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?


This entry was posted in Financial Implications and tagged , , , , by Gail Tverberg. Bookmark the permalink.

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.

1,325 thoughts on “Our Energy and Debt Predicament in 2019

  1. Cheap Gas Is Killing Nuclear, Green Power May Finish the Job
    Will Wade
    BloombergSeptember 21, 2019, 6:00 AM EDT
    (Bloomberg) — The natural gas boom is killing America’s nuclear industry. Wind and solar may finish the job.

    While nuclear plants struggle to compete with the flood of cheap gas coming from the nation’s shale fields, they still offer a key advantage, supporters say: They generate 24-hour electricity without producing carbon emissions. Renewables, meanwhile, haven’t yet nailed down the storage capacity needed to do that. Proponents insist it’s only a matter of time.

    Battery prices have plunged 85% from 2010 through 2018, and huge storage plants are planned in California and Arizona. Meanwhile, science is advancing on new technology — including chemical alternatives to lithium-ion systems — with the potential to supply power for 100 hours straight, sun or no sun.

    “All signs point to the acceleration of renewable energy that can out-compete nuclear and fossil fuels,” said Jodie Van Horn, director of the Sierra Club’s Ready for 100 campaign, a group seeking a grid powered solely by renewables.

    The drive for grids that are 100% emissions-free is being pushed by a growing number of U.S. states citing increasingly aggressive time frames. In July, New York mandated that 70% of the state’s power come from renewables by 2030, and 100% by 2040. Seven other states, including California, have similar mandates, and Virginia’s governor earlier this month announced an executive order calling for 100% clean energy there by 2050.

    Still, there remains a gap between now and 2050. “To get to 80%-to-85%, you can see a path to get there with today’s technologies,” said Yayoi Sekine, an analyst with BloombergNEF. But using renewables to achieve the final 15%, “that’s where the challenge really is.”

    • So if these states cant meet these renewable mandates they go dark? Not. Nice mandating “things” with dates when you are out of office. Yup solved the crisis. Humanity can thank me. Its amazing what can be achieved with visionary goals such as what I have. Someone has to take on the billionaire class fossil fuel climate criminals!

      If people are so detached from reality that they think that just imagining things makes it so our future will be interesting.

      • Renewables and nuclear will provide 100% of societies energy. Not clear how much energy per person, not clear cost per KwH. Of course when the state of New York says 100% renewable by 2040 they are thinking today’s level of use plus some at today cost plus at most 10%. That will not happen.

        • Inherent to this legislation is the premise that energy use will continue at present levels. New reactors. Not! Both renewables an nuclear are fossil fuel dependent. Lst i checked new york is a cold climate. Dwellings are heated with fossil fuels. Where are you going to use your daily 10kw cindy? I thought i would use it heating my closet. ive insulated it with leftover bubble wrap!. living within our “renewable” (lie) means will not occur. No ed the super elite will not be existing in a tech supplied energy world with massive depopulation as you envision.

    • “Meanwhile, science is advancing on new technology”
      This sentence… It says nothing. It has no deliverable. It does not address fundamental thermodydamic and EROI problems of alternatives. What does it do? Presents a IMAGE. We have become IMAGE believers. We have lost all capacity for critical thinking. The great and powerful oz . And theres no Toto to pull the curtain.

      • We don’t learn critical thinking in our education and upbringing, except learning which sources that are “trustworthy”… That’s why it is so easy to dismiss stories that don’t fit the main stream narrative. Only a few brave souls can see through all the lies and understand that it is all boils down to human psychology. We want more cheese, because if we don’t get it then the competing rat eats the cheese and increases his survival prospects (food and copulation) and decreases our own. This psychology is hard wired in all living organisms and we can not change this basic behavior. So just sit back and enjoy the show.

    • “The drive for grids that are 100% emissions-free is being pushed by a growing number of U.S. states citing increasingly aggressive time frames.”

      I don’t see 2030 and 2040 and 2050 as being especially “aggressive time frames”…

      “But using renewables to achieve the final 15%, “that’s where the challenge really is.””

      no, that’s just not true…

      the real challenge is to get to 85% as the world experiences decreasing net (surplus) energy over the next 3 decades…

      and not merely challenging…

      but virtually impossible…

      • I agree. And the big intermittency is from summer to winter. Also from year to year, when someone tries to use hydro in a dry area. Wind, too, is variable from year to year. We could never produce enough batteries to store all the energy needed from summer to winter. Year to year would be a huge hurdle as well. Pumped storage wouldn’t work as well either.

      • Some thoughts. First, nuclear power is not “emissions free”. Over 65% of the energy generated by the reactor is emitted as waste heat, and this is heat that otherwise would not exist. Secondly, forget batteries of any composition. Trying to store electrical energy as chemical energy has always been a losing proposition, and still is. No matter how cheap the batteries are, they cannot evade the laws of physics.

        Last thought: our current renewables are intermittent, and necessarily so. The only reliable sources are geothermal, which is insufficient even for Japan, and ocean thermal, which nobody is looking at because nobody is willing to fund the research. But even with that (immense!) source, the problem of energy flux density (very low) would remain.

        Bottom line: we cannot generate enough energy to meet our current needs. The only workable answer is therefore to reduce those needs to require only what we can generate. Which we as a species are biologically programmed not to do, and where we have set up societies where those who consume the most energy are rewarded with the most power: like the 10,000 steaks the Democrat candidates have just consumed.

        • I think people forget that there is an in-and-out loss of energy, whenever electricity is stored in a battery. This is the physics issue you refer to. I am not certain the amount- ten percent or so.

          • There is another problem. Batteries slowly leak energy, and the bigger the battery, the faster it leaks. We don’t usually notice this because small non rechargeable batteries (like the ones in this keyboard) can last for several years without much degradation. But a large rechargeable battery expected to store its charge for six months plus is not a good idea.

            Lithium based batteries, for example, under the best storage conditions lose about 4% per month. That’s more than 20% over six months (0.96^6, do the math). The phenomenon is called “self discharge”, and you can look it up. Moreover, this phenomenon causes incremental and irreversible degradation; slow, but significant enough that you probably need to replace the battery every five years. (Warrantywise recommends every three years for car batteries, but that’s assuming no preventive maintenance)

            Would you invest in an energy source (well, buffer, actually) that lost 4% of its value every month? I thought not.

            • Well, single crystal lithium batteries charged to max 90% of rated voltage lasts in excess of 20 years.

            • “Well, single crystal lithium batteries charged to max 90% of rated voltage lasts in excess of 20 years.”

              So says Tesla. I await independent confirmation from a reliable source.

            • In “battery land” a lot is based on accelerated performance assumptions.
              The past 5+ yrs of mass manuf and usage by public clearly indicate that shallow/gentle charge-discharge around ~15-90% might very likely guarantee ~15-20yrs of dependable longevity.. also on the condition of not frequent fast charging, car sitting in temp garage etc..

              And now they are retooling into even much better performance for the next gen batts.

              But as alluded previously, the spillover effect into price drop will be minimal as people would naturally tend to spent this excess rather on either faster or heavier(larger) cars segments. Even econobox cars ala VW Up will remain at least double the price of similar ICE equivalents.. and they still skip some important equip. like active batt temp management which is included in proper higher segment etc.

              Similarly for home/utility energy storage, where ~10-20kWh capacity was deemed enough for many it will be shortly just bare minimum or not at all as the tech evolves..

            • A battery is a magic box that contains energy! If we need more energy we just make more and improve the product! It may cost a little more of our debt based money but hey saving the planet is worth it!!!

    • I’d like to see the details on the supposedly ~85% (@?!) drop in price of batteries..
      It’s not happening in the real world at least what I consider “batteries” – setting aside the cheap short cycle mass manufactured disposable stuff everywhere for toys, tools and appliances.. The more stable or quality chemistry like LiFePO4 (or other even exotic) did not decrease in price as much or at all.. Well, perhaps for a reason, the patents did not lapse so far, plus the more powerful reason which tends to rhyme with the Jevon’s paradox, the advantage is simply burned off immediately on other improvable “concerns” like ever increasing range for batt cars, industrial power packs etc. Simply, there is relatively big market for $60-100k carz segment and people just adore that 400km range at highway speeds of today vs half (or 2/3) of that for the ~same car and price 5yrs ago..

      Furthermore as we posted earlier, e.g. Musk is now retooling for newer much shorter assembly lines for his battery packs, but this won’t affect the product pricing that much. Instead, what you simply get is your new expensive car with gigantic new range and mid luxury car with huge range.. The money will “evaporate” in retooling and new factories, eventually stock price/dividends, and also elsewhere in the “value added” niches of car industry like further research into AI etc..

      Where the honey pot resides is the partially used batt packs churned/disposed off from these new industries, that’s where the price for energy storage is competitive today, obviously this arena is/will fluctuate to demand-availability so at some point it will be reformed into a business with decent margin, hence the entry price point again crippled for most outsiders.. But for now and immediate future it’s the good times..

        • The issues are (1) Cheap, (2) Work in the current infrastructure, and (3) available in huge quantity.

          The cost and timing of the changeover is surprisingly slow if a new fuel does not work in current vehicles.

          “Cheap” is an amazingly big issue. There is plenty of oil and gas in the ground, if we could just get the price up high enough. Can these fuels be made for $10 to $20 per barrel or less?

          • “The cost and timing of the changeover is surprisingly slow if a new fuel does not work in current vehicles.”

            Gail, I have doubts about this one. It seems to me that it wold make more sense to fit the vehicles to the fuel, not the fuel to the vehicles. Replace cars with public transport, plus last mile runabouts for the mobility impaired. Put freight between densely populated areas back on the rivers, canals and railways, with 3 ton trucks collecting individual loads from “distriparks”. I saw exactly that in Singapore, and it worked very well. No 30 ton trucks on their roads!

            Sparsely populated areas: relocate the inhabitants and restore the land to its original form, or to sustainable (organic) agriculture.

            • Yes, I guess few weeks ago I posted late ~1940s bw docu video how freight transport worked around the major IC hubs at the time. The trains and individual wagons where sorted by various clever (yet pre IT times) means for specific cargo offload and the last mile dealt with smaller short distance trucks, boats, animal/human powered carts etc..

              This network used to be everywhere inside the perimeter of the big cities, but it has been deleted shortly after WWII from most US/Euro lands in favor of stuuupid RE developments and obnoxious individual car culture..

              What a grave mistake and detour.

            • I have a hard time seeing public transport lasting very long. Public transport needs to be subsidized by governments. Europe and Japan are already deep into financial trouble, as evidenced by their negative interest rates on bonds. They will need to cut back on borrowing. Jobs will be going away in city centers, as well, resulting in less need for transport to city centers.

              To the extent any part of the economy can continue, it will be the transport of the rich, in forms that don’t require much subsidies. I would expect cars with ICE engines will last as long as anything. Walking will again become much more the primary form of transportation.

              Relocating of inhabitants to rural areas will need to take place by the inhabitants themselves. Most rural old homes have disappeared, as farmers have expanded the size of their fields. New residents will need to do with make-shift homes that they and their friends can put together with locally available materials. Probably no electricity or piped in water.

      • Thanks for the summary, but as we all know, the QE print fest was a global phenomenon, virtually everybody printed in sort of baton passing fashion: FED, BoC, ECB, BoJ, ..

        There were nuances but everybody is on the scheme.

        • Except the US stopped printing, and in fact started to buy back what had been printed. This raised the level of the US currency relative to other currencies. It also allowed US interest rates to self-organize at a level above those of other countries. In fact, the currencies of other countries are providing negative yields today. It is the fact that no one wants to hold the 17 trillion dollars worth of debt with negative yields to maturity that is causing a problem now. Banks, insurance companies, and pension funds all need positive yielding debt.

          • Understood, but to me this supposedly FED’s QE pause moment looks more of as (zoomed in) unfinished sequence rather than a deliberate feature/strategy vs the other top CBs going into another direction..

            In other words the print will resume shortly in one way or another.

            /PS besides it could be easily also a ploy setting up (willingly) the BoJ & ECB as the primary debt sterilization machines while FED will posture as the more sane adult overseeing (benefiting) from it..

            Afterall anything is possible since we are dealing with a very old and cunning hydra of int finance., so overall zoomed out perspective is also important.

            • But there is still a huge problem of banks, insurance companies, and pension funds really not being able to hold this negative yielding debt on their balance sheets to maturity. The only way it temporarily works is as a trading item, during the period when interest rates become more negative. But as interest rates turn around, the owner of the bond gets whipsawed with a big decrease in value of the bonds. That problem, plus the need for frequent payments to the bond issuer, makes these bonds highly undesirable.

    • Yes, I thought it was very good. The fellow who makes these videos seems to be Peter Burke, CEO of an organization called Strategian. This is a link to his YouTube Chanel. https://www.youtube.com/channel/UClZY-A9DGiR10ZlUMTLjDBQ

      Burke is talking about all of the debt with negative interest rates that is being issued in Europe and Japan, which banks in those countries are required by law to buy. They don’t really want to hold it, so they purchase derivatives to enable the bank to invest in positive-yielding US securities. But there is a shortage of US $ for this purpose, if I understand him correctly.

      Interest rates should be set by market forces, but in Europe and Japan, there is so much interference through the use of QE that interest rates are nowhere near the correct levels. The existence of all of this debt at artificially low interest rates means that investment decisions are badly distorted. Derivative instruments used to theoretically stabilize cross-border investments are likely to encounter more and more problems, as the amount of negative debt grows. On bank balance sheets, these bonds act more like liabilities than they do assets, since they require future payments, rather than generating income. When the bubble of negative-yielding debt collapses, it could bring down the whole system.

      The negatively yielding debt is enabling a lot of socialistic policies in the countries with negative interest rates. These policies will have to go away, as well.

      • Thanks for the synopsis, Gail – helped crystallize the information in my brain, which is finding some of these concepts very slippery!

      • Looks like Peter Burke has written a rather intriguing book, which appears to predict a deflationary death-spiral for the global economy:

        “A series of Crises are primed to explode, devastating the world economy. They will happen concurrently. The net effect will be to cause the greatest deflation and hardship since The Great Depression, and the irony is that most people won’t know what hit them!”

        • The problem with this book is that it was published in 2015, predicting a great Chinese debt crash in 2016. I am sure there are good things in it, but it needs some updating.

          • Times simply moved on, as we are entering 2020s, his preoccupation with single digit $T unbalances given the overall global throughput (both in GDP and debt leverage, and other liabilities) is sort of “chicken little mentality”, although I watched his recent YTch material and it’s not bad introduction into these schemes.

      • Just note that the economics ground is shifting under our feet now. The much maligned MMT is suddenly killing off the decrepit mainstream. It just got a vital lift when AOC mentioned it in Congress as a support for the Green New Deal. Suddenly all the Nobel prize economists were hard at work building straw men to demolish, but begrudgingly they can see it is just descriptive of real economics. There are myriad blogs destroying the mainstream. Lars Syll among the most outspoken;

        Then we have Bill Mitchell ‘s daily blog, Here’s a typical one;
        These are just typical examples. There are thousands more to study, textbooks included
        From now on to make relevant comments on economics one has to avoid the mainstream or risk being sidelined and overlooked.

    • I may be overlooking something, as honestly the whole thing makes my brain hurt, but the article seems to explain the proximate problem but does not explain *why* some banks are so scared to lend and others are so desperate for liquidity.

      • This Forbes article agrees that a pivot towards the relative safety US debt is a factor:

        “This [USA] is the only major nation or region that is growing or has good prospects for growth. Europe is stagnant, China decelerating, formerly major places like Argentina on the precipice of a currency crisis. “Good collateral” increasingly does not include debt instruments from places like these, at least in comparison to American debt. 

        “If haircuts could be imminent in the bonds of all sorts of places, on account of entrenching no-growth or slow growth or even nationalization, why take the risk of holding that debt when the haircut happens.”


      • The economy slowing down and there is stress in the markets. The treasury yields have inverted with the Effective Federal Funds Rate and with the Interest On Excess Reserves.

        The primary dealers must take part in the treasury auctions according to BIS lll rules, but they are not forced to hold on to the treasuries, but can’t find buyers to them.

        The banks have become bag holders to the U.S government debt, which is growing by USD 1 Trillion annually…as the treasury is flooding the market with new treasuries.

        The treasuries have become toxic?

        The banks are saying no to more treasuries and trying to force the Fed to start buying treasuries again by restarting QE?

        That’s my 2 cents.

        • Thanks, Yoshua. Some of the financial plumbing is so arcane and abstruse. My mind boggles!

          • I’m probably wrong though, since falling treasury yields indicates high demand for treasuries.

            I’m lost on this one too.

    • The thing that strikes me is the fact that commodity prices were close to high enough for producers up until 2014. Then when the US stopped QE, and later switched to QT, the Federal Reserve bank balances dropped. Commodity prices in general fell at the same time. Without more reserves in the system, commodity prices don’t seem to stay high enough.

  2. Prof Tim Garrett remains one of the best collapse thinkers we have.

    As a physicist professor of Atmospheric sciences with interests in Civilization and Thermodynamics, his overall thinking about collapse issues is astute.

    – With BAU growth, our total consumption of raw materials and energy products must double in 30 years. And with BAU growth, double again in the following 30 years after that.
    – If we think about environmental destruction today, the sixth mass extinction, terrestrial vertebrates collapse, ecosystem collapse and CO2. Also those, must therefore double with BAU growth in 30 years. And the environmental destruction must double again in the following 30 years, after that.
    = Therefore BAU Growth ad infinitum is simply.. impossible.

    – Tim Garrett sees energy as a support mechanism. When GDP grows, energy is what sustains and maintains the finished product. Energy is not according to Garrett, the primary engine for growth. But is the only engine that supports the value of the products that growth has been able to produce.
    = Maintaining the civilization we have today, without growth, would also mean the level of environmental destruction today, would also be maintained at current levels. Maintaining raw material extraction, energy products extraction and environmental destruction levels at this level we have today, is.. impossible.

    Therefore the only way we have is.. down. A collapse.

    There is an amount of inertia in the incredible growth momentum of our global civilization we have today. Because of the inertia of our global economy and delays in all of the environmental destruction we already have caused, it looks like we will be in a double collapse scenario. The inertia of the global civilization collapsing, fast or slow, will nonetheless drag down the environment with it. The environment will be different in 30 years, from what is is today, and it will be much different in 60 years, and unrecognizable to us in 1000 years. These changes are already locked in..

    Therefore a double collapse is in the pipeline. But there remains questions.
    An global economic meltdown is inevitable, but how long can that be staved of by CB smoke and mirrors tricks?
    This human species of ours has been inventive in the past. There is no guarantee we wont yet see a miracle technology or two. Though there simply is no miracle that can change the double bind described above..
    How fast will the environmental collapse procede? Earth systems also have inertia.
    And how bad will the environmental collapse be in the end? What will the earth look like in 10.000 years from now?

    Tims blog

    • The article lost me when it started talking carbon. All of the others statements about impact on the environment are true.

    • I think energy consumption depending on all historic GDP is not intuitive.

      What energy goes into maintaining earlier spending (ie repairing a bridge) is new GDP and should only require energy in proportion to the new GDP.

    • The consumerism is shifting from the material to the immaterial. It is most obvious with crypto currencies. It is totally manufactured symbols of wealth and trade. Let the roads, bridges and other devices of mass psychosis rot away.

      Good fucking riddance.

        • No material artifact is being manufactured in the process where the item of consumption is immaterial/intangible, such as a service on the Internet. For example: WordPress hosting OFW is such a service where Gail creates the content and manages the comments and replies.

          A better measurement of immaterial transactions would be units of transmitted Data per Watt and Computation per Watt as well as the Engineering effort per Watt for enabling these services. No actual good or service in the traditional sense is being part of this transaction, thus his analysis is shallow and fail to account for the increasing immaterial/intangible consumption.

          As FW issues mount, the shift from material to immaterial will only accelerate since real physical goods and services ultimately becomes prohibitively priced due to the physical resources required to extract the natural resources, manufacture the artifacts in factories, shipping and ultimately end up as expressions of frivolous items of mass psychosis before finally being recycled or disposed in garbage heaps.

  3. One species expands, others contract

    U.S., Canada have lost 3 billion birds since 1970. Scientists say ‘nature is unraveling.
    For a study published Sep. 19 in the journal Science, Marra joined with other scientists and conservationists to analyze nearly five decades of population data on 529 species of North American birds. The results were staggering: Since 1970, the continental U.S. and Canada have lost more than 1 in 4 birds. The total bird population in the two countries has fallen by almost 3 billion, with grassland birds such as western meadowlarks and American sparrows and shorebirds such as green herons taking the biggest hits
    The population of birds at the start of breeding season in the U.S. and Canada has fallen from just over 10 billion to a little more than 7 billion in the last 50 years, the research showed
    Habitat loss seems to be the biggest issue. By clearing forests and grasslands to erect buildings, roads and farms, humans have encroached on the ecosystems in which birds thrive. And the use of neonicotinoid insecticides has fueled the decline both by poisoning birds and by eradicating insects, depriving birds of a key food. Cats are estimated to kill more than 1 billion birds in the U.S. each year.
    The study authors agreed that lawmakers can help shore up bird populations by enacting legislation to conserve federal lands and curb the use of neonicotinoid insecticides. Bird lovers, they said, can help by keeping cats indoors, eating organic food to help reduce the use of pesticides and taking part in bird surveys like the Audubon Christmas Bird Count

    And so …..

    Trump administration announces plan for expanded hunting, fishing access across 1.4 million protected acres.

    Trump wetlands rule rollback makes about 6 million acres in Florida unprotected

    Got to keep expanding…BAU demands it, Sonny

  4. This “Clapper” person sounds a lot like the beloved “Fast Eddy”:
    “A Dark Age is coming – challenge your values!
    “It’s time for good people of impeccable character — like you…”

    “Impeccable character”???? Really??? We’re heading into a decline, a collapse, … death, starvation and desperation. School teachers will be had for $20 (like in Greece) or only $2 (like in Venezuela) …. not for an hour, but for a whole night… but only if they’re young and pretty! Wink, wink! I’m not joking, this is what happens when society BEGINS to falls apart. When society enters the final Dark Age collapse, values have to change rapidly, or you die, Die, DIE!!!!!!

    So from Crapper, here’s a few pointers to expand your imagination. Hate and violence will be winning attributes. That’s right… and that’s only the start. Connect with your inner self and embrace the hate. Then get yourself off to the local fight club and learn how to take a whack to the head without losing one’s senses. This is just the beginning of preparation.

    Any community you connect with must look like you – and skin color/colour is EVERYTHING! If you think you’re gonna be accepted by a bunch of people who don’t look like you just because you want to hold their hands and sing kumbaya then you’re kidding yourself. Racial slaughter is standard fare in a Dark Age.

    And one further note to wet those mental juices: where are you gonna get the protein when the famine sets is? Chickens? Yeah, maybe. But they’re best used as bait, for thieves…. lots of protein on those “two-legged pigs” we see all around us every day. You think I’m ridiculous? Outrageous? Disgusting? Abhorrent even? Study up on famines as I have. Study Dark Ages throughout history as I have. It opens one’s preconceived ideas of how the world should work and how it does work when the proverbial doo-doo hits the fan.

    This civilization is doomed…. just like the Titanic. I say crack open a beer and enjoy the show… but be connected with your inner savage for when you jump on the first life boat, laughing with manic glee at those left behind with a raised middle finger… and enter the dark night of what we once knew.

    The Age of Disintegration starts in the coming decade (only a few months away). Our world will change rapidly, and so much our values. What won in the age of ascent will lose in the age of decent. Very sad… but very true.

    I’m off to holiday in Southern Europe next week … I’m all stocked up on $20 notes (just kidding!).”


    • Fast Eddy is ALIVE! Maybe? Boy, that is a relief and so nice his head popped up somewhere else.
      Does anyone have Fast Eddie’s last entry post here at OFW? Did he give a swan song goodbye?
      I picture him nawing at a turnip and some kale or vacationing in the Italian Riviera on the coast dining by the sea view.
      Hard to say. Maybe had a spat with Gail, who knows.

      In memory of Fast Eddie
      A hoax photo that claims to show rubbish left behind by Australian climate strike protesters is circulating on Facebook, despite being revealed as fake months ago.
      Though it lacks any verification, and was debunked in April, the image and false caption have been shared 19,000 times in 12 hours, and thousands of times from copycats.
      On Friday, an estimated 300,000 Australians, and millions of people around the world, took part in protests against inaction on the climate emergency.
      Hours later, an Australian pro-coal page reposted the photo, which originated in April. It was captioned: “Look at the mess today’s climate protesters left behind in beautiful Hyde Park.


    • Rodster, on cannibalism as a consequence of collapse:

      “You think I’m ridiculous? Outrageous? Disgusting? Abhorrent even?”

      Yes to all the above. But not wrong: that is exactly what happened on Easter Island.

    • This seems to be sort of a “Mad Max” world, if violence really solved anything then some of the most heavily armed nations would be paradise to say nothing of Baltimore.

      Bending the thread a bit, those of us who are older are going to need to be useful to those younger than us which means providing something more than capital. My grandmother when her husband was killed in her thirties lived with my parents and was a babysitter for me as well as worked in the garden and helped with canning – she was useful.

      The idea of sitting in an easy chair in Fl may appeal, but even with digital wealth Washington can change the rules and instantly less claims on wealth, or back to work.

      I see my tenants who work my farm during harvest take a nap when it is raining to try and catch up on the sixteen hour days when it is not . A CDL on my part would help, someone gets to take a break. I cannot drive the sixteen, but I could pitch in for six.

      I keep returning to the generational issue. We have robbed our children by not paying for their advanced education, the government stepped in, loans, and the horrible escalation in costs. It is our jobs as parents to put children first, practically speaking had an adult been paying the cost, things would not have gone off the rails and BAU in buying a house, having a family might still be going on. I am not alone in this generational thing. It is not our children’s job to pay off our debts for a good time.


      As for values, some do some don’t. The Amish around me seem to have kept theirs and ironically they do fairly well as farmers and food is never a problem. The horse trainer along a road I drive now has a cow grazing the ditch, grass is grass I guess. He is already practicing storing food for winter, the cow just doesn’t know it yet. He must read OFW at the library, don’t you know.

      Dennis L.

      • Strangely enough, even when parents try to help their children avoid higher education debt, the children can still get themselves into it. My daughter’s view was, “but all my friend have college debt.” She wanted to take a third year in a graduate program in creative writing, which theoretically could have been finished in two. She didn’t think we should pay for it. Now, In retrospect, she has figured out that the degree was not really helpful financially. (We had raised the issue earlier.)

        • Hint:
          Education is not always a capital investment.
          Actually, when it is, you are just in “training”.
          (but I had a almost free UC education)

        • I guess your daughter developed skills of understanding that she can use in teaching, marketing, advertising, journalism, writing papers or decision making one day. We know more than we realize and if she had a strong interest this interest leads to some job skills sooner or later. All is about developing the brain – and job descriptions are not as narrow as they seem. I am glad to hear you were able to provide your daughter the education she has dreamed about. It is not necessary to fullfil all wishes but it is good to walk the path we dream of. It pays at the end. Life is long.

          • She has a job she likes now, working for an acoustical society as an editor of some of its publications. She works from home, with occasional meetings. I don’t think the job pays very well, though. She also writes fictional short stories that she posts on a website, aimed that young people in their thirties, in her spare time.

    • What I liked he was enough sport to admit that his initial “NZ relocation” reflex reaction was a very bad mistake on almost every front and angle.. Otherwise he did not contributed that much of value in later stage. This warning about 2020s threshold shift sounds plausible as there are many factual as well as psycho-social clues that stuff will indeed start to happen around this time even for the IC hubs – regions..

      The text sounds lot of like him, albeit tuned down, perhaps for a new audience.
      So is it now “FE / TM / C(l/r)apper” ?

      • FE was an object lesson in not running about like a headless chicken trying to escape. I’m sure his Chinese business interests must have run into serious trouble -what was it, air purifiers?

        • I think people who have visited Asia knows how air purification works in a practical sense over there.

  5. Big Oil’s Future May Rest on Climate Debate Over Natural Gas
    Kevin Crowley
    BloombergSeptember 22, 2019, 7:30 AM EDT
    Bloomberg) — Championed by Big Oil as the fastest way to reduce emissions and reviled by environmentalists who say the world needs to ditch all fossil fuels — the debate over natural gas may be one of the controversial aspects of climate change.
    The arguments will get an airing as politicians, activists and business leaders gather for Climate Week in New York. On Monday, CEOs of the world’s largest oil companies are expected to speak at an event organized by the Oil and Gas Climate Initiative where they’ll likely defend the idea that gas is integral to a low-carbon future.
    Here are six key arguments about gas, starting with the case for the fuel
    1. Gas is killing coal
    2. Gas helps bring down emissions
    3. Gas will be affordable long-term

    And here the case’ against gas

    1. Gas means carbon is unavoidable
    2. Gas is being wasted
    3. Gas leaks


  6. Don’t know about Fast Eddy, but I’m still alive at the ripe old age of 38. Though I am suffering from a mid life crisis for more than a year.

    Collapse is boring, it’s a process, not an event. It’s no way to live your life. From the dawn of time until the present, people have been occupied by sex, money, power, their own status within the system. And our mortality rate is 100 percent, collapse or not.

    • Collapse…boring!?
      It is what you make it Dolph.

      Hope this helps😜

    • “Collapse is boring, it’s a process, not an event.”

      dolph, that’s the same conclusion I came to about a year ago. There’s a certain amount of stuff, resources, and it’s getting used, wrung out over time (diminishing returns), but unlike a book with a last chapter and last page, it just rearranges itself to use what’s left for those that can use it, and for those that fall by the wayside it’s unfortunate, but for those that can still use what’s left it’s BAU.

      That’s why I’m convinced we are not only in a game of musical chairs to stay in the game, but the stakes get higher as the competition for what’s left narrows, pressed harder as population increases. It requires everyone to push that much harder to learn new skills faster, to do as the red queen does, run in place faster just to stay in place. And some make so much currency, they are able to sit back and watch the fray desperately seek remaining chairs to remain in the game of holding on to BAU.

      In many senses it would be merciful if the situation had a last page, because it would end the desperation in a sudden, brief period of chaos, but really the circumstances will just get tougher as the what’s left narrows incrementally.

      • A bit like being a German (who never voted for Hitler) : it all unfolds and gets worse and worse, maybe with some bright spots, but essentially one is helpless to affect the course of events. First the terrible late 1920’s and early 1930’s; then the dictatorship; the war, not too bad at first; the grind of the last years of the war and the downfall of the dictatorship; then Russian invasion, with mass rapes, murders, semi-starvation; then you find yourself still alive in a totalitarian Communist dictatorship in which you die. Worse with every turn of the screw…….

        These are our golden years, best to enjoy them and be grateful.

        • We can make a case that the global economy began to hit decrepitude in the early 70’s with fiat currencies and an increasingly complex and surreal financial system papering over the cracks – but don’t let the length of the ageing process relative to our human life-spans fool you into thinking that there cannot be a death.

          As a growth-dependent civilisation operating on a finite resource-base we are up against the law of physics. At some point we will experience a loss of socio-economic complexity that will be self-reinforcing.

          That being said, perhaps there are more years of hot showers and fresh groceries ahead than the more pessimistic amongst us might imagine. This possibility had not even crossed my mind, for example:

          “If and when economic recession comes, there will be few places to hide. Monetary policy has been stretched to near its limits already (unless you are a modern monetary theorist) while governments are too highly borrowed to finance a bailout. But could the corporate sector act as a kind of deus ex machina?

          “The idea that big business corporations might emulate the “gods from the wings” of ancient Greek and Roman drama, and offer salvation when all seems lost, may seem far-fetched. And yet many of them are so stuffed with cash that they have the means (if not yet the will) to mount such a rescue.

          “We are talking sums that make government fiscal reserves look puny in comparison. Nowhere is this more true than in Japan where corporate cash balances easily outpace the size of Japan’s gross domestic product. They are very big too in the United States and in Europe – Britain especially.

          “Why would companies distribute the cash mountains they have built from restraining wage growth, cutting capital investment and other Scrooge-like behaviours? It could be a matter of enlightened self-interest to prevent the global economy from imploding.”


          • That’s an interesting concept, although I tend to suspect these corp cash reserves are in today’s overall system only of pure synthetic (ether) nature. So, not really deploy-able midterm-long term. In this sense however one has to admire the Japanese or Chinese drive on the public infrastructure realm, as purely individualistic driven societies tend to lapse without such buffer into very fast paced disorderly realignments.. which is a double edged sword as it nurtures immediate swift reallocation of resources and “progress” on the mega trend upswing but at major thresholds it’s just quick one way road to ruin..

            But perhaps this “corp cash mountain” could stabilize-suspend a fall into collapse proper for a few years nevertheless..

            • Yes, dropping helicopter money into to the wallets of plebs inevitably only produces inflation since all physical goods and services ultimately are priced in energy/natural resources by the means of the fiat currency (petrodollar) proxy.

      • I am afraid you may be right:

        ” . . . we are not only in a game of musical chairs to stay in the game, but the stakes get higher as the competition for what’s left narrows, pressed harder as population increases. It requires everyone to push that much harder to learn new skills faster, to do as the red queen does, run in place faster just to stay in place. And some make so much currency, they are able to sit back and watch the fray desperately seek remaining chairs to remain in the game of holding on to BAU.”

    • In biology, Niles Eldredge and Stephen Jay Gould popularized the hypothesis of punctuated equilibrium; instead of a slow, continuous movement, evolution tends to be characterized by long periods of virtual standstill (“equilibrium”), “punctuated” by episodes of very fast development of new forms.

      I see economic evolution following a similar path. Periods of relative stability are punctuated by episodes of very fast change. If we are anticipating collapse, it could come as a staircase of events over decades, years or months, or it could hit as fast as a stack of falling dominoes. On the other hand, it might be staved off by the very fast development of something not even on our current horizon that I’m not going to speculate about.

      A game of soccer, Rugby, American football, cricket, baseball, even ice hockey (if you’re a canadian) is exciting: it’s a process, not an event. It also conforms to the punctuated equilibrium idea. Periods of nothing much happening are often punctuated by goals, tries, strikes, runs, points, wickets, etc. And the spectators are riveted.

      Whether you find sports or economic developments or watching the local finches evolve boring or interesting is partly a matter of where your interests lie and and partly a matter of how short or long your attention span is.

      There’s a time to be born, a time to die, a time to be occupied by sex, by money, by power, by one’s status within the system, by mowing the lawn, watching the grass grow under your feet, and for every purpose under heaven. You’ve got all the time in the world—until suddenly you haven’t—and you have a fair amount of choice as to how you use or waste it. What’s more, you can multi-task. You can do the things you want to do and the things you feel you have to do, while simultaneously waiting for collapse, for the Rapture, or for Santa Claus.

    • It couldn’t have happened to a more deserving bunch of incompetents. But I bet the CEO keeps the $20 million in bonuses he screwed out of a collapsing company.

      • How hard is it to book an airline ticket and hotel rooms online these days? Do we really need a middle man for this simple procedure?

        Apparently not.

        • Well, earlier this year I had a rather difficult airline journey: Malta => Singapore => Chengdu (Sichuan Province) and back. So yes, i visited a local travel agent, a two man operation, and they did everything in 20 minutes. Saved me a lot of online hassle with booking companies with wretchedly bad IT systems.

          I have found this to be a pervasive IT problem: the programmers have no idea of customer service, neither do their managers, and the whole carbuncle is safe in its silo where it can do what it pleases.

          • Once a person moves outside of the US/Europe arena, language becomes a much bigger issue.

            When we visited Japan, we discovered that virtually no one speaks English. A few people read English, but speaking English is not a skill they have learned. Trying to get problems fixed, when a person cannot find anyone who speaks English, can be an issue. We discovered that signs on a map showing stops on the subway lines were all in Japanese characters, for example. There were no live workers to talk to; everything was online.

            I have also had problems in Italy and in Spain, in the not-too-distant past.

    • Thomas Cook was in debt to the tune of 1.5 billion dollars before its collapse. A zombie company, propped up for years, flushed away in an instant. Imagine the carnage once this financial sh*t show finally comes to an end?

      • It’s another powerful reminder we are into the world of dozens and hundreds of $T (systems speaking), as we left the old $B counting (“mom and pop” scale joint) “small” world behind us for good.. What a madhouse this planet became as of lately..

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