Do the World’s Energy Policies Make Sense?

The world today has a myriad of energy policies. One of them seems to be to encourage renewables, especially wind and solar. Another seems to be to encourage electric cars. A third seems to be to try to move away from fossil fuels. Countries in Europe and elsewhere have been trying carbon taxes. There are also programs to buy carbon offsets for energy uses such as air travel.

Maybe it is time to step back and take a look. Where are we now? Where are we really headed? Have the policies implemented since the Kyoto Protocol in 1997 had any positive impact?

Let’s look at some of the issues involved.

[1] We have had very little success in reducing CO2 emissions.

CO2 emissions for all countries, in total, have been spiraling upward, year after year.

World CO2 Emissions

Figure 1. Carbon dioxide emissions for the world, based on BP’s 2019 Statistical Review of World Energy.

If we look at the situation by part of the world, we see an even more concerning pattern.

Figure 2. Carbon dioxide emissions by part of the world through 2018, based on BP’s 2019 Statistical Review of World Energy. Soviet Empire is an approximation including Eastern Europe and the Former Soviet Union, based on the BP report. It would not include Cuba and North Korea.

The group US+EU+Japan has been able to reduce its CO2 emissions by 5% since 2005. Emissions were slowly rising between 1981 and 2005. There was a dip at the time of the Great Recession of 2008-2009, followed by a downward trend. A person might get the impression that CO2 emissions for the EU tend to rise during periods when the economy is doing well and tend to fall when it is doing poorly.

The “star” in emissions reductions is the former Soviet Union and its Eastern European satellites. I refer to this group as the Soviet Empire. Emissions fell around the time of the collapse of the central government of the Soviet Union in 1991. This big decrease in emissions seems to be related to huge changes that took place at that time. Instead of one country with a single currency, the individual republics were suddenly on their own.

The high point in CO2 emissions for the Soviet Empire came in 1990, the year before the collapse of the Soviet Union central government. By 1999, emissions had fallen to a level 37% below their 1990 level. In fact, even in recent years, emissions for this group of countries has stayed low. Much industry collapsed and has never been replaced.

The group that has more than doubled its emissions is what I call the Remainder Group. The group includes many countries, including China and India, that ramped up their manufacturing and other heavy industry in the late 1990s and early 2000s, when the World Trade Organization added members. The Remainder Group also includes many countries that suddenly found new export markets for their raw materials, such as oil, iron ore, and copper. The Remainder countries became richer; they became more able to pave roads and build more substantial homes for their citizens. With all of this GDP-related activity, CO2 emissions increased rapidly.

[2] Population growth has followed a pattern that is in some ways similar to CO2 growth. 

Figure 3. Population from 1965 to 2018, based on UN 2019 population estimates.

In Figure 3, we see that population has been virtually flat in the former Soviet Empire (2% growth between 1997 and 2018). With the economy not doing well, young people emigrate to countries that seem to provide better prospects.

Population in the US+EU+Japan Group grew by 11% between 1997 and 2018.

The group that is simply outstanding for population growth is the Remainder Group, with 35% growth between 1997 and 2018. A big part of this population growth comes from improved sanitation and basic medical care, such as antibiotics. With these changes, a larger percentage of the babies that are born have been able to live to maturity.

It is hard to see any bend in the trend lines, which would indicate that recent actions have actually changed the course of activity from the way it was headed previously. Of course, the trend is only “linear,” implying that the percentage growth is gradually slowing over time.

This rapidly growing population feeds into the CO2 problem as well. The many young people would all like food, homes and transportation. While it is possible to obtain some version of these desired products without fossil fuels, the version with fossil fuels tends to be vastly improved. Most people prefer homes with indoor plumbing and electricity, if given an opportunity, for example.

[3] Deforestation keeps growing as a world problem.

Figure 4. Chart showing World Bank estimates of share of world forested by economic grouping.

High Income Countries keep pushing the deforestation problem to the poorer parts of the world. Heavily Indebted Poor Countries are especially affected. Worldwide, deforestation continues to grow.

[4] With respect to fossil fuels, there is a great deal of confusion with respect to, “What do we need to be saved from?” 

Do we have a problem with too much or too little fossil fuel? We hear two different stories.

Figure 5. Author’s image of two trains speeding toward the world economy.

Climate modelers keep telling us about what could happen, if indeed we use too much fossil fuel. In fact, the climate currently is changing, bolstering this point of view.

It seems to me that there is an equally great danger of collapse, accompanied by low energy prices. For example, we know that energy production in the European Union has been declining for many years, without the countries being able to do anything about it.

We also know historically that many civilizations have collapsed. The Soviet Empire collapsed in 1991, illustrating one type of collapse. The Soviet Union was an oil exporter. Its collapse came after oil prices were too low to allow adequate investment in new oil fields for an extended period of time. The Great Recession of 2008-2009 offers a much smaller, temporary version of what collapse might look like.

Another example of low prices accompanying collapse comes from Revelation 18: 11-13, warning of possible collapse like that of ancient Babylon. The problem was inadequate demand and low prices; even the energy product of the day (human beings sold as slaves) had little value.

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

What we have been seeing recently is falling prices and prices that are too low for producers. Such a result can lead to collapse if too many energy producers go bankrupt and quit.

Figure 6. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

If we are in danger of collapse from low prices, renewables would not seem to be of much assistance unless they (a) are significantly less expensive than fossil fuels and (b) can be scaled up sufficiently rapidly to more than replace fossil fuels. Neither of these seems to be a possibility.

[5] Early studies overestimated how much help renewables might provide, especially if our problem comes from too little energy supply rather than too much.

Renewables look like they would be great from many points of view, but when it comes down to the real world situation, they don’t live up to the hype.

One issue is that while wind, solar, hydroelectric, geothermal, and other devices for capturing energy are called “renewables,” they are really only available through the use of the fossil fuel system. They are made using fossil fuels. If a part breaks, or if insects eat away the insulation on wires, replacements need to be made using the fossil fuel system and transported using the fossil fuel system. At best, renewables should be considered fossil fuel extenders, using less fossil fuels than conventional electricity generation. They are also dependent on other resources, which may eventually deplete, but which are not a problem at this time.

A second issue is that it is extremely difficult to do a proper cost-benefit analysis on renewables because they can only be used as part of a larger system. They tend to look inexpensive, when viewed in isolation. But when total system costs are viewed, they often are quite expensive.

One difficulty in a proper cost-benefit analysis is the fact that renewables are often sited at quite a distance from where electricity is to be used, leading to the need for a significant number of long distance transmission lines. Furthermore, if renewables provide intermittent power, they need to be sized for the maximum output, not their average output. All of these long distance lines need to be properly maintained, or they tend to cause fires. In some instances, burying the lines underground at significant cost is the only solution. Somehow, these higher costs need to be recognized as part of the cost of the system, but this is rarely done.

Another difficulty in a proper cost-benefit analysis is the fact that renewables’  intermittency must be overcome, if the electricity is to be of benefit to a modern economy that requires electricity 24/7/365. In theory, we could greatly overbuild the renewables system and the transmission. This might work, but we would end up with a large percentage of the system that is not used most of the time, greatly adding to costs.

Batteries can be added, but the cost tends to be high. One commenter on my site recently observed:

EIA reports the average cost for utility scale battery systems to be about $1500 per kWh. At that rate the batteries needed for backing up a solar or wind facility for three days cost around 30 times as much as the RE facility. But wind is often unpowered for more like seven days, during huge stagnant high pressure episodes. Thus the backup battery cost is more like 100 times the wind farm cost. Batteries are not feasible.

The major intermittency problem is season-to-season, especially saving up enough for winter. We do not have a way, today, of storing energy from one season to another, short of making it into a liquid (such as ammonia), and storing the liquid from season to season. This would be another way of driving up costs of the overall system. It has not been included in anyone’s cost calculations.

For the time being, we are forcing nuclear and fossil fuel to provide backup electrical services to intermittent renewables without adequately compensating them for their services. This tends to drive them out of business. This is not an adequate solution either.

A third issue is that renewables really need to be “economic” to work. In other words, they need to generate a profit for their owners, when comparing the unsubsidized costs with the benefits of the system. In fact, their owners need to be able to pay fairly substantial taxes to governments, to cover their share of governmental costs as well. If renewables truly were providing substantial benefit to the system, their use would tend to “take off” on their own, because they would be providing “net energy” to the system. Instead, renewables tend to act like “energy sinks.” They need endless subsidies. They can never substitute for fossil fuels. In fact, they can’t even pay their own way.

A related issue is that, because of the high total costs (as well as their lack of true net energy benefits), it is almost impossible to ramp up the quantity of renewables such as wind and solar very high. The EU has been a big supporter of renewables other than hydroelectric. Figure 7 shows a chart of the EU’s own energy production, together with its energy imports.

EU Energy by Type and Whether Imported

Figure 7. EU energy by type and whether imported, based on data of BP’s 2019 Statistical Review of World Energy. Renewables are non-hydroelectric renewables such as wind, solar, and geothermal.

After at least 20 years of subsidies, the EU has been able to increase renewables (other than hydroelectric) to about 10% of its total energy supply. The EU’s oil imports are roughly level, and its natural gas imports have been increasing. Even with rapid growth in non-hydro renewables, the EU has been experiencing a decrease in total energy consumption.

[6] Looking at the actual outcomes, a person might ask, “What in the world were policymakers really thinking about?”

We are told that the reason policymakers made the decisions they did was because they thought that they could reduce CO2 emissions in this way. Really? If a person really wants to reduce CO2 emissions, it is easy to see how to do it. A person simply has to take steps in the direction of reducing global co-operation. One step would be to reduce international trade. Another would be to get rid of umbrella organizations such as the World Trade Organization, the United Nations and the European Union. In fact, within individual countries, the top level of government could be removed, leaving (for example) the provinces of Canada and the states of the United States. In other words, policymakers could push economies in the direction of collapse.

Another way collapse could be encouraged would be by rapidly raising interest rates or cutting off credit. With less purchasing power, the world would be pushed into recession.

At the time of the Kyoto Protocol, policymakers moved in precisely the opposite direction of pushing the economy toward collapse. They moved in the direction of adding international trade and more debt to enable the growth. The countries with greater trade had huge coal resources that had not been used. With the help of this coal, the world economy was able to continue to grow. This approach only made sense if the real problem at the time of the Kyoto Protocol in 1997 was too little energy resources, not too much. The economy needed the stimulation that more low-cost energy and more debt could provide.

It is now more than twenty years later. The coal resources of China are starting to deplete. Coal is also causing serious ground-level pollution problems, both in China and India. Without growing coal production, world GDP growth starts slowing. We are again facing low oil prices and other commodity prices–a problem similar to the one present when the government of the Soviet Union collapsed. The world economy seems again to be headed toward having some of its governmental organizations collapse from inadequate energy. Political parties are becoming more extreme; countries are enacting new tariffs. If we go back to Figure 5, the concern should again be collapse, on the left side of the figure.

[7] The scenarios considered by the IPCC climate model need to be revisited.

A climate model looks to the past and tries to forecast what would happen in alternative “scenarios.” The concern I have is that the scenarios evaluated are not realistic. To get to the level of CO2 that would produce the most extreme scenarios, coal production would need to continue at a high level for many, many years. This seems unrealistic because world coal production has been fairly flat for several years, and prices tend to be lower than producers require if they are to stay in business. The likely direction for coal production seems to be down, rather than up.

Figure 8. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.

In order for coal production to grow as much as the higher emission scenarios assume, there needs to be a major turnaround in the situation. World coal prices would need to rise substantially. In fact, coal in very difficult locations for extraction, such as under the North Sea, need to become profitable to extract. This situation seems very unlikely.

It seems to me that climate modelers should be considering more realistic scenarios regarding CO2 emissions from fossil fuels. One scenario which should be considered is the possible near term collapse of several governmental organizations, such as the European Union, World Trade Organization, and the governments of several oil exporting countries.

[8] The push toward renewables makes little sense without a firmer foundation than currently exists.

Early studies looked only at the cost of renewables themselves, without the cost of extra long-distance grid transportation and battery storage. Such an estimate makes renewables look far more valuable than they really are.

We now have enough experience that we can see what goes wrong. A hydroelectric plant that operates during the wet season in a tropical country may be of little practical use, for example, if there is no fossil fuel energy available to provide backup electricity production during the dry season. The total cost of the overlapping systems needs to be taken into consideration, including the need to hire staff year around for both the fossil fuel and hydroelectric facilities. Electricity transmission will likely be needed for both types of generation.

There are many other real-world examples that can be examined, before blanket “use renewables” recommendations should be issued. If renewables are not truly very inexpensive (around 2 cents per kWh or less), without subsidies, they are likely not to be long-lasting. Subsidies become more and more difficult to maintain, as a system scales up.

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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1,380 Responses to Do the World’s Energy Policies Make Sense?

  1. Herbie R Ficklestein says:

    How DARE THEY!
    World’s Biggest Oil-Refining Tower Completes 11,000-Mile Voyage
    Anthony Osae-Brown, Tope Alake and Alaric Nightingale
    BloombergDecember 4, 2019, 10:17 AM EST

    It’s the length of a soccer field and the weight of 320 large elephants, but the world’s biggest oil-refining tower has finally reached its destination — Nigeria — after an 11,000 mile voyage.
    The distillation column, which will heat up crude at different temperatures to make various fuels, arrived on Sunday at a port in Lagos, Dangote Industries Ltd. said in a statement. It will now be carefully unloaded so that it can be installed as the critical piece of kit at the Dangote oil refinery in Nigeria. When operational, it will be by far Africa’s single biggest oil-processing facility and be one of the largest anywhere in the world.
    The column is 112.5 meters (369 feet) long and weighs 2,250 metric tons. The tower — the largest of its kind in the world, according to Dangote — left China roughly 12 weeks ago aboard the Fan Zhou 9, a ship dedicated to transporting heavy pieces of infrastructure across oceans
    The refinery is a relatively unusual because it has just one column for distilling crude into more valuable fuels. Modern plants of a similar size would typically have at least two.
    The distiller was moved Tuesday to its final destination about six miles away by a self-propelled modular transporter that’s designed for such activity.
    While the arrival of the column is a milestone for Dangote, there’s still work to do to get the refinery ready, said David Bleasdale, an executive director at CITAC, an adviser to downstream energy companies in Africa. A major construction challenge remains completing the groundwork for the facility, he said.
    Designed to maximize gasoline output, it could start operations at the beginning of 2021, with full capacity reached by the end of the first half of the year, Devakumar Edwin, a group executive director at Dangote Industries, said in an interview in October.

    Looks like BAU is going strong….so sorry GRETA

    • I wonder whether this has been fully thought through.

      If something goes wrong, clearly the whole thing is out of commission. If there were two or three towers, there would be some backup. There is no doubt a reason for using multiple towers. I can’t imagine that there are many roads in Africa that can bear the weight of transporting such heavy equipment.

  2. Herbie R Ficklestein says:

    OMG….Is this just awful…..HOW DARE THEY!
    Hindu worshippers have begun beheading thousands of buffalo in Nepal as part of what is thought to be the world’s largest animal sacrifice event.
    The Gadhimai festival started in the early hours of Tuesday morning as a priest killed a goat, rat, chicken, pig and pigeon and then offered blood from his own body
    Around 200 butchers wielding curved kukri knives then descended on a walled temple arena containing an estimated 3,500 buffalo to behead the animals
    Campaigners for animal rights charity Humane Society International described seeing baby buffaloes bellowing as they watched their mothers being decapitated
    They said others collapsed from exhaustion, sickness and stress as worshippers attempted to drag them to their deaths
    Thousands of people from Nepal and neighbouring India travelled to Bariyarpur village to witness the festival, which occurs every five years.
    The sacrifices went ahead despite temple authorities announcing a ban in 2015 and Nepal’s supreme court directing the government to reduce animal sacrifice a year later.
    Alokparna Sengupta, managing director of Humane Society International in India, said being at the festival was “one of the most depressing and challenging experiences of my life”.
    “The suffering of these animals is so upsetting, they have endured exhausting journeys to get here and are paraded in front of a baying crowd as all around them they witness other animals being decapitated one by one,” she said.
    the last week the Indian border force and campaigners seized hundreds of baby goats, pigeons and buffaloes at the border.
    “We may not have a bloodless Gadhimai this time, but we are determined that one day we will see an end to this gruesome spectacle,” Ms Sengupta added.
    Mimi Bekhechi, Peta’s director of international programmes, said: “Nepali officials promised – but have failed – to protect thousands of petrified animals from being dragged and transported to a violent mass killing that starts today.
    The government must act forcefully to prevent this bloodbath from taking place again or feel the impact of a tourist boycott.”
    She added: “Devotees are bringing universal condemnation to a wonderful religion – which needn’t be based on fear and cruelty – and just as widow-burning and human-baby sacrifice have ended, so must the horror of an animal-slaughter festival.
    “Gruesome images of animals looking up pitifully and struggling as they’re hacked into pieces ruin Nepal’s reputation, and we urge all of its compassionate citizens to join the international clamour for an end to such barbarity.”
    In 2009, at the height of the festival, around 500,000 buffaloes, goats, pigeons and other animals were killed. After protests in the intervening years 30,000 were killed in 2014


    I imagine these worshippers are reasonable, rationale folks and just need an exchange to remedy their ill gotten traditions.
    Why, here in our Western culture open communication and democratic order solves such disagreements

    Oops…wrong video
    So sorry

    • It is strange how animal and human sacrifices have shown up in so many religions around the world. There seems to be a lot of people who see these sacrifices as helpful/necessary.

      At one time, the sacrificed meat was eaten by priests, at least some places. The leftovers were sold in the marketplace. Perhaps a way of providing meat to everyone on certain festival days?

      • Herbie R Ficklestein says:

        Seems a reasonable assumption.

        Remember reading the last Pagan Roman Emperor Julian the Philosopher known as the Apostate attempted a revival of Paganism and to promote such to the people in Antioch had lavish Bull sacrifices. While traveling he was visible upset at a Temple when a Pagan priest showed up with only a undernourished goose for the ritual.
        He was a prolific writer and a great deal of his work has survived

      • Xabier says:

        Until recently Ethiopians,and no doubt others, kept an animal tethered outside the dining hut, and meat was cut from it sloice by slice – while still alive – so that guest could be assured of freshness.

        There was also a common theory that an animal which is stressed and terrified before being killed will taste much better – this lies behind the notorious bull-running of Pamplona, which also took place in England as well until the early 19th-century.

        • doomphd says:

          i know for fish, the effect of stress on the meat is opposite. a tuna that’s meat is “burned” (lighter red color) from stress will draw a lower price at market.

  3. Tim Groves says:

    Is Greta Thunberg for real? An independent actor? A consummate actress from family of thespians? A high priestess of an apocalyptic death cult? Or is she a marionette who is being used, abused and exploited by the global elites who are putting her on the world stage and applauding her antics?

    Of course, much the same could be said about many young pop stars and actresses. Buy why choose Greta to front their campaign? This video, watched till the end, answers these questions and more, including introducing us to past generations of Gretas who failed to gain the level of traction Greta has achieved.

    • Herbie R Ficklestein says:

      Curious minds WANT to KNOW!
      Me LVS GRETA and Hanoi Jane and all other elites privileged SNOWFLAKES.
      They sacrifice so much of themselves in an attempt to shake enlightenment in the rest of us consumer addicted zombies who unwittingly destroy the biosphere to prop up a collapsing economic, social network serving the multinational Corporate Empire!
      It’s very, very late in the game, only seconds left to go before it’s all over for humanity and life on the Green Planet.
      Will Greta and team be able to save us from the cruel finale while the uproaring crowds cheer on …..
      We need a miracle….

      Up to now Humanity has rolled the dice and won, will Lady Fate smile upon us all?

      But FIRST the awards …..drum roll please

    • Rodster says:

      This is how one parent wants to deal with his daughter’s worship of Greta Thunberg. It’s classic as it is funny !

      Maybe AOC and the entire members of the New Green Deal and Extinction Rebellion should read this as well.

  4. Harry McGibbs says:

    “U.S. government debt yields plunged on Tuesday after President Trump poured cold water on an imminent China trade deal, sending stocks tumbling.”

  5. Harry McGibbs says:

    “The 0.4% Australian GDP growth for the third quarter was lower than forecast by the Reserve Bank this week. But although it might have caught Martin Place by surprise, it’s no great shock to many close observers of the Australian economy.

    “With the retail sector on its knees…, wages still stagnant and serious doubts about whether the once-booming construction sector can continue to support growth, the outlook touted by the RBA on Tuesday appears quite optimistic.

    “All this comes despite the economy effectively living on the life support of ultra-low interest rates.”

    • Harry McGibbs says:

      “More Australians are expected to struggle repaying their mortgage next year, despite record-low interest rates.

      “Australia’s household-debt-to-income ratio already stands at a record 190 per cent, which is second only to Switzerland. American credit ratings agency Moody’s Investors Service has this week issued a note predicting a rise in delinquencies…”

      • Any little bump in the road would seem to be likely to cause a problem when debt levels are this high. A person might wonder about Switzerland as well.

        • Switzerland is one of the key spots for global fin cartel, tax heaven (safe heaven residency) for upper levers of int rich (mutually recognized as such), etc. So they (CH) will go down in the very last wave not sooner.. there are so many others to be thrown under the triage steamroller first. In other words the Swiss debt doesn’t stink.

          • Let’s hope! Whatever energy is available does tend to rise to the top, we know.

            But we can also see what a mess California is, with its high wages, little water, and attempts at non-fossil fuel energy supply. It is another rich place that either goes down first or last.

    • I see, “. . . sales of new cars fell 9.8% in November, the 20th monthly decline in a row . . .” This is hardly a good sign. When things aren’t going well and a person is already over indebted, buying a new car is not at the top of the list of their things to do.

      • Also, one has to admire the schemes how to get rid off old(er) clunkers asap in order to support the price structure from bellow. Be it parking lots at old runways and abandoned industrial parks to keep unwanted cars (diving in resale price) or subsidized premature scraping programs for ~newish carz etc..

  6. Harry McGibbs says:

    “A decade of ultra-easy monetary policy conducted by the world’s major central banks has fuelled this dangerous bull market. To cite one example, US equity prices have increased more than threefold since their nadir in March 2009, and the US equity bull market is in its eleventh year…

    “Despite the clearest signals of gross global credit misallocation and the serious mispricing of credit risk, markets and policy-makers seem remarkably sanguine. The possibility of a violent repricing of risky assets, which could lead to large strains in the financial markets, is apparently far from their minds.

    “Their complacency is surprising, particularly in the light of early warning signs… Many factors point towards a global economic recession…”

    • Harry McGibbs says:

      “The next push for the global economy may come from governments instead of central banks – and the outcome for financial markets could be messy…

      “Even if a consensus is building that governments will have to enact more expansionary fiscal measures, not all may be able to do so…

      “Inflation may also accelerate if governments start to stimulate economies at full employment while interest rates are already low, putting pressure on bonds…”

      • “Enact more expansionary fiscal measures”

        In other words, build more bridges to nowhere, to keep people employed. Kick the can down the road a little farther. Indirectly, raise government debt. Back when more roads were helpful, such spending would have been helpful. More spending on electricity transmission might be helpful, but this does not really raise the potential productivity of the system. It simply reflects that intermittent renewables require a huge amount of electricity transmission. Hiring a vast army of people to keep branches cut away from long distance electricity transmission lines might be somewhat helpful in preventing fires, but did we need to get ourselves into this mess with the need for lots of long distance transmission in the first place?

        Can Venezuela and Saudi Arabia do this? Not very well.

        • Robert Firth says:

          Gail, I once again display my ignorance of modern economic theory. So, we pay people to create “bridges to nowhere”, things of no value. But they will presumably spend their pay on things that are of value, food, clothing, shelter, … rather than bridges. So the result of this policy is to create a surplus of things with no value, and a shortage of things with value. How can this make sense?

          • One of the big questions is, “Do you count all of these things with virtually no value as part of GDP?” Clearly the fact that the workers go and buy groceries and food means that there will be some true GDP coming out of this “investment.” It is part of the “multiplier effect” that we get whenever someone is hired to do something or the government pays someone a pension.

            There seem to be any number of investments that are equivalent to bridges to nowhere that can be built. China seems to build far too many concrete homes, relative to the number of people who can afford them. They sometimes build big four-lane highways that are practically not used. Japan does something similar.

            Back when we were first putting roads and bridges in place, these additions truly aided commerce. More businesses could prosper than in the past. Transportation would be faster. It likely would take less time and less fuel, if the new roads were paved and the previous ones were not. These investments truly added to the productivity of the system. They had a different kind of multiplier effect.

            Now, a lot of the “investments” we are making are simply fixing things that are breaking down. They don’t really add to GDP; they prevent it from falling.

            When it comes to things like electricity transmission and pipelines of various kinds, at one time the view was, “Keep replacing parts of the system on a regular schedule, so it doesn’t all fall apart at once.” Then someone figured out that it would be cheaper to just use the transmission lines and pipelines until they break, and then fix what is broken. I read that one of the California transmission lines that was recently a problem was installed in 1921. It supposedly had a life expectancy of 65 years. There is no sinking fund dedicated to taking care of electricity transmission lines. I suppose the money that should have been spent on transmission maintenance is spent on something else, helping reported GDP. Of course, fighting fires adds to reported GDP, too.

            Do all of our wind and solar investments really make sense? Probably not, if the full cost were considered. As long as the money is spent, the spending seems to be treated as adding to GDP.

            We have to keep the system going, so we convince women that they need a new dress for every occasion.

            I have stayed at a few hotels recently that don’t have towel bars in the bathroom. I asked about this over Thanksgiving weekend. I was told that management doesn’t think that people need to reuse towels, so there is no need for towel bars. Just put the towels on the floor.

    • I am not the only one saying “Recession Ahead,” I see.

      • Harry McGibbs says:

        I am hoping that in the run-up to the Nov 2020 election, Trump will resist the temptation to ratchet up trade tensions any further, as confidence in global economic growth is very fragile now, one feels.

        • At some point, China’s debt problems may take center stage instead of the trade tensions. Then it will (sort of) become apparent that China was not really a reliable trading partner in the first place. We were simply kidding ourselves.

          • Harry McGibbs says:

            Whatever the trigger, it is going to be pretty spectacular when the psychology of contraction takes hold to the point where it becomes self-reinforcing. A sudden dose of reality is going to be very unpleasant for our stimulus-addled financial system.

          • That’s an interesting point – suddenly China reliable partner no more?
            To whom, to perennial debt, int rule benders and warmongering scammers (of the West)?

            Actually what could happen, is sort of globalization stumbling relapse into block structure and quasi barter like deals, all stripped out of the legacy western currency and legal frameworks. For example, Africans and SE Asians getting tech, tools and medical supplies from China in exchange for raw materials, food, training.. It’s actually ongoing on some level already.

            The Chinese plan was to derail the US before ~2045, and later dominate in the partnership with Russia. Now, the ~nationalistic faction behind Donald answered with sanctions which perplexed the Chinese as unimaginably bold and crazy, unprecedented move, so their strategy must be also to speed up the process of maturing into more respected player.

            The only known issue is that there are also factions within the US not willing to go quietly into the night of ~relative collapse at any cost, hence the direct Russian ~recent warning on ~leaked first strike doctrine, don’t try anything unwise we have the coordinates of both of your gov & private dooms day bunkers dialed in for annihilation response..

        • Xabier says:

          t will be ‘interesting’, ‘memorable’, and ‘spectacular’ in all the most unpleasant senses of those words….

          I do love can-kicking, may it go on and on and on……..

          • Harry McGibbs says:

            Me, too! Weird and unsettling though this era of unprecedented central bank interventions is, it is surely better than whatever may follow it.

  7. Harry McGibbs says:

    “China is hurtling toward another record year of onshore bond defaults, testing the government’s ability to keep financial markets stable as the economy slows and companies struggle to cope with unprecedented levels of debt.”

    • Harry McGibbs says:

      “Capital investment by Chinese firms has ground to its slowest pace in three years, as a weakening economy, tight credit and prolonged trade war with the United States dent sales growth and cash reserves, a Reuters analysis showed.

      “Companies are also spending more days to turn inventory into sales and eking out smaller profit gains, the analysis showed…”

      • Harry McGibbs says:

        “A household debt crisis may be brewing in China as the government tries to boost sluggish consumption amid a domestic economic slowdown and trade war with the United States.

        “China’s household debt had ballooned to 60.4 per cent of its gross domestic product at the end of 2018, the People’s Bank of China said in its annual financial stability report last week.China’s household debt

        “And for the first time, the household debt to income ratio hit 99.9 per cent, meaning that total debt is now roughly equal to total household income among the average Chinese household.”

        • I see, “. . . overall sales growth for the annual shopping festival [Singles Day] eased by 26 per cent, the weakest pace since the event started in 2009.” This doesn’t sound like an auspicious sign!

          • could it be that China will become the first (of many) slave supported societies of our modern era?

            Right now, the Chinese government are bringing in a form of total surveillance to cover every aspect of chinese life.

            those who conform receive benefits of the state (at rising levels) those who do not conform are relegated to lower and lower status. Modern technology now allows this to happen, far worse than Orwell imagined it.

            Taken to the logical endgame, the conclusion would seem to be that you end up with a elite and slave society.

            The elite are allowed all the priveleges, while the working class provide them—which excatly describes a medieval society

            • In terms of collapse sequencing and int/global triage, these provision by the Chinese gov should give them better pecking order chances. Some disagree though, Gail seems to support the theory China goes down either in sync as everybody else or sooner than the US/West..

            • China doesn’t do well in “Happiness” ratings. This article says:

              China’s relatively low ranking in the most recent United Nations-sponsored World Happiness Report puzzles some experts.

              Residents of more than 150 countries were asked how satisfied they are with their lives.

              China ranked 86 out of the 156 countries, down seven places from the previous year.

              As The Economist magazine noted, this placed China, “below Russia and even war-torn Libya.”

      • The article says,

        Companies’ financial reports indicate consumers have been cutting back spending on vacations and big-ticket items such as cars and home appliances, while falling smartphone sales have capped growth among telecommunications network providers. . . Yet while earnings reports indicate a slowdown, growth in factory activity neared a three-year high in November, reinforcing upbeat government data released over the weekend.

        Somehow, this combination doesn’t sound like it will work well. Local consumers aren’t buying. The US isn’t buying much. Who is going to buy all of this factory output? Won’t there be rising inventories that can’t really be sold? Alternatively, they will be dumped on the world markets at below the cost of production.

  8. Harry McGibbs says:

    “The oil patch is facing a reckoning in coming years when billions of dollars of debt that helped energy companies weather the prolonged commodity price slump comes due.

    “Scheduled debt maturities among oil and natural gas production and services companies amount to roughly $3 billion in 2020 but will skyrocket from there to $20 billion in 2021, $41 billion in 2022 and $59 billion in 2023, according to data compiled by asset manager Angelo Gordon.”

    • It sounds like 2020 will not be a bad year for debt maturities. The problems are farther out. I am sure that oil and gas production and service companies assume that prices will be higher by then, so there will be no problem. Probably, investors think this way as well.

  9. The WSJ is reporting, Iraq, Other Countries Support Extra OPEC Cuts
    Oil minister said Iraq and other countries would support more cuts by 400,000 barrels to 1.6 million barrels a day

    “All countries should share and no country should take that [alone],” Mr. Ghadhban said. “It has been calculated that 1.2 [million barrels a day] has not been enough so there’s an additional cut required…and 1.6 was one of the alternatives discussed last year.”

    The Saudi Arabia-led OPEC cartel is set to meet with a 10-nation coalition led by Russia on Dec. 5 and 6 in Vienna to debate to extend a pact to curb production by 1.2 million barrels a day beyond the agreed end of March 2020.

  10. name says:

    Delete this one.

    • Lots of cranes in the photo.

      • Name says:

        Poland uses about 18 million metric tonnes of cement a year in recent years. That’s quite a big number. About 180 thousands of dwellings is completed a year, plus all the other buildings, and roads.

        • The US seems to use about 100 million metric tons a year.

          The US has a population of about 329 million and Poland has a population of about 38 million, so Poland is about 11.5% the size of the US. If Poland used the same amount of cement as the US per capita, it would only use 11 or 12 million metric tonnes of cement a year.

          Of course, in the US, we tend to use more asphalt and wood, compared to a lot of other countries. This holds down our cement use.

    • MG says:

      The center is rising, the rest of the country depopulating – like in other countries.

      • This is related to the physics of the situation. What energy there is, tends to “rise to the top.” The rural areas get frozen out, so to speak.

        • MG says:

          When the soil was not depleted and the food production was cheap, the rural areas could at least produce some workforce for the cities. Now, the food production is costly and producing workforce for the cities brings little benefits to the rural areas, as preserving the cheap food production in the rural areas requires more and more industrial inputs like machines and fertilizers.

          The rural areas do not need so much human workforce, but there is a rising need for machines. Like in the cities. The humans are too costly in comparison to machines.

          • I think you are right. Our rural areas are doing terribly, also.

            The people making the agricultural machines are not doing very well either, however, because with low farm profits, people cannot afford the expensive machinery.

            John Deere is a major manufacturer in the United States. An article today says, Deere & Co. Ag and Turf Sales Downturn Forecast for 2020

            John Deere’s worldwide sales of agriculture and turf equipment are forecast to decline 5 to 10 percent for fiscal-year 2020, including a negative currency-translation effect of 1 percent, according to a company press release issued November 27.

  11. Herbie R Ficklestein says:

    HaHaHa…Back YahooFINANCE
    There Are More Dollars in Venezuela Now Than There Are Bolivars
    Alex Vasquez
    BloombergDecember 3, 2019, 11:36 AM EST
    (Bloomberg) — The U.S. dollar has extended its dominance in Venezuela as locals increasingly turn to the greenback for even the smallest of purchases.

    Physical dollars now account for more than half of all retail transactions as the amount in circulation has increased to as high as $2.7 billion, according to data from the Caracas-based research firm Ecoanalitica. That’s three times the value of all the cash bolivars in existence combined with the amount of local currency held in checking and savings accounts, the data show.

    The dollar has taken hold of the economy following years of devaluations and hyperinflation that eroded the value of the bolivar to a level that hovers just a hair above worthless, and amid a shortage of local-currency notes. Rather than putting in the work to assemble a big enough pile of bolivar notes and dragging them around in bags, it’s more practical for Venezuelans to conduct their commerce in dollar bills flown into the country as remittances or picked up at exchange houses at the borders of Colombia and Brazil
    While until recently it was illegal to transact in U.S. currency, those restrictions have all but evaporated in any practical sense. Even the authoritarian President Nicolas Maduro, who has generally tried his best to keep an iron grip over the economy, has accepted the transition as the country suffers from a crippling economic crisis that has caused mass emigration amid growing poverty. Things are so bad, and the bolivar so weak, that Venezuela has struggled to print enough physical bolivar bills to keep up with the devaluation.

    “That process that they call dollarization can help the recovery of the country, the spread of productive forces in the country, and the economy,” Maduro said in a televised interview last month. “Thank God it exists

    That’s why the call it THE GOD ALMIGHTY 🙏 Dollar!

  12. Herbie R Ficklestein says:

    Gobble, gobble….Plastic People eat Plastic….what a surprise!😘
    We tend to look at drugs and toiletries as a category far away from food, even though we often ingest them orally and they end up in our stomachs along with everything else we eat. Because of this, maybe it doesn’t seem so crazy that petro-products that were once crude oil are in our medicine because we are aware that medicine is synthesized and created in laboratories full of all kinds of chemicals. But when it comes to actual food, most of us would never imagine that there is crude oil lurking in our fridges and pantries. But there is. And a lot more of it than you would expect.
    Thought Co. reports that “petrochemicals are used to make most food preservatives that keep food fresh on the shelf or in a can. In addition, you’ll find petrochemicals listed as ingredients in many chocolates and candies. Food colorings made with petrochemicals are used in a surprising number of products including chips, packaged foods, and canned or jarred foods.” Chewing gum also includes crude oil as the basis for not just one but many of its primary ingredients. LiveScience reports that “People who enjoy the snap and long-lasting texture of their chewing gum can give a nod of thanks to petroleum-derived polymers. Today’s gum bases can consist of both natural latexes and petroleum products such as polyethylene and paraffin wax, which also means most gums are non-biodegradable. But the first chewing gums typically relied upon the natural latex known as chicle — still the gum base of choice for some upscale gum brands and certain regional markets.”

    This is to say nothing of the synthetic petrochemical fertilizers that are used to grow nearly all of the produce that we consume (especially in more developed countries) and that give nitrogen, phosphorous, and potassium to our soils and the fruits and vegetables grown from them. As summed up by Thought Co., “More than a billion pounds of plastic, all made with petrochemicals, find use annually in U.S. agriculture. The chemicals are used to make everything from plastic sheeting and mulch to pesticides and fertilizers. Plastics are also used to make twine, silage, and tubing. Petroleum fuels are also used to transport foods (which are, of course, stored in plastic containers).” In fact, our entire food system is fueled by oil, and agriculture is responsible for a quarter of all greenhouse gas emissions, making it the second biggest greenhouse gas-emitting sector after the energy sector itself.

    While we as consumers may not be aware of or mindful about the fact that so much of the things that we choose to consume contain some amount of crude oil in the form of petrochemicals, at least the petrochemicals were put there on purpose and are therefore almost certainly measured or regulated in some way. But there are also plenty of things that we consume that are full of petrochemicals that are not supposed to be there at all. And it’s no simple feat to avoid consuming these hidden petrochemicals, because one of the most common sources is something that we can’t live without: water.

    Like Gail stated…a lot of oil use is hidden from ordinary people…
    Someone please inform Greta and Jane Hanoi Fonda…

    Yep, you’ll act alright….when you are freezing and starving because no energy to serve you.

    • Davidin100millionbilliontrillionzillionyears says:

      “In addition, you’ll find petrochemicals listed as ingredients in many chocolates and candies.”

      as younger ones say: “sweet!”…

      another reason to love crude…

      the electricity is on, the house is toasty warm from the forced hot air produced by the oil furnace in my basement… yes, here in the northeast USA, heating oil is still a somewhat common way to go, not the cheapest, but the furnace still has some years of life left, so the cost equation says to keep it for now…

      and Ghirardelli 60% Intense Dark later, I think…

      they subtitle the bar as “Evening Dream”…

      life’s a dream, Greta… BAU tonight, baby!

  13. “Cheap at Last, Batteries Are Making a Solar Dream Come True
    “Solar power is increasingly available around the clock as energy storage become more affordable.”

    Meanwhile, why is Hawaii still shipping in so much diesel fuel to run their power grids?

    • Kowalainen says:

      Obviously it is to keep the cheap batteries charged.

    • Hawaii not living the US opulence ways would be theoretically plenty ok with contemporary offgrid batt setup for ecovillages style tourism. Frankly, not knowing their specific insolation numbers (assuming above average / seasonal overcast days).

      Now, return to reality, Hawaii is an industrial (tourism) place and mil/gov outpost, hence the sucking sound of imported energy..

    • Davidin100millionbilliontrillionzillionyears says:

      more affordable?

      “Karin, a 31-year-old postdoctoral fellow at Lawrence Berkeley National Laboratory, spent just under $4,000 for his battery by taking advantage of tax credits.”

      oh, I see!

      more affordable with tax credits!

      we should give tax credits on all food purchases, and that way food would be “more affordable”…

    • Yet another apples to oranges price comparison. Renewables look good, but really aren’t, when the cost of paying backup providers and extra grid capacity is included. Batteries are needed for a far longer time than a few hours to replace backup providers. Batteries are needed to store energy for weeks or months. In places that are not right on the equator, batteries are needed to store electricity from summer to winter.

      When I visited Hawaii recently, I was told that Hawaii is having a problem with the cost of living being too high to attract people willing to work in Hawaii. This high cost of living is to a significant extent driven by the high cost of electricity and the high cost of oil. Some estimates say the total population of Hawaii reached a peak in 2016 and is beginning to fall.

      Hawaii is still shipping so much diesel fuel to run their power grid because renewables are no longer growing by much, relative to the total. The Puna Geothermal Venture has been non operational since May 2018, because of the lower Puna Eruption. (People forget that “renewable” doesn’t mean permanent.) Neither the burning of biomass nor wind turbine use seems to be growing. Hydroelectric is tiny. Renewables growth is now coming solely from solar in Hawaii.

      • Robert Firth says:

        Hawaii is also being crippled by the Jones Act, which requires all commerce between the islands, or between the islands and the mainland, to be carried by US ships. Ships crewed by union labour. Set the people free, and the cost of imported goods would drop by at least 25%.

        Alternatively, decolonise Hawaii and give the native people their country back.

        • Hawaii’s living costs are so high, and Hawaii is located so far from other inhabitable areas that it seems to me that crew on the ships need union wages for themselves and their families to survive, if they are not on the ship. It is not like there is a lower living cost are nearby.

          • Robert Firth says:

            Gail, with the present arrangements, I agree. But before its seizure by the US, Hawaii was prosperous, and its (zero carbon) commerce with the Polynesian islands to the West was flourishing. It was, again, the US sugar planters and their fossil fuel economy that made them so dependent on others.

        • Or, a better solution is to end the privileges enjoyed by descendants of Hawaiian nobles and their white hangars on , as described in the George Clooney movie Descendants.

          Hawaii is a feudal area where the pre-US annexation landowners still hold tremendous powers.

          • Kowalainen says:

            Yes! Let the competitive collaborative forces rule the world. We already got the technology for that.

            The smart would prosper, the ordinary thrive as administers and the wise to critique.

    • doomphd says:

      Hawaii has two refineries that make JP-8 for the airline industry from imported Indonesian crude. That process produces bunker oil that is pretty useless and would have to be shipped out at some cost to the refineries. Therefore, they sell the bunker oil to the power plant at nearby Kahe Point, where they burn the oil and produce about 1.6 GW of electrical power for Oahu.

  14. Harry McGibbs says:

    “Today, more than a decade on from the crisis, interest rates are close to historic lows throughout much of the developed world. The problem of too much debt has been solved with even more debt.

    “The nature of the debt has changed, so too has the make-up of debtors and creditors, but the very low level of interest rates, when compared to 2008, means that small changes in interest rates have a greater impact on the price of credit.”

    • Harry McGibbs says:

      “US corporations are sitting on nearly $10 trillion in debt. That’s equivalent to roughly 47% of the overall economy, which is a record, according to data first cited by the Washington Post.

      “Since the financial crisis in 2008, corporations have splurged on debt amid historically cheap borrowing costs. In recent months, experts have warning that ballooning corporate debt could worsen a future economic downturn.”

    • There are still writing covenant light loans and reselling them in CLO packages. Something seems bound to “break.”

      • Kowalainen says:

        I wonder, what is that something which is going to break?

        • Davidin100millionbilliontrillionzillionyears says:

          whatever it is, it doesn’t have to be huge…

          just big enough to cause widespread panic…

          group behavior will ensure a swift collapse…

          • Kowalainen says:

            Yes, but what? What is actually subject to breakage?

            Give me one timeline of a breakage, its effects and consequences.

            I’m not interested in having “magic” or “then stuff happens” in the chain of reasoning leading to a complete collapse.

            • Harry McGibbs says:

              David Korowicz’s ‘Trade Off’ paper looks at how, in his example, a sovereign default in the Eurozone could lead to socio-economic collapse:

              “David Korowicz explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. He uses a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.”


            • Kowalainen says:

              Plenty of lofty words and fluff in that piece. I want to see a clear timeline including exactly when and what is going to break and why it will lead to a collapse. Yes, a detailed chain of reasoning pinpointing the exact mechanism which inevitably have the outcome of collapse.

              It is all plenty of words and little substance, droning on about complexity in the supply chain, finance, energy supply, risk this, predicament that.

              Where is the inevitability in the same sense that The Hills Group puts a definitive measure of the entropy generation as a measure of the consequences of depletion and outlining the effects of the pricing the oil.

              Yes, I want to read in great concise clarity in the spirit of how M King Hubbert outlined his peak oil observations, theory and inevitable conclusion.

  15. Harry McGibbs says:

    Two of the world’s major national airlines have hurtled closer to the possibility of going bust after a difficult weekend that’s left both with even more uncertain futures.

    “Italy’s flag carrier Alitalia and South African Airways… have been haemorrhaging money for years but a series of fresh blows have raised concerns of collapse for both… the airlines… may be the latest flag carriers to crumble in the wake of low-cost competition, rising fuel prices and global economic uncertainty.”

    • Harry McGibbs says:

      “Italy’s government has approved a €400 million ($443 million) loan to troubled flag-carrier Alitalia, to provide funding while a strategy for the airline’s future is decided.”

      • Davidin100millionbilliontrillionzillionyears says:

        like Iceland, another easy one:

        sell off all their planes…

        and voila!

        sometimes the best strategy is the obvious one…

      • Oil prices aren’t even high. Not enough seats filled? General inefficiency? Too many air carriers in total?

        • Phil D says:

          I can speak to the problems with South African, since I grew up there. It used to be a very well run airline but today, like with all large South African enterprises, it is used as a cash cow to to advance political agendas. In other words, it’s stocked top to bottom with unqualified affirmative action hires on bloated compensation packages and corrupt politically-connected management. You can see similar financial problems at other formerly profitable companies like Eskom, Denel, many of the big mining companies, banks etc. and the reasons are the same. This has been an explicit policy of the government since 1994, officially called “Black Economic Empowerment”. The attempted land-grab from white farmers a year or two ago (anyone remember that?) was also tangentially related to this policy. South Africa is essentially Zimbabwefying itself but at a much slower pace, because it started from a much, much higher point of accumulated wealth and capital stock. For the past 20 years a lot of that wealth has been spent into feeding Swiss bank accounts and many millions of unproductive mouths. It’s now to the point that the whole country has regularly/daily scheduled power blackouts, because Eskom underinvested in power generating capacity for the past 2+ decades (read: the money was frittered away) and the coal mining companies that supply the power plants can’t meet their obligations…for the same reasons.

  16. Harry McGibbs says:

    “Due to a lack of funding, Reykjavík cemeteries [Iceland] are having difficulties providing their services… In fact, the only cremation furnace in the country, located in Reykjavík, now faces the risk of collapsing…

    “In 2005, the state and the cemetery council signed a contract that stipulated that the cemeteries’ projects would be fully financed. Soon after, the 2009 economic crisis led to cuts in funding and the state stopped complying with the contract…

    “Currently, the cremation oven is 72 years old and at risk of collapsing… if the furnace stops working, the only other option for cremation would be to get the service done abroad.”

  17. Yoshua says:

    Trump’s trade deal with China is dead.

    China has already signed an agricultural deal with Brazil and Argentina.

    Trump just imposed tariffs on steel and aluminium from Brazil and Argentina…claiming that the devaluation of their currencies are hurting U.S producers…and of course to punish them for hurting U.S farmers.

    Trump has restricted sales to Huawei on national security issues. Huawei’s latest smartphone doesn’t have any U.S components. China now either produce or source components from other nations.

    Trump is now looking at targeting E.U with tarrifs and House and Senate will soon impose sanctions on E.U over Nord Stream 2.

    The U.S is still the largest military power in the world and owns the world reserve currency. So what’s next?

    • Harry McGibbs says:

      Trump showing no urgency to resolve issues with China:

      “I have no deadline on #China deal and it might be better to wait until after November 2020 election”

    • The Dow is down 417 points right now. Maybe this will be another bad December for the stock market.

      • Harry McGibbs says:

        You’d guess it would hinge mostly on whether the “phase-one” trade deal between China and the US is signed by Dec. 15th – even though such a deal is really just a can-kicking exercise:

        “Investors look set to make money when Washington and Beijing sign their “phase one” trade deal — but in the long term, the Sino-U.S. trade war is “unresolvable,” according to one analyst.”

        • Davidin100millionbilliontrillionzillionyears says:

          but long term, it is easily resolvable…

          if the D candidate wins in 11/2020 then the Ds could quite readily cave in to most/all of the demands from the Chinese side…

          a very real return to pre-Trump…

    • Robert Firth says:

      Yes, the US is still the largest military power in the world. but is it the most effective? Look at Afghanistan, no victory after 20 years of war, in a land Alexander conquered in two months.

      One Russian or Chinese hypersonic missile, launched from a strategically located small boat, can send an aircraft carrier to Davy Jones’ Locker. In other words, the entire US carrier fleet (11 in total) could be sunk for less than the cost of one F35 fighter. Welcome to the age of asymmetric warfare.

      • Kowalainen says:

        The drone attacks on the Saudi refinery highlights that true assertion.

        However, it is not the purpose of the MIC to be effective. It is a jobs program. And sinking one of those floating behemoths is basically asking for becoming eradicated from the surface of earth.

      • Xabier says:

        There are some wonderful people working with the huge numbers of orphans in Afghanistan, and I encourage people to help them with donations.

        Among others, The Idries Shah Foundation publishes beautiful children’s books based on ancient tales from the region (some illustrated by my supremely talented artist friend from Iraq, ‘Daby’ ,now herself a refugee in the US) and the sales go to the orphans – they also get copies of the books.

        In this bleak and in many ways quite evil world, make an orphan smile!

      • Yoshua says:

        Israel said that the Iranian missile attack on Saudi oil infrastructure had an 80% accuracy.

        The U.S missile accuracy is 60% at best.

        The U.S military force is too large to be effective?

        • Kowalainen says:

          No they just have to fire 133.33% more missiles. Not a problem, they got plenty of gear.

        • The Saudi attack was at least partly an inside job?

        • Robert Firth says:

          There was no Iranian missile attack. That claim is pure Israeli propaganda, designed to further their aim of inducing the US to attack Iran. And since US foreign policy in the Middle East is dictated from Tel Aviv, and has been for years, it may well succeed.

  18. Yoshua says:

    S&P 500 Futures

    If technical charts mean anything…then the top is in…and now comes the crash.

    • Davidin100millionbilliontrillionzillionyears says:

      now comes more months/years of manipulation to keep the markets up…

      as has been said before, The Collapse may very well come when markets are at all-time highs…

      • Yoshua says:

        Are you talking about the collapse of the entire system?


        I didn’t think of that. The collapse is still just a theory for me… impossible to really comprehend.

        • Kowalainen says:

          Isn’t the collapse in full swing now? ZIRP, Etc, etc.

          • Yoshua says:


            • Kowalainen says:

              Is it the end of the beginning of the collapse then? Is the second derivative of economic growth showing clear signs of plunging?

              Luckily we got some serious momentum built up into the oil guzzling behemoth. Plenty of time until it shrieks to a halt.

            • Davidin100millionbilliontrillionzillionyears says:

              2019 has certainly been a year of partial collapse in some/many peripheral countries…

              2020 looks like we could see partial collapse moving closer to The Core… UK, Italy, etc… and deepening collapse in The Periphery… Argentina, South Africa, etc…

              I’ve said we are in The Endgame…

              probably the beginning of The Endgame, but who knows?

              2 months, 2 years or 2 decades… it’s coming soon… even 2 decades is soon to me…

  19. Yoshua says:




    Global trade and manufacturing is in contraction despite central banks stimulus. How bad would the prints be without stimulus?

  20. Now the peak oil theory is debunked, what will happen is oil will be out of touch for most of the world’s pop. Sorry, but Gail’s theory of non elite worker has been superseded by automation.

    What will happen is the world will adapt to higher priced oil, and those who can’t afford it will simply die. It is cruel but it is reality.

    • The issue is low-priced oil. Robots cannot buy goods, just as low paid workers cannot buy goods. It is low prices that will bring the system down.

      You are still looking at the world through the high-priced peak oil lens.

      • Tim Groves says:

        Oil prices will be too low to keep the system ticking over, but they will seem too high for the billions non-elite workers or former workers whose consumption is needed to keep the oil price high enough to keep the system ticking over.

        When you’ve got no money, everything is too expensive.

        • Davidin100millionbilliontrillionzillionyears says:

          oh, reminds me of the Goldilocks sub-theory of the Peak Oil theory…

          oil could stay in that perfect zone where it was priced low enough for consumers but high enough for producers…

          ah yes, those were the naive days of yore…

          • Yep, there were various sub theories floating around, some better than others..
            For instance the “heretic one” mentioned ever lower price of oil via “Triangle of Doom” could have made (did) some people rich during the 2015/16 price collapse. Similar occurrence (albeit of not so intense amplitude) could happen again, i.e. brief collapse bellow $30-40 barrel.. say before 2023-25… Although these days there are other instruments at play, e.g. naked markets support by CBs for propping up big corps and govs etc..

          • The WSJ has come up with another story along those lines, today: Oil Trading in Sweet Spot Adds to Improving Economic Signals

            Oil prices have stayed in a contained range that analysts say benefits both producers and consumers, bolstering hopes that the global economy can rebound.

            U.S. crude has generally stayed between $50 and $60 a barrel in the past six months and is on pace for its best year since 2016 following a sharp selloff late in 2018. Brent, the global gauge of prices, has also been steady and traded between $55 and $65.

            Because it is critical for the transportation and shipping industries, oil is used by some investors to gauge momentum in the economy. Prices had sent an alarming signal when they tumbled earlier in the year, hurt by worries that crumbling demand would result in a glut. But recent progress toward an initial U.S.-China trade accord and stabilizing economic data around the globe have fueled bets on an improving picture for consumption.

        • Good point! An awfully lot of our young people are in the “no money” predicament.

          • Kowalainen says:

            No need for that. Video games are cheap. Plenty of interactive entertainment without the hassle of owning physical stuff.

            They just don’t care about worldly stuff. The near perfect form of escapism is here.

      • Kowalainen says:

        Robots can however be turned off and won’t revolt if their access to the spoils of IC gets rationed.

        That is the whole point of circling the wagons around the last productive areas and assets of the world. The rest is subject to triage.

    • Kowalainen says:

      Is peak oil theory “debunked”?

      M King Hubbert clearly stated the incompleteness of the interaction between the ancient monetary system and the FF energy systems that underpins IC.

      Read some Hubbert and you will find.

      • We have a lot of Peak Oil followers who have decided that low oil supplies mean high prices. This doesn’t mean that Hubbert necessarily believed this nonsense.

        • Kowalainen says:

          Reading directly from the source is the way to go. Hubbert was indeed a profound mind. I wish the peak oilers would take inspiration from his principles of thought.

          There is nothing inherently wrong with price hikes as resources deplete. Unfortunately it does not work that way when the dependency to that specific resource is endemic, systematic and an integral part of the fabric of IC.

  21. Harry McGibbs says:

    “The UK manufacturing sector shrank for its seventh straight month in November, survey data has shown, causing bosses to cut jobs at the fastest pace in over seven years.”

    • Harry McGibbs says:

      “Daimler said on Friday that it will shed more than 10,000 positions, lifting the tally of job cuts announced this year across Germany’s manufacturing sector to more than 100,000, according to Bloomberg calculations.”

      • Ouch! This cannot help demand for goods and services.

      • all industrial products contain a proportion of surplus energy

        it used to be cheap, now it isn’t and people are finding it less and less affordable—hence the slowdown in buying stuff

        I bought a VW on Saturday—but it obviously hasn’t improved things

        • Harry McGibbs says:

          You need to be drinking some Japanese beer as well, Norman, now that the South Koreans are turning their noses up at it – but obviously not at the wheel of your fine Volkswagen.

          • Robert Firth says:

            i found Asahi Japanese beer goes very well with pork gyoza. But neither is available here. I do miss the Asian food in Singapore (except for their Cantonese food, which tastes of nothing) and tends to be overpriced.

            But Maltese beer is good, especially the “1565” brand. Naming your beer after a victory over the Ottoman Turks is real class, don’t you think.

            • Ed says:

              Robert, hell yeah, I am looking forward to 2034 beer.

            • Dennis L. says:

              Perhaps a break from doom and gloom; would you be willing to tell us about life in Malta and how you came to chose living there to see the end of the world which we now is coming in twelve years or so( a bit of gallows humor, who really knows?)

              Dennis L.

        • I guess you opted for the ICE version from VW though ..
          Assuming there should be the greatest deals at the moment.

        • Kowalainen says:

          Was it a second hand one of these?

          In good condition with minor scuffs and dents from the few guys that so many owed so much.


          • yes i bought it because i thought i would get more for the dummy of Hitler in the back seat than i paid for the car

            • Kowalainen says:

              Those fire bombs over Dresden was a bit excessive, wouldn’t you agree? Specially after he gifted you the troops back home from Dunkirk.

              But being a Swede I have no right to complain due to the fact that our government corporate complex was involved in eager collaboration and profiteering with the nazis which prolonged the war with an estimated 1.5 years. One can only imagine the consequence of that calculated in human lives and untold suffering.

              But yeah, some things are timeless; the VW beetle, Churchill, Hitler and Swedish “neutrality”.

            • Davidin100millionbilliontrillionzillionyears says:

              what? no Jaguar for you?

              don’t we all have that image of you, cruising around the English countryside in style?

            • your image is perfectly correct

              but I had to get rid of my coach and four, and the postilions, because the local peasants were getting restless and sharpening their pitchforks

              trouble was you see, that because I’d written a book and made a fortune prophesying their doom, it was all my fault

            • Tim Groves says:

              I fear the Swedes, even when they come dancing to Abba’s hits.

              Their empire wasn’t quite as large as the later German ones, but it crumbled less fast!


            • Tim> curiously enough, this video doesn’t show the brief but huge extent of their continent bound invasion during the 30yrs war in mid 17th century, they ~almost reached the Alps and Danube river. They pillaged among other lands: Saxony, Bohemia, Bavaria, ..

              Up to this day their museums are up to the roof packed with this very loot.

            • Kowalainen says:

              Hej, hey hey worldof.

              HOW DARE YOU?

              Speaking bad about the virtuous Swedes who would never, evaaaar hurt anyone else through their inaction and profiteering rackets with aggressor states and other regimes corrupt to the core.

              “ Ericsson has been cooperating since 2013 with an investigation by the United States Securities and Exchange Commission (SEC) and, since 2015, with an investigation by the US Department of Justice.

              The investigation covers a period up to the first quarter of 2017, and involves operations in six countries: China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam.”


            • Robert Firth says:

              The “Swedish Empire” was decisively ended on 8 July 1709, by Peter the Great of Russia, who had celebrated an earlier, partial victory by building a log cabin near the river Neva. That cabin is now Saint Petersburg. May God and his holy Archangel, St Michael, bless, preserve, and defend Svyataya Rus, Holy Russia.

  22. Harry McGibbs says:

    “When 6pm struck in Colombia, the sound of banging pots and pans – the “cacerolazo” – echoed across the country like they have since the mass anti-government protest kicked off more than a week ago. But on Sunday, the thousands of Colombians gathered on the streets of the country’s biggest cities were not alone.

    “Colombia joined at least nine other countries in the region in what was dubbed a “Latin American Cacerolazo”.”

  23. Harry McGibbs says:

    “What do recent trade data portend? The news is not good, and suggests that not only is the world economy weaker than it was earlier this year but that more weakness lies ahead…

    “The Baltic Dry Index, a closely-watched indicator based on bulk commodities shipping that serves as a reliable indicator of future trade activity, has fallen by nearly 50 percent since August (after doubling in the first eight months of the year), squelching hopes for a rebound in global trade…

    “Slowing trade growth is adding to economic woes around the world. What is worse, trade tensions and the uncertainty they have spawned are likely to leave a long-lasting scar on the world economy if they continue affecting business confidence and, therefore, investment growth.”

    • Harry McGibbs says:

      “As the U.S.-China trade war drags into its 16th month and continues to disrupt supply chains, more than one-quarter of multinational firms have not made contingency plans, showed a survey from a subsidiary of courier giant DHL…

      “48% from the engineering and manufacturing industry and 40% from the automotive mobility sector reported that they had no contingency plans at all…”

      • Xabier says:

        And in a further blow to the confidence of everyone except the village idiot (happy soul!) Homo Sapiens reported that, as a species, it has absolutely no contingency plans to deal with the mess it has got itself into over the last century or two.

        There is of course always the hope that Something Will Turn Up…….

      • Harry McGibbs says:

        Trump tweets:

        “Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.”!/trump-reiterates-call-for-fed-to-lower-rates-laments-strong-us-dollar-20191202

        • The story is all about not enough jobs to go around. It is necessary to keep goods that are too inexpensive out.

          • Your thesis of onset into pervasive depression seems to be gaining on strength / likely-hood every day.. I’m wondering about the possible sequencing events-scenarios in its wake:

            – UBI for some IC hubs
            – global fin reset
            – sheer full spectrum chaos
            – balkanization / trade block structures / escalation of protectionism
            – BAU-ish muddling through (without UBI) as long as possible (Japanization)
            perhaps all of the above attempted and abandoned shortly for the next “best” option
            Therefore endless possibilities for the short-midterm quasi BAU..

          • Kowalainen says:

            There are jobs all right. The problem is that those are highly abstract or technical.

            Working in complex systems is a challenge even for the skilled.

            Not much hope there, thus the government industrial complex must retort to theft to keep the charade going.

      • I expect that goods that use computers are particularly difficult to move out of China.

        • Kowalainen says:

          Just wait until Trumpo cuts the semiconductor exports into China, then SHTF.

          • Ed says:

            In thiis chart is Taiwan counted as not China? If so, this is misleading.

          • Wasn’t there a related story to this CPU question in the wake of the hot Huawei sanctions? If I recall it correctly, the Chinese understood the weakness in reliance on foreign CPU designs and build (fast tracked) their own program ..

            Similar thing happened in Russia yrs ago, they opted for own CPUs at least for the core mil-defense and some telco/banking application, doubt they managed to have it all incl. the most powerful (clusters/mainframes) yet – or partnered with Asia on that one..

            • Kowalainen says:

              Once behind the technological bandwagon, there is no tractable way catching up. The ship has left the harbor.

            • Robert Firth says:

              And I think the Russians got it right. Yes, they built processors with about 1/20 of the speed of the best Western products, but then, they have programmers who can write excellent software that needs less than 1/20 of the power. It’s not that hard: even I, many years ago, wrote systems software for a military machine that ran four times faster than the contractor’s offering on a civilian machine with five times the power.

              And it even gave me a quote: “The ability of hardware engineers to enhance is far exceeded by the ability of software engineers to degrade.”

            • Kowalainen says:

              Thing is Robert, we soon will no longer write software. All complex logic will eventually be automatically generated or trained to specification.

              We have all heard stories of the exemplary skills of the “other guys” to prop up the domestic sense of emergency. It is trope by now.

              Garbage software gets written all over the world and is caused by bad system design, incompetent management and lack of time.

  24. Harry McGibbs says:

    “Between the slings and arrows of China’s global trade war with the United States, a separate battle has been brewing between the Asia-Pacific’s next two largest economies: Japan and South Korea.

    “But unlike the economic issues underpinning Beijing’s fight with Washington, Tokyo and Seoul’s dispute is fundamentally rooted in bitter grievances that date back to Japan’s occupation of South Korea during World War II.”

    • Harry McGibbs says:

      “Beer guzzlers are feeling the impact of the South Korea-Japan trade war.

      “Japanese trade data released on Thursday showed beer exports to South Korea plunged to zero last month from 800 million yen ($7.3 million) a year earlier, amid boycotts sparked by an escalating trade spat between the Asian neighbors.”

      • ssincoski says:

        Should be good for beer-producers in South Korea, right? I have to admit though I don’t recall ever seeing or drinking any beer made in South Korea. Do they have any decent nationally produced brands?

        • Harry McGibbs says:

          It looks like they have a couple of major indigenous manufacturers – Hite-Jinro and OB – but their favourite imported beer is Tsingtao from China, so perhaps this is one trade conflict that is benefiting the Chinese.

      • The South Korea-Japan trade war seems to stem from “not enough jobs for everyone.” Semiconductors manufacturing has been major problem area.

        A decrease in auto sales is no doubt another problem area.

        • Ed says:

          Yes, China wants to source all the electronics it uses, Samsung is huge, TSMC and Taiwan are huge and the US DOD wants to pull back electronics to domestic production (hot dog this is so good for me). Let the fight go on hurray DOD and Donald Trump I can stay employed until 70 and max social security, there are no pensions in the electronics industry. Currently 61.

          • Kowalainen says:

            It is all energy policy. Curb the clumsy Chinese geopolitical interests by denying them access to high-tech chips and dollars, and then let those US coal and natgas power plants electrify the domestic oil producers squeezing the last bit of oil from the rocks, while the Chinese energy usage and prosperity plunge as a consequence of an idle manufacturing industry.

            If you don’t agree with El Trumpo’s policies, maybe quite suddenly you no longer can source the coveted Military grade GaN’s, FPGA’s and misc IC’s for the next generation ‘fireworks’ plans of yours.

            Yup, that mfg capability is coming back “home”, that is for sure. Let’s see if the Chinese makes blunder of signing that trade deal and then proceed with rolling in tanks on the streets of HK. That’s all the excuse there needs to be for a complete embargo.

            The clock is ticking for Winnie the Pooh.


          • Davidin100millionbilliontrillionzillionyears says:

            I’m about the same age…

            so you’re planning on retiring in 2028, and then I assume you will be hoping to enjoy your retirement into the 2030s…

            I don’t think I’ve seen this high level of optimism here at OFW in a very long time…

            maybe your optimism will be warranted by the actual reality of 2030…

            we can hope…

            • doomphd says:

              i don’t think the odds are with you, but we will see. it sure would be nice to have 10+ moron years of BAU.

              when i turned 66, i did the math on not withdrawing SS until age 70 versus taking it then. it would take at least 10 years beyond age 70 at the higher pay rate to break even with the money lost by deferring the payments. only then would the SS checks exceed the age 66 rate + four years of deferred (lost) payments.

              well, how lucky do you feel, p-u-n-k?

            • ssincoski says:

              I have already started the process of taking early retirement (62 last August). Still waiting for first payment. I’ve always joked with my son that I would never see a single payment. it would suck to be right this time. Wife is up for spousal benefits too, so it could be good if it happens. I have no debt and live in a country (Poland) where $1500 +$1250 per month would still put us 2-3 times above average wages.

            • Davidin100millionbilliontrillionzillionyears says:

              retiring with 2 to 3 x the average wage?


              in a decade or two from now, your descendants will speak in amazement that such a thing was actually possible…

              after another decade or so, others may need to be educated about what the word “retirement” means…

              at least the Polish word…

          • Denial says:

            Good luck getting social security It’s a dead man walking

    • While ~25yrs ago S. Korean manuf production was a joke, nowadays they are eating significantly into established markets of European and Japanese car industries.. Similarly, ~15yrs ago some of their electronics started to leapfrog Japanese on innovation and quality.

      Japanese tend to stagnate – reaching maturing plateau – even if it means very slowly improving the already perfected (but not branching – refusing – stalling out in venturing into the new opening up domains).

      • Kowalainen says:

        They already ate up their market share and as the quality and reputation for reliability increase, so does the prices.

        Next wave will be cheap Chinese cars. If they manage to get past the regulations in the west.

        • Yes, I was after this very larger cycle – wave of passing baton change if you will phenomenon. The Chinese are almost already there in niche products like electric motorcycles – scooters. And the car segment looks almost on par with the West as well, surely by ~2020-25 threshold. But mind you Koreans had to build up factories in the customer-importing based countries for the fullest effect. That’s not in the cards for China (for now – near term).

          • Kowalainen says:

            Import tariffs and regulations will hinder that. The US and European car industry is already feeling the burn from finite world issues and transition to electrification.

            • “Transition to electrification” is a way of reducing total car usage. People cannot afford them, so they don’t buy them. The cost of road maintenance will stay virtually equally high. The cost of road maintenance per driver will rise. The total cost of personal vehicle use will soar, with electrification. Vehicle electrification is just another way that differentiates the rich from the poor and pushes the economy toward collapse.

            • John Doyle says:

              there is also a surge in the use of public transport, quite separate from issues like parking. Today nearly everyone has a mobile phone. The young are preferring public transport over the private car because the car disconnects them from their friends etc. They can stay connected on the train or bus. It is making a substantial difference

            • They are preferring public transport over the private cars because they cannot afford private cars. The system self-organizes in a way that leads to a “sour grapes” story. The sour grapes story says, “I didn’t want those grapes anyhow; they were probably sour.” Today’s version says, “I didn’t want my own car anyhow; I would rather take Uber or a bus.”

              In most places in the US, public transport, apart from Uber, is not really an option. People drop out of the work force when transportation cost becomes too high relative to expected earnings. This is part of the reason for the large number of “not in the labor force” people.

      • Ed says:

        Why I can name US companies that have been around for more than 100 years that are every bit as stubborn about refusing anything new.

  25. Herbie R Ficklestein says:

    Another bites the DUST….
    Gee, MOM, when I grow up I want to be a small family FARMER!
    “We’ve lost a great deal of our productive capacity,” said Peter Spyke, a third-generation citrus farmer
    Fort Pierce (United States) (AFP) – Peter Spyke has two types of oranges in his groves: those that are the color orange — and those that are green, unsaleable and responsible for the collapse of Florida’s orange crop over the past 15 years.
    Florida farmers have observed, almost powerless, the spread of the huanglongbing bacterium (“yellow dragon disease” in Chinese), known worldwide as “HLB” and native to China. It was first reported in Florida in 2005, and has been conquering groves ever since.
    The bacterium causes one of the most devastating citrus diseases called “greening”: the leaves of the infected trees turn pale, the fruit fails to ripen and remain green, and eventually fall to the ground.
    The bacterium is transmitted by a small insect called citrus psyllid.
    Compared to the 2003-2004 season, Florida’s orange production will be down by 80 percent this season (harvests last from November to April depending on the citrus variety). Grapefruits are the most affected.
    “We’ve lost a great deal of our productive capacity and along with that we’ve lost juice plants, we’ve lost jobs, we’ve lost packing houses,” said Spyke, a third-generation citrus farmer.
    “At this point we haven’t identified any way to make the trees immune to HLB,” he said during a tour of his orchard.
    Florida citrus farmers have generally been reluctant to destroy contaminated trees, and as a result 90 percent of their groves are infected — compared to only 19 percent in Brazil, while Europe so far has been spared the blight. Sprays used to treat trees in Florida have been ineffective.

    Oh well, now we see how the native American Indians got wiped out by blight of European illnesses.
    Well, this is good news in the sense these vacant orchards can now be put into housing developments! See, there is a silver lining in every dark cloud.
    Oranges can be imported from overseas…..with other agricultural pests

    • Bananas have a somewhat similar problem. Fulsarium wilt of bananas, popularly known as Panama disease, is a lethal fungal disease of certain types of bananas.

      The banana is one step closer to disappearing
      A fungus that devastates banana plants has now arrived in Latin America, the Colombian government confirms.

      ICA, the Colombian agriculture and livestock authority, confirmed on Thursday that laboratory tests have positively identified the presence of so-called Panama disease Tropical Race 4 on banana farms in the Caribbean coastal region. The announcement was accompanied by a declaration of a national state of emergency.

      The discovery of the fungus represents a potential impending disaster for bananas as both a food source and an export commodity. Panama disease Tropical Race 4—or TR4—is an infection of the banana plant by a fungus of the genus Fusarium. Although bananas produced in infected soil are not unsafe for humans, infected plants eventually stop bearing fruit.

    • Xabier says:

      One should always open a bottle of champagne to celebrate the opportunity for more real estate development, quite right!

      Just so long as it has the right Greenwash certification, of course…..

    • “Gee, MOM, when I grow up I want to be a small family FARMER!”

      These are mostly mono culture citrus plantations, so good riddance – that’s not proper farming in the first place..

    • Ed says:

      Turkey are raised in bio isolation. We will have to raise oranges in bio isolation also. No issue for those with money and well….

  26. Herbie R Ficklestein says:

    Just for fun….this guy failed the Fast Eddy Challenge…
    Booby trap kills man in his own home on Thanksgiving night
    Good Morning America
    Good Morning AmericaDecember 1, 201

    Ronald Cyr, 65, of Van Buren, Maine died of injuries sustained at his home on Nov. 28 after a handgun that was designed to fire upon anybody entering the front door of his residence went off.
    Officer Chandler Madore and the Van Buren Police Department, assisted by the U.S. Border Patrol, responded to a call indicating that Cyr had been shot. But when officers arrived on scene they discovered that he had been injured by a booby trap that he had allegedly set up himself, according to a statement released by the Van Buren Police Department
    Several other booby traps were found at Cyr’s residence causing investigators to contact the Maine State Police Bomb Squad.
    However, following an extensive investigation that last several hours, it was determined Cyr had been shot unintentionally after discharging his own booby trap.
    “Regretfully, Mr. Cyr succumbed to the injuries sustained from the gunshot,” said a statement from the Van Buren Police Department.
    It is unknown why Cyr had set up the booby traps at his home or how he managed to accidentally detonate the device.

    Or should I say, We are our own most dangerous enemies!🙃

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