The tariffs, seen as a massive new tax on the U.S. consumer, are also right out of the socialist playbook, he said.
    “The fact that U.S. companies need to compete in an international market requires them to be international is lost on this president and his people,” he said. “They set up a clear list of businesses they deem enemies of the state, and they do not hesitate to use the powers they have to berate them.”
    Other socialist-leaning ideologies espoused by the president that Gregg lists in his piece include the desire for a weaker dollar DXY, +0.19% as well as the push for running up debts and deficits.

    https://www.marketwatch.com/story/how-trumps-startling-blunt-exercise-in-socialism-is-overlooked-by-his-backers-2019-09-16?siteid=yhoof2&yptr=yahoo

    Think he forgot a few…like permanent tax cuts for the super rich…LOL

    Yada, yada, yada

  9. Harry McGibbs says:

    “When Alan Greenspan ran a consulting firm and wanted to know where the economy was headed, he would often look at sales of men’s underwear as a guide.

    “Mr. Greenspan, who later served as chairman of the Federal Reserve, believed that when times were tough, men would stop replacing worn-out underwear, which no one could see, before cutting other purchases.

    “By that measure, India is in a serious slump.”

    https://www.google.com/amp/s/www.nytimes.com/2019/09/21/business/economy/india-economy-trade.amp.html

    • India is supposedly one of the fastest growing countries in the world, yet it keeps coming up with problems. Something doesn’t add up.

    • Xabier says:

      Sounds reasonable. Socks, too: my Dickensian holey socks were quite a sight after the 4 -year slump in orders I experienced, when paying the mortgage – and eating – were the only priority.

      Still, on the bright side, if people are hanging on to old underwear,etc, less land-fill!

    • Robert Firth says:

      Thank you for a good, informative article. So, India’s banks are in trouble because of “excessive” lending. No: they are in trouble because they don’t consider the borrower’s ability to repay, but rather his caste, status, and willingness to pay bribes.

      And India’s two biggest industries, agriculture and textiles, are in deep trouble. That is what reckless industrialisation always does, and India’s peasant farmers, the backbone of her food supply, are being driven to suicide by a system that strongly favours agribusiness, which down the road will create famine.

      The government’s answer: more subsidies to the auto industry, which any sane government in its predicament would shut down, because if you count the externalities (pollution, shortened lifespan, child mortality, congestion and general misery) it subtracts value from the country as a whole.

      But I guess the ethnic cleansing of Kashmir is Modi’s highest priority.

  10. Harry McGibbs says:

    “The global debt bonanza has begun to show cracks as investors increasingly yank cash out of leveraged loans to companies with low credit ratings.”

    https://asia.nikkei.com/Spotlight/Datawatch/Investors-edge-away-from-risky-leveraged-loans-in-echo-of-2008

Comments are closed.