Expect low oil prices in 2020; tendency toward recession

Energy Forecast for 2020

Overall, I expect that oil and other commodity prices will remain low in 2020. These low oil prices will adversely affect oil production and several other parts of the economy. As a result, a strong tendency toward recession can be expected. The extent of recessionary influences will vary from country to country. Financial factors, not discussed in these forecasts, are likely also to play a role.

The following are pieces of my energy forecast for 2020:

[1] Oil prices can be expected to remain generally low in 2020. There may be an occasional spike to $80 or $90 per barrel, but average prices in 2020 are likely to be at or below the 2019 level. 

Figure 1. Average annual inflation-adjusted Brent equivalent oil prices in 2018 US$. 2018 and prior are as shown in BP’s 2019 Statistical Review of World Energy. Value for 2019 estimated by author based on EIA Brent daily oil prices and 2% expected inflation.

Figure 2 shows in more detail how peaks in oil prices have been falling since 2008. While it doesn’t include early January 2020 oil prices, even these prices would be below the dotted line.

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

Oil prices can temporarily spike because of inadequate supply or fear of war. However, to keep oil prices up, there needs to be an increase in “demand” for finished goods and services made with commodities. Workers need to be able to afford to purchase more goods such as new homes, cars, and cell phones. Governments need to be able to afford to purchase new goods such as paved roads and school buildings.

At this point, the world economy is struggling with a lack of affordability in finished goods and services. This lack of affordability is what causes oil and other commodity prices to tend to fall, rather than to rise. Lack of affordability comes when too many would-be buyers have low wages or no income at all. Wage disparity tends to rise with globalization. It also tends to rise with increased specialization. A few highly trained workers earn high wages, but many others are left with low wages or no job at all.

It is the fact that we do not have a way of making the affordability of finished goods rise that leads me to believe that oil prices will remain low. Raising minimum wages tends to encourage more mechanization of processes and thus tends to lower total employment. Interest rates cannot be brought much lower, nor can the terms of loans be extended much longer. If such changes were available, they would enhance affordability and thus help prevent low commodity prices and recession.

[2] World oil production seems likely to fall by 1% or more in 2020 because of low oil prices.

Quarterly oil production data of the US Energy Information Administration shows the following pattern:

Figure 3. Quarterly World Crude Oil and Natural Gas Liquids production, based on EIA international data through September 2019. This is a fairly broad definition of oil. It does not include biofuels because their production tends to be seasonal.

The highest single quarter of world oil production was the fourth quarter of 2018. Oil production has been falling since this peak quarter.

To examine what is happening, the production shown in Figure 3 can be divided into that by the United States, OPEC, and “All Other.”

Figure 4. Quarterly world crude oil and natural gas liquids production by part of the world, based on international data of the US Energy Information Agency through September 30, 2019.

Figure 4 shows that the production of All Other seems to be steady to slightly rising, more or less regardless of oil prices.

OPEC’s oil production bobs up and down. In general, its production is lower when oil prices are low, and higher when oil prices are high. (This shouldn’t be a surprise.) Recently, its production has been lower in response to low prices. Effective January 1, 2020, OPEC plans to reduce its production by another 500,000 barrels per day.

Figure 4 shows that oil production of the United States rose in response to high prices in the 2010 to 2013 period. It dipped in response to low oil prices in 2015 and 2016. When oil prices rose in 2017 and 2018, its production again rose. Production in 2019 seems to have risen less rapidly. Recent monthly and weekly EIA data confirm the flatter US oil production growth pattern in 2019.

Putting the pieces together, I estimate that world oil production (including natural gas liquids) for 2019 will be about 0.5% lower than that of 2018. Since world population is rising by about 1.1% per year, per capita oil production is falling faster, about 1.6% per year.

A self-organizing networked economy seems to distribute oil shortages through lack of affordability. Thus, for example, they might be expected to affect the economy through lower auto sales and through less international trade related to automobile production. International trade, of course, requires the use of oil, since ships and airplanes use oil products for fuel.

If prices stay low in 2020, both the oil production of the United States and OPEC will likely be adversely affected, bringing 2020 oil production down even further. I would expect that even without a major recession, world oil supply might be expected to fall by 1% in 2020, relative to 2019. If a major recession occurs, oil prices could fall further (perhaps to $30 per barrel), and oil production would likely fall lower. Laid off workers don’t need to drive to work!

[3] In theory, the 2019 and 2020 decreases in world oil production might be the beginning of “world peak oil.” 

If oil prices cannot be brought back up again after 2020, world oil production is likely to drop precipitously. Even the “All Other” group in Figure 4 would be likely to reduce their production, if there is no chance of making a profit.

The big question is whether the affordability of finished goods and services can be raised in the future. Such an increase would tend to raise the price of all commodities, including oil.

[4] The implosion of the recycling business is part of what is causing today’s low oil prices. The effects of the recycling implosion can be expected to continue into 2020.

With the rise in oil prices in the 2002-2008 period, there came the opportunity for a new growth industry: recycling. Unfortunately, as oil prices started to fall from their lofty heights, the business model behind recycling started to make less and less sense. Effective January 1, 2018, China stopped nearly all of its paper and plastic recycling. Other Asian nations, including India, have been following suit.

When recycling efforts were reduced, many people working in the recycling industry lost their jobs. By coincidence or not, auto purchases in China began to fall at exactly the same time as recycling stopped. Of course, when fewer automobiles are sold, demand for oil to make and operate automobiles tends to fall. This has been part of what is pushing world oil prices down.

Sending materials to Asia for recycling made economic sense when oil prices were high. Once prices dropped, China was faced with dismantling a fairly large, no longer economic, industry. Other countries have followed suit, and their automobile sales have also fallen.

Companies operating ships that transport manufactured goods to high income countries were adversely affected by the loss of recycling. When material for recycling was available, it could be used to fill otherwise-empty containers returning from high income countries. Fees for transporting materials to be recycled indirectly made the cost of shipping goods manufactured in China and India a little lower than they otherwise would be, if containers needed to be shipped back empty. All of these effects have helped reduce demand for oil. Indirectly, these effects tend to reduce oil prices.

The recycling industry has not yet shrunk back to the size that the economics would suggest is needed if oil prices remain low. There may be a few kinds of recycling that work (well sorted materials, recycled near where the materials have been gathered, for example), but it probably does not make sense to send separate trucks through neighborhoods to pick up poorly sorted materials. Some materials may better be burned or placed in landfills.

We are not yet through winding down the recycling effort. Even the recycling of materials such as aluminum cans is affected by oil prices. A March, 2019, WSJ article talks about a “glut of used cans” because some markets now prefer to use newly produced aluminum.

[5] The growth of the electric car industry can be expected to slow substantially in 2020, as it becomes increasingly apparent that oil prices are likely to stay low for a long period. 

Electric cars are expensive in two ways:

  1. In building the cars initially, and
  2. In building and maintaining all of the charging stations required if more than a few elite workers with charging facilities in their garages are to use the vehicles.

Once it is clear that oil prices cannot rise indefinitely, the need for all of the extra costs of electric vehicles becomes very iffy. In light of the changing view of the economics of the situation, China has discontinued its electric vehicle (EV) subsidies, as of January 1, 2020. Prior to the change, China was the world’s largest seller of electric vehicles. Year over year EV sales in China dropped by 45.6% in October 2019 and 45.7% in November 2019. The big drop in China’s EV sales has had a follow-on effect of sharply lower lithium prices.

In the US, Tesla has recently been the largest seller of EVs. The subsidy for the Tesla is disappearing in 2020 because it has sold over 200,000 vehicles. This is likely to adversely affect the growth of EV sales in the US in 2020.

The area of the world that seems to have a significant chance of a major uptick in EV sales in 2020 is Europe. This increase is possible because governments there are still giving sizable subsidies to buyers of such cars. If, in future years, these subsidies become too great a burden for European governments, EV sales are likely to lag there as well.

[6] Oceangoing ships are required to use fuels that cause less pollution as of January 2020. This change will have a positive environmental impact, but it will lead to additional costs which are impossible to pass on to buyers of shipping services. The net impact will be to push the world economy in the direction of recession.

If oceangoing ships use less polluting fuels, this will raise costs somewhere along the line. In the simplest cases, oceangoing vessels will purchase diesel fuel rather than lower, more polluting, grades of fuel. Refineries will need to charge more for the diesel fuel, if they are to cover the cost of removing sulfur and other pollutants.

The “catch” is that the buyers of finished goods and services cannot really afford more expensive finished goods. They cut back in their demand for automobiles, homes, cell phones and paved roads if oil prices rise. This reduction in demand is what pushes commodity prices, including oil prices, down.

Evidence that ship owners cannot really pass the higher refining costs along comes from the fact that the prices that shippers are able to charge for shipping seems to be falling, rather than rising. One January article says, “The Baltic Exchange’s main sea freight index touched its lowest level in eight months on Friday, weighed down by weak demand across all segments. . .The Index posted its biggest one day percentage drop since January 2014, in the previous session.”

So higher costs for shippers have been greeted by lower prices for the cost of shipping. It will partly be ship owners who suffer from the lower sales margin. They will operate fewer ships and lay off workers. But part of the problem will be passed on to the rest of the economy, pushing it toward recession and lower oil prices.

[7] Expect increasingly warlike behavior by governments in 2020, for the primary purpose of increasing oil prices.

Oil producers around the world need higher prices than recently have been available. This is why the US seems to be tapering its growth in shale oil production. Middle Eastern countries need higher oil prices in order to be able to collect enough taxes on oil revenue to provide jobs and to subsidize food purchases for citizens.

With the US, as well as Middle Eastern countries, wanting higher oil prices, it is no wonder that warlike behavior takes place. If, somehow, a country can get control of more oil, that is simply an added benefit.

[8] The year 2020 is likely to bring transmission line concerns to the wind and solar industries. In some areas, this will lead to cutbacks in added wind and solar.

A recent industry news item was titled Renewables ‘hit a wall’ in saturated Upper Midwest grid. Most of the material that is published regarding the cost of wind and solar omits the cost of new transmission lines to support wind and solar. In some cases, additional transmission lines are not really required for the first additions of wind and solar generation; it is only when more wind and solar are added that it becomes a problem. The linked article talks about projects being withdrawn until new transmission lines can be added in an area that includes Minnesota, Iowa, parts of the Dakotas and western Wisconsin. Adding transmission lines may take several years.

A related issue that has come up recently is the awareness that, at least in dry areas, transmission lines cause fires. Getting permission to site new transmission lines has been a longstanding problem. When the problem of fires is added to the list of concerns, delays in getting the approval of new transmission lines are likely to be longer, and the cost of new transmission lines is likely to rise higher.

The overlooked transmission line issue, once it is understood, is likely to reduce the interest in replacing other generation with wind and solar.

[9] Countries that are exporters of crude oil are likely to find themselves in increasingly dire financial straits in 2020, as oil prices stay low for longer. Rebellions may arise. Governments may even be overthrown.

Oil exporters often obtain the vast majority of their revenue from the taxation of receipts related to oil exports. If prices stay low in 2020, exporters will find their tax revenues inadequate to maintain current programs for the welfare of their people, such as programs providing jobs and food subsidies. Some of this lost revenue may be offset by increased borrowing. In many cases, programs will need to be cut back. Needless to say, cutbacks are likely to lead to unhappiness and rebellions by citizens.

The problem of rebellions and overthrown governments also can be expected to occur when exporters of other commodities find their prices too low. An example is Chile, an exporter of copper and lithium. Both of these products have recently suffered from low export prices. These low prices no doubt play a major part in the protests taking place in Chile. If more tax revenue from the sales of exports were available, there would be no difficulty in satisfying protesters’ demands related to poverty, inequality, and an overly high cost of living.

We can expect more of these kinds of rebellions and uprisings, the longer oil and other commodity prices stay too low for commodity producers.


I have not tried to tell the whole economic story for 2020; even the energy portion is concerning. A networked self-organizing system, such as the world economy, operates in ways that are far different from what simple “common sense” would suggest. Things that seem to be wonderful in the eyes of consumers, such as low oil prices and low commodity prices, may have dark sides that are recessionary in nature. Producers need high prices to produce commodities, but these high commodity prices lead to finished goods and services that are too expensive for many consumers to afford.

There probably cannot be a “one-size-fits-all” forecast for the world economy. Some parts of the world will likely fare better than others. It is possible that a collapse of one or more parts of the world economy will allow other parts to continue. Such a situation occurred in 1991, when the central government of the Soviet Union collapsed after an extended period of low oil prices.

It is easy to think that the future is entirely bleak, but we cannot entirely understand the workings of a self-organizing networked economy. The economy tends to have more redundancy than we would expect. Furthermore, things that seem to be terrible often do not turn out as badly as expected. Things that seem to be wonderful often do not turn out as favorably as expected. Thus, we really don’t know what the future holds. We need to keep watching the signs and adjust our views as more information unfolds.

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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1,162 Responses to Expect low oil prices in 2020; tendency toward recession

  1. Harry McGibbs says:

    “The International Monetary Fund’s pro-forma World Outlook says one thing: the worried tone and faces of its officials in Davos tell quite another. 

    “We came far closer to a global economic and financial crisis over the summer than most people realised. While drastic action by central banks averted a recessionary chain-reaction, the world has patently not achieved “escape velocity” and remains vulnerable to the slightest shock.

    “That is the message – and not so sotto voce, either – from the IMF’s managing director Kristalina Georgieva. “We have not reached a turning point yet,” she said. 

    “Mrs Georgieva’s advice to the world’s governments is switch to a “systematic reliance on fiscal tools” and keep preparing for the storm. “Be ready to act if growth slows again. That means having your portfolio of  projects prepared,” she said. 

    “This fragility remains despite 71 interest rate cuts by 49 central banks worldwide and a return to quantitative easing by the US Federal Reserve and the European Central Bank, what she described as the “most synchronised monetary easing” since the financial crisis.”


    • Harry McGibbs says:

      “A global economic slowdown — caused partly, but not entirely, by trade tensions — has curbed demand for American products abroad. … That slowdown is driving the deceleration of job growth across the American economy. Railroads have been hit particularly hard, analysts said.”

      • Harry McGibbs says:

        “Global aluminum production fell by 1.0% last year in its first annual contraction since the Global Financial Crisis in 2009. That should have been good news for the aluminum price, but London Metal Exchange three-month metal spent most of last year grinding steadily lower…

        “The problem is that a rare year of lower production coincided with an equally rare year of weak aluminum demand.”


        • Harry McGibbs says:

          “…sagging exports and global trade tensions pulled [South Korea’s] annual [GDP] reading to its lowest level since 2009.

          “The slowdown comes as President Moon Jae-in’s administration is set to sharply boost fiscal spending this year and as the Bank of Korea mulls further stimulus to shield the economy from the global slowdown.”


          • According to the article:

            For the whole of 2019, the economy grew 2.0%, the slowest pace in 10 years and matching the central bank’s projection.

            “Of the 2%, the net government contribution to growth came to 1.5 percentage points, the biggest portion since 2009 but that didn’t change the fact that it was a hard year for Korea in terms of exports,” a central bank official said.

            The quote you gave is with respect to the government sharply boosting increasing its spending on stimulus in 2020. But the huge share of growth coming from government contributions makes it sound like 2019 GDP growth was already significantly impacted by government stimulus.

        • What is strange about lower production coinciding with lower demand. Lower demand means lower prices. Aluminum producers are not stupid; they cut back when prices are low and demand is low.

          Aluminum is now used partly in vehicle production. I doubt vehicle production is rising. It is also used in aluminum cans. Perhaps use of these is rising. But the sustainability message is, “Drink fewer beverages from cans. It is hard to get recyclers to take used aluminum cans.”

      • Robert Firth says:

        Yawn. The New York Times, as usual, is cherry picking any and all data that can be used to damage Trump. Don’t believe their conclusions. They are also quoting natural seasonal variations as if they were trends that could be extrapolated.

    • Thanks for that, it was likely not my original idea obviously, but I was almost a lone voice over here for years stressing the “most” important fact of such ongoing [!”synchronized”!] nature of monetary (and fiscal) stimuli agenda in the world..

      Unless this changes in serious fashion lets not naively expect any drastic outcomes of the few next rounds of GFC_ver_xy … at least in the realm of IC hubs and periphery. Yes in some of the 2,5-3rd world countries or the emerging world tied to specific growth pattern the road to ruin could be much quicker though..

      • Harry McGibbs says:

        Trump pushing negative rates again:

        ““President Donald Trump and his top economic advisor Larry Kudlow …offered different views on how effective below-zero government bond yields are on stimulating growth. As he has in the past, Trump heaped praise on the practice, while Kudlow said such central bank contrivances are no substitute for pro-growth fiscal policy.”


        • We seem to have a choice between:

          (1) Lending at negative interest rates and
          (2) Governments overspending tax revenue, and using this tax revenue to fund projects that have virtually no chance of a positive return.

          I would put all of the spending on renewable transmission lines and renewable subsidies in the second category.

          The choices basically are for negative return, one way or another. The second version can be dressed up with, “Let’s be green. Let’s help prevent climate change.”

          Kudlow is advocating the second choice.

          • Ano737 says:

            I’m pretty sure Kudlow means tax cuts, followed by tax cuts, more tax cuts and, well, you get the idea. Does anyone remember him ever advocating anything else when he mentions “fiscal policy?” He sure ain’t no Greenie.

          • At Davos gathering they just clearly signaled at the option #2, it was all plastered with megaboards on “new green deal” type of activities from now on (both by corp and gov), also being the main or at least overarching focus in panel discussions etc..

      • Harry McGibbs says:

        “Unless this changes in serious fashion lets not naively expect any drastic outcomes of the few next rounds of GFC_ver_xy.”

        This is a financial system and indeed a planet in totally uncharted territory. Making assumptions *either way* would be naive at this point.

        To borrow Tim Morgan’s phrase, “the window of opportunity” for GFC 2.0 has been open since summer 2019, a view echoed by Kristalina Georgieva in her comments above.

        The noose of energy and resource-constraints only ever tightens and the major central banks by their own admission have limited additional firepower after last year’s splurge, which means that window is only likely to open wider…

        At some unknowable point a Purple Prancing Peacock Preparing Purgatory [TM Curt Kurschus] will fly in.

    • denial says:

      Trump says that the FED should do more right now to get the economy going….but the FED has done more crazy crap in the last 6 months than ever before! They are trying to stop leaks at every stage! So my question is ….does Trump not get what is going on? Is he that clueless or that great of an actor. I have to lean on the clueless part because I think if he knew what was going on there is no way he would want to be president again! But then again nothing surprises me anymore.

      • He had to be briefed at least on some limited part of the ongoing agenda, hence the disgusted and freaked out look when he switched from winning “maverick candidate” who can promise anything into boxed in POTUS dealing with antagonistic bureaucracy and various shady perennial deep gov structures and “their projects”. I don’t expect him to have that almost full spectrum access to deep state know how as for example the Bush dynasty though.. They obviously try to marionette Trump blind around as they pulled it on Carter (earlier on Eisenhower, JFK, ..) and the other “outsiders / disruptors” etc..

  2. Harry McGibbs says:

    “U.S. shale oil fracking has already peaked and is in a period of sustained contraction, according to two major providers of services to the industry… Slower output growth would have global ramifications, given additional American barrels are forecast to account for most of the increase in worldwide supply this year.”


    • Harry McGibbs says:

      “Libya’s oil output will collapse “within days” to the lowest level since the 2011 civil war as a blockade of its export terminals has forced a rapid shutdown of production and electricity blackouts in parts of the country, according to the head of the national oil company.”


      • Yep, the sequencing can proceed as follows:
        for now still eating through the surplus oil for next ~1-2yrs, then serious shortage (perhaps of peculiar blend/market) kicks in (+regional skirmish here and there) and moderate spike to at least ~$100 per barrel guaranteed, only then followed by demand crash response – energy price collapse to say ~$30 levels..
        That could all unwind before 2025..

        ps mind you this is all surfing on the ongoing trendy cloud of massive $T gov/CB support hence lets not get fooled in the meantime by simplistic economy commentators outside OFW/Surplus

        ps2 followed by serious GFC but not terminal, bailout / phase shift doable

    • We’ve read this a thousand times in the last ten years, no ?

      • Ano737 says:

        Yup. I’ve only been here are a couple of months but I recall a recent comment from a long time reader that predictions of imminent collapse have been a regular feature here from the beginning (over 10 years?). I wonder how many of the current predictions of “definitely in a year or two” are from long time readers who have been saying the same thing for years.

        The doomer mentality is interesting. I think it has to do with the fact that the human brain simply can’t process the huge quantities and complexity involved. So just about everything is either very soon, never, or the amorphous medium term which means “who knows”.

        Gail keeps saying from time to time that predicting timing is difficult. Quite an understatement.

        • Welcome. Some have been interested (or sucked into) this vortex ~20yrs ago, some even way earlier in the “first” wake up call of the early – mid 1970s..

          The problem with “doomer mentality” is that it’s a very large encompassing spectrum indeed, lets say from normal precautionary pessimism (low bias) to full blown day/day (y/y) end of the time kind of paranoia (very unhealthy freaking bias).

          Nevertheless, the numbers and social studies don’t lie on the core message that people are doing (or perceive) worse in recent decades because of both relative and also tangible impoverishment which is derived from less per capita resource consumption and or at least stall in growth pattern of these, it’s very likely similar to junkies withdrawal syndromes..

          Yes there is also this often mentioned quality shift for example in the available cheap electronics-comm, progress in healthcare etc. but that’s not (all) how humans tend to evaluate their relative stance in society.

          And obviously the mirror itself doesn’t lie, as we can witness the govs/CBs had to for “some strange reason” opt for series of extraordinary policies. So we are likely into a bouncy road of breaching various thresholds mid term, ultimately reshaping our reality sooner or later in profound ways.

          • Ano737 says:

            Thanks. I don’t doubt for a minute we are up against resource limits and that those limits more than likely account for events for a while now. While this knowledge can be disconcerting, I find it useful even if only to greatly reduce confusion about what’s been happening. The thing is, the scale of still available resources is so immense, perhaps beyond even imagination, with the number of players and options to match, not to mention the stakes, that predictions seem to me utterly useless. I see neither denial nor end-of-days nihilism as useful. With this knowledge I do appreciate what we have more and I recognize that very long term planning is probably moot.

    • I see that McDermott International has filed for bankruptcy. It plans to keep operating; it is restructuring its debt. A big part of its losses are related to the Cameron LNG export terminal in Louisiana and the Freeport LNG export terminal in Texas.

      I observe that natural gas is doing especially poorly. It seems to be doing much worse than oil, right now.

      • The Russians are now hastily reshuffling their top gov cadre, I guesstimate it might rhyme with similar vector, i.e. pre-panic mode bracing up for further natgas price massacre, although they are running lot of long term contracts, the spot price would affect them anyway..

      • Robert Firth says:

        LNG is a losing proposition and always has been. natural gas ca be piped, event across continents, but the cost of producing and transporting LNG is prohibitive. And what idiot would build liquified natural gas terminals in two of the warmest states in the US?

        • Agreed! Shipping LNG across the Atlantic Ocean adds something like $2 per Mcf to the cost of production. Shipping it across the Pacific has to be a lot worse, perhaps double that amount. When the price of natural gas is barely $2 per Mcf locally in the US, then shipping LNG across the ocean doubles or triples the cost.

          At the other end, there is a lot of locally produced natural gas that can easily compete with the high cost of shipped LNG. Natural gas producers in the US are losing money at $2 per Mcf, so this really isn’t really an acceptable price to them. They were hoping that by shipping natural gas abroad, they could create a shortage of natural gas in the US. With this shortage of natural gas, they hoped the natural gas prices would rise much higher, say to $6 or $8 per Mcf. (Shipping costs would of course rise in this scenario.) But this hasn’t happened.

          To make matters worse, methane is a global warming gas. Quite a bit of it is emitted in the shipping process, making the effect on global warming gasses terrible.

  3. Harry McGibbs says:

    “India may be experiencing the most glaring setback among emerging economies, but its double pain of slowing growth and surging inflation is spreading far and wide…

    “An analysis of 30 major emerging economies, based on public data and Bloomberg surveys, shows half of them slowing or stagnating in 2020. Two-thirds are set to experience a simultaneous acceleration in inflation. That’s a potent source of mini-economic crises across the group.”


    • Harry McGibbs says:

      “A far-left governor of Argentina’s most populous province is rattling investors with plans to hold off paying back foreign debt, raising fears that his faction of the ruling Peronist coalition could push the rest of the federal government into a messy new debt default.”


    • The slowdown in the 30 countries is concerning. This Yahoo article is obviously part of a Bloomberg article. Is any of this Bloomberg material available? (I didn’t see it.)

      • Harry McGibbs says:

        “An analysis of 30 major emerging economies, based on public data and Bloomberg surveys, shows half of them slowing or stagnating in 2020. Two-thirds are set to experience a simultaneous acceleration in inflation. That’s a potent source of mini-economic crises across the group.

        “Inflation Rises Fastest in 9 Years in Emerging Economies: Chart

        “Here are the details:

        “Six other economies are on course for a fate similar to India, and that includes China.

        “Four Eastern European economies will probably manage to control inflation, but pay for it in terms of slower growth.

        “Inflation Trends Split EU Along Historic East-West Divide

        “Four nations are expected to maintain their gross-domestic-product expansion, but inflation will erode purchasing power in their economies.

        “Seven other countries may see growth accelerate, but also higher rates of inflation. Two of these, the United Arab Emirates and Saudi Arabia, may welcome that given they’ve been suffering from deflation.

        “The following eight are the pick of emerging markets. They will see lower or stable inflation and faster growth.

        “The diverging rates of growth and inflation point to the impact U.S.-China trade tensions have had on emerging markets. Most of the countries on a “stagflationary” path are in Asia.

        “India, however, is not a victim of trade wars. Its slowdown is self-inflicted, caused by the evaporation of consumer demand, proliferation of bad loans and erosion in business confidence. The Reserve Bank of India’s interest-rate cuts have failed to boost the economy, while the government has been distracted by social strife and its fiscal measures so far haven’t done much to spur demand.

        “At the other end of the spectrum, Turkey is projected to post the biggest improvement in growth as private consumption and investment pick up. Yet the growth won’t be strong enough to drive up inflation, which is expected to fall back below 10%.

        “Russia has been a haven amid the trade war and it doesn’t look like it will lose that status this year, even with Vladimir Putin overhauling his government. Add to that its famed twin surplus — on the fiscal and current accounts — and the nation looks well poised. Any increase in oil prices will be a further boost.

        “Volatile Argentina will make progress bringing down inflation. Mexico, whose local bonds offer real yields of 4.4%, will see its economy return to growth in 2019.

        “The bottom line is that each country has its own demons to slay and trouble in its backyard that has nothing to do with tensions between Beijing and Washington.

        “That calls for a dose of caution after a stock, bond and currency rally since August that’s been driven by optimism over the phase-one trade deal.”

  4. Harry McGibbs says:

    “Eurozone companies’ demand for bank loans has fallen for the first time in six years, in a worrying sign for the region’s faltering economy and the European Central Bank’s attempt to stimulate more lending.”


  5. CTG says:

    Another thing coming in (as though we do not have enough problems) – coronavirus.


    David Korowicz has done this work. I was there when SARS struck. The airports, malls, hotels, etc are empty. Huge impact on the economy. Not because of the virus but people are just scared to do any travelling. In some worse case scenarios, people might just go AWOL. Imagine if half of the workers in a power plant is sick, who will run the power plant? We re just too interconnected and too dependent on each other.

    • Or as Tim Groves pointed out, if coronavirus is like other viruses, it is very likely that some people will have the virus but will not have any symptoms. These people will come into work, even though they have the disease and could spread it. So it becomes impossible to spread its stop.

      With this virus, the elderly seem to be especially affected. If there are people with poor nutrition, it would seem like they could be affected as well. I know the thinking at this time seems to be that early pandemics spread partly because a large number of poor people were not getting adequate diets. Their immune systems were not working well. Thus, when they were exposed to the virus, they were more likely to be severely affected. Death rates skyrocketed.

  6. Yoshua says:

    Syria is going from bad to worse after the war. The poverty is now so bad that people seem to struggle just to stay alive.


    • At least part of the problem would seem to be a falling resources per capita problem. This chart is a little out of date.

      Syria at one time was an oil exporter.

      The problems spill over to Lebanon. The article you link to says:

      In recent years, Lebanon has been an important economic haven for Syrians, as it is the only neighbouring country that is easy and safe to reach and was not influenced by the turmoil that has swept the region since 2011. Thus, Syrians have relied heavily on Lebanon in many aspects of their lives.

      Lebanon does not have enough resources (including electricity) for its own population, much less adding one million Syrian refugees to the mix. It makes for a volatile situation.

      • Yoshua says:

        What happens in Syria doesn’t stay in Syria. If there’s another mass exodus from Syria into the neighboring nations, then the entire region could start to fall like dominoes.

        The Syrian government can’t control the territory it now rules over. It can’t provide electricity, water, sewage or security.

        The situation is probably very dangerous, but the world has Syria fatigue, no one cares anymore.

        • beidawei says:

          Remember that Turkey (with its much more robust economy) has accepted some 3.5 million Syrian refugees. One reason why Turkey is involved in the Syrian War is that Erdogan wants to be able to resettle some of these people on Syrian soil, and deflect some of the criticism against him. (His initial instinct was to encourage the refugees to naturalize as Turkish citizens after five years, so they could become reliable supporters of Erdogan’s AK Party). Now that Idlib is falling to Assad’s forces and the Russians, this threatens to add a big new wave of refugees, some of them Salafi Jihadi militiamen.

          Europe, with less than a million refugees, is mainly concerned that Erdogan not let more of them flee to Europe. So they keep haggling about money and so forth.

          • Yoshua says:

            Assad and Putin are trying to people out from Syria.

            Europe and Turkey are trying to push them back in.

  7. Herbie R Ficklestein says:


    Billionaire Salesforce founder: ‘Capitalism as we know it is dead’
    Oscar Williams-GrutSenior City Correspondent, Yahoo Finance UK


    The billionaire founder of Silicon Valley company Salesforce (CRM) declared on Tuesday modern capitalism is “dead”, saying business leaders now have a “responsibility” to think beyond just shareholders.
    “Capitalism as we have known it is dead,” Marc Benioff, chief executive of Salesforce, said at Davos. “This obsession that we have with maximising profits for shareholders alone has led to incredible inequality and a planetary emergency.”
    Benioff, who is worth $7.7bn (£6bn) according to Forbes, made the comments during a panel on ‘Stakeholder Capitalism’ — the idea that companies should work to maximise the value for all ‘stakeholders’ such as employees and society, rather than just maximising shareholder value.
    “Stakeholder capitalism is finally hitting a tipping point,” Benioff said.
    “Does it mean I have to fight for my employees? Yes. If they’re being discriminated against and if they’re LGBT employees, yes, we will fight for them

    Let’s all rejoice….

    • Robert Firth says:

      “Benioff, who is worth $7.7bn (£6bn) according to Forbes, …”

      Ah yes. He’s got his, and now wants to virtue signal by kicking down the ladder he climbed. Another billionaire with no gratitude and no shame.

    • cashisking says:

      Did you see those Munchkins hatch from eggs? Subliminal reptilian Hollywood influence OPENLY displayed. Ha. 🙂 Im in good mood. 🙂

  8. Malcopian says:

    World’s consumption of materials hits record 100bn tonnes a year

    Unsustainable use of resources is wrecking the planet but recycling is falling



    “The materials used by the global economy have quadrupled since 1970, far faster than the population, which has doubled. In the last two years, consumption has jumped by more than 8% but the reuse of resources has fallen from 9.1% to 8.6%. But the report also found that some nations are making steps towards circular economies in which renewable energy underpins systems where waste and pollution are reduced to zero.”

    Reduced to ZERO?! Haven’t they heard of ENTROPY?

    My solution: build a time machine, go back to 1976, then nuke China. Problem solved – temporarily.

    • cashisking says:

      Get with the program daddio 🙂

    • This article links to this report. https://www.circularity-gap.world/2020

      According to it,

      Drive the renewable energy transition
      This means decarbonising ‘Shift’ economies [countries that have become mostly service economies, but still use most of the world’s resources] and creating abundant renewable capacity, storage and smart grid systems. A transition to 100% renewable energy in the US would see a net increase 2 million jobs, halve energy costs for consumers and save taxpayers $600 billion in healthcare costs and $3.3 trillion in climate costs, according to Stanford University research.

      I haven’t seen precisely which Stanford report they are referring to, but it seems to come back to Mark Jacobson’s absurd model regarding what is possible.

  9. Chrome Mags says:


    Tim, here’s an article you may find interesting.

    “We think we will soon enter a stage where there will be a realization of the immense economic and personal trade-offs we will collectively have to make in order to hit domestic and globally agreed climate targets,” the firm writes. “Such sacrifices may shock citizens and be difficult to administer in democracies.”

    Deutsche Bank adds that, “The problem for the environmental lobby is that a world without economic growth may create a damaging backlash against such climate policies. Nevertheless, the problem with the status quo is that the irreversible damage to our planet will increase.”

    On the one hand, modern civilization is screwed. On the other hand, modern civilization is screwed.”

    That conundrum I mentioned in a post yesterday is well summed up in that last paragraph.

    • Malcopian says:

      But it takes around 40 years for all the effects of what we do to filter thru the “etamilC”. So things will keep getting worse for AT LEAST 40 years. Yet we humans just cannot endure things getting worse. I wonder if i’ll still be here even only 5 or 6 years out.

      • Chrome Mags says:

        By “etamilC”, I presume you mean ‘thermal inertia’; the time it takes for added energy in the oceans to influence climb ate. I’ve tried to convey that to people but it always goes in one ear and out the other because they think as soon as we stop emit ting, it will stop.

        What’s so galling about understanding that, is the mainstream idea that we can stop like a truck with hydraulic brakes this side of 1.5

        Things will begin to unravel really fast once the i c e in the a r c t i c is gone with time left in the m e l t season. That was recently proven from Earth’s history.

      • I hear you, but the instability humans wracked on the planet might just flip into another direction, i.e. hasten the upcoming new Ice Age (proper not just few decades min) instead.

        • Chrome Mags says:

          That’s true too, as the thermohaline circulation might get cut off to a location much further south in the Atlantic, with warm water circulation in the oceans confined to a smaller geographical area 8 billion people can inhabit. Which way will it go is the big question.

        • It is a good thing that there seems to be intelligent design underlying how the universe operates. There have been a previous “rough spots,” but somehow extraordinarily unlikely solutions have come to the fore. See

          Rare Earth by Peter Ward and Donald Brownlee


          We think we have the ability to fix things, but we really don’t. We are small part of a universe that is being created, day by day. We assume that we have powers that we don’t have.

          We think that we can stop the fires in Australia by doing more recycling. Instead, what happens is that people who are angry with the system begin starting more fires, once they see how easy it is to bring the system down this way. CO2 emissions go way up in an unintended way: through these fires.

    • TIm Groves says:

      Thanks for the article, Chrome.

      My first problem is I am a climate denier. A heretic even. I don’t believe climate exists except in the abstract. In any place on the surface of the earth we just experience lots and lots of weather, and we absolutely don’t have the power to control the weather. So climate targets are a waste of time, money and effort. Far better to spend more on mitigation of whatever weather and other things nature throws our way.

      My big worry is that all these well-meaning people, including economists and bankers, are worrying about things that we have no power to alter. And that we are devoting massive resources to solutions that it is now clear to almost everybody won’t work. With thinking like that and policies like that, I quite agree that modern civilization is screwed.

      But given the ridiculous nature of what we see on the surface of politics and economic policy, there must be something else going on beneath. Perhaps something wonderful is going on beneath the curtain and the magicians are going to pull something out of the hat for us?

  10. GBV says:

    Some days you just come across something… different.


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