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. as soon as the EU builders finished the job, they cleared off back to Rome


    • Rebuilding the wall sounds like a project a very rich society could afford. In theory, tourist visits might offset the costs, over the few years the wall was remained in place.

      If the wall was financed by debt, it likely hasn’t been repaid. A new wall, financed by debt, likely won’t be repaid either.

      • Robert Firth says:

        Gail, I have visited Chester, Roman “Deva Victrix”, and its walls need minimal care. Just stop undermining them with badly planned new building projects. It is also one of the most walkable cities in England, because its streets still follow the original Roman plan. As do the streets of another of my favourite cities, Lindum Colonia.

        The past is still around us; if only we had the wit to learn from it. But, most of all, the Romans regarded architecture as a supreme act of worship. They built for the Gods; and when you build for the Gods, you build for eternity.

        • my comment was intended as gentle european humour

          but yes Chester is exquisite, the only UK roman city left completely encircled by a walkable wall

          • Xabier says:

            I prefer York, which is, of course, medieval but the locals are prettier – all that Viking blood still tells…..

            • you may be right

              I have dallied in both cities—but I took my dalliance with me.

              something about a hot summer night in an ancient inn within the city walls,

              Such a misspent youth, before we had global warming to worry about

            • Robert Firth says:

              Xabier, I also am very fond of York / Eboracum, though as a Mancunian I could get sanctioned for saying so! I shall be there again later this year, watching my two grandsons sing in the Minster.

              They are members of a choir that will be touring England, singing also at Canterbury (Durovernum Cantiacorum ).

            • Yorchichan says:

              Let me know if you want a free taxi when you are here, Robert (and I don’t make that offer often).

              If your grandsons have a spare day they can spend with you, take them here. It’s the funnest place I know.

            • Robert Firth says:

              Dear Yorchichan, thank you for your most kind offer. However, my elder daughter lives in England, and i think plans to ferry me around. My son in San Jose is also coming, and he can ferry my other daughter and her family. So in theory we should be OK: six adults, four children, two cars, However, I shall keep your offer in mind as a Plan B.

        • Herbie R Ficklestein says:

          Modern construction, no doubt, here in the US is fast and cheap.
          Just a thought, generally speaking my asphalt single roof on my single family home needs replacing every 15 to 20 years. Without a leak proof roof the whole structure is undermined.
          Old Irish saying, Blessed is the home with a full pantry and sound roof.
          When BAU ends and dwellings go in disrepair, it will not be long for whole neighborhoods be abandoned, such as, in Detroit Michigan

          • Artleads says:


            • Herbie R Ficklestein says:

              Or can not afford to repair, or RePLacE thE neEDEd components of parts.
              Never mind if the materials are simply not available, like after a hurricane.
              Here in South Florida, many homes have blue cheapo tarps covering sections of the roof.
              Replacing the roof is not cheap …people make do…

            • Artleads says:

              Yes. Electrical and plumbing are major professional skills we can’t do without, and they are very expensive to hire. But what does not cost is making small fixes to cracks in walls. And ladders to get up to the ceiling are not too expensive in this economic system. So the pediment in this picture didn’t have to go like that. There are stunning difficulties to keeping buildings functional, but this kind of deterioration is not among those.

            • cashisking says:

              “Yes. Electrical and plumbing are major professional skills we can’t do without, and they are very expensive to hire. ”
              Meh. Plumbing is pvc glue and PEX crimps. Not hard to get those two right. Its not hard to plumb. It takes skill to make it look good
              I find electrical easier than plumbing. If your brain dead you shouldnt do it. Yes you have to know how to isolate power and then test to make sure. you have to understand code, wire fill, and wire capacity.
              Those are easy. Understanding why my cell phone had a meltdown because i touched a button, not so much. 🙂
              Code allows a homeowner pull permits and work on there own plumbing and electrical pretty much anywhere. Trust me the inspector will tell you if it is not right 🙂
              Theres a time to call a plumber or electrician. why ? Because they are about twenty times the speed of a amateur with work 5x as nice.

            • Electrical and plumbing require the right supplies. If these are not available from suppliers, no amount of electrical or plumbing skill will fix the problem.

            • cashisking says:

              “Or can not afford to repair, or RePLacE thE neEDEd components of parts.
              Never mind if the materials are simply not available, like after a hurricane.
              Here in South Florida, many homes have blue cheapo tarps covering sections of the roof.”
              This is one of the reasons why building small seperatly insulated connected spaces is so important.
              Yes its easier building big all space in one envelope.
              If you choose to live in hurricane alley perhaps materials of housing should be appropriate? I know thats crazy talk. 🙂

          • Xabier says:

            Another Irish saying: ‘Give a boy boots, and he’s a man who can work’.

            Now the young grow up with feet too tender to take army boots…..

  2. Harry McGibbs says:

    “…over seven million Americans are more than three months behind on their [auto] loan payments. Some owe much more than the asset is actually worth. And many of those loans are “subprime,” taken out by borrowers with poor credit…

    “…it’s making some economists very nervous indeed.”


    • Robert Firth says:

      Harry, in my experience living in the US, almost everyone with an auto loan owes more than the auto is worth. That is the modus operandi of the auto companies: they make their money on the loans, not the vehicles. So you are under water the minute you drive the thing off the lot.

      As for “subprime” loans; first, they are actually more profitable, because the lender is now legally permitted to raise the interest rate, and this usually more than covers the inevitable delinquencies. And secondly, they are a systemic problem, whose root cause is a built environment in which public transport is essentially infeasible, and where crazy zoning laws make walking to work impossible, and road planners make cycling to work close to being suicidal.

      • I agree.

        The feature-creep of automobiles has also made them more and more expensive. This is not considered inflation, in the sense of the CPI, but wages have not risen to rise the feature-creep. The practice of allowing borrowers to add the past unpaid loan in to the amount on the new loan adds to the problem.

        A person in the US really cannot get to work without a vehicle. Carpooling is in theory a solution, but it is difficult to make work in practice. The savings is mostly in not having to have a vehicle at all. Vehicles are needed for every aspect of daily life: buying groceries, taking children to school, visiting friends, going to the gym or church.

        • Artleads says:

          “The savings is mostly in not having to have a vehicle at all. Vehicles are needed for every aspect of daily life: buying groceries, taking children to school, visiting friends, going to the gym or church.”

          All totally fixable with planning. The problem is not knowing the chain of effects related to the “fix.”

          • Robert Firth says:

            Artleads, thank you for a good laugh. The problem was created by planning, bad planning that ignored a couple of thousand years of history. And the system that created the problem is supposed to fix it? Yes, there once was a movement to do this, called New Urbanism. It went nowhere; after a few showcase projects, it was choked by the kudzu of an entrenched and inflexible bureaucracy. I fear Kunstler is right: there is no solution short of collapse.

            • Artleads says:

              Robert F,

              Looking at Seaside aerial view was a bit nauseating. It showed immense resource use–those large glass windows bought the rest of it clearly into focus. What was on the site before, I wonder? I had been turned way off by New Urbanism, since I thought they saw nothing contradictory about building sustainable developments on open land. Maybe I was wrong about that. But if they sometimes cut down trees or demolish buildings that would dismiss their claims of sustainability too.

              I now advocate not demolishing any building, however misguided and out of context the building is. It is a new context, and one can’t lie and pretend it was never there. So going back to some ideal past when street layout was sustainable is not realistic.

              If we keep what’s there now, we have a better sense of the energy impacts we are working with. We also save embedded energy. I also think that the lighter and more removable you make new interventions the less you would outrun your energy budget. You’re not changing something but instead adding something. Extreme ideas, I know. But what we’re dealing with in the universe of construction is nothing if not extreme.

            • I am not sure how much we need to add. We need to move closer together. For example, multiple generations might live in the same house. Or close friends.

              We have all kinds of subspecialties of physicians now, plus physician assistants and nurse practitioners. People going through standard insurance plans have to figure out who to go to for what. Needless to say, everyone can think of some services that they would like to sell you. Some of the subspecialists are at a great distance. A few generalists, living nearby would be helpful. Or perhaps nurse midwives for deliveries.

          • Once the whole area is built out, it becomes impossible to fix. Homes are mostly in “subdivisions.” Apartments are often in “apartment complexes.” There may be a gate at the entrance to the subdivision or apartment complex. For many residents, it is a long walk just to the entrance, to get out. Businesses are scattered all over the Atlanta metropolitan area. There is no grid pattern because the area is hilly. The low density of housing and the scattered nature of jobs makes it hard to make public transportation, except for “Park and Ride” stations, next to occasional bus stops, that are available to take a person to downtown Atlanta. (There is a Park and Ride three miles from our home.) A person drives to the parking lot, and leaves his car there all day. Alternatively, a family member drops a bus rider off in the morning and picks him up in the evening.

            • Artleads says:

              I’m trying to figure out what you can change and what you can’t. For what it’s worth, I advocate being sensitized to the energy used in building development. Some insane people talk about demolishing things and making better things. Bad idea.

              But I’m not sure a grid couldn’t be imposed on uphill development. I’m unofficially trying to do planning in a British colonial town c. 1800, laid out on a steep-enough incline in a grid. The gutter work throughout is remarkable. I also wonder if “new” structures’ effluent couldn’t be hauled to the top of the hill, treated marginally and sent down through the guttering in flexible conduits to create one of those “oasis” types of sewerage remediation. at the bottom of the grade. I could see it growing bamboo forests, you could use to build with.

              The city near me has distinguished itself in creating miles of single use sprawl along its main artery that led into the rural county (whose land they annexed, to be sure). So what can we do with this sprawl now? It all looks the same. I’m saying make walkable hubs here and there among the sprawl. No demolition; just adding light and modular structures on top or wherever space allows. Instead of all fast food and strip malls as now, have a mix of residences within it so that workers can walk to work .

            • cashisking says:

              “Some insane people talk about demolishing things and making better things. Bad idea.”

              I know this isnt what your talking about… One water intrusion has rotted the rafters. Creatures are living in the ceiling walls and under the floor….

              Im not putting on a respirator and dealing with it.

              There are a million ways to stop water intrusion, keep a roof on. Shingles, membrane, steel. All can be found for cheap if u look.

              If you let it go… THere are times when its not salvageable.

              Its always the roof that destroys the rest of the house.

            • Water leaking in anywhere can have a similar effect. Termites are not good either.

            • Artleads says:

              pATCHING OPENINGS EITHER IN EXTERior OR INTERior WALLS, INCLUDING REACHING UP FAIRLY HIGH ON A LADDER, (easy at any skill level, and virtually cost free) KEEPS MOISTURE FROM GETTING IN THE WALLS. Roofs are different, and generally require more skill and toughness. But keeping moisture out beneath roof level is easy and effective. That is the low hanging fruit that most people ignore.

          • Artleads says:

            In the old days, lots of people lived in the same house and shared th3 same kitchen and bathroom. Poor Mexican immigrants still do it, but to an imaginable degree. I think for us spoiled modern westerners, an intermediary step might be to subdivide existing rooms into micro flats with a hotplate, tiny fridge, some sort of wetroom shower/toilet, and a way not to add to the septic system and instead get the effluent where it can be composted.

            • Once electricity becomes intermittent, a person can forget refrigerators.

            • Artleads says:

              I greatly value the cars we have now (even when we have them sitting most of the time), for when that time comes, they ought to work as generators . It’s going to be tough, but there will still be igloos to keep ice from melting too fast and food and shopping schedules will need to change. I live in a village 25 miles from the city, and I imagine that electricity would get cut off here first. So I have to think seriously about getting by.

            • Xabier says:

              The great problem with that kind of poverty sub-division can be house fires., above all with cooking going on in multiple rooms…..

            • Good point. In India, I saw one set of homes where all of the cooking was done outside. Actually, I saw this at least two places.

              Of course, all of the multiple residents need to be able to get out in case of fire. Every apartment needs at least one exit, preferably two. Walking down from an upper level, when fire is coming up from below, is likely not to work.

            • Artleads says:

              Some advocate for Edo style food stalls that serve food to the many. Some like the privacy of their own individual “kitchen.” Then there are populists who are severely introverted and crowd phobic. 🙂 But “poverty” figures here obliquely. In essential ways we’re talking about ANTI-poverty housing, since it is based on advanced spacial training and sophistication to set up. Left to the poor, all you have is squalor and disorder. This is an elitist enterprise for the poor. It is not democratic, but instead based on what actually works. And it’s also based on a level of social planning that could be called socialistic.

            • Robert Firth says:

              Dear Gail, when we moved to Africa, we found ourselves with no electricity. But we still had a refrigerator, run by bottled gas. It worked very well, because it had only one moving part, the fluid inside it. We also had a hot water heater, again with no other moving parts. I believe Alibaba still markets this technology.

              Once again, we lose touch with the past to our disadvantage.

            • My mother used to talk about an aunt who had a gasoline powered washing machine.

              Obviously, we have a lot of natural gas powered dryers today. (I expect they use electricity as well.)

              All of these things need an industrial economy powered by fossil fuels.

            • gas powered radios were available inUK before ww2, as we gas powered fridges

              as an art deco object the radios look pretty good i think


  3. Harry McGibbs says:

    “China’s economic growth cooled to its weakest in nearly 30 years in 2019 amid a bruising trade war with the United States, and more stimulus is expected this year as Beijing tries to boost sluggish investment and demand.”


  4. Harry McGibbs says:

    “The amount of credit made available to [UK] corporates last quarter fell to a level not seen since the Global Financial Crisis… available credit for corporates fell for its sixth successive quarter in the fourth quarter of 2019.”


    • Harry McGibbs says:

      “At the same time a crackdown on access to credit cards intensified [in the UK], according to Bank of England data, with availability falling for three straight years following warnings from regulators that a risky bubble has blown up.

      “The figures will intensify speculation that an interest rate cut is needed to boost the flagging economy.”


      • Robert Firth says:

        It seems the problem is a debt bubble, and the proposed remedy is, wait for it, an interest rate cut. I shall never understand Modern Monetary Theory. So I shall invent Modern Firefighting, which teaches that the correct response to a fire is to pour petrol on it.

        • Harry McGibbs says:

          Right. Borrow your way out of a debt crisis with ever lower interest rates. What could possibly go wrong? 😀

      • Xabier says:

        Cut interest rates in the UK, and I still won’t be buying anymore stuff, dining out more , or trading up in property,etc. I’m in siege-mode……

    • I expect that this is at least part of the problem: “Business demand for borrowing was also reported to have fallen across corporations of all sizes.”

      If business conditions are not seen as very good by businesses themselves, it is unlikely that banks will want to lend to them.

      • Robert Firth says:

        Gail, I believe this is exactly the right approach. Classical economics teaches that borrowing depends on two necessary conditions: first, that there is a wiling borrower, and secondly, that the borrower has sound reason to believe they can repay the debt. And if the latter condition is not met, do not borrow.

        But in today’s world, banks create fake money out of thin air, and then hunt for borrowers who can be persuaded to take it, often against their best interests. If this system is now breaking down, I call that good news.

        • Xabier says:

          Here, the loans officer of the local branch of a big TBTF bank recently actually walked into shops uninvited offering the owners £20k personal loans. When asked why (clearly on commission targets), replied: ‘ Because you own a business and must be an OK risk’. !!! Truly hunting for people to lend to!

          The founder of a very successful ceramics business revealed in her autobiography that back in the 1980’s she was scared stiff on entering the imposing manager’s office of her bank in order to make a case for a very modest loan for expansion (that grand branch is now owned a fashion chain, the manager and his imposing mahogany desk long gone…..

  5. Harry McGibbs says:

    “America’s hidden recession is in plain view…

    “According to the latest “Earnings Insight” report from FactSet Research Systems on S&P 500 companies, fourth-quarter earnings for the benchmark index are expected to have declined by 2% from the prior-year period. This follows year-over-year earnings per share declines in Q1, Q2, and Q3…”


  6. Davidinamonthorayearoradecade says:

    widespread civil unrest:


    “There are 195 countries in the world, if the Vatican and Palestine are included, and a newly released index of civil unrest has claimed that 47 of those states witnessed a rise in civil unrest in 2019.
    The data model, published Thursday by socio-economic and political analysis firm Verisk Maplecroft, has also predicted that in 2020, the number will balloon to 75 countries.”

    if that rate of increase (+28) begins in 2020 and continues linearly, then by 2024 it will be just about every country…

    we live in interesting times…

    • cashisking says:

      Complete with plug for tear gas industry. A must for every diversified portfolio. 🙂

    • Thanks for that alert.
      One could assume this would eventually spill into premature “infrastructure decay” of one sort or another – wider meaning anyway..

    • it’s pulling away the universal rug of fossil fuel from under our feet.

      the inevitable collapse of our collective stability is certain to result in mass unrest of some form or another. It will vary from country to country, but effectively the end result will be the same.

      I was taken to task the other day for saying that after 2020 mass unrest will lead to civil disorder in the USA towards the mid 2020s, earlier rather than later, because its infrastructure is insupportable. And that it would lead to dictatorship. (theocratic dictatorship more likely).

      Everything is in place to do that, but I was guilty of hate crimes.

      Yet here we have that 2020-on date cropping up again from a better source than me.

      • Davidinamonthorayearoradecade says:

        then perhaps it follows logically that the UK will break up relatively soon…

        Prince Harry may be foreshadowing this with his sudden move to Canada…


        do you think the English dictator will be theocratic or not so much?

        And Now For Something Completely Different… It’s…

        • no empire nation or state can hold together beyond the energy output level that created it in the first place

          reference to any history book will confirm that

          what happens after it falls apart is subject to infinite variables, no history book will tell you that

      • Tim Groves says:

        Taken to task? Hate crimes? Perish the thought Norman. I just think you need to keep working on that TDS. He’s not going to be The Great Dictator. He hasn’t got the gonads for that. Witness how his enemies are still making rude gestures in his direction while his friends end up in jail on trumped up charges.

        You are fortunate you don’t have to deal with the sort of trolling that real dissidents suffer. For instance, according to the Mirror:

        Actor Laurence Fox clashed with a BBC Question Time audience member last night over “racist” coverage of Meghan Markle. The Lewis star prompted a furious debate by saying he was “bored” of talk about racism – and told an audience member she herself was racist for suggesting he has white privilege.

        Unforgivably, Laurence went on to say of Blighty, “We’re the most tolerant lovely country in Europe.” I doubt if we’ll be seeing much more of him on TV after this.

      • cashisking says:

        Now Norman u know we luv u 🙂

        Good thing queen merkel isnt a dictator engaging in dedicated culturcide! oops didnt say that. Wouldnt want to express a strong opinion about some other countries queen. None of my business. Rather quaint libertarian idea nowadays none of my business.

        This is more modern!

    • Xabier says:

      On the other hand, human societies have always been far more turbulent and violent than we care to think – it gets edited out of history on the whole.

      Generally, as long as the minimum necessary energy keeps flowing, things will hold together, even if daily life for most isn’t at all pleasant or comfortable according to the dreams sold us by advertisers.

      Let the fools riot: they’ll only make their neighbourhoods worse.

      • modern media doesnt allow that

        if a refugee from say, Sudan, makes it to England, then stands in Tesco and points his camera down the food aisles at Tesco, his buddies back in Sudan or wherever are going to see that and be on the next raft across the Meditteranean. No matter what the danger.

        simple human nature

      • Herbie R Ficklestein says:

        Yes, when traveling on the Romantic Road in Germany, remember visiting a lovely red walled town Rothenburg had a surprising museum of Medieval Crime.
        Proof of the violent means to extract justice from those charged.
        A good read is from this write up
        hanged, drawn and quartered…
        Edward therefore introduced the Treason Act 1351. It was enacted at a time in English history when a monarch’s right to rule was indisputable and was therefore written principally to protect the throne and sovereign.[14] The new law offered a narrower definition of treason than had existed before and split the old feudal offence into two classes.[15][16] Petty treason referred to the killing of a master (or lord) by his servant, a husband by his wife, or a prelate by his clergyman. Men guilty of petty treason were drawn and hanged, whereas women were burned.[nb 3][19]

        Looking to return after the end of our Easy Peezy Magical Era of BAU!😜

    • This is the chart shown of countries at risk in the first six months of 2020. Presumably, the risk is worse in the second six months.


      • JesseJames says:

        This is a chart that leaves out collapsing countries like Mexico and Puerto Rico. In Mexico cartels effectively control large areas. Would the executions and gun battles that occur there qualify as civil unrest? In Puerto Rico, the people are largely just leaving for Florida. But there have been civil protests there against the gov corruption. One day soon Puerto Rico will not even keep the lights on except in perhaps the major cities.

        I think this chart is the tip of the iceberg. Collapse continues to spread. This decade will be one of unrest.

        • I am wondering if Mexico is one of the unlabeled dots.

          Puerto Rico I am less sure about. It could be considered part of the US. Or the recent hurricane and earthquake could be considered natural disasters and thus ignored. I also wonder about the study’s indices:
          (1) Security Forces and Human Rights Index
          (2) Civil Unrest Index

  7. Chrome Mags says:


    Just to alert people the latest narrative of 200 people arrested in Australia for arson are false. See linked article for explanation.

    • This 2013 article by Munich Re gives the insurance company’s perspective on fires under insurance contracts. Of course, things may have changed from 2013.

      In a human-caused bushfire, the party responsible for the fire may face civil and/or criminal charges, based on negligence or strict liability. Liability insurance comes into play if a party caused the fire with a legal liability, but no wilful intent was involved. Since a large proportion of damaging fires in Australia are directly or indirectly attributable to human activity, and given the substantial monetary losses, fire-fighting costs and harm to people they cause, the risk of bushfire also needs to be considered in connection with casualty contracts.

      The exposure of public utility companies is particularly high, as overhead power lines are a potential ignition source and run throughout the country over long distances. Under “normal conditions” a low single-digit percentage figure of bushfires start in the context of power lines. But during days of extreme fire danger, the percentage of fires caused by electrical distribution installations rises strongly above the long-term average. This becomes evident when regarding the three costliest bushfire disasters since 1980. A significant portion of the individual fires were electricity-caused – half of the fires during the Ash Wednesday disaster in 1983 and one third of the fires during the Black Saturday events in 2009. Only the Canberra fires in January 2003 were all started by lightning.

      Wind is a key variable. Adverse wind conditions, i.e. high wind speeds and change in wind direction, can turn a normal fire into an uncontrollable inferno. High wind speeds also increase the probability of an inferno being triggered by electrical assets.

      The article also notes that historically, underinsurance has been an issue. Buildings that burn down don’t have adequate policy limits, or they aren’t insured at all.

    • Tim Groves says:

      This VOX writer is spinning this story like a top to try to make it sound like it isn’t people that are causing these fires—it’s the climatemonster that’s doing it.

      From the article:

      Let’s unpack what’s going on here. The source of the “nearly 200” people being charged with arson claim is a news release from the New South Wales Police Force on January 6, 2020. What the release actually says is that legal action was taken against 183 people since November 8, 2019, for fire-related offenses, including things like improperly discarding cigarettes or not taking enough precautions around machinery, i.e. not arson. Legal action “ranges from cautions through to criminal charges,” according to NSW police, so not everyone is being charged with a crime. And not all of these penalties are for incidents linked to the wildfires.

      Right. Let’s unpack what’s going on here. New South Wales Police say they have taken legal action against 183 people in the past two months for fire-related offenses. That’s 183 people who started fires (accidentally or on purpose) in just two months in just one of the seven Aussie states and territories. And that’s just the fire-starters who got caught. Thanks to Chrome Mags, VOC and the NSW Police for setting the record straight.

      Now Chrome Mags, it’s reality time. So put down the Green Kool Aid and drink down this! It is Green policies backed by Green activism that have allowed Australia to turn into a tinderbox. The stoopid, stoopid infaantile green philosophy that leaving things to nature is always best. In hot semi-arid places such as parts of Australia and California, that just ain’t so.

      • The Magus says:

        Could it be that the New South Wales Police Force in Australia is making this up?

        The NSW Police Force has taken legal action against more than 180 people for bushfire-related offences since late last year.

        Numerous bush and grass fires have impacted the state, claiming the lives of 18 people and destroying hundreds of millions of animals and livestock, thousands of homes, and more than 4.9 million hectares of land, so far this bushfire season.

        Since Friday 8 November 2019, legal action – which ranges from cautions through to criminal charges – has been taken against 183 people – including 40 juveniles – for 205 bushfire-related offences.

        Of note:

        24 people have been charged over alleged deliberately-lit bushfires
        53 people have had legal actions for allegedly failing to comply with a total fire ban, and
        47 people have had legal actions for allegedly discarding a lighted cigarette or match on land.


        • I see that only 24 people have been charged over alleged deliberately-lit bushfires. There are a lot of other bush fires.

          Also, there is a lot of material sitting around to be burned and an ecosystem that depends on regular re-burning, so that new plants can grow. People for some crazy reason have built homes in the middle of this. Fires have been suppressed for a while. Now, the excess supply of burnable material is allowing any little spark to create a good-sized fire. Some of these sparks are from transmission lines, I expect.

  8. Chrome Mags says:


    Well, it appears help is on the way. Trump to reinforce protections for prayer in school. Hopefully the power of prayer will spread across our great land and we’ll all be saved from economic collapse. ‘God helps those that help themselves’, so if we can just help ourselves to enough prayer, then we can overcome the loss of cheap energy in a growing economy with a growing populace. Sometimes I crack myself up.

    • According to the article, ” “It’s important for all Americans, parents, teachers, administrators and citizens to understand that the First Amendment protects religious beliefs and protects people in expressing their spiritual life in the public square.”

      • Robert Firth says:

        Perhaps when Trump next visits England, he should look at the Martyrs’ Memorial in Oxford. That’s what happens when people are left free to practice their religion in the public square.

        Or, a little closer to home, perhaps a trip to the Temple of Kukulkan in Chichen Itza.

  9. Harry McGibbs says:

    U.S. rate-setters could set negative interest rates in the future, despite their own current doubts about the risks of this unconventional measure…

    “…if a recession were to hit in the near-term, Jan Hatzius, chief economist at Goldman Sachs, told CNBC, the Fed could use forward guidance, quantitative easing and ultimately negative rates to revamp the economy.

    “If we were to see a recession at some point in the next few years, with interest rates close to where they are now, then you would only have 150 basis points or so for conventional interest rate cuts — that’s only about a third of the typical reduction in short-term rates,” he said.

    “You’d have to rely on other tools,” he explained.


    • Harry McGibbs says:

      “It seems to me that we are in the waning days of Keynesianism. On the one hand, people want to push their Keynesian tricks to the limit; on the other, people sense that it isn’t really working. One leads to the other — it doesn’t work, so we do more of it.

      “This might lead to one of two outcomes: we get tired of the charade, and it peters out as we go in a new direction. Or, we double down on stupid, and it blows up in our face. Either way, the Keynesian Age comes to an end…”


      • The Forbes article is interesting.

        Some quotes:

        “While there are often worthy things for the government to spend money on, the ‘Keynesian’ framework asserts that spending itself is some kind of economic benefit, even if it produces nothing of value and is a total waste.”

        “It [Modern Monetary Theory] is doubling, tripling and quadrupling down on the same old Keynesian playbook that has served up little more than disappointment over the past ninety years.”

        “On the spending side, the Classical view was that wasteful spending was a waste. You took productive resources from the economy (labor and resources, via either taxes or debt finance), and squandered them to create nothing of value.”

        “But, governments can certainly do something. . .It should include reducing wasteful spending, not increasing it. . . It might include solutions to many of our pressing problems today, such as chronic housing shortages in cities with job growth, or fixing our disastrous healthcare system.”

        Of course, in my view, GDP measures “churn.” More debt at lower interest rates keeps the economy going. More debt means more jobs. Without wasteful spending, we might be worse off than we are. Everyone has a different idea regarding what is wasteful.

        • Artleads says:

          “Without wasteful spending, we might be worse off than we are. Everyone has a different idea regarding what is wasteful.”

          This is most educational, and might do with more elaboration over time. (You never hear this stated with such straightforwardness.) And saying that everyone has a different idea of what waste is also a major issue to contend with. It’s looking as if people need to stop pointing fingers and trying to change each other. I’m very thrifty in some ways, and just so so in others. But the subject hinges on divinities acting in a manner way beyond our comprehension. It may get back to human entities following their best judgment as to what those divinities are nudging them to do. These things will all be different for different people and groups. Whomever is doing what they’re supposed to be doing will have a way of knowing, sensing it. But it’s the self organizing system which decides on the major outcomes wrought by this tangled and confusing “mess.” OFW explains religions and their variations in related ways. Religions stick around in their different ways because they work for a specific set of circumstances or other.)

          • It is hard to understand what is wasteful spending in advance. I just saw an article this morning in the WSJ called “India’s ‘Ghost Towns’ Saddle Middle Class With Debt–and Broken Dreams.”

            Overleveraged developers have left nearly half a million apartments unfinished after decadelong building spree ends in a bust

            I would imagine that the true cost of building these apartments was underestimated. The price charged buyers was probably at the upper end of what they could afford, but not really enough to pay the developers for all of the costs. The price of the condos did not include the inside finishing, so buyers were faced with these costs, in addition to the condo debt. The developers have been going bankrupt, leaving a bubble not too different from the US sub-prime debt bubble. Residents don’t want to move into buildings with practically no other residents. “Those who have moved in complain that the golf club, gyms, pools, retail spaces and restaurants advertised by its developer, Jaypee Group have largely yet to be built.”

            As a result of the condo problems, the article says, “Many have cut back spending on everything from cars and clothes to flights and eating out.”

            I can think of a lot of other bubbles out there. The recycling bubble, which depends on high oil prices, is one of them. The renewables bubble is another; this is why we hear so much hype based on the assumption that a partial cost estimate of renewables tells us something useful. The many high priced drugs are another bubble. The pay-back over the recipients lifetime is far below the recovery of lost wages. The economy cannot really afford these. Lithium mines seem to be another bubble. People cannot really afford electric cars when lithium prices are high enough for workers to make a reasonable living. Lithium prices are now at a four year low, and expected to fall lower.

          • a reasonable definition of ‘wasteful spending’ might be ‘borrowing’

            if i borrow money to buy goods i can do without, then my money is being borrowed to pay the wages of the people making the goods

            or is this too simplistic?

            • We also have government spending on Social Security and all kinds of other things (unemployment payments, and guarantees of nuclear and solar debt, for example) that is funded on a pay as you go basis. There is no official government debt involved, because the governments are funded on a pay-as-you go basis. In theory, governments can get rid of Social Security tomorrow.

              Yet I was reading today that a 97 year old man was able to get a 30-year mortgage, because age discrimination is not permitted. Social Security and other expected future payments are used as expected income used to justify these loans. These mortgage loans are part of what keep the system going.

        • Harry McGibbs says:

          “A moment of truth is coming. The current central bank framework, which focuses on achieving inflation targets, has been in place since the early 1990s. It has served many countries well, but the cracks are showing.

          “Whether this framework survives the next decade or not remains to be seen. I have a hunch that it will not.”


    • Xabier says:

      Prayer. Prayer looks like being a very appropriate tool…..

      • Xabier says:

        ‘Doubling down on stupid’ also looks more likely than not.

        It keeps so many plates spinning, for the time being…

      • doomphd says:

        prayer certainly helped the Christians when confronted by the hungry lions in the Coliseum. at least it gave them something to do.

        • Robert Firth says:

          The prayers of the lions were certainly answered, perhaps indeed by Zeus. The prayers of the Christians, not so much. By the way, please call that building by its right name: the Flavian Amphitheatre.

          As for today, I suggest we pray to Rudyard Kipling’s “Gods of the Copybook Headings”, who won’t save us, but might help us understand why we do not deserve to be saved.

          • doomphd says:

            “By the way, please call that building by its right name: the Flavian Amphitheatre”

            yes, my understanding is the place was named after Nero’s Colossus, a giant 100-foot high bronze (?) statue of him. he was not popular, so after he died they reconfigured and moved the statue, eventually setting it close to the Flavian Amphitheatre. it didn’t survive past the 7th century. however, the nick name stuck to the amphitheater.


      • Davidinamonthorayearoradecade says:

        yes, many prayers to Zeus…

        I suspect that hasn’t been tried yet…

        • Xabier says:

          Zeus has -or had – a reputation of not caring very much about human beings, being mostly interested in suddenly descending on attractive virgins in various disguises.

          The same goes for most of the old gods except that interfering and bad-tempered old boy Yahweh who can get too interested in the smallest details. Perhaps he should have chilled out and thought more about chasing virgins?

          So I suspect Zeus wouldn’t be quick to respond unless we get Doetzen Kroes, or some other super-model, to offer up sacrifices.

          A few years back, the Spanish conservative government did formally ask the Virgin Mary to do something about unemployment.

          • Robert Firth says:

            An alarming thought. Would Zeus be interested in a Goddess of Climate Change? It might be more fun than being thrown into a volcano, but I doubt Greta would welcome it. We should declare her High Priestess of Gaia, and so put her beyond his reach.

  10. Harry McGibbs says:

    “The German economy grew at 0.6% in 2019, according to Destatis, the country’s federal statistics office, marking a sharp slump in growth and the weakest expansion since 2013.”


    • Harry McGibbs says:

      “Britain is suffering a productivity crisis more damaging than “even the worst-case Brexit scenario,” one of Britain’s leading economists has warned. Andy Haldane, the Bank of England’s chief economist, said stagnant productivity since the financial crisis over a decade ago was the “single most pressing issue facing the UK economy.””


      • Robert Firth says:

        Andy Haldane was one of the chief architects of “project fear”, the strategy of the pro Europeans to generate the most dire predictions they could about the effect of Brexit. Events have proven them to be false; the response of the predictors, Haldane for instance blaming his failures on “irrational behaviour” by the peasants, now prove them to have been deliberate lies. Ignore him; he is last year’s news.

        • Harry McGibbs says:

          In a sense all mainstream economists espousing perpetual growth whilst ignoring biophysical constraints and the fundamental role of energy in economic activity are yesterday’s news.

          The UK is at least fifteen years into in an era of declining prosperity and Brexit is more a symptom of that than a driver. Andy Haldane is far from alone in overlooking this.

          You can download a speech he gave to the University of East Anglia in 2015:


          It gives a fairly good overview of his economic theories on growth and there is not *one* single mention of oil, gas or coal. And this is the Chief Economist at the Bank of England! He concludes:

          “Growth is a gift. Yet contrary to popular perceptions, it has not always kept on giving. Despite centuries of experience, the raw ingredients of growth remain something of a mystery. As best we can tell historically, they have been a complex mix of the sociological and the technological, typically acting in harmony. All three of the industrial revolutions since 1750 bear these hallmarks.”

          • Duncan Idaho says:

            Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist. …

          • Davidinamonthorayearoradecade says:

            “And this is the Chief Economist at the Bank of England! He concludes:
            “Growth is a gift. Yet contrary to popular perceptions, it has not always kept on giving. Despite centuries of experience, the raw ingredients of growth remain something of a mystery.” ”

            I just smacked myself on the forehead…

            it’s sort of pathetic that he doesn’t know the answer is Energy…

            surely he has never met Dr. Tim Morgan…

            who should chain himself to one of the statues in Trafalgar Square and spray paint SEEDS onto it, after which when arrested, he should say he was driven bat crazy by Haldane…

            perhaps the knowledge of net (surplus) energy would become widespread…

            it’s not happening with just a Surplus Energy Economics blog… no matter how excellent such a blog (just like OFW) is…

            • Xabier says:

              Well, yes, one is tempted to say that if growth is a ‘mystery’ to you, it’s time to resign! I have never been greatly impressed by Haldane’s thoughts generally, but this one wins the prize.

              Ample demonstration of the fact that Dr Tim Morgan’s strictures on the limitations, and unreality, of classical economic theory – in which energy is a relatively minor factor, which can always be substituted – are entirely merited.

              It’s like Napoleon or Alexander the Great saying with a shrug ‘How one wins any battle is a mystery’. Of course, there are many interlocking variables, but…..

            • Robert Firth says:

              For Xabier: Our best general (after Queen Boudicca) was surely the Duke of Wellington. When asked just before the Battle of Waterloo how he proposed to win it, he replied, “By beating the French”. The Art of War in four words.

            • Robert Firth says:

              For Xabier again. The classical economics of Adam Smith indeed did not emphasise energy; but that was in 1776 and the big growth drivers were still competitive advantage and the division of labour. But in 1865 William Stanley Jevons gave a detailed, and prescient, account of the role of energy, and the future problem of energy depletion, in “The Coal Question”. He was the first to discuss “peak coal” and its implications.

              Over and over, history has proved the classical economists mostly right, and their modern adversaries, including Keynes, mostly dead wrong.

            • The advantage of Keynes’ approach is that there is no obvious limit to added debt. In a finite world, it is obvious that there is a limit to energy resources. Politicians very much preferred the approach without an obvious limit.

            • Robert Firth says:

              Gail, I agree. Keynes’ advocacy of fiat money was welcome indeed to politicians who wanted to buy votes with lies. Its embrace by FDR turned an 18 month recession into a Great Depression, by spending fake money on (mostly) worthless projects.

              The classical economists might not have fully understood the Gold Standard, but they were right to support it. The only way to get gold is to mine it, which takes energy. In effect, then, gold is embedded energy, and debt backed by gold is therefore limited by the supply of available energy. Which is what we have been discussing in OFW for several years.

            • The supply of gold does not rise with population, however. The population gets poorer and poorer, if population rises and the ability to pay for goods and services does not. Changes that allowed more babies to live to adulthood (more attention to microbes at delivery and later, for example) led to a need for much for food and other goods. For example, there was a need for more food per acre of arable land. This led to the need for more complexity (irrigation, machines made with coal, etc.) The wage disparity problem tends to rise with complexity. There seems have been a big problem with financial collapses on the gold standard for essentially this reason, I believe.

            • Robert Firth says:

              For Gail: thank you for a most interesting comment, with which I tend to agree. In the past, the purchasing power of gold gradually rose as pupolation grew, but very slowly, so there was an approximate balance. That I believe broke down in the late 18 or early 19 century. But population growth in the developed world has mostly come to a halt. If we redistributed employment away from our bloated bureaucracies towards productive work, there would be no need for mass immigration, and we could restore a system of sound money.

              But that cannot happen with the current governing elites, who seem determined to continue their folly until the Sword of Islam brings it, and them, to a bad end.

      • UK’s poor productivity growth is likely associated with falling energy consumption per capita.


        • Tim Groves says:

          You don’t think it’s all because of better insulation and LED lightbulbs then?

          • Thinkstoomuch says:

            Total electricity makes residential makes a small dent in energy usage as a whole. Most of those LED light bulbs get offset by large screen TVs, monitors, computers, automation and the like.

            Not sure about insulation. People leaving north for points south probably makes more difference, at a guess.

            Here is a chart of energy use by sector in trillion BTU. All are mostly flat.

            Despite the US pop increasing app. 20% in that period. If industrial and commercial is flat …


        • Apart from more historically re-distributive setting of that society to begin with, France was relatively more successful in juicing out the new colonies (or investments) in CEE (after the #1 Germany) also did some joint-ventures in Russia, etc. These were all momentarily surplus stories.. translating and enabling into slightly more favorable domestic per capita profile debauchery..

          In the end it’s a wash. Both UK and France are internally turning into no-go zones, and internationally weakening as well.. Plus one can expect with Brexit yoke away, the trend is now stacked more against France, the ongoing – rolling mass protests and strikes will deter capital spending near / midterm for sure..

    • Xabier says:

      Look quickly, or you won’t notice that ‘expansion’ at all!

      It’s all becoming rather comical.

  11. Harry McGibbs says:

    “The global debt balloon continues to inflate — with what consequences no one knows. Could the balloon soon become a “bubble” that pops? …a broad-based financial crisis or serious recession might occur.”


    • Harry McGibbs says:

      “…central banks didn’t fix the 2008-09 financial crisis, they just covered over it and kicked the can down the road. Now the Fed is caught funding this repo market and they have had to inject $505 billion now since mid-September, with the latest injection a whopping $83 billion in early January. Peak QE was at $60 billion a month. This is averaging $127 billion, or more than double that!

      “…When do the alarms go off here? …you can’t keep pumping up a dead economy and financial system without creating bubbles that burst of their own extremes and losing control over a repo crisis like this.”


      • In the FXStreet article, Harry Dent is saying that the current run-up in stock prices is the direct result of all of the money being injected in the system through Treasury Bills and REPOs purchased by the Federal Reserve. He expects the stock market to crash, not too long after this activity is stopped.

        • Davidinamonthorayearoradecade says:

          therefore this activity will never be stopped…

          at least not voluntarily by the Fed…

          the real economy eventually may/will force these activities to end…

          perhaps in 1 or 2 months or years or decades…

  12. Herbie R Ficklestein says:

    Hahahaha… Guess What?

    Tackle ‘Titanic’ climate challenge before it’s too late, leaders told

    It’s too LATE

    • Right! We also have absolutely nothing we can do about it.

    • Chrome Mags says:

      We’ve painted ourselves into a corner. Damned if we burn FF because of momentum of CC & damned if we don’t because world economy will falter.

      • Xabier says:

        It’s very true: people paint themselves in the corner by concentrating on the immediate task without thinking about where they are heading. That stands for our whole civilization.

    • Robert Firth says:

      The RMS Titanic was more than twice as big as any ship yet built. Its designers scaled everything up by a factor of two. This meant the ship had eight times the mass (and inertia), but the rudder had only four times the area. As a consequence, when her helm was put hard to port, she could not turn fast enough.

      Does that sound like the global economy today? Consider the problem as you watch “A Night to Remember”, the only good Titanic movie.

      • I agree.

        I think the transmission line problem is a little like the rudder problem.

        With renewables, the need for long distance transmission lines (and maintenance) scaled up to a far greater extent than the quantity of electricity added through intermittent renewables. The whole need for a great deal more long distance transmission has tended to be ignored, just like the need for a much bigger rudder.

        I think that there is another issue, however, if a great deal of new electricity transmission is to be provided. Who says that balancing is just to be for intermittent renewables? Can’t all electricity supplies be traded over a much bigger grid? Won’t differences in grid prices tend to even out, except at a higher overall level, to include the price of the new expensive grid?

        It would seem to me that the countries that would be at a disadvantage are the ones with relatively low baseload wholesale electricity rates now. These would be the countries in light blue, I would think. Source


  13. meh says:

    Phase 1 trade deal- meh
    January 15, 2020

    The United States and China signed the Phase 1 Trade Agreement today. Specific details of the trade agreement can be read on the USTR website. For U.S. importers, the primary concern remains the tariffs. As mentioned back in December, the Phase 1 trade agreement will have the following effect on the various Section 301 China tariffs:

    List 1, 2 and 3: Products subject to list 1, 2, or 3 will continue to be assessed a tariff of 25%. There is no change to this tariff.

    List 4A: Products subject to list 4A are currently assessed a tariff of 15%. This tariff will be reduced to 7.5%. We are anticipating details about the timeframe for this reduction to be published in the Federal Register sometime within the next week or so. Until we hear of a specific timeframe for the reduction, importers should continue to plan on paying 15% on their products subject to List 4A tariffs.

    List 4B: The list 4B tariff remains suspended.

    • This lifeline provided to US domestic manufs could be too late to actually matter.
      It certainly helped to disrupt the Chinese stealth and linearly progressing domination long term plans though. Nevertheless, Gail could be proven correct if the Chinese won’t cope and disintegrate before the US, which I still doubt, since I evaluate the “full spectrum deterioration” in the West as fairly (and relatively) advanced one..

      But I could be (very) wrong obviously..

    • Year are right. The tariff deal is not a big deal in terms of charges. But it covers over 90 pages. There are promises to buy more goods in the future, for example. People are happy to see something.

  14. Herbie R Ficklestein says:

    Hahahaha, sure It’s OK to do Janet, because when it’s paid back the money to do so will
    be worthless paper digital dots on a screen….

    Former Fed chair Janet Yellen thinks it’s OK if the government adds to its $23 trillion debt load — although there are strings attached.

    “Even under current conditions, I think we can afford to increase federal spending or cut taxes to stimulate the economy if there’s a downturn,” said Janet Yellen, the former Federal Reserve chief, at the annual meeting of the American Economic Association, according to the Washington Post. “Chronic low interest rates create additional fiscal space.”

    Yellen said that gives policymakers more room to embark on ambitious spending that could juice the nation’s long-term economic development right now.

    “In a world of low real rates, there’s also a strong case for programs to invest in infrastructure, education, research and development, climate change mitigation — namely investments that would elevate potential growth,” Yellen said, according to the Post.

    It marks a shift in Yellen’s previous thinking about the national debt and the future budget outlook. In 2017, when the debt stood at $20 trillion and Congress debated the GOP tax cut legislation, she said mounting level of federal spending “should keep people awake at night.”

    The former Fed chair forms part of a growing collection of economists who believe that targeted spending in programs — even if it adds to the debt — may not be so harmful if it spurs growth in the long-run, especially in a competitive global economy. However, they do believe that type of deficit-spending should be paid back eventually.

    It underscores an evolving view of federal spending as low interest rates make it cheaper to finance government initiatives. Currently, the Fed’s benchmark interest rate stands around 1.75% as it was cut three times last year.

    Some experts criticized the Federal Reserve for hiking rates prematurely after the recession and holding back economic growth.

    The deficit in fiscal year 2019 neared $1 trillion, a 26% jump from the year before, swelled by the 2017 Republican tax cuts and rising government spending. The Congressional Budget Office projected last year the deficit will continue growing between 2020 and 2029.

    Some progressive economists, such as Gabriel Zucman and Emmanuel Saez of the University of California at Berkeley, have called for additional taxes on the rich to pay for hefty spending programs in healthcare and education.

    Both consulted with Sens. Elizabeth Warren and Bernie Sanders in designing their plans for a wealth tax on the most-affluent Americans.

    Read the original article on Business Insider

    • Robert Firth says:

      Oh my paws and whiskers, a wealth tax!. Tax salt (if you want to end up meeting Madame la Guillotine). Tax real property. Tax windows. Tax shirts. But this is the twenty first century, and if you try to tax wealth it will disappear at the speed of light. Good luck extracting those trillions from the Elon Musk First Bank of Mars.

  15. this is a fantastic listen on UK BBC radio

    the Power of oil

    worth half an hour of anybody’s time—don’t miss it


    • I see this is from 2013, but the role of oil hasn’t changed much over time.

      • I put it in because it makes the correlation between the advent of coal energy and the rise of democracy.

        Now that energy availability is fading, democracy is going with it

        • Interesting! Democracy generally takes more energy than a monarchy or other single leader. But people given an example of one or two early democratic forms of government, and claim that proves that energy supply really isn’t needed. That might be true for a few people in a small area, but not generally.

          • Robert Firth says:

            Gail, a good point, and one with which I agree. The Greek city states believed they were too large when the agora could no longer accommodate all the voting citizens (about 25% of the whole population). In early America, local democracy revolved around the “town meeting”, where again every voter could attend and participate.

            One solution is simple: don’t have big states. Well, Philip II of Macedon put paid to that idea at the Battle of Chaeronea in 338BC. Another solution is to restrict the franchise. I would certainly agree with a system that allowed people to vote only if they were citizens, owned real property, and had children; in other words, people with a real stake in the future.

            But these seem palliatives. Democracy seems necessary for only one reason: the State is far too powerful. A government that does as little as possible would not need checks and balances; the individual citizens, as individuals or in voluntary associations, would do the heavy lifting. And an armed citizenry could resist potential tyrants before they could accumulate power. It worked in Viking Iceland, did it not: the country with the oldest Parliament in the world.

            • the Greeks didn’t have a democracy

              their energy source was slaves and wives, neither of whom had any involvement in the process of government

              We’ve had a democratic system (of sorts) only since the advent of fossil fuels, particularly coal

              now that fossil fuels are on the way out, so is democracy

          • i think the reason for that is, that the leader–monarch, emperor whatever takes all the surplus energy for himself and his immediate buddies and his army, (if that sounds familiar don’t blame me). leaving less and less for everyone else

            we see it happening now, but it was equally true in France in 1780, and Russia in 1917

  16. Harry McGibbs says:

    “The Fed is reportedly considering completely overhauling the current repo market and instead begin allowing the repo market clearinghouse, the Fixed Income Clearing Corp. (FICC), to lend directly to small banks and hedge funds. This change would essentially eliminate the larger bank middlemen from the process and provide a direct source of overnight loans for small banks…

    “However, providing wealthy hedge fund managers with a direct path to Fed lending via the FICC might not sit will with the average American. The prospect of a taxpayer-funded hedge fund bailout would likely trigger political backlash.”


    • Harry McGibbs says:

      “The Trump administration plans to restrict the news media’s ability to prepare advance stories on market-moving economic data, according to people familiar with the matter, in a move that could create a logjam in accessing figures such as the monthly jobs report.”


      • I don’t quite understand this. Today, we have a short list of selected journals (Bloomberg, Reuters, etc) distributing economic numbers, in addition to the government, at the time of the announcement. In the future, the government website would be the only place available. This would remove the monopoly that Bloomberg, Reuters, etc. now have on news stories, so we might get a wider range of stories. It also would mean that the government website would need to be able to withstand more traffic to get the undigested data.

        • Harry McGibbs says:

          I am likewise puzzled. My initial assumption on skim-reading the article was that the government’s intent here must be sinister but now I am not so sure.

          • Thinkstoomuch says:

            I am puzzled as well. First trying to say 30-60 minutes of the same data(apparently) is a huge change. *Biggest in decades*. First thing that comes to my mind is Bloomberg trying to protect the “semi-monpoly” and over-hype the headline.

            Though I can see people spinning this every which way from Sunday. Depending on the persons viewpoint.

            Overall seems like just a yawn to me. Like all too many headlines.


    • I wonder what rules this Fixed Income Clearing Corp. would have.

      Clearly, the FICC would benefit small US banks and hedge funds. But I would expect a lot of the problems are international. Does this mean that the US would back away from trying to fix international problems.

      Also, I wonder what the moral hazard in this is. If the FICC will always step in and bail a hedge fund or bank out, at a low interest rate, how much caution is needed?

      Could any rich individual (someone interested in real estate speculation, for example) set up their own hedge fund and be covered?

      • It smells like my prediction of the “Japanization” as in more direct – naked gov support under everything financial to be eventually phased in other key IC hubs as well.

        Internal logic of self preservation dictates that.
        Simply, just live for another day, more distant future dead end road of little concern.

  17. All is Dust says:

    Is our climate model correct? This 1 hour video argues otherwise:


    As I learned in Systems Engineer school, “All models are wrong, but some are useful.” The two key pitfalls they face are incorrect assumptions and missing elements/sub-systems.

    Firstly – assumptions: The assumptions made in the IPCC 5th Report are that carbon emissions will keep on increasing if we don’t take action – i.e. they fall between RCP6.5 and RCP8.0 on page 9 of the report – https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf

    To me, that is an unvalidated assumption – China contributes to a large part of the earth’s carbon emissions and we see that their fossil consumption is stalling.

    Secondly – Missing elements: The video makes the argument that climate scientists have only studied thermal exchanges, thus it has led them to vastly understate the sun’s influence on warming and cooling the earth (by omitting its particle and electromagnetic effects). Currently the sun is in solar maxima, which combined with our high rate of co2 emissions increases surface temperature on earth (with all of the ill effects therein). However, the sun will not always stay at solar maxima, as it enters solar minima there is potential for drastic cooling.

    Perhaps the future looks something like increased global warming for the next 20 years, but then global cooling for the next 200?

    • There is also the issue that the modeling exercises assume that it is possible for the world to continue to extract a growing amount of fossil fuels (particularly coal), in the years ahead. With this growing amount of fossil fuel use, business as usual is able to continue indefinitely.

      This assumption is what most people would like to believe, but it is not the way economies really behave. Economies collapse, essentially from too much wage and wealth disparity, as “complexity” increases. Too few of the workers in the economy can afford the output of the economy. The government makes too many demands on resources, leaving too little discretionary income for citizens. Economies fail in many different ways: in battles for resources with other countries; with dissatisfied workers overturning the government; with rising death rates from disease; in financial collapses; in peaceful dissolutions of top levels of governmental structures (such as central government of the Soviet Union in 1991, or the European Union in the future).

      With growing complexity, the low wages of many workers means that a large share of the population cannot afford new homes, vehicles, washing machines, cell phones, and many other modern conveniences. With fewer purchases of end products, commodity prices fall rather than rise. The falling prices of commodities is thus added to the list of issues that brings about collapse.

      Economists are in denial regarding how the economy actually works. The amounts of fossil fuels consumed in climate change scenarios are basically impossible. The model evaluates future “scenarios,” but these future scenarios are extremely unrealistic scenarios. There is no way that these amounts of fossil fuels can be extracted; fossil fuel prices don’t rise high enough.

      With these absurd scenarios as a base, the scenarios presented to the public are likely to also be absurd, regardless of how “correct” the underlying model is.

      • JW says:

        “Economists are in denial regarding how the economy actually works. The amounts of fossil fuels consumed in climate change scenarios are basically impossible. The model evaluates future “scenarios,” but these future scenarios are extremely unrealistic scenarios. There is no way that these amounts of fossil fuels can be extracted; fossil fuel prices don’t rise high enough.”

        Gail, you have elaborated good reasons, why a recession could be ahead, that could ultimately lead to a collapse of the industrial civilisation as we know it. However, after such a collapse there is still a huge amount of fossil fuels (FF) in the ground with an EROEI well above 1. As long as this is the case, I think the “maximum power principle” will ensure that humans will try to extract FF under new circumstances – whatever it costs – in order to lever their muscle power for essential things of life – particularly think of agriculture and transport. Nate Hagens explains the “energy benefits” of FF in part 3 of his video series:
        At around 4 min into the video Nate mentions that oil at 20$ per barrel can do the work of 25833 average americans, oil at 75$ per barrel can do the work of 7045 average americans, – my extrapolation: oil at 150$ per barrel would still do the work of 7045/2 = 3522 average americans. That’s very tempting. Therefore, I am not so sure that CO2 – emissions will effectively stop after a collapse. Of course, as EROEI proceeds down towards 1, the more frivolous activities of humans can no longer be maintained after a collapse and will be dismissed.

        • cashisking says:

          The real question is what EROI ratio is needed to have enough surplus to provide enough order to extract and distribute energy sources. Order commonly provides our assurances of some permanence and stability.

          I feel Libya is a good example. Libya probably has a 60 to 1 eroi or better. After the NATO intervention the system which extracted and distributed the wealth from oil was ended. The new system cut some people out. They promptly engaged in some destructive activities and were cut in again.

          With a 60 to 1 EROI there was enough surplus that it was n everyones advantage to not disrupt the system of distribution.

          The tribes that demanded their cut new that the surplus EROI existed. They had just gotten it prior to the intervention. In there minds if they didnt get that it was because someone else did. And in that case it was the truth.

          So what are the forms of surplus that populaces know exist? Pensions and SS. Medical and dental services. Police and criminal justice systems. Food and water. Sanitation.

          As long as a certain amount of surplus is distributed to the people they will tolerate less without creating disruption assuming they understand that disorder will end all surplus distribution. If their idea is that there exists a large mount of surplus that is being held from them they will be less likely to not create disorder.

          What happens if EROI surpluses are reduced not because some one else is getting it but because its not there because of eroi ratio reduction?

          Another good example is Iran. The people understand on some level energy distribution can not occur if they are bombed into the stone age. Once again no change in EROI ratio just how its distribution might change.

          The UN food distribution in somalia being taken by warlords is a another example. And this is with a functioning EROI providing limited order via UN troops.

          I think its fair to say the military would provide order enough to continue their own energy use.
          As far as citizens getting some share of the remaining EROI surplus that might well be dependent on the amount of disorder. If it took all the remaining surplus to have enough order to distribute the surplus theres nothing left to distribute. So the distribution scope would be reduced and SOME GET CUT OUT.

          Do they have the capability of having creating enough disorder to stop ANY EROI distribution? Probably not. But at some point the energy required to provide security for the distribution system might not exist. Things would continue to tighten with security providers looking after their needs first. As more areas existed with disorder the remaining areas would need more energy to keep secure. At some point those distributing can only look after their own needs not distribute.

          Since what allows the extraction to occur is networked systems the failure point comes much much sooner as security is not able to provided for areas that are essential to the network fall into disorder. Even extraction itself as we know it comes to a end eventually as networked systems fail to provide essential infrastructure

          There will be some improvised local extraction at the resource location and local security. At some point it just is not worth it. Maintaining order for high EROI resource extraction takes more energy than is extracted. Voila Energy sink. Continuance depends on Quantity not quality of low eroi sources at that point. Very hard hunter gatherer learning curve.

          We really dont know what EROI 30 would be like, At some point we would just have energy surplus distribution failure. That EROI failure rate would be far in excess of 1 ten being the best guess of pundits. I consider an EROI of ten allowing some continuance of order very optimistic.

          This situation is occurring with international EROI still well above 60 and all networked systems functioning well if not as well as the past.

          It would be different if they had high EROI energy or were needed for a crucial network.

          • JW says:

            Good points!

            • cashisking says:

              Gail taught me everything I know. I just apply her analysis now and then. Probably without much insight. Her analysis is the only one that fits observed events.

              Its pretty funny. I use the word funny loosely. Because society has the freedom to reject things they dont “like” this blog has very little following. Gails brilliant analysis sits in this tiny blog largely ignored, available to all, rejected by 99.999999999999999999999999999%.

              Imagine if one of the candidates suddenly presented the ideas here in the debates. The condemnation would be universal, and robust. I would truly enjoy seeing that. Guess I have a taste for drama after all. 🙂

        • I think you are assuming that EROEI of 1:1 for fuels means something different than it does.

          EROEI is pretty well defined for animals. It related to the energy that they have to expend to catch their prey, and perhaps bring it back to where they eat it and feed it to their families. Animals cannot spend very much of their energy in food-related activities, or the population of such animals will collapse. They certainly cannot spend all of their energy gathering food. In fact, they cannot spend very much of it on gathering food, because they need their energy from food for keeping warm, for operating their muscles, for providing enough energy for their reproductive system, and for providing the energy they need to care for their young after they are born. They probably can spend only a very small percentage in food gathering activities.

          If a person is growing food for himself and his family, we can talk about what share of the family’s energy goes into food production and into gathering fuel for cooking the food. Maybe we need to include fetching water as well, since this is another necessity. If women spend most of their lives fetching water from distant streams, this becomes a problem. People clearly need time for sleeping and for raising a family. We can probably figure out some sort of ratio of calories of work expended associated with food and water necessities compared to total hours in the week. This cannot rise too high, or the population will collapse.

          We could also talk about a return on human labor in terms of wages. Are wages falling too low for unskilled workers? Such a problem could be called a problem of low Return on (Human) Energy Invested.

          I don’t think that the concept of “Energy Return on Energy Invested” works nearly as well for fuels, as it does for animals of various kinds and for humans. The 1972 Limits to Growth model used something similar to an EROEI (across all materials) calculation in its model. The 1972 modeling seemed to show that EROEI of this type could not fall (in the aggregate) below 20:1, or the system would begin to collapse. (5% input relative to output)

          In a sense, what is really needed in order to be able to build wind turbines is a whole economy that will allow wind turbines to be built and their output used. But it is impossible to figure out how much energy this requires (other than to look and see how much is currently being used for this purpose today.) Such an economy should be able to provide advanced education to workers who design and build wind turbines. Such an economy needs huge road, huge trucks, and huge ships for transporting parts. It needs an international trade system that allows the manufacture and trade of all of the parts that go into the wind turbine. It needs factories that make parts for wind turbines. It needs helicopters for repairing broken wind turbines (especially at sea). The workers in the system need transportation to work. They need medical care. They need clothing. If electricity from the wind turbines are ever to be used for anything else, there need to be electricity transmission lines, and workers to keep those lines in good repair. There needs to be fire protections, so that burning forests under these transmission lines don’t cause a problem.

          Needless to say, graduate students (or others computing EROEI) cannot possibly measure all of the energy going into manufacturing and transporting the wind turbines to the final destination of where the wind energy is used. Instead, they are given rules defining what limited pieces they should consider in their calculations, such as the energy used to make the blades and the other parts of the system. But there is a whole lot that is hard to figure out, so it is just left out, or just defined away as “not in the boundaries of what we measure.”

          So if we come to an EROEI of 20:1 for a wind turbine, it looks like we have 19 times as much out as went in. Except, we really have no idea how much went in, in total. And the energy out was of a much lower quality than went in. So a person is badly misled if they think that an EROEI of 1:1 is anything that is possibly attainable. What is measured by the “Energy Invested” in EROEI is basically the easy-to-count piece. There is one paper that talks about a modern economy seeming to need an EROEI of 10:1 to function. The rest of the energy is needed for the many other functions of the economy, such as transportation and home heating.

          Apart from the issue of EROEI of 1:1 not being something that tells us much about how much energy is available, there is a real problem in going backward. We can’t go back to horse and buggy now, for example, because we don’t have enough horses, and our cities aren’t built to accommodate the huge number of horses needed. We don’t have land set aside to feed these horses either.

          Whether we fossil fuels are very helpful or not, fossil fuels are leaving us through low prices. The prices are so low that producers of oil, coal and natural gas are driven into bankruptcy. The only reason that wind and solar can exist is because of the huge subsidies they are being given. The subsidy of going first is an amazingly large subsidy; our system really needs 24/7/365 electricity, and wind and solar do not provide it. Also, the cost of their needed transmission is not charged back.

          • Artleads says:

            So isn’t it advantageous to keep all existing fossil fuel resources functioning? Rather than talk about renewables? That would present a huge information, political, educational emergency, but not so much one of adding unforeseen costs?

            • Xabier says:

              Pseudo -‘Renewables’ (ie just an additional ‘Green’ hi-tech complexity layer and resource- consumer) will be next to useless, and even destructive: but – in the very short term – huge fortunes will be made out of them. It’s the whole story I suggest behind the Renewables (TM) drive: totally corporatised.

            • Lots of tax credits for big profitable corporations in the US! A big chunk of the cost of renewables is hidden in reduced corporate tax collections, with practically no one the wiser!

            • Harry McGibbs says:

              Amen to that, Xabier. The bulk of the populace has been suckered into believing that “green/sustainable” equals “at no environmental cost”.

              “Wind farms installed offshore to tackle climate change are actually threatening thousands of endangered seabirds around the UK, according to the RSPB. The bird charity says new wind farms could be the ‘final nail in the coffin’ for more than 1,000 birds across four of the most threatened species.”


            • It would seem that way. But a person could argue that more renewables leads to more demand for fossil fuels to build those renewables.

            • Sven Røgeberg says:

              «There is one paper that talks about a modern economy seeming to need an EROEI of 10:1 to function»
              Would you mind letting us know where to find this paper, Gail?

            • This is an interview with Charles Hall that says something to this effect.

              If you’ve got an EROI of 1.1:1, you can pump the oil out of the ground and look at it. If you’ve got 1.2:1, you can refine it and look at it. At 1.3:1, you can move it to where you want it and look at it. We looked at the minimum EROI you need to drive a truck, and you need at least 3:1 at the wellhead. Now, if you want to put anything in the truck, like grain, you need to have an EROI of 5:1. And that includes the depreciation for the truck. But if you want to include the depreciation for the truck driver and the oil worker and the farmer, then you’ve got to support the families. And then you need an EROI of 7:1. And if you want education, you need 8:1 or 9:1. And if you want health care, you need 10:1 or 11:1.

              This is an article published in Energies in 2009 that talks about the issue: What is the Minimum EROI that a Sustainable Society Must Have?

              According to it,

              Thus by both economic (Figure 1) and energetic (i.e. assuming an EROImm of 10:1) measures calculated here it appears that at present roughly 10 percent of our economy is required to get the energy to run the other 90 percent, or 20 percent used to get 80 percent to the point of delivery, and even a larger percentage if the use infrastructure is included. This seems to be true if numerator and denominator are in either dollars or in energy.

            • Artleads says:

              ” a person could argue that more renewables leads to more demand for fossil fuels to build those renewables.”

              As I understand it, it’s not just the raw fuels and their emissions that’s a problem, it’s also limits to natural resources–land, water and vegetation, especially–that cost in some way, and add complexity when you remove their free services.

              What we seem to need instead is radical reduction in fossil fuel dependency AT THE SAME TIME that existing fossil fuel mines are busily employed (They don’t require new roads or new lands, since they are already using existing ones,.

              Somehow or other, financial considerations necessitating (financial?) growth have to kept within bounds (however that is to be done.)

              Then it wouldn’t be a case of stopping fossil fueled civilization; it would be a case of adding a scarce or fossil fuel civilization AT THE SAME TIME. The case has been made repeatedly that a globally networked, centralized economic system can’t work, if for no other reason that the earth’s living systems can’t sustain such a civilization.

              So rather than think always in centralized, networked, top down terms (WHICH WOULD SEEM NECESSARY AT SOME LEVEL IN STRATEGIC WAYS) we can also be returning to old less fossil fuel hungry technologies IN CERTAIN PLACES. Not suggesting that the whole entire world would need to adapt to that. That’s the point., There must be diversity within a single planetary oversight system. What ain’t brooke doesn’t need to be fixed. Tribal people living on breastfeeding don’t need formula milk so the current growth system can continue to grow. The earth’s living systems can’t afford that. Arguing that growth and destruction are what keep us from collapsing is a circular argument. Something has to change. Dictatorships that can pull this off are very much in order.

            • Maybe there isn’t anything that keeps economies from collapsing. People who are alive want to continue to live. The use of fossil fuel and other resources helps make this possible. They also want to have families. Food production is needed at somewhat above a bare minimum, simply to prevent collapse in the case of bad year weather-wise. Couples need to have children, to assist them in their efforts and to help them in their later years. World population continues to grow, largely because of humans’ use of supplemental energy in addition to energy from food. Growing population means that more of everything is needed just to sustain the existing population.

              It is hard to have enough jobs in a shrinking economy. There is no need for new buildings; just fix up what exists. The same for roads. The number of teaching jobs shrinks.

            • Artleads says:

              So if renewables present a way to use more fossil fuels that we know coincide with the earth’s various limits, maybe we needn’t waste time trying to stop that. Limits of various sorts will do that eventually. Renewing or continuing old mining sites is also a way to produce more fossil fuels, but with the advantage of not causing more incidental and unjustified costs. But I would think that a parallel low-carbon substrate of the overall economy would be thrown into the mix. That could occupy some of us who, under no circumstances, want to cut down more forests and dig up more land. (The fact that others will do that, and that this will have some advantages shouldn’t deter us from finding a way not to do this along with them.)

            • cashisking says:

              “There is one paper that talks about a modern economy seeming to need an EROEI of 10:1 to function»
              Would you mind letting us know where to find this paper, Gail?”

              Well i think the classic round these parts would be Ugos seneca cliff article. https://www.resilience.org/stories/2014-12-09/fossil-fuels-are-we-on-the-edge-of-the-seneca-cliff/
              Not a true “paper” though

              theres also a couple other guesses out there. Pretty tough to guess considering much everthing uses fossil fuels. All in the minimum eroi for industrial civilization 10 ballpark


              That you need 3 to 1 EROI to get it out of the ground and to the refinery door is pretty much established with less tough guesses

          • Niels Colding says:

            Dear Gail

            You say “graduate students (or others computing EROEI) cannot possibly measure all of the energy going into manufacturing and transporting the wind turbines to the final destination of where the wind energy is used”.
            I am not so sure about that. Why not simply use the total amount spent on raising the wind park and then add about 15 % to this amount as operation and maintenance through the life time of the park?
            There is a very close connection between money and energy which you have shown at various occasions.
            I would like to use a practical example to demonstrate what I mean. I could use every wind park in the world as example but once again I would use Anholt Vindmøllepark because I know the exact price of it.
            It cost 10 billion DKK to build and to establish the main lines to the shore extra 1 billion DKK should be added. That should be 11 billion DKK. Then you have to add 15 % (or maybe even 20 %) in operation and maintenance and you end up with approximately no less than 12 billion DKK.
            We have an entity called Nord Pool – it is a cooperation between Nordic countries where you buy and sell MWh to variable spot prices. Today (16-01-2020) the price per MWh is 24,52 EUR which corresponds to DKK 0,18 DKK per kwh. But in order to “anticipate” raising prices I will in the following set future prices at 0,25 DKK on this spot market.
            Instead of building the wind farm – which in its lifetime (here in this example 25 years) will cost no less than 12 billion DKK – you could buy electricity on the Nord Pool spot market and get 48 billion kwh for these 12 billion DKK. Anholt Vindmøllepark will in its function time deliver max 44 billion kwh. As I see it, already at this stage the park runs with a deficit in kwh.
            I am quite sure that other wind parks can do much better but there will never be any energy surplus if you also include costs of auxiliary power stations that must always be at disposal and many other disadvantages which you so often have defined.
            But again Gail “graduate students (or others computing EROEI) cannot possibly measure all of the energy going into manufacturing and transporting the wind turbines to the final destination of where the wind energy is used”.
            I think they can – just follow the money and compare.

            • cashisking says:

              Wages alone introduce uncertainty. Wages for labor are part of the cost of any product. If they are spent on a diesel truck and fuel that means a lot more energy is associated with those wages than say a undeveloped piece of property. Does the energy cost of the the product get tacked on too the er oi of the product the worker is making or that which he spends it on? Regardless none of it works without a lot of fossil fuel energy spread about everywhere. So called renewables will nor provide that and the energy cost associated with them will be a huge waste if this green economy BS ever trys to get implemented. Trying to bail the titanic with a green teacup.

            • “Trying to bail the titanic with a green teacup.” That is a good way of putting our problem.

              EROEI studies don’t count the wages of workers, unless they are based on the total cost of the wind turbine, as Niels Colding is suggested. I agree that quite a bit of a worker’s wages is spent on energy related items. It is the whole system that uses energy.

            • You make a good point. The expected total cost of wind turbines (12 billion DKK) would buy about 48 billion kWh, while the wind turbines themselves would produce only 44 billion kWh. Thus, there is already a deficit, looking at the pieces you are looking at.

              You point out that this does not include the impact on auxiliary power stations, either.

              I would point out a few things that tend to make the comparison even worse than you suggest.

              Paul-Frederik Bach writes about increasing curtailments of West Denmark wind electricity, because of inadequate transmission to handle all of the variable electricity. Of course, new transmission from Denmark to other countries are being built to try to keep up.

              Paul-Frederik Bach also writes about the difficulty in using additional wind power for Germany. He mentions

              -Surplus of wind power in the north
              -Large consumption of electricity in the south
              -Insufficient grid capacity for power transmission from north to south
              -A single price electricity market preventing the market from solving the problem

              He also mentions a more than 15 year lead time on new power lines in Germany. I understand that some of them will be buried underground, making them very expensive. Needless to say, all of these additional power lines within Germany really need to be included in the cost as well, if Germany is to use this electricity

              There are other details. The price of Power Purchase Agreements offering intermittent electricity for sale seems to be falling, rather than rising, in the US. The price of contracts to buy intermittent wind energy has been reported to be generally below $20 MWh in 2017 and 2018. The wholesale price you quote of 24,52 Euros per kWh is equivalent to 27.34 in US$. Your selected future price is higher than this.

              Paul-Frederik Back reports that Denmark is caught in the middle. Its spot prices for wind tend to be low. It is charged an increasingly high price for imported electricity, when there is a shortfall. At the same time, the amount it can sell excess wind for is far below the electricity spot price. Needless to say, adding more offshore wind will simply make this situation worse.


              P-F Bach suggests that wind developers may need to subsidize long distance transmission from Denmark, if more wind is to be added. New lines, if added, will be lightly used most of the time, making it hard to charge enough using conventional charges.

              Another issue is the fact that, as more transmission lines are added (for example, from Norway to the UK), Norway and Sweden’s balancing capacity becomes exceeded. At such a point, it seems like curtailment may become the only option, unless there is a whole lot more transmission to the rest of Europe than there is in place today.

            • Artleads says:

              “People who are alive want to continue to live. The use of fossil fuel and other resources helps make this possible.”

              One can’t argue there, but the fact that we need fossil fuels and other resources to live doesn’t suggest HOW we need to use them. Some people have a more survivable way to use them than others. All humans are not exactly the same, and all their actions don’t lead to exactly the same ends. I know, I know, there’s the need to dissipate energy as quickly as possible. Even if that is so, do the results have to end up exactly the same? No matter what anyone or any group does the energy runs out in the middle of 2040. Or if not, the difference is negligible.

              “World population continues to grow, largely because of humans’ use of supplemental energy in addition to energy from food. ”

              There are some points of Therbergian philosophy that aren’t consistent with each other.

              1) There is a power beyond the human that shapes events (even if not entirely)

              2) We think this way on account of how small and humble beginnings grow as if they had a mysterious power promoting them.

              But what if all this power needs to jump in was one’s effort? No start, no higher power at work.

              “World population continues to grow, largely because of humans’ use of supplemental energy in addition to energy from food. ”

              One way in which population growth can be tempered is through educating women (although there is a Therbergian meme that women should get out of the work force and leave it to men).

              The economy shrinks, so there are no jobs building homes or paving roads. But now very heavy machines do much of the work building homes, using heavy materials that huge trucks must haul in with a single driver. But a different way to build homes could use nearby materials and far more intensive human labor, and that labor could be very largely local.

              When we don’t take advantage of such potential shifts to economic custom, could that help to dampen the demand that the economy needs in order not to collapse?

  18. Jan says:

    Adding a thought to the religious discussion:

    I guess we can all agree on similar social duties and a humanistic image of man. My atheist point, though: If you don’t clean up your room, you can’t blame God for it!

    Abrahamitic religions demand uncontrolled population growth, Muslims in the Middle East, Christians in Africa. In the historical European Migration Period people clearly exceeded carrying capacity. Wars and raids (Vikings!) followed. Is there a connection to christianisation’s ‘be fruitful and multiply’?

    There is a hint: John M. Riddle (Contraception and Abortion from the Ancient World to the Renaissance) shows that pre-christian women did successfully used family planning with effective herbs. A knowledge lost in the Middle Ages.

    That means human OVERSHOOT IS NOT INEVITABLE – with all biological and economical implications! At least pre-christian societies successfully managed to prevent it. It was knowingly prevented, not tragically enforced by recource limitations.

    That indicates that human population growth is not merely a function of fossile fuels. The overshoot thinkers (Malthus) were blinded by their own religious morals. Maybe it is time that members of the Abrahamitic confessions re-evaluate if their god really demands ininhibited population growth contradicting all reason – reason that is also given by God!

    Otherwise it might fuel a very unholy self-fulfilling prophecy of the revelation. Revelation has been delayed for so often now! Wouldn’t it be more human to delay it another few thousand years? In history the prophecy of the revelation had a social function (Georges Minois, Prophecies): To correct decadent rulers – Calvin did, Luther did. Maybe thats a better view than the Hollywood version.

    • doomphd says:

      you’re wishing to close the gate after the horses have left. interesting about the contraceptive use of effective herbs that was lost in the Middle Ages.

    • info says:

      If space colonization is viable then everything changes.

      • Sort of a big if, IMO. Hard to breath in space. Hard to grow food.

        • Country Joe says:

          Are you saying that Mars isn’t all white sandy beaches and palm trees?

          • Robert Firth says:

            Sorry, no. Mars is deserts, canals, abandoned cities, and impossibly cute egg laying princesses. Just watch out for the twelve foot green nomads.

      • Ed says:

        With even modest growth rates in about 400 years humankind would be a solid ball of bodies expanding outward faster than the speed of light. You just can not beat an exponential.

    • It would be helpful to mention the pre and post interest charging period of medieval Europe. That changed a lot, also cleared way for the “reformation” you mentioned.

      As well as the later junction at which CBs took over in the core IC hubs ~17-18th century onwards. And after that we had the ~200yrs hockey stick of fossil fuel bonanza.
      Evidently, multiple steps leveraging and mutating each other brought us here..

      So, it’s doubtful it will go down in one simple swing (yes the down slope will be likely and noticeably quicker though), lets posit the 1970s was the first big saturation-exhaustion discontinuity point/period on unchecked growth out of many incoming (next tilting from plateauish to collapse proper profile) on the ~midterm horizon future..

    • First, lets move away from Abrahamic religions. There are lots of non-Abrahamic religions. Some of them have preached killing of infants to keep population down. You can find whatever teaching you look for. Religions are adapted to the situations of the day. They differ. It is a little late to complain now about practices that may have made sense back at the time that they were originally put in place. Just move on. Find a religion that has beliefs more akin to what you want to believe. If you want to believe that Central Bankers, with their Hocus Locus, can save the world, so be it.

      Second, “OVERSHOOT IS NOT INEVITABLE,” is not really right. We are way past the world’s carrying capacity without fossil fuels right now. Many, many post civilizations have collapsed.

      One of the warnings in Revelation in about Collapse. Read Revelation 18.

      10 Terrified at her torment, they will stand far off and cry:

      “‘Woe! Woe to you, great city,
      you mighty city of Babylon!
      In one hour your doom has come!’

      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.

      14 “They will say, ‘The fruit you longed for is gone from you. All your luxury and splendor have vanished, never to be recovered.’

      • ssincoski says:

        I always thought it was interesting that there was ‘no one to buy their cargoes anymore’. It wasn’t simply the case that there wasn’t stuff to sell. There were simply no or not enough buyers to keep the gig going. Kind of like what we see now. Consumers are tapped out.

        • This is an “on the ground” look at what collapse looks. Sometimes we have to look at old documents to see how past problems appeared.

          All of our Peak Oil friends had good imaginations regarding the problem ahead.

    • beidawei says:

      India and China are famously populous countries, and yet are not dominated by Abrahamic religions.

      The population of any animal (humans included) is a function of available resources, with food supply usually being the most limiting factor. Anything that causes more food to be available (e.g. agricultural improvements) will result in a population increase. This also means that it is impossible to solve the problem of world hunger by growing more food.

      • Good points!

      • Artleads says:

        i THINK IT’S A VERY BAD USE OF NATURAL TREASURE TO GROW FOOD AT SCALE, ON OPEN LAND. I can see instead surgical and minimalist food growing for the local marketplace. If you grow food without clearing land, confining it to pockets between existing vegetation (or on roofs or other urban infrastructure), that might well correlate to moderating population growth?

    • cashisking says:

      “That means human OVERSHOOT IS NOT INEVITABLE” HUH? Already occurred. Your saying the glass breaking when it drops is not inevitable when its already in a thousand pieces on the floor.

  19. Harry McGibbs says:

    “The number of corporate bankruptcies in Japan increased in 2019 for the first time in 11 years… Business failures with debts of at least 10 million yen rose 1.8 percent from the previous year to 8,383, the first increase since the 2008 global financial crisis…”


  20. Harry McGibbs says:

    “U.S. economic indicators are depicting a broad range of readings.

    “Many economic measures are depicting or implying weak growth or outright contraction. Numerous highly worrisome economic trends persist.”


    • Harry McGibbs says:

      “…the lesson is not that the [US] economy is not threatened with recession, but that it simply didn’t come last year.

      “Some combination of fiscal stimulus from tax cuts and lower interest rates, lower costs from deregulation, and simple consumer confidence has kept the U.S. economy buoyant.”


      • Denial says:

        It is interesting that this last forbes link is an article by Micheal Lynch!!!?? I am not sure if you are an oil drum viewer from the past or peak oil etc….but Lynch has made his money talking hopium for years about how much oil etc there is ripe for the pickens!! I would even say he is not very far from the abiotic oil people!!

        • Harry McGibbs says:

          Denial, how interesting. I went down the peak oil rabbit hole not long before The Oil Drum went defunct, so Michael Lynch is unknown to me in that capacity.

    • The Seeking Alpha article shows several interesting charts, include relatively low new orders and relatively low purchased on large trucks.

      It remarked that Federal Receipts are unsteady since 2015. I printed out this chart showing quarterly (a) State and Local Receipts and (b) Federal Receipts using the same FRED system.


      The state and local receipts are a lot more stable than the federal government receipts. I know that in the State of Georgia, where I live, there have been state government cutbacks because tax rates were mistakenly lowered, in the belief that the federal tax changes would be beneficial, so lower tax rates would be appropriate. Now it is clear that the state needs to cut back, to stay within budget.

      I also put together another chart, to try to figure out why total US government receipts look so strange. This chart compares total receipts to “Federal Government Current Tax Receipts.”


      The current tax receipts look amazingly flat since the beginning of 2015. I expect that things that are not specifically income tax (such as royalties on oil extracted, social security and medicare funding, student loan repayments and tariffs on imported goods) are in the difference. Also, if tax adjustments are made to prior years, these would also be in the difference. The big spike is in the 4th quarter of 2017.

      Very flat tax receipts aren’t what a person would expect with a growing economy.

      • Harry McGibbs says:

        “The Cass Freight Index fell to its lowest level for 2019 in the month of December, with the shipments component of the index falling 7.9% and the expenditures component declining 6.2% year-over-year….”


        • This is the Cass Freight Index chart shown on its website.


          December 2019 has fallen below any of the preceding years on the chart, in quantity shipped. If this pattern continues, there is a clear problem.

          Another chart shows that on a revenue basis, December 2019 was only the second worst. There seems to have been an increase in shipping charges a couple of years ago, keeping revenue high the last two years. I remember that about two years ago, monitoring devices were added that kept drivers from working more hours than permitted by safety rules. As a result, they could drive fewer hours. More trucks were required to ship the same amount of goods. Drivers were paid based on miles not hours, so their wages fell. More trucks to deliver the same goods, so more fuel for shipping and more payments for trucks. Wages spread over more drivers. Trucking companies needed to charge more, with the use of more trucks for same amount of goods.

  21. Harry McGibbs says:

    “Global semiconductor firms suffered a decline in revenue last year as a huge oversupply in the market and a slowdown in smartphone sales took their toll.

    “Semiconductor revenue totalled $418.3bn (£322bn) in 2019, down almost 12 per cent on the previous year, according to figures from research firm Gartner.”


    • Semiconductors, automobiles, and recycling are all big industries that are showing contraction. This is hard for economies to absorb. Layoffs, more fixed expenses relative to output. It tends to push economies toward contraction.

  22. MG says:

    Modifying Monkeys With Genes From Human Brains?


    “In what was “the first attempt to experimentally interrogate the genetic basis of human brain origin using a transgenic monkey model,”3 researchers used 11 monkeys, six of which died during the experiment. The five surviving animals, however, had better short-term memory and shorter reaction times compared to nonengineered monkeys.

    In human babies, MCPH1 is expressed in abundance during development, a phenomenon not seen to the same extent in nonhuman primates.4 When the researchers engineered the monkeys to carry human copies of MCPH1, no difference in brain size was found, but the monkeys performed better on memory tests and took longer to develop, similar to brains in humans.”



    “Implicated in chromosome condensation and DNA damage induced cellular responses. May play a role in neurogenesis and regulation of the size of the cerebral cortex.”

    MCPH1: a window into brain development and evolution


    Transgenic rhesus monkeys carrying the human MCPH1 gene copies show human-like neoteny of brain development


    “One hallmark difference between humans and non-human primates is that humans require a much longer time to shape their neuro-networks during development, greatly elongating childhood, namely the so-called ‘neoteny’. Myelination is the process of generating myelin sheaths around nerve fibers so that neural signals can be propagated more swiftly with less signal loss. This process is considered a key developmental aspect of the human brain and continues for at least 10–12 years after birth, providing an extended window of neural-network plasticity [51]. In fact, human neocortical myelination is developmentally protracted compared with that of chimpanzees [52]. We speculate that the observed neural-maturation delay in the TG monkeys may have extended their time window of neural-network plasticity, similar to the brain-developmental neoteny of humans. In support of our speculation, when we combined the RNAseq data of all developmental stages, we found that many of the delay genes were synapse-related genes, which are required for the experience-dependent process of neural-network plasticity [53]. More interestingly, most of the delay genes showed human-specific changes in the timing of synaptic development in the previous study [11]. For example, MEF2A and SYP were among the key genes showing human-specific delay of youth-like expression compared with chimpanzee and macaque [11]. Notably, synapse and spine density in the human-projection neurons is much higher than that in rhesus macaque, which is associated with the higher cognitive performance in humans [11,54].

    The speculated extension of neural-network plasticity in the TG monkeys gained further support from our preliminary cognitive data. The TG monkeys showed an improved short-term memory, suggesting that the observed brain-developmental delay in the TG monkeys is beneficial, possibly through extending the time window of neural-network plasticity. More interestingly, the TG monkeys displayed a significantly shorter reaction time than the WT monkeys during the DMS task, which is another hint at cognitive improvement. More sophisticated cognitive tests are needed to understand the long-term effect of the huMCPH1 transgene in the TG monkeys.”

    • Who knows? Maybe modified monkeys can survive and reproduce.

      • Artleads says:

        I see on TV and hear about (increasingly) wondrous feats of animal intelligence. I’d think they can evolve on their own (with the increasing human presence in their world) without all the tech gimmicks.

  23. Davidinamonthorayearoradecade says:

    an interesting article about how we have arrived at today’s “low” interest rates:


    “… suggests that — irrespective of particular monetary and fiscal responses — real rates could soon enter permanently negative territory,” Schmelzing wrote.

    permanently negative…

    well, at least until interest rates no longer exist…

    • MG says:

      Why not negative rates, when the profitability declines? The machines produce more and more stuff, our world becomes overcrowded with man-made stuff, with less and less cheap energy for everyday operation of the stuff.

      We produce more and more stuff that becomes faster and faster obsolete.

    • This article relates to a recent working paper, written by someone on the staff of the Bank of England. It can be reached at this link:


      The chart the CNN article shows is this one:

      Note that these are “real” interest rates. Thus, inflation has been backed out from nominal interest rates.

      The working papers considers the possibility that the risk of default has been falling, and this is the reason rates have been decreasing. These are supposedly “risk free” rates however. The author does not see this as being a major factor, but it could still be somewhat of a factor. People live longer now.

      I wonder if the issue is partly supply versus demand of debt. If everyone wants debt as in “asset,” perhaps they will be less concerned about how much it really yields. The demand for debt could be rising, if it is being to fund pension plans, personal savings, and excess funds generated by businesses, before the funds are used for other purposes.

      Another issue is affordability of finished products, if debt needs to be used to purchase them. I am sure that this use of debt has become more common in recent years. As such us increases, interest rates need to be lower. If energy is becoming higher cost (and EROEI falling), real rates of return are likely falling; this contributes to a need for lower interest rates as well.

      I note the very negative real interest rates at the time of the Depression of the 1930s. I expect that part of this was really inflation. I doubt that nominal rates were negative back then. If real rates were that low during the Depression, I suppose they could end up in a similar state today. But many banks defaulted back then; this is not risk free.

      • cashisking says:

        Federal loan denial report
        Check applicable
        A coughed blood on application.
        B Application for coffin loan
        C Applicant watched too much monte python

  24. Davidinamonthorayearoradecade says:

    story time:

    the monthly ValPak came today in the mail… a standard size envelope about 4″ x 9″ and usually stuffed full with perhaps 2 to 3 dozen aprox 4×9 glossy color-printed advertisements from various companies, mostly local but sometimes national…

    today was a quasi shocker since the envelope was way under its usual contents, so I counted and there were only 13… not that I ever counted in the past, but this one was so obviously lower…

    so, could that just be my local ValPak mailing/company or is it A Sign of Something Bigger?

    anyone have any other recent economic observation that might suggest this is a more widespread pattern?

  25. From medpagetoday.com: Hospital Megasystems: More Expensive and No Improvement in Care

    . . . a newly published study in the New England Journal of Medicine shows that after a hospital merger, costs increase significantly and quality of care did not improve at all.

    Multiple studies have shown that hospital costs after mergers increase almost 10%, and this amounts to trillions of wasted healthcare dollars. There were 90 deals in 2018, 117 transactions in 2017, and an 80% increase from the 50 deals inked in 2009. Hospital leaders tout these mergers as a way to provide better, more accessible, and more affordable care — but in reality, this new very well-done study argues otherwise.

    • Hubbs says:

      Oligopoly. The first baseball bat across the face to patients, especially when the hospital has bought up physician’s practices is the so-called “facility fee.” Getting an x-ray, EKG or other diagnostic test that used to be done and billed in the doctor’s office now has an attached “facility fee.”

      • Another issue is all of the data collection that is now being done. Medical providers now have to spend a bigger share of their days plugging codes into screens. Of course, with more of the day spend on coding, less time is available for patient care.

        A recent story I saw was about the problem of physician burn-out. The single biggest issue mentioned was all of the time spent on coding.

  26. Pingback: Expect low oil prices in 2020; tendency toward recession - Deflation Market

  27. From Mining.com: Lithium Price Plunges to 4 Year Low

    China seems to be the problem:

    “additional supply and weakening conditions in the downstream industry in China, responsible for as much as 80% of global processing, have piled pressure on prices.”

    In other words, China is producing some lithium of its own. China is also responsible for as much as 80% of the world’s lithium processing, and this processing is not growing much, at least partly because China’s sales of electric automobiles is off significantly, after subsidies were reduced in mid 2019, and were reduced to zero as of January 1, 2020.

    The article also says

    “Benchmark [a forecasting group] says cutthroat competition in China could push prices down further.”

    My interpretation of the problem is that if the only way the batteries can be sold is very cheaply (in cars or otherwise), then the price of lithium needs to go down. It is a question of which producers can hold up under the low-price pressure. Is the result more rioting in Chile?

    The article says:

    Canadian lithium hopeful Nemaska has obtained creditor protection and suspended operations while Australian spodumene (feedstock for lithium hydroxide) producers have scaled back projects, reduced output targets and mothballed mines in an effort to shore up the market.

    So lithium is under the same low price pressures as oil, coal, and natural gas.

  28. WSJ reports Energy Companies Seize the Day with Bond Refinancing

    Surge in appetite for riskier debt creates window of opportunity to push out impending maturities

    Conditions began changing in December with a sudden surge in appetite for riskier debt, driven in part by growing optimism about the economic outlook, an uptick in oil prices and a lack of yield available elsewhere in fixed-income markets.

    Energy-company bonds in the Bloomberg Barclays high-yield bond index yielded 8.10% on average as of Friday. That was still well above the 5.04% yield for the index as a whole but a big drop from the recent peak of 9.71% on Dec. 3.

    So the story seems to be, “Refinance whenever there is glimmer of hope.” Reasonably big US companies seem to use bonds for financing, rather than banks. A cut off in financing by banks isn’t really as relevant for them. Instead, they issue new bonds to replace old ones, with a later maturity date, if interest rates fall.

    • Dennis L. says:

      It seems that with much of debt, given what is accepted wisdom that the amount of energy available at today’s prices will fall going forward, borrowing by a corporation is good business as what ever is built or purchased has a depreciable life and thus embedded energy will have some remainder of that energy tomorrow. If everything falls apart, nothing has any value so as long as an asset has a probability of having value tomorrow, it is a good bet. Basically, it is trying to chose the asset that loses the least.
      Those who have bet the financial system lacks resiliency have to date been on the wrong side of the trade, it adapts very quickly. 2008 might be seen as a success story in this light, not an almost failure.

      Dennis L.

      • Right! Everyone expects oil prices to rise. They expect that investment made by energy companies now will have value later. In fact, they expect that what is built now will have more value later than it does now. They also seem to expect that other investments, such as roads, will have more value later.

        Of course, if the system falls apart, this isn’t true.

        You are right. 2008 showed how resilient the financial system really is. There is redundancy built in that we don’t really understand.

        • Rodster says:

          But wasn’t that resiliency manufactured by the central banks making the problem go away with more debt on top of more debt?

          Surely, if the central banks had not bailed out their respective governments and financial systems, by printing more money, the system would have collapsed in 2008. Hank Paulson was very afraid of an economic armageddon if the meltdown was allowed to run it’s course.

          • Denial says:

            Or is it that the whole system is less transparent than we believe? Sort of like playing monopoly and the banker does not tell you all the information; you just keep go around and around…..I believe the fed has made a lot of things disappear over the years…so yes it is really hard to know anything fo that matter.

          • Think of central banks as being a big part of what offers the resiliency.

            • Rodster says:

              But eventually the Bank resiliency dries up. We learned that after the 2008 pseudo meltdown where trillions of printed money has made a difference in growth. It’s just keep the house of cards from all falling down.

              At this point the Banksters have shifted gears to the Repo Market, that’s the latest leak to appear in the flooding boat.

            • Rodster says:

              I meant to type, has made virtually NO difference

            • Robert Firth says:

              Gail, I respectfully doubt that thesis. A resilient system has no need of intervention by a large, overarching, and uncontrolled actor: it has enough negative feedback loops, small and large, to return it to stability. The very fact of bank intervention proves that the system is not resilient, and requires ever more heroic efforts to maintain even the illusion of metastability.

              Take the analogy of the 737MAX: the pilots work harder and harder to keep the nose up, and the implacable computer continues inexorably to push the nose down. Our pilots are the bankers, but the forces pushing the economy down are the brute facts of Nature, against which there is no appeal. O vanae et inanae curae!

  29. WSJ reports S&P Ticks Lower as China’s Export Growth Stalls.

    Overseas, exports from China climbed by 0.5% last year, a sharp comedown from 2018’s expansion of nearly 10%, according to data released Tuesday. Imports dropped 2.8% last year.

  30. Harry McGibbs says:

    “BlackRock is promising to ditch its holdings in any company that produces more than a quarter of its revenues from thermal coal. Larry Fink says its active investment teams will shun major coal producers, due to the environmental damage they cause.”


    • Harry McGibbs says:

      From Dec. 2019:

      “Goldman Sachs has announced the strongest fossil-fuel finance restrictions of any major U.S. bank, a move conditionally embraced by advocacy groups such as the Sierra Club.”


    • Curt Kurschus says:

      If their concerns are environmental, then perhaps they should make the same announcement regarding any investments they may have in builders of wind turbines, solar panels, hydroelectric dams, electric cars, computers, smartphones… They may as well just shut down their entire operation.

    • The fact that prices are too low for oil, coal, and natural gas producers, and have been generally falling for many years, makes it clear that these are not good investments. A person doesn’t need to have interest in climate change to come to the conclusion about not funding this sector. Any analyst would come to this conclusion. The fact that this is the concern of the day allows those making the decisions to “look good” in the eyes of the public, at the same time it helps their bottom line. What is there not to like?

  31. Harry McGibbs says:

    “Almost half of UK businesses expect there will be an economic recession this year, while one in three believes the contraction could be as much as 4 per cent, according to a survey of senior directors.

    “The research, based on 250 senior executives at medium-large sized businesses across the UK, also revealed that well over a third (37 per cent) also expect to see a global recession or international global crisis in 2020.”


    • Harry McGibbs says:

      “A flood of poor data hit the headlines this morning, threatening to plunge the UK into recession. With the global economy on thin ice, Britain may be the black swan event that brings it all crashing down.

      “As the 6th largest economy on the planet, Britain has the ability to trigger a domino effect on the global stage. Its close ties to Germany (4th largest economy), France (7th), and Italy (8th) contribute to the systematic risk underlying the markets.”


    • The UK, with all of its big changes ahead, doesn’t seem to be doing well!

      • Tim Groves says:

        I read this morning that the new Japanese Emperor and Empress will be visiting the UK in the spring on their first overseas visit since the coronation. Our two great island nations’ constitutional monarchs will meet, dine and engage in conversations about their happy relationship, their shared values—such as maintaining a philosophy of noblesse oblige in an age when it’s unfashionable, tea drinking, driving on the correct side of the road, and hosting American troops—how to handle family problems, and what they can do together on the world stage. There will be photo ops galore, huge headlines in the press, and a great time will be had by all concerned. There may be a trade deal in the offing. And for a small extra charge, Big Ben may even be allowed to bong for the occasion.

  32. Harry McGibbs says:

    “A depressing consensus prevailed among economists at the recent American Economic Association annual meetings: the developed world is stuck with low growth, low inflation and low interest rates for years to come. Even worse, there is no consensus on why.“


  33. Harry McGibbs says:

    “Recession fears are again on the rise, with the vast majority of chief financial officers bracing for an economic downturn in 2020—and historical data shows that trends of declining optimism among America’s financial executives can sometimes be a harbinger for looming market sell-offs.”


    • Harry McGibbs says:

      “Consumer debt is within touching distance of $2 trillion at America’s biggest banks, lead by credit card spends. Wall Street is celebrating… Wall Street expects big banks to post big profits on the interest from consumer credit balances soaring at unnerving record highs.

      “Is this the ‘macroprudence’ America was promised after the last financial crisis? Or reckless brinkmanship in the face of a looming recession?”


      • The CNN article references a 4Q 2019 Deloitte survey of Chief Financial Officers. It says:

        Downturn concerns dampen 2020 revenue, earnings, investment, and hiring expectations

        The good news is that only three percent now say they expect a true recession, well down from Q1 2019. But 97 percent say a downturn has either already begun or will occur in 2020. Moreover, expectations for consumer and business spending have fallen sharply, and CFOs are less likely than last year to expect higher industry revenue and prices. And they cite much more defensive action around expenses and hiring than in Q1 2019.

        Meanwhile, CFOs’ performance projections for revenue and earnings remain near last quarter’s multiyear lows, and their expectations for capital spending and hiring are again notably depressed. And while the own-company optimism index rose from last quarter’s low, it is still quite weak—with only three lower readings in the last 15 quarters.

        So somehow,CFOs expect the economy to slow, but not really reach recession. (Elsewhere, they say that the US is the bright spot in the world economy.) Their own business will not do very well, and will cut back on hiring, but somehow, the economy as a whole will do better. This sounds a little like the forecast we saw a day or two ago about the economy growth shrinking, but the stock market continuing to rise.

        • Harry McGibbs says:

          Right – somewhat confused, in other words. Which is hardly a surprise at the tail-end of this era of delusional optimism and dodgy accounting.

    • The Forbes article is an article about the Deloitte survey. Its Deloitte write-up that I quoted seems to be substantially different from the Forbes’ writers’ view. As I understand the Deloitte survey, the US economic growth could slow, say to 0.5% or 1.0% per quarter, but they do not really expect two quarters of negative growth. Of course, with rising population, per capita growth is less than the stated growth percentage. Per capita GDP growth would decline at 0.5% published (after inflation deduction) GDP growth.

  34. Harry McGibbs says:

    “The world’s already huge debt load smashed the record for the highest debt-to-GDP ratio before 2019 was even over.

    “In fact, it broke that record in the first nine months of last year. Global debt, which comprises borrowings from households, governments and companies, grew by $9 trillion, to nearly $253 trillion, in the first nine months of last year, according to the Institute of International Finance.

    “That puts the global debt-to-GDP ratio at 322%…

    “Such massive worldwide debt is a real risk for the global economy, especially because the IIF expects levels to rise even further in 2020.

    “”Spurred by low interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion” in the first quarter of 2020, the IIF said.

    “The Federal Reserve lowered interest rates three times last year, and the European Central Bank’s benchmark rate is still at its post-financial crisis lows.

    “Despite favorable borrowing conditions, the refinancing risk is massive.”


    • Harry McGibbs says:

      “Debt is “the match that lights the fire of every crisis”, in the words of Aaron Ross Sorkin, chronicler-in-chief of the meltdown which nearly collapsed the world’s financial system more than a decade ago…

      “Experts say the biggest potential flashpoints are in the world’s two largest economies.

      “In China, the debt mountain of state-backed companies has soared and defaults are on the rise. In the US, the stock of leveraged loans – the high-risk credit offered to debt-laden companies which carries a higher chance of default – has shot past the trillion-dollar mark.”


      • If the world economy slows, it becomes more difficult to repay at least some of the debt with interest. If interest rates fall, there is less of a problem. “Extend and pretend” can help as well.

    • CNN shows this chart of world debt:


      It seems to me that the drops in the growth in world debt are what are concerning. The turning of debt growth to debt shrinkage in the third quarter of 2014 may explain the fall in oil prices, starting about then. The fact that it did not start coming back up again until the first quarter of 2016 is an issue as well. In fact, the first time that debt levels rose above the 2nd quarter 2014 level, and stayed there, was the 2nd quarter in 2017. This is sort of when oil prices started rising again.

      The debt decline in early 2018 may be related to China’s problems. The increases in debt are not very high now, compared to immediate prior quarters.

  35. cashisking says:

    Good news food is infinite!
    Seriously though the rest of the fossil fuels should be reserved for food production and distribution not “green revolution”.
    And video games.


  36. Dennis L. says:

    More on solar, a local, landowner’s point of view.

    I am familiar with this area having driven 61 many times during my 30 years in the Quad Cities, it is beautiful, the land is not easy to farm. Moneywise, as long as they utility can pay, the rent offered per acre/per year is approximately 4 times its rental rate to a farmer based on what was solicited for my land. Taking that much land out of production would seemingly decrease the amount of land available for farming and either cause some farmers to quit or increase the rents paid for the remaining land. It is a challenge to farm without land.

    NEE is a very good stock, good dividend, good appreciation, known for using tax credits and expanding in renewable energy. What’s not to like?

    Dennis L.

    • Looking up “Pelosi Wisconsin Solar farm,” I see that this debate seems to have begun in mid-2018. In the words of one farmer,

      “I feel like this is taking the best, most fertile land in Wisconsin out of production,” said resident Jean Slapak, in a public comment. “I am in favor of solar and wind, but put solar panels in the desert, where they are not using fertile land.”

      Another concern:

      “How will rainwater and melted snow runoff impact our well-water system and that of our community? What herbicides truly will be used to spray around the hundreds of thousands of solar panels? In addition, what is the impact of winter weather or a large storm on a project of this magnitude?”

      One of the things that is needed for this solar farm is adequate transmission to take the electricity away. The proposed solar farm is near the proposed Cardinal Hickory Creek transmission line. According to this article, the $492 million project will be cost-shared among MISO users (a subsidy to the solar and wind it is helping). It doesn’t sound entirely like a done deal yet:

      Project partners ATC, ITC Midwest and Dairyland Power Cooperative will begin contacting Wisconsin property owners along the PSC-selected route beginning this fall. If approval is granted by the Iowa Utilities Board and three federal agencies next year, construction will begin in 2021 to meet an in-service date of 2023.

      It mostly uses the right of way of existing transmission lines, so it has a better chance than many transmission lines of going through fairly quickly.

      • Dennis L. says:

        Very nice research, this is relevant to me as Dairyland is the power provider for the cooperative utility based in Rushford.
        “The approximately 100-mile line, which will electrically connect the Dane County, Wisconsin, region to the Dubuque County, Iowa region, will help improve access to lower-cost power and renewable energy.”
        I note that “lower-cost power” does not necessarily imply renewable energy will be lower cost, were this to be it would be a trendsetter. Unfortunately I also own utility providers at either end of this line so I suppose profits will decline as costs increase, these utilities have been very well run over the years. Something about the road to hell being paved with good intentions.

        Dennis L.

    • The article talks about how the aging infrastructure can be expected to start many fires in the years ahead, if the power isn’t cut off to many consumers, under perhaps any foreseeable circumstances.

      I think the think that people lose sight of is that fire is a very normal activity in forests, especially dry forest. Fires are to be expected. It is only because of fire suppression techniques that we have managed to have fairly low levels of fires in recent years. Some kinds of seeds do not germinate without exposure to smoke.

      The US National Interagency Fire Center has a registry of acres of wild land fires burned going back to 1926. Information at the top of the chart says that reporting isn’t the same as in the past. We also know that fire suppression efforts are much higher today than they were in early years.

      The of acres burned can be found at this link:

      The number of acres burned exceeded 20 million for every year from 1929 to 1943. In fact, the acres burned was reported as 52,266,000 in 1930. Recent acres burned are far lower. There are some years with less than 2 million acres burned. The year 2017 is the highest recent year shown, with 10 million acres burned and 2018 had 8.8 million acres burned.

      If we cut back fossil fuel use, we cut back our ability to suppress forest fires. We will need to expect more forest fires (and thus damage to transmission equipment), even if the fires are “only” caused by lightning and other natural events.

  37. goss says:

    20 years ago we were talking about transmission line contraints with wind in the ‘north. The puc knew of this issue 20 years ago. Our mennonite/amish communities have invested heavily in wind power – grid connected and were investing back then too. Now we have xcel building out a fair bit of wind.

    I told them 20 years ago to locate their data centers next to the wind farm and run fiber wherever the data needs to go. Permitting for internet fiber is wham bam thank-you maam. A non issue. Guess what google is finally doing? Oh look, a data center, right next to the wind. Go figure.

    • The only catch is that wind is not really steady enough to provide the kind of electricity that a data center needs. The wind must be balanced with other fossil fuel electricity. It also need long distance transmission lines to get it population centers.

      In far too many cases, those supposedly buying wind power were really buying stabilized power that was partly from wind, at a cost far below its cost of production. Other customers were, in effect, subsidizing the price of these big buyers electricity. Also, the tax structure is providing huge credits for wind energy.

      One of the things that got left out of cost estimates was the cost of adding sufficient transmission lines. Now this is becoming a problem in one part of the Upper Midwest. It means that the amount of wind that will be added will likely drop way back for a while (even with subsidies) until more transmission is added. This may take a few years. I remember seeing 2024 mentioned in one write-up.

    • cashisking says:

      How many calories does data have per serving? Good recipes?

      • We know that there are bacteria that live on electricity for food. Data storage preparation and storage requires energy, especially electricity. This electricity, at least for microbes, seems to have calories.

        • Robert Firth says:

          Bacteria that live on electricity? So the greenies who want to decarbonise the world will deprive them of their food? Bacteria killers! Have you no shame?!

          The natural world is a seamless web, and one that we humans seem to be intent on unravelling, whatever political stance we adopt.

          “From Nature’s chain whatever link you strike,
          Tenth, or ten thousandth, breaks the chain alike”

    • Jan says:

      Those are great ideas to reduce our energy consumption. But semi-conductor technology is hard to maintain in an agrarian culture close to the middle ages or the bronze age. If you find a way how to produce its components in little quantities in unequipped alchemist labs without products from the chemical industry – that would be something. Glas is hard to make without fossiles, they burnt half of the European forests for some cathedral windows. I cannot believe this technology can remain in a system of reduces complexity.

      • Xabier says:

        This is being discussed on Dr Tim Morgan’s blog.

        Our communications systems are the most complex ever devised, and how they can survive ‘de-complexifying’ beyond a certain point is a mystery.

        Telepathy might be the future, I suppose? 🙂

        • oil free construction, ultimate energy saving

        • I wonder how our fire prevention and fire extinguishing capability will survive de-complexification. Expect buildings made of wood to burn down frequently.

          • Artleads says:

            I don’t think sprinklers in each wooden house is excessively complex. No doubt, a governance system that orders sprinklers at scale could afford to have ubiquitous wooden house sprinklers. That doesn’t happen now. Wooden houses don’t keep in the summer heat like concrete. It’s easier to forego AC in a wooden house. Concrete uses tons of energy to create, and wipes out mountain ranges. Wooden houses have important aesthetic qualities for a species that doesn’t live by bread alone. Charring wood prior to building with it keeps it from burning. Wooden houses are important to promote and value. Putting wooden houses down is unnecessary, and makes about as much sense as putting down fossil fuels and advocating for a switch to renewables.

          • Artleads: Pipes to carry water are pretty much too complex, so sprinklers are as well. The system becomes much less complex, if we are not using fossil fuels.

            • Artleads says:

              Sorry, I get confused as to when we’re talking about somehow being in a sharply contracting and unequal economic environment (that still runs on fossil fuels) , and when we’re talking about a world without fossil fuels altogether (which I’ve been thinking is impossible).

        • This is a link to the post on Dr. Tim Morgan’s blog. https://surplusenergyeconomics.wordpress.com/2020/01/13/162-the-business-of-de-growth/

          Near the beginning he says,

          In reality, though, both de-growth and de-layering offer opportunities as well as challenges. The trick is to know which is which.

          I can see that new small local companies might do better than global conglomerates, but apart from this, I think that de-growth and de-layering are mostly out of our hands.

          Then he says:

          How, then, are businesses likely to position themselves for the onset of de-growth? The answer begins with the recognition of two realities.

          The first of these is that prosperity is deteriorating, and that there is no ‘fix’ for this situation.

          The second is that ‘price isn’t value’.

          I very much agree with both of these statements.

          Dr. Tim has nice charts by country showing how discretionary income keeps falling. If required education and required medical care, keep rising, as does the share of GDP that needs to be paid to seniors as Social Security (or a similar benefit), it is pretty much a no-brainer that what is left over for raising a family and other discretionary pursuits has to keep falling.

          Dr. Tim’s big point with respect to ‘price isn’t value’ is that prices of shares of stock and of homes can rise far beyond their value, as determined by future income streams (dividend or profit streams). This is certainly true as well.

          Dr. Tim doesn’t seem to figure out that the price of commodities can fall far below their cost of production, as well. He also doesn’t mention the huge debt collapse problem that occurs if stock market and home prices fall.

          Near the end, he says, “Ultimately, the aim is likely to be to front-run both de-layering and revaluation.”

          New small businesses, growing where there are low or no minimum wages would seem to work, as long as collapsing asset prices don’t bring down the financial system, and as long as low oil prices don’t lead to the downfall of oil exporting countries.

          • The threats posed by sudden “de-layering and revaluation” are taken very seriously by the BAU / legacy system owners. Hence it will “sort of continue to work” till the very last possible moment, unknown from our vantage point. We can merely guesstimate from the ricocheting side effects about the true progress of this overall process (and its various sub kernels) so far..

        • Robert Firth says:

          Xabier, the Inca solved that problem over a thousand years ago, as I saw for myself in Peru. They built heliograph towers. Not quite as fast as email, but fast enough to run an empire that stretched halfway down the Andes.

          • DB says:

            Robert, do you have more information about the Incan system? I couldn’t find anything on it, although the Incas of course had an extensive road network used by running messengers.

            There also were optical, non-electric telegraph systems in parts of Europe in the decades before the electrical telegraph: https://www.lowtechmagazine.com/2007/12/email-in-the-18.html.

            • Robert Firth says:

              DB, it was up on he Altiplano, on one of the Inca trails. There was a native guide. Along the way, I saw a tower: quite tall, slightly sloped (think of the frustrum of a thin cone). A door at the bottom, and two windows in the top, facing in different directions.

              That rang a bell, so I looked around, and, sure enough, there were two other towers in line of sight, exactly corresponding to the aspect of the windows, and with windows of their own. Nobody else was showing much interest, so I said to the guide “This is a heliograph tower”. He smiled and nodded. I continued: “But how could the Inca send messages when they had no writing?” He smiled again, but with a smile that said “I know something you don’t”.

              Well, that was many years ago, and today most archaeologists agree that the Inca did have writing, but it was kept a secret by the authorities. Perhaps because fast communications were a military secret? My guess only. There are surviving quipu that are very complex, using colours, different kinds of spacing, different knots. Information theory will tell you one quipu can easily convey a bill of lading or a tactical military plan.

              Map the contents of the quipu into something like the instructions for a knitting pattern, send the result as flashes of light, and you have the answer.

            • DB says:

              Thank you, Robert.

  38. Denial says:

    I am an electrician by trade and it always amazes me that when I turn someone’s power off they still go around and try and turn on lights etc….
    The same holds true for this idea of “crash light idea”….when things go all things will go….social security, 401 k , pensions,….etc….As I used to argue on the oil drum 15 years ago there will be no real place to hide….I hear so many comments like I am going to sit back and watch and eat my popcorn; as if they will not be affected! Reminds me of when the wealthy went to watch the the first civil war battle and have a picnic as it was going to be over in a few hours…they came away shocked and repulsed!

    • It is not clear that people understand where electricity comes from and the amount of effort that goes into providing the level supply that we need.

      People also don’t understand how important it is that electricity is inexpensive. If it is expensive, everything that is made with electricity will also be expensive.

      • Tim Groves says:

        This morning I got up early, bunged a basketful of dirty clothes and towels into the washing machine, added some magic liquid, and selected the Hurry wash function.

        Then I made and ate breakfast, read the newspaper headlines, and by the time I was finished, the clothes were washed, rinsed and spun dry.

        I remember over half a century ago in the good ole days my mother and my grandmother washing and rinsing everything by hand and then wringing it through the mangle. Talk about drudgery! Housewives back then were full-time labourers. These days, thanks to miracle of electricity and the wonders of home appliance technology, it’s so easy that even a man can do it!

        Maintaining cheap and stable electricity may be a challenge, but if we don’t want to go through collapse, it’s one of those challenges we had better not fail at.

        If I ruled the world, I would organize a huge climate/global environmental conference on an island either off the cost of British Columbia or else in the Hebrides—somewhere not too cold, not too hot, and not too easy to escape from. When the delegates had all arrived, I would announce that they would be staying for a year and that they would have to do without electricity or fossil fuels. Not being a cruel man, I would provide a supply of plastic bowls and scrubbing boards. And I would tell them that they were pioneers who were beta-testing the new economy that they were advocating for everyone else.

        If I ran on that platform, I’m confident the entire world would vote for me!


        • I found this chart from an academic paper showing the results of a 2016 survey of washing methods around the world.


          A note says that the only African countries included are Egypt, Morocco, and South Africa. I suspect that India and Bangladesh were not weighted very heavily in the Asia-Pacific data either. I expect that a significant percentage of today’s world population hand washes its clothes, sometimes in nearby streams. Running water is a luxury of developed countries.

          • Robert Firth says:

            Gail, how “developed” do you have to be to have running water? The ancient Hebrews had running water. So did the Minoans. The citizens of Machu Picchu irrigated their terraces and furnished their homes with continuously running water. It’s not that hard: just build your settlements near running rivers or streams and let gravity do the rest.

            • I can get enough water collected off my roof to satisfy my basic needs.

              clothes might get a bit smelly, but as in past times, if everybody smells alike, who will notice

              it’s not getting hold of water that’s the problem, it’s getting rid of what comes out the other end that’s the problem.

              Those living upstream will dump their effluent on those living downstream

              it’s called ‘letting gravity do the rest.’

            • I think that the issue is mostly either (a) water too far from population centers or (b) not enough fresh water to distribute by pipeline, except for short periods, at designated central distribution areas.

              Both Africa and India are known for women walking around with jars of water on tops of their heads. I took this photo in India:


              I know that in Africa, one issue in educating girls is freeing the girls from the task of hauling water from the nearest stream or functioning water pump, which is often two or three miles away.

              This is an NPR story called Millions of Women Take a Long Walk with a 40-Pound Water Can.

              Before setting off, a woman must figure out which pump she can visit to actually acquire water on that particular day, Crow says. There are seasonal shortages and rations that may complicate this decision — and lengthen the trip.

              Once a woman gets to a water source, she can expect to spend even more time waiting in line. When there’s just a single hand pump, progress is slow.

              Depending on the size of the family and the household’s needs — like laundry, for instance — women may make this trip multiple times on the same day. If water is available only during a certain window, “they rush, and can’t pace,” Geere says.

            • Robert Firth says:

              For Norman: Your comment seems to me a very “western” view of the matter. Most sustainable societies channelled their waste water into simple purification systems, usually biologically based. At Machu Picchu, the people lived on the top of the hill; their effluent flowed down the agricultural terraces, which removed the contaminants (mostly human and kitchen waste). Yes, I’ve been there.

              In Edo Japan, the same role was usually played by rice paddies, where the ducks and the carp helped dispose of some waste; the rest helped the rice grow. And houses without running water had their waste removed by hand.

              In Rome, the sewage system was used almost entirely by the baths and other public works; human waste was usually sequestered and dealt with separately. This system began to fail in later years as the city population expanded, but the original design was sound.

              We forget that, before the Industrial Revolution, almost all pollution was biological in origin, and could be dealt with by natural systems if they were well designed and tended.

            • I think you dealt with the question yourself:

              The system stopped working after the population expanded.

              In London and other cities, “night soil” was removed by men with carts, and taken out to surrounding fields which supplied food back to the city itself

              No doubt you’ve read about the ‘great stink of the mid 1800s

            • Robert Firth says:

              For Norman:

              You say: “The system stopped working after the population expanded.”

              A comment with which I agree without reservation. And thank you for a most thought provoking and informative exchange.

            • yes I too enjoy being forced to stop and think things through in here and debate conclusions

            • doomphd says:

              when visiting Germany in the late 1980s to early 1990s, the train routes all smelled of urine, because it was being dumped from the trains in route. they were all using humane manure on some of the crop fields. it has a certain pungent odor, even if somewhat composted.

            • John Doyle says:

              Switzerland too recycled all their cattle waste [+?] into a very smelly “soup” they sprayed on their fields. I never saw that happening in Italy even though they kept all the waste straw from the fattorie, and spread it around. Here in Aus where we don’t have sheds for winter quarters for animals we have dung beetles, and superphosphate.

        • Jan says:

          You can do without a washing machine easily. Use warm water, detergeant and a brush. It is hard work to do bed sheets and towel or jeans for the family, though. You can leach wood ash in water to get a mild alkaline solution after filtration. Boiling and vaporizing the filtrate you get potassium carbornate. The early glassmakers used this. Drop a strong solution into 60°C fat and get a soft yellow soap. No deal. Use wood ash directly to clean dishes or desinfect rooms. Much more difficult to grow linseed (flax) to make fabrics and clothes. What is more the kids grow every second. Guess thats why Romans and Indians just wrapped the cloth around, one has to be clever!

        • Artleads says:


        • Dennis L. says:

          Yes, the time constraint, modern conveniences are wonderful time savers.

          Notice how neatly these women are dressed, most have aprons, their hair is well done, they are standing on a duck board to soften what I assume is a concrete floor behind them and there are perhaps two pipes along the wall one for hot, one for cold?
          Note also that while they are not model thin, they are basically of a healthy weight. This is what I see so often in what I assume is a WPA photo, the people were neat, they are proud, their clothes are clean even though they are poor and these women are dressed in a modest manner, they look like the mom’s next door in my youth.

          There is good evidence that modern, social media is driving kids nuts, especially girls who have experienced a 100% plus increase in suicide rates since the social media craze.
          We are trying to live a Hollywood existence, air brushed, surgically modified, scripted which even for those living it seems to be a life or stress, divorce, drugs and when seen in actual photos of later life, man, they have been on a life of forty miles of hard road.

          So, what can we do? Turn off social media servers, use the money to update and maintain the grid as it exists, this in turn helps our mental health especially our young women, so it will get the feminist vote, updating the grid will put men to work, climbing a pole is hard and we can save petroleum by not using bucket trucks. At the same time there will be a few less billionaires, is that such a bad thing? Is this such a bad way down?

          Life is going to change and as you mentioned, some things are worth maintaining, it can be done. Homes can use less electricity without solar cells, etc., turn off the TV, get a book and read. Have some friends over and play a game. Somehow my parents did these things and mom still did the laundry albeit with a wringer machine, two tubs and an environmentally friendly clothes line – humidified the house once a week in the winter.
          Water, have more than one person use the tub, sequentially, or together. No, it does not all have to be sexual, sometimes it is a bath. We did this when I was a child, the toilet was not always flushed after peeing, my parents saved money, one dollar or dime at a time. I was wealthy fashionable, my jeans were patched and did not have the holes and tears so common today.

          Even with the challenges before us, we have it good, life is good; betting on all the disasters and vicariously participating in them by putting in a supply of popcorn is not a very positive way to live one’s life.

          I remain an optimist, there will be a tomorrow and it can be a good tomorrow. We can adapt, my greater concern is that we do adapt, we socially need eachother and somehow have to come to a more realistic view of the world and our place in it, accepting it and finding some happiness in what is our only life, this one.

          Dennis L.

          • Artleads says:

            Well said. But I may be too far gone into individualism and privacy-fetish to endorse some of these communal measures (although they very significantly describe my own upbringing). I recommend small cheap (or even free) housing, but each unit having its own compost toilet that empties elsewhere than into over-full sewerage systems. Ubiquitous rain catchment of course (although that won’t be enough in many places).

    • Davidinamonthorayearoradecade says:

      “As I used to argue on the oil drum 15 years ago there will be no real place to hide….”


      I agree… yes yes yes yes yes…

      by the year 2035, there will be no real place to hide…

  39. Jan says:

    EU commission to invest EURs (1 German Billion = 1.000 US billion) into sustainable energy until 2030. First focus: Subventions for regions stopping coal electrification (Poland). The money should be raised by unclear mechanisms from private and public sources. More to be published in the near future. Objective is climate neutrality until 2050.


    Climate neutrality means obviously not to rely on fossile fuels at all.

    • Wishful thinking!

      • Or clever scheme how to play for time..
        Basically, along the lines of attempted making a smaller batch, self imposed austerity etc.. Could very theoretically work for few more decades with diligent planning and tightly controlled levers on power, obviously unless the %pop gets restless first and kicks the table upside down, e.g. extrapolating French beyond today ~calm protest scenario.. and or other intervening civilization on natural derailment.

    • Rodster says:

      “Climate neutrality means obviously not to rely on fossile fuels at all.”

      Not gonna happen for two important reasons !

      1) The world is up to it’s eyeballs and drowning in debt.
      2) There aren’t enough natural resources on this planet to switch from fossil fuels to alternative energy, not with a population of 7.8B humans and that number keeps growing.

    • DJ says:

      I would have guessed climate neutrality is another word for co2 neutrality, that is deducting some make believe negative emissions from co2 emissions.

      If they spend much money they could probably invent lots of negative emissions.

  40. Harry McGibbs says:

    “Manufacturers will be hoping for a turnaround in fortunes in 2020…

    “It’s unlikely there will be a marked improvement globally. World trade growth will continue to move along at a glacial pace, increasing by 1.7%, but GDP growth will decelerate to 2.4%, down slightly from 2.5% this year. Insolvencies… will … remain at an uncomfortably high level.”


  41. Harry McGibbs says:

    “Yet again, the Fed and other major central banks have helped to extend the global expansion by adding stimulus in response to rising recession risks. However, last year’s easing of monetary policy comes at a price: Whenever the next economic downturn or major risk market drawdown hits, policymakers will have even less policy capacity to maneuver, thus limiting their ability to fight future recessionary forces.”


    • Harry McGibbs says:

      “Companies across the globe took advantage of lower borrowing costs to sell a record amount of bonds in 2019, prompting renewed concerns among policymakers about soaring levels of debt.

      “Central bank policy has played a significant role in what’s happening,” said Asif Sherani, a managing director in debt syndicate at HSBC in London. “It is clearly contributing to the surge of corporate issuance.”

      “The record debt sales highlight tensions between policymakers’ desire to keep the cost of borrowing low in an attempt to stimulate economic growth, while at the same time sounding the alarm over rising corporate indebtedness.”

      “The trend has shown little sign of abating in 2020…”


      • Harry McGibbs says:

        “Investors have largely disregarded warnings about a US stock market crash, but these three red flags have become too serious to ignore:

        “Ballooning government, corporate and private debt across the world will make an upcoming bear market more painful.

        “Stretched valuations in the market point to an upcoming pullback.

        “Geopolitical tension is looming like a dark cloud over the mark.”


  42. Harry McGibbs says:

    “…a low mortgage rate environment is important in keeping housing conditions in good shape. The Federal Reserve has played its part by slashing interest rates. But the problem is that stagnant wage growth and consistently rising home values [due to supply pressures] could price buyers out of the market.”


    • Harry McGibbs says:

      “Scott… is a marketing manager for a health and beauty company based in nearby Provo, Utah. Though he earns around $60,000 annually — about 20% more than his dad did at his age — he is living with his parents, because he doesn’t feel he can afford to buy a place of his own thanks to soaring housing prices.”


    • As the article says, “. . . buyers could start pulling out as supply remains scarce, prices rise, and wage growth remains weak.”

      My daughter tells me about the problems that her friends in the Boston area have run into when they buy expensive, old homes. These old homes often need expensive repairs. Some of her friends have sold and moved back into apartments. She is in no rush to buy a home. She and her spouse would think about buying a home, only if buying in a home was needed to help lock in a school district for a child.

      Educational attainment in the US seems to vary a whole lot, based on the education of parents. A major reason for buying a home seems to be to lock oneself into an area where other parents are educated and can afford to buy homes. Schools seem to vary a lot, by school district; they are mostly paid for by local property taxes. If there are no children involved, or if they are only of preschool age, the pressure to buy a home is much lower. Quite a few US families seem to home-school, partly because of school issues.

      • Artleads says:

        Without mainstream-type experience, I don’t know if I have this right. I experiment with “repairing” my old house. I certainly don’t do it conventionally, but use what is at hand, much of it being discarded paper (for pulp) mixed with discarded paint (for adhesion, rain fastness, etc.) Since I have no interest in selling the property, I’m not involved with mainstream aesthetics. There is a whole lot I can’t do–electric, plumbing, etc.–but I try to do things to barter for the expertise. It’s not a perfect system, but it tends to keep the house standing without a lot of money.

    • Robert Firth says:

      Harry, the comment you quote seems to me exceptionally stupid, even for an economist. Low mortgage rates simply trigger a bidding war, as potential buyers feel able to borrow even more money. This raises the price of housing, and nobody really wins anything. In addition, lower rates in the longer term reduce the surplus available for builders to invest in new houses, so creating a shortage. If left to itself, the free market will find a balance among these competing interests, but today there is no free market.

      Many people sympathise with Shakespeare’s remark “kill all the lawyers” (Henry VI, Part 2, Act IV, Scene 2). Maybe today we should amend that to “kill al the economists”.

      • Customers with falling discretionary income can afford lower and lower monthly payments for homes. And fewer customers, in total, can afford to buy homes. There may be a bidding war, but only among a relatively small number of folks whose income comes from ever-rising stock prices and building prices. Ordinary folks, getting their income entirely from wages, find themselves dealing with higher costs of education and medical insurance, bringing down their discretionary income.

        Economists recognize that in such a situation, about the only band-aid they have available is extremely low interest rates–preferably lower than they were in the past–together with very long amortization periods, to keep monthly payments as low as possible.

        • Robert Firth says:

          Thank you, Gail. As you might guess, I respectfully disagree. First, why do economists feel they need to rush in with a “band aid”? They are not part of the solution; they are part of the problem, and should quietly go away. Secondly, they are trying to solve a liquidity problem by making people take on more debt, for longer terms. That will merely exacerbate the problem.

          The solution to expensive housing is more supply. And the way to achieve that is first, to ensure the house builders enjoy more income, and secondly to remove many of the legal and bureaucratic obstacles to house building. In other words, to relinquish control, and let the free market work.

          Which they will never do, because as William Burroughs once wisely remarked: “Control is never a means to any useful end. It is a means only to more control.”

          “Let us break their bands asunder, and cast away their cords from us.” (Ps ii:3)

  43. MG says:


    “Bald men are typically older, and tend to be seen by women as more intelligent and wiser, according to a separate study conducted at the University of Saarland.”


    “And another study at the University of Saarland found bald men tend to be seen by women as more intelligent and wiser. However there is a catch. You have to be completely bald for the perception to apply – with men with bald spots or patterned baldness seen as weaker.”

    The baldness is a sign of ageing and ageing is connected with aquired wisdom. Maybe it is just this visual deception, not the reality.


    “Maybe bald men can thank prominent bald actors like The Rock, Bruce Willis, and Vin Diesel for demonstrating that bald men can still ooze sex appeal. This study reported that bald men were viewed as more manly and strong.”

  44. MG says:

    Humans are the highest energy apes, making us smarter—but also fatter


    For me, it is interesting that it is l-threonate that inhibits androgene alopecia:


    And it is magnesium l-threonate that regulates synaptic density and plasticity of the brain.


    That is why l-threonate seems to be responsible for our hair rich heads and better brains, i. e. as if more of it was concentrated in the head than in other parts of the body in comparison to apes.

    Does Alzheimer’s disease exist in all primates? Alzheimer pathology in non-human primates and its pathophysiological implications (I)




    “One important physical difference between humans and apes concerns human hair’s ability to grow ceaselessly.”


    • This is sort of a combination of articles about different things.

      It is interesting that humans have a significantly higher metabolism rate than other primates. It sounds like from the research that the various types of primates all had different metabolic rates, and humans came out on top. There had to be a number of changes to accommodate this change.

      The magnesium l-threonate seems to be available as a supplement from a number of sellers. There seem to be a few percent of buyers of all of the brands who have adverse reactions to its use.

      • MG says:

        Yes, the adverse reactions are present. Because it is about the correct concentration of magnesium l-threonate in the brain. Those who do not need to elevate the concetration of this stuff, have the adverse effects similar to taking memantine, which is a drug prescribed to Alzheimer’s patients, when they not need it. The adverse reactionw can be felt like brain fog etc.:


        But I wanted to point out to the connection between the neverending hair growth on the human head and the synaptic density and plasticity increase together with beta amyloid deposition reduction (see the picture here: https://www.neurocentria.com/research) which magnesium l-threonate exerts.

        There simply must be something that connects these 2 characteristics of the human head and the research points out to this stuff.

        The humans differ from apes in the delayed synaptogenesis. The process of synaptogenesis may be the key difference between the humans and the apes:


        “Our results suggest that delay in cortical synaptogenesis, extending the period of synapse formation to over 5 yr in humans from a few months in chimpanzees and macaques, could be a potential mechanism contributing to the emergence of human-specific cognitive skills.”

        And it is the concentration of magnesium l-threonate that regulates synaptic plasticity and density. Higher levels of l-threonate prevent head balding, too.

        Is it just some coincidence?

        • NikoB says:

          One would expect bald men to be less intelligent or have lesser brain plasticity if there was a link.

        • Xabier says:

          So much minute and careful research into the brain (the ecosystem, etc,), while all around us the poisons and decay continue build up, unstoppably, until our civilization is gone – such irony!

          As if one died and went to Hell and thought that the best thing to do was to map it, and that it would help one find a way out…..

          The cleverest and most foolish animal on the planet.

          • Robert Firth says:

            Xabier, you enter Hades by crossing the River Styx, ferried by Charon. And there you are judged. If righteous, you may return to the living world across the River Lethe. But you must swim across, and if you drink of the water, you forget your previous life. Thereby learning nothing. And so turns the wheel of Tyche.

        • Interesting study! I am not sure I understood all of it.

          • MG says:

            Environmental enrichment combined with meantime or magnesium l-threonate works as therapy for Alzheimer’s.

            “Environmental enrichment and MgT may synergistically improve recognition and spatial memory by reducing synaptic loss and restoring the NMDAR signaling pathway in AD mice, which suggests that combination of EE and MgT may be a novel therapeutic strategy for AD.”

            The impact of the environment on the formation of the human brain seems to be profound.

        • TY says:

          Intersting you mention this; i’ve just discovered recently myself that maybe magnesium l-threonate may be of benefit to improve cognitive performance and sleep as well and have recently started testing it.
          Unlike many food supplements, it does appear to have some effect, at least it does feel like it’s “doing something”.

  45. Dennis L. says:


    Assumption: the above cited article is approximately correct.

    How did ASPO get it so wrong?

    There is no $300/barrel oil as predicted at a DC meeting when ASPO went to Dept. of Energy to inform them soon oil would run out.

    An incredibly intelligent, concerned and from directly chatting with them an honest group of people who got it wrong, why, how?

    Dennis L.

    • People do not understand how networked systems work. They assume that “of course” we will run out of oil and prices will be high.

      There is a different way that we can get to the same end point: We can have more wage disparity, and as a result many fewer people can afford homes, cars, air conditioning, and many other devices that use energy prices in their production and in their ongoing operations. Prices can drop too low. The system can fail from too low prices. This was more or less the problem we were up against at the time of the Great Depression. This is what is happening again now.

      • Jan says:

        With a potatoe supply crunch the price rises. People understand this. But there is a second effect: Less potatoes are sold – of course, otherwise it wouldnt be a supply crunch. Now our highly paid government experts and sci-fi friends believe, that a high price for potatoes will also rocket caviar sales – because they are becoming competitive.

        Even the simplest pitchman knows, people buy more cabbage instead or go on a diet.

        If this is a question of understanding there is indeed not much hope for the human race…

        • DJ says:

          It is easier substitute potatoes than oil.

        • DJ says:

          Maybe wind power is our cabbage?

          Not our first choice, but keeps us alive a bit longer.

          • I am afraid wind is no substitute for oil. The economy just “makes a smaller batch” — really a smaller economy. It shuts down part of manufacturing and international trade. Our supposed substitutes aren’t good enough.

          • Jan says:

            I bet on diet.

          • NikoB says:

            Cabbage generates wind power.

          • DJ, great point. I guess it must be linked to some deep psycho condition of humanoids..

            Wind is seasonal, erratic, on occasions even beyond dangerous.
            Wind energy is an addendum to pre-existing base load grid system.
            Wind is way more expensive to install, maintain, connect to grid or microgrids w. batt packs etc.
            Still, people are fascinating that it works at all or in the most expensive variant (microgrids) it seemingly makes the outside baseload grid invisible for most of the year.
            Hence people get ecstatic.

            But if you suddenly don’t have the fallback option (to service it – high end parts) or to connect back to the grid, well..

    • Davidinamonthorayearoradecade says:

      “How did ASPO get it so wrong?

      There is no $300/barrel oil as predicted at a DC meeting when ASPO went to Dept. of Energy to inform them soon oil would run out.”

      I remember quite clearly that at that time there were other “intelligent, concerned” persons who thought that oil could never get that high (in the dollar value of those days)…

      it was a debate that seemed to last for quite a while…

      the other side of the debate thought that if oil ever started to approach even $200 then that would harm the economy because the energy in oil is within almost every part of IC…

      and then the price would come down because of the economic slowdown caused by the huge extra expense of the too-high-priced oil…

      so, the facts show that oil spiked to almost $150 in 2008 and then quickly plunged due to the predicted economic slowdown…

      so we do know who was right… 😉

      • From my hazy cloud recollection of those days I guess there were three major blocks of thought formed around that question, namely:

        1/ Hockey stick pricing for ever and or highly elevated plateau from now on
        2/ Return to realistic range bound snake (on way lower level to #1)
        3/ Demand constrained – very low even crashed price levels to be expected

        The options #2-3 were discussed, but formed minority in the forums community.
        Groups #2-3 (also active elsewhere) even involved one or two brainiacs openly boasting – predicting and betting on the ~2015 slump.. although the early hockey stickers moved more up previously (disregarding later slump losses if they did not get out on top).

    • Davidinamonthorayearoradecade says:

      so now the oilprice.com article has its own predictions:

      “Global oil markets will remain well supplied this year, with a possible overhang of some 1 million bpd, the head of the International Energy Agency, Fatih Bitol, told Reuters.

      Demand growth, however, will be slow, according to Birol. “We are expecting a demand growth of slightly higher than 1 million barrels per day,” the top IEA man told Reuters.”

      “This means that except sudden spikes in prices due to geopolitical factors or possible production outages in a major producer, oil prices this year will remain largely range-bound.”

      this is where OPEC/Russia can’t or won’t get serious about establishing production cuts to enable higher prices… they would have to cut by MORE THAN 1 million bpd to eliminate the oversupply…

      I think there’s a better chance that demand will be lower than he thinks, due to what appears to be a global economic slowdown, perhaps a global recession, depending on how statistics are compiled/manipulated…

      it’s probably going to be right that 2020 oil prices “will remain largely range-bound”…

      but the economic lessons of OFW tell us that oil prices will remain mostly in a low range, and that is where we are now with WTI at $59

      if ASPO back then could have realized the many downward economic pressures on oil prices, they would not have been so wrong…

      • Dennis L. says:

        My introspective question is “Why did they fail to realize?” “The Limits to Growth” is supposedly recursive and as such sort of self organizing, most of us read it, but we came to conclusions that did not work.
        US oil production is at an all time high, overall poverty is down, the wealthy who did not follow such ideas have more wealth than ever before and according to a report those making more than $500K are very happy and satisfied with their lives.
        Those who were optimists have happy, successful lives, those who thought the price of oil was going to the moon are grumbling and thinking doom and gloom is right around the corner – there have been a lot of corners these past fifty or so years.

        Dennis L.

        • Economists have been great evangelists for the view that prices rise in the case of shortage. They never considered that there are two different cases:

          1. When a necessary “ingredient” for the economy to function is missing or is in short supply.
          2. When an easily substituted ingredient for the economy to function is missing.

          Their high-price model works in the substitution case. It also tends to work in the very short term, when refineries, factories, and others have workers that they would need to lay off, in the absence of adequate commodity supplies. In this case, they have costs that are fixed in the short term.

          But if a high enough quantity of the right kinds of energy products cannot be found in a short enough time, the economy simply shrinks back. This is what collapse is all about. Economists cannot imagine the possibility of collapse.

          • Robert Firth says:

            Gail, once again classical economists knew all the above. This knowledge was captured by Liebig’s Law of the Minimum, actually enunciated by Carl Sprengel in 1840. Those interested can look it up. It was true then, and it is true today.

            As a modern example, the determining factor in developing wind power is neither the windmills nor the wind, but the transmission lines, the least available resource.

            • That is a good point about the transmission lines being the least available resource, and thus the limiting factor.

              With respect to plants, I think that Jevons was generally right. One catch is that this doesn’t mean that plants will necessarily have the right nutrients for humans who eat those plants. For example, plants don’t seem to need supplemental magnesium to grow, but humans need magnesium from water and/or plants. There are minor nutrients that plants can get along without, but perhaps humans require. At some point, there can be a “minimum nutrition for humans” problem, even if the plants seem to do adequately well.

    • to be able to afford $300 oil, you first have to burn $300 oil–ie the $300 oil has to be surplus in the first place,

      We no longer have that surplus.

      When oil hit $25, it was going to be the end of the industrial world. It wasn’t because we just pumped more oil —ie, we had ‘surplus’ to burn.

      When we paid $25, there was always more oil to create more wages with which to pay for more oil to be produced.

      which is what we did. Think of it as an upward spiral

      As king as production always kept ahead of burning, the system worked

      with oil at $300, production falls behind burning. Which is why that can’t work. The spiral is now running downward

    • Another issue:

      “An estimated 90 per cent of migrants who came to the country during the height of the 2015 migrant crisis and received permanent residency are unemployed.”

      • Tim Groves says:

        One wonders whether Sweden will run down its pension funds in order to keep making welfare payments to the unemployed, and then promote euthanasia for retirees in an attempt to balance the books?

        • Hubbs says:

          I suspect the state will just withhold medical care. Here in the US, ?90%? of the care dollar is spent (wasted) on keeping people alive the last 6 months of their lives. Although I am a retired orthopedic surgeon, if this number is accurate, Gail can verify this percentage far better than I although anecdotally, while I was in practice, I just marveled at the expense pumped into keeping people alive. My most memorable case was a 90ish-year-old man who was incredibly alert, who fell and broke his hip. ( a non-pathologic fracture- not due to weakness of the bone from cancer, but from the impact of a fall- required a quick 30 minute surgical hip pinning with plate and screws.) He had Stage 4 (metastatic) lung cancer with known mets to the brain, and stage 4 prostate cancer with mets to the spine. He went on for days lying in bed, absolutely pissed as hell as to why he “just couldn’t get this God damned hip fixed” as the internist ran test after test, CT brain, CT Chest, Bone scan, adenosine cardiac stress test, etc., at the anesthesiologist’s insistence. By the time he was “cleared” for surgery, he had deteriorated so much that I think pneumonia had set in. And now North Carolina has some incredible BS requirement that for me, a healthy 65 yr old, with no family, no friends but an ineligible 16 year old daughter (required age 18 to drive me home after the scope ) on no meds and no active medical problems getting a routine colonoscopy requires an official medical transport attendant to stay with me at the center during the procedure and transport me home afterward. If I were to get a heart attack or suffer a colon perforation during the procedure, what would this “authorized medical transport” to be able to do while I got transported to the hospital by a formal ambulance, or if anything happened after leaving the outpatient center, what would he or she be able to do more than a regular taxi driver who would take me directly to the hospital? The bullshit and bureaucracy is mind-boggling and I am pissed!

          • I would agree with you that the health care spending in the US is absolutely absurd. An awfully lot is spent during the last few months of life, even when it is not possible (for me) to see any sense in the spending. The idea behind the “hospice” program was to cut back on this absurd spending.

            As long as the government is paying nearly all of the cost of extraordinary procedures, too many relatives feel as though they have an obligation to extend the lives of their loved ones, using whatever means are available. I have run into this too often in talking to people. “So and so (who is 80 years old) has Stage IV cancer; we found an out of state doctor who thinks he can cure her. It will take surgeries and chemo. Perhaps that there is a chance it will work, for at least a few weeks.”

            • Robert Firth says:

              “Thou shalt not kill; but needst not strive
              officiously to keep alive:”

              Arthur Hugh Clough (1819 to 1861)

              Almost ten years ago, I wrote a living will that said essentially the same thing. When God in his wisdom calls me out of this world, do not hold me back.

            • cashisking says:

              I dont trustem. Its for profit medical system. Once they see someone will pay they start to decide what procedures you need. if no ones paying you dont need them.

              Lots of people head to Thailand to die. Less drama. If im terminal think i will take a walk. Coyotes need to eat too.

            • Robert Firth says:

              cashisking, I agree with your comment. That is precisely why when I turned 70 I cancelled my health insurance. (I’d never claimed on it anyway: the first line of defence in health care is me.) So nobody is going to run up a huge insurance bill on my behalf, and so raising premiums for younger people who cannot afford any major medical expense. And by the way, a living will is here legally binding.

        • DJ says:

          The pensions are self-regulated, I think one of the worlds most sustainable pension systems, there are no promises to pay out anything that isn’t there.

          Same with health care. There are guarantees receiving treatment within certain time, but if failing to do so there is no penalty or compensation.

          Current status is
          Future (hah) government pensions will be the same no matter how much or little you worked.
          Treatments are routinely postponed. I believe average time to prostate cancer surgery is 200 days. That will weed out aggressive cancers.

          I predict occupational pensions will be put under state control (“to ensure sustainability and justice”), and then used to cover budget holes.
          Healthcare wise the trend to shelter good tax payers from faltering care will continue.

          In the future guaranteed minimum living standards will have to be cut, and that will buy time before total collapse.

          • Nearly all government “pension” schemes (such as Social Security) are basically “pay as you go.” The contributions of young people today pay for payments to today’s elderly. If these payments fall short, general tax revenue need to pay for these pensions. Future payments are not guaranteed, even though people think they are. Governments, in theory, can cut funding whenever they choose. (They will get riots, as a result.)

            There are also the pensions you talk about, which are supposedly pre-funded. The catch is that interest rates have come down greatly from when the assumptions were made. Also, if there are a lot of bond defaults, or if the stock market falls, the money that has been contributed won’t really be there. The US has a guaranty fund, but it depends on taxpayer funds for funding.

            • DJ says:

              Swedish occupational pension is not only pre-funded but also earmarked for and invested by the worker.

              As Christoper wrote- as long as stocks go up-up-up and the funds are not stolen at least top 20% will get decent pensions.

              But we’re asking for 30-40 years of positive real returns…

            • cashisking says:

              .gov is unbelievably prepared for riots in the USA. riots will be SQUASHED. Grey panthers not the best rioters either.

              I dont see that though.

              Someone always seems to buy the bonds as they come mature. My understanding is that fractional reserve banking regards USA treasury bonds as the ultimate collateral. This make buying US treasury bonds a no brainer for financial institutions as they can then create 10x 40x that amount in “money”

              Hypothetically you could buy a million in bonds if you were a bank then create ten million in cash. You could buy ten million worth of bonds with that and create 100 million in cash.

              See how this goes. So there will always be bond buyers. Very desirable instrument at any interest rate. Including negative. If your in the club and play by the rules.

              Bonds are the only example of a self replicating exponential growth phenomena. Besides humans of course.

              ss will get financed. The stock market wont fall. Whether there are goods to buy or their price is a different question.

              We will have homeless camps big as NYC way B4 that.

              Housing takes real resources to create. Materials labor. code . electric and sewage infrastructure. one doesnt create ten like bonds.

              Sure would be nice if energy food and housing were self replicating 10x to infinity and beyond like cash.


        • Christopher says:

          As DJ says the swedish system is considered to most sustainable pension system. There are no actual guarantees issued, you only get what the system can afford. The government part of the swedish pensions consists of a special tax on the employed which directly feeds the pensions there is also the four AP-funds that collects money in this system in times of plenty and are supposed to kick in during poorer times. These funds have been around since the sixties and have of course benefited much from the stock market bubble.

          Beside the government part of the pensions you are expected to have an occupational pension paid by your employer and put in some private pension fund, which also benefits from the stock bubble. Most people I talk with of upper middle class background in the age span of 35-50 seems to be quite satisfied with the numbers amassed in these funds and they expect an early retirement….

          The occupational pensions will be hard to expropriate. The AP-funds will most likely be expropriated, they are already in government control but their spending is restricted to pensions. But in the end they will likely be used to fund general government costs besides pensions. There are 1400 billion SEK in the AP-funds, about 40% of swedish GDP, most of the value is of course predicated on the value of the stock exchange.

          My conclusion is that the swedish pension system may be the worlds most sustainable system but the sustainability of the swedish pension is entirely predicated on the global stock market bubble which will most likely not prove to be sustainable.

          • DJ says:

            There are workarounfs.

            State wants to build a railroad- have the AP funds invest in the railroad.

            State have too little pension fund, and “rich” have too much occupational pension- let government pension fall to say 3k, but at least 10k guaranteed. Those with occupational pension will in effect get a 7k deduction.

            • Christopher says:

              Sure, possibly this will be tested. At least wasting the AP-funds on state expenditures.

              The second proposal will appear as theft to many more. If the values of swedish government bond and the stock exchange will remain on it’s current levels it may of course be tested. Somehow I can’t get rid of the suspicion that these values will prove to be rather shaky, at least adjusted for inflation.

          • Financial systems fail and governments fail. If either of these things fail for Sweden, the Swedish pension system will be like every other pension system in the world–not really available, I am afraid.

            Government guarantees are no stronger than the ability of the government of continue as it is today.

          • cashisking says:

            Along the lines of normans comment earlier- you cant own the planet. Studying native cultures, its clear to me there was incredible hardship. No one really knew whether there would be continuance in yearly period not only for individuals but for the whole tribe. I have no allusions about how hard that life must have been I do wonder what it would be like living understanding impermanence instead of living caught inbetween understanding it and living with the frail structures that try to negate it to some extent that have been there our whole lives. I wonder if in a understanding impermanence there was unity both on a individual and tribal level even as I shy from the hardness of those lives.

      • Denial says:

        Not denying this but could you please site your sources when you make claims……otherwise you turn the water in to a dirty mess
        “An estimated 90 per cent of migrants who came to the country during the height of the 2015 migrant crisis and received permanent residency are unemployed.”

        • I copied the sentence out of the linked Breitbart article. That is why I put quotes around it.

          It strikes me as high also.

        • Denial says:

          I just read this and did not realize that it was talking about Sweden that could be right….I thought it was about the U.S

      • Robert Firth says:

        No surprise there. The migrants did not come for work; they came for welfare. And they have what they came for, so why bother working?

        Repeat after me: the only way to get rid of the wasps is to put the lid back on the marmalade jar.

        • Now, this comment will “automatically” turn some people glowing hot mad, but just ponder the following.. During recent days large part of the European TV was dedicated to coverage of the sport activities in various biathlon races, meaning guys and gals running dozens of miles in snowy mountains, occasionally sharp shooting at the range etc.. Hugely popular across many, especially northern states. Most likely this interest and all stems from some atavistic “hunt” or “war” making activities of the past..

          In strange contrast many of these very same societies absolutely object to fully back standing laws, so external frontier of the EU is not protected, often various parts of the agencies-apparatus are actively helping incoming migration waves to get in.. And no I’m not advocating for open fire on them, denying access/entry and not carrying blue water rescue should be enough.

          This is obviously uneasy realm of decision making, but one can clearly draw parallels into past self destructing behavior of various cultures and civilizations.

          • Xabier says:

            Over-civilised, media-saturated people are often in love with the ego-image of themselves as just, generous, kind: leading to self-destruction and detachment from reality.

            The very high unemployment and crime rates among recent Asian, African and the all-star Gypsy immigrants (50% + in most countries) speak volumes – not to mention the evidence of their being exploited and enslaved by other migrants and criminals on a massive scale. A dismal picture!

            Governments have, in effect, been acting as accomplices of the people-smuggling gangs.

            Weak government has meant that, say, a boy can be kidnapped in Vietnam and find himself months later in Britain tending a cannabis farm under threat of death, having been gang-raped repeatedly, as in a recent case in the UK.

        • I don’t know about the situation in Europe, but we in the US seem to have found a lot of hard-working immigrants that come here. We find immigrants in a wide range of job categories. We see quite a lot of working women wearing hajibs, for example.

          I don’t know the particulars in Europe. Lack of training? Not speaking the language? Too generous a benefit system?

          It no doubt takes time to integrate newcomers. We have enough Hispanics in the US that many of them seem to speak Spanish exclusively on their jobs, for example. There are Hispanic-owned companies providing tree trimming and removal services, painting services, landscaping services and many other services. Their children learn English, even if the parents don’t learn quickly.

          • agreed

            if we in uk stop migrants, our elderly will remain uncared for, our veg will remain in the fields and our cars will remain unwashed

            too simplistic?


            but this is where we are right now.

          • That’s defaulting into the classic long winded argument about the nature and pro/cons of immigration. I simply observe and posit that almost no strings attached form of migration, meaning pre paid generous benefits, ghettos formation etc. is something completely else from the minority of active, skilled and welcomed melting-pot few in between participants. Not mentioning the whole issue has been supercharged by the economic-school/gov faction looking only after aggregate volume per head, i.e. the bigger inrush the $better argument.

            It’s tricky also in historical context, e.g. the supposed Ugro-Fin branch of ancient Uralians the Hun-garians made a lot of mess when forcefully joining Europe in the middle ages. Well, they paid their duties later when for centuries guarded the front-line from the Ottoman Turk wave of invasions.

            Now, we have been into this before, but clearly the genetic (and specific biome adaptation) conformity follows (from northern lat) more or less the route of W. European (Celtic-German/Nordic-Latin) ->CEE/Slavic->UgroFins-> … -> various blends of Caucasians … -> Asians incl. the branch of native Americans.. -> … -> Middle Eastern -> … -> Africans

            Well, the past few brief thousand yrs and especially few last centuries attempted to fast track – equalize adaptation on this wide front (also incl. slavery), but it’s obviously impossible for everybody on different stage and everywhere to achieve it.. lofty arguments on “default” human brotherhood aside.

          • DJ says:

            Compared to US Europe has:
            Higher minimum wages
            Higher benefits
            Much lower wage spread

            This means a lot of US work opportunities doesn’t exist in Europe.

            N/W europe has two kind of immigrants:
            Eastern europeans building and cleaning cheaper than natives
            Non-europeans to high extent not finding a place on the job market.

  46. Morpheus says:

    Thanks for all you do Gail! I’ve been a reader and fan for years. You constantly express very complex concepts clearly and gently. It’s unfortunate that more humans don’t read this.

    • el mar says:

      Are you the Morpheus I once met in Berlin?

    • You are welcome, Morpheus. I don’t think you have commented before.

      As I understand the situation, Morpheus has been considered the god of sleep and dreams. Is this whole story sort of like a dream?

  47. The US, at least for now, seems to be doing quite well in terms of jobs and pay.

    This is a chart from an opinion article called, The Economy’s Inequality Dividend: Growth Is Lifting Low-Income Workers and the Middle Class


    Wage gains are occurring particularly among lower-wage workers.

    I also noticed an article called “Hiring way up at area small businesses,” in today’s Atlanta Journal Constitution about Atlanta’s job market. I don’t think that this article is available on the internet. The big point it makes is that large businesses tend to be very exposed to international trends. As a result of problems internationally, they are not growing very fast. Small local companies tend to be more US focused. They seem to be doing much better. They are the ones adding jobs.

    My thoughts:

    Jobs growth is possible because of energy availability. The US, with its cheap oil, gas, and coal has been doing better than most other countries. The tariffs are intended to raise job growth at home.

    • Jason says:

      Plus the retirement of the baby boomers, and inflation in general helps the younger wages.
      Also, if more jobs require computer knowledge, the young have an advantage. l meet a lot of people with various backgrounds, due to my profession, mostly liberals, due to location, and I had a very intelligent patient claim that the improved economy was a carry over effect of the Obama presidency. Will Trump ever be looked at in a fair light?

      • Thinkstoomuch says:

        Is any President viewed in a fair light??? Not that I have seen or read about (everybody shades things think about President Lincoln, Jackson or Wilson). The powers of the President are vastly over rated, IMO.

        Further complicating things is the number of states and localities raising minimum wages. Plus a boat load of other factors, very few will think about the energy aspect of it. I would not have a few years ago.

        Good to learn things to consider.


    • Herbie R Ficklestein says:

      The minimum wage increased starting January 1st 2020,
      The Minimum Wage Is Rising, but These Workers Are Being Left Behind
      There is a class of worker, mostly those who get tips, whose earnings floor has not been increased since 1991
      The debate is calling attention to how many workers are still scraping by with subminimum wages. They are mostly employees who rely on tips and are exempt from minimum wage rules. Under a New Deal-era federal labor law, employers are allowed to pay as little as $2.13 an hour — unchanged since 1991 — to about 2.6 million waiters, bartenders and others who get tips, so long as the total of their tips and wages meets the federal minimum.
      Last month, a ruling from a federal court in Massachusetts found that au pairs are also now entitled to the minimum wage. Parents are resisting the change, arguing that they won’t be able to manage the significantly increased cost of child care
      The poverty rate among subminimum wage workers is nearly double that for non-tipped workers, according to a data analysis done by the Economic Policy Institute. Not surprisingly, they are also far less likely to receive paid leave of any kind; health care coverage; or retirement benefits as part of their employment. They and their families are also more likely to be supported by public assistance
      The average minimum-wage job now pays almost $12 an hour. That is believed to be the highest rate in United States history, even after adjusting for inflation. The federal minimum wage was last increased in 2009, to $7.25 from $6.55; since then, American workers have gone longer without a federal increase than at any time since the minimum wage was introduced in the 1930s. (The nation’s capital and 34 states require a higher tipped minimum wage than the federal floor of $2.13 an hour

    • Denial says:

      Wait I think you are missing the elephant in the room!!!! Is it growth if it is debt laden spending that is creating it!!!! The good thing about Trump is he is willing to lie about the economy and probably willing to manipulate or lie about the actual numbers in general. That is what all countries are doing today! Why not….? If you look at the current economy that is “supposedly so great; why is there massive increase in debt spending? I am always amazed at the comments on here when people seemingly grasp what is going on and then miss the major points of what is happening!!!

      • Davidinamonthorayearoradecade says:

        okay, let’s be real then!!!!!

        under Obama, US debt rose by about $8 trillion in 8 years!!!!!

        so, what’s your point exactly?

        • Denial says:

          My point is “Mr. Political Man”! that it does not matter who is president there is no, no and no real growth!!!!! When Obama fans would come to me with how he increased the economy and got the stock market back on track I would point out the massive debt of our country! Now that Trump is office it is the same damn thing! More debt and more smoke and mirrors….the system is failing! Trump didn’t fix anything nor did Obama…I am not political gave that up a long time ago when I realized the collapse we have ahead of us….

          So david go get your MAGA hat on and watch fox news until your eyes turn red….I don’t care….political blindness keeps you from seeing the truth…

          • Davidinamonthorayearoradecade says:

            okay, got it… I thought you were being political, as in “Trump massive debt” but I now see that you actually grasp the situation which is 11+ years of massive debt…

            “Now that Trump is office it is the same damn thing! More debt and more smoke and mirrors….the system is failing!”

            yes, the system is in The Endgame, and only massive debt can delay continual recessions…

            US debt has been about 4% of GDP for many years and GDP itself barely “grows” 2%…

            you are correct, the system is failing… slowly… very very slowly…

            • Yep, but the proverbial burners hidden in the lower decks of the machine will eventually demand new sacrifices.. So, any specific ideas, how are the new following chapters in slowly – very slowly failing system – going to reveal to us.. ?

              We have already checked most of the existing boxes (global north vs. south triage, naked debt print, demand curbed by incoming generations etc.) – what’s next?
              Apart from the obvious, as some “tangential” infrastructure accelerated decay etc.. ?

            • Davidinamonthorayearoradecade says:

              “So, any specific ideas, how are the new following chapters in slowly – very slowly failing system – going to reveal to us.. ?”

              one of the most interesting questions is “Is there any new economic shocker yet to come?”

              we’ve had a huge one recently with negative interest rates… I don’t remember anyone having that on their radar 10 years ago… grade A to whomever might have seen that coming…

              otherwise, one unstoppable force will be the reduction of most all promises of future payments/handouts… the future will seem less and less important as the present times grow in problems… pensions will be gone…

              that goes with a continuing decrease in the repair/maintenance of existing infrastructure…

              and perhaps deeper negative rates which actually will start to shrink savings…

              and throw in a bit higher inflation on necessities, where it really matters…

              there are many ways to continue to downsize the economy bit by bit, and since this is happening now, why can’t it continue to decline bit by bit for many years?

              do you foresee anything “new”?

              right now, I can’t…

      • Dennis L. says:

        Let’s think about this for a minute. The a country offers to rebuild Iraq for half its oil money(someone bombed it to pieces a few years back, think of it as accelerated depreciation). Oil is money, let’s make a deal.

        Looking further, a general is killed and whether he was he a good or bad guy, depends on view point. Everyone panics, assumes WWIII is next, a certain country fires a missile, most likely in the fog of war, an honest mistake, a perfectly good plane falls to the ground secondary to said projectile and now the population of that country is seen rioting to remove the leadership of what was first thought to be the protagonist of WWIII. The dispatch of a certain general who was accused of trying to take over an embassy of a western country leads to the original leader of a country that took over a US embassy being disposed due to missile error. Well, some bumbling leader in a certain western country is either very smart of just plain lucky. Even if it is luck, luck is a good thing. This reminds one of a certain Super Bowl in the sixties, Bart Star took the football, fell over the goal line, the final buzzer rang as he hit the ground and the Packer’s won by one point. Lombardi thought that winning by one point was good enough, the other coach was heard muttering about the Packers doing this time after time – his team didn’t get winner’s rings.

        Fracking was no doubt a bad economic move, but if fracking drove down the price of oil and destabilized countries not friendly to the fracker, was that cheaper than war? If a country were to get half the oil income from Iraq and that country’s companies were get the income from rebuilding Iraq, well, those would be good manufacturing jobs, sort of like Make …. how does that go? Would that maybe repay the debt for fracking? Wasn’t something similar done back in the 80’s? In that era, some western leader got a very rich oil country to pump more oil and drive the price down and in so doing reduce its income, while causing an empire to fall apart, now that is statesmanship.

        Maybe the western leaders are not as incompetent as some would suggest.

        It is a strange world and sort of fascinating to see.

        Dennis L.

        • Dennis and others in this sub thread, lots of interesting points, thanks.

          Indeed the grand maneuver how to turn around on the dime the 1970s peak cheap resource malaise into “winning the cold war” in few years time was exceptionally cunning plan, the execution not bad either. The “West” has been evidently capable to extend and pretend over several dangerous thresholds when hitting supposedly imminent end of the road, it’s simply stunning. That’s why I’m still very doubtful about any “sure scenarios” – I do more like probabilities though. To over simplify you just can’t have competency (even to mischief) and luck falling down from heavens in your favor for ever. The next crucial threshold-crossroad seems to be building around next two decades, meaning 2020-30s..

          Some mega trends (previously not taken that seriously) are clearly coming to fruition big way, for example the “self constrained/imposed” consumption of new entering generations (no carz, gig economy, less ownership etc..), also the onslaught of rapid triage war waged on the 1.5-2.5/3rd world.. freeing up resources elsewhere. Plus new techno fixes of lasting nature (or not) incoming as new reality. Not mentioning the global seems very likely just about to fully join the Japanese naked printing regime, which would help masking nicely that decreasing capacity utilization on all fronts of the IC for a while.

          In summary, it’s a very fluent dynamics but it still wants (and is evidently capable) to kick the can some more..

        • Things don’t turn out as we expect. The self-organizing economic system seems to produce outcomes that work, even when the chances seemed remote. At times, it seems like we have many modern day miracles.

        • cashisking says:

          Yes all is well. Crisis over. Iranian people not stupid. The mad max scenario of syria, iraq, and libya not real desirable.
          Why wouldnt you come into the fold?
          Its not like they cant keep there religion, ayatollah and sell there oil for dollars.
          All that they have to do is give up there nukes and quit their shenanigans.
          Shenanigans overated. Cant spend shenanigans.
          Nukes are overated. Cant spend nukes.
          Ahh yes they only want them for energy. One the most oil rich nations wants nukes for energy. fell off the turnip truck we did. (obama like turnips).
          Door number 1 seems a lot better choice to me than door number 3 .

        • cashisking says:

          The downed airliner just gave the Iranian people a chance to vote against WWIII. YEAAA BABY. Sorry Revolutionary guard your silly shenanigans will have to be let go. How about this we will make a farsi call of duty for you?

      • GDP is a measure of finished goods and services made. It doesn’t matter how much debt had to be pumped up in order for the economy to be able to “sort of” afford those services. If you can now buy a car for $75,000, and someone will give you a loan for $75,000 to buy that car, this fact enables the production of such a vehicle.

        Trump has been using loans to buy a lot of things in his life. He is not afraid of debt.

        I think the differences are mostly in how people see that this debt should be used. Some think that the debt should be used to enable rich people to afford electric cars and solar panels on their homes. Some think the debt should be dispensed in such a way as to give monthly payments to people who would otherwise have very low incomes or no income at all. Some think the debt should be used to keep pension programs going.

        Some think that companies and earners of high incomes should be beneficiaries of more debt (through lower tax rates). Even thought this last choice seems ridiculous, if it keeps production of goods and services going a bit longer, it may be helpful. If these companies were struggling with low profitability, the tax cut can indirectly produce jobs at higher wages, especially if cheap energy is available.

        • This is interesting, perhaps the sequencing order of wants/desires and eventually aggregate consumption patterns must follow this order otherwise things don’t run smoothly in the economy. Specifically, today’s self projected middle classes (mostly precariat bordering status already anyway) desperately want to keep their perceived (vanishing) social niveau, which means lurking beyond their means on upper level class and the truly rich levels above. Hence the consumerist drive beyond their means.. (irrational living space demands, multiple new carz per family, RVs, electronic gadgets y/y update treadmill, expensive vacation activities, ..). Obviously, this was initially supercharged by energy access leverage (ever growth-normalcy bias) for several decades-generations..

          In past ~30yrs this perverse model was upgraded and made possible by moving production and increasingly also R&D “offshore” into Asia.. Now the Chinese were “smart enough” not to squander it all on frivolous individual consumption, but use it as leapfrogging opportunity on some major domestic dev fronts (e.g. long distance transport, education, foreign trade, ..) and not so much on other priorities (externally applied war machine).

          All above being just quick notes, but for me it results again in “conformation”, we are still in brewing phase (albeit advanced) of the future not at immediate precipice. Although, in retrospect say by late 2020s this could seem as naive BAU leaning expectation, actually for the triaged out civilization hubs already like in S America, the reality of living it today clearly prevails.

          • I had to do a little checking to see that you were responding to my link up at the top of this thread, relating to wages rising most for those with the least education. I also remarked that it was the smallest businesses that were adding workers.

            So your current comment, “perhaps the sequencing order of wants/desires and eventually aggregate consumption patterns must follow this order otherwise things don’t run smoothly in the economy,” in some sense refers to this link.

            The way the economy seems to be building up now is from businesses with low complexity, using workers with less than average education. This helps keep demand up. Higher paid workers can try to also raise their demand levels, but this tends to require more debt to buy goods (like education) that no longer pay back well at all.

            A little change can be tolerated, but not too much. Programmers can’t be expected to learn a new language every two years. Physicians cannot be expected to read journal articles on all of the new developments coming out. At most, they can follow their own subspecialty. It is just too bad if a patient has a problem that covers multiple sub-specialties.

            I am not sure how smart Chinese spending was. International trade can’t be kept at today’s level, I expect. Spending on transport works for a while, but reaches diminishing returns. Spending on advanced education reaches diminishing returns. Spending on health care reaches diminishing returns.

            If the war machine somehow allows the US to import more than it exports, it has a fairly significant benefit to the economy. I am also not sure how long this benefit lasts.

            • Yes, and the latter part on China was meant in relative comparison among the players obviously. The highly elevated US domestic transport energy consumption (vs RoW) by airplanes, trucks and passenger carz will sooner or later hit another reality facing wall. Probably the needed energy could be to some extent stolen abroad again, but one could expect decreasing success rate on this front as well as the time goes on..

              Also the Miuskian types (his mother and or Bezos resemble abductees) could bend the “laws of physics” on some energy storing formulae to prolong the suffering by few more chapters and totally wreck this planet. Who knows this is creepy planet-universe and we only tend to observe various derivatives of meta-reality..

            • cashisking says:

              Really in the abstract UBI makes sense. If we could all play nice we hand out a certain amount of chits to every person on the planet until resource depletion hits. Most people like working. They could pay to work. Playing nice is the hard part.

    • Robert Firthb says:

      Thank you, Gail, for more interesting information. It seems the Trump administration is indeed helping the lower paid. And that small businesses are taking the lead is also good news. Such organisations tend to hire locally, buy locally, and help in the relocalisation of the economy. All good news, in my view.

      That big, international companies are doing worse is a phenomenon I have been expecting. These companies tend to hire cheap foreign labour, in the belief it will give them a market advantage. But as the economy becomes more technology focused, these workers will begin to underperform, to need more training and supervision, and to produce lower quality output. In the long run, they are a lose. It seems Kunstler’s “Long Emergency” got a lot of things right.

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