Reaching the End of Early Stimulus – What’s Ahead?

Many people thought that COVID-19 would be gone with a short shutdown. They also thought that the world’s economic problems could be cured with a six month “dose” of stimulus.

It is increasingly clear that neither of these assumptions is correct. Despite the claims of epidemiologists, our best efforts have never been able to reduce the number of newly reported COVID-19 cases for the world as a whole for any significant period of time. In fact, the latest week seems to be the highest week so far.

Figure 1. Chart of worldwide COVID-19 new cases, in chart prepared by Worldometer with data through September 20, 2020.

At the same time, the economy, despite all of the stimulus, is not doing very well. Airlines are doing very poorly. The parts of the economy that are dependent upon tourism are having huge problems. This reduces the “upside” of economic recovery, pretty much everywhere, until it can be corrected.

Another part of the world economy doing poorly is clothing sales. For example, many fewer people are attending concerts, weddings, funerals, out-of-town business meetings and conventions, leading to a need for fewer “dressy” clothes. Also, with air travel greatly reduced, people don’t need new clothing for visiting places with different climates, either. Most clothing is bought by people from rich countries but made by people in poor countries. This cutback in clothing purchases disproportionately affects people who are already very poor. The loss of jobs in these countries may lead to an inability to afford food, for those who are laid off.

Besides these difficult to solve problems, initial programs set up to help mitigate job losses are running out. What kinds of things might governments do, if they are running short of borrowing capacity, and medical solutions still seem to be far away?

In Section A of this post, I outline what I see as some approaches that governments might take to try to “kick the can down the road” a while longer, as well as some general trends regarding near term outcomes.

In Section B, I explain how our current problems seem to be related to the more general “overshoot and collapse” problems of many prior economies. I show that historically, these overshoot and collapse situations seem to have played out over a number of years. In many ways, the outcome might look more like “overshoot and decline” than “overshoot and collapse” from the point of view of an observer at the time.

In Section C, I explain two different types of “breakage” we can expect going forward, if we are really dealing with an overshoot and collapse situation. In the first, oil production is likely to fall because of the collapse of some of the governments of oil exporters. In the second, the international trade system breaks down because of problems with the financial system and countries no longer trusting each other’s currencies.

[A] Ideas for “Sort of” Addressing the Economic Problems at Hand 

The following are a few ideas regarding possible mitigation approaches, and the expected results of these attempted solutions:

[1] Programs to keep citizens in their homes will likely be extended. Mortgage repayment programs will be extended. Renters will be allowed to stay where they are, even if they cannot afford the rent.

[2] New programs may be added, allowing those without adequate income to pay for electricity, heat, water and sewer connections. These programs may be debt-based. For example, homeowners and renters may be given loans to pay for these programs, with the hope that eventually the economy will bounce back, and the loans can be repaid.

[3] More food bank programs will be added, with governments buying food from farmers and donating it to food banks. There is even an outside chance that people will be given loans so that they can “buy” food from the food bank, with the hope that they can someday repay the loans. All of these loan-based programs will appear to be “cost free” to the government, since “certainly” the crisis will go away, and borrowers will be able to repay the loans.

[4] Loans to students will increasingly be put in forbearance, to be repaid when the crisis is over. Auto loans and credit card debt may be also be put into forbearance, if the person with the debt has inadequate income.

[5] Even with all of these actions, families will tend to move back together into a smaller total number of residences. This will happen partly because citizens won’t want to be burdened with even more debt, if they can avoid it. Also, older citizens won’t want to move into facilities offering care for the elderly because they know that COVID restrictions may limit with whom they can have contact. They will much prefer moving in with a relative, if anyone will take them in return for a suitable monthly payment.

[6] As extended families move in together, the total number of housing units required will tend to fall. Prices of homes will tend to fall, especially in areas where citizens no longer want to live. Governments will encourage banks and other mortgage holders to look the other way as prices fall, but as homes are sold, this will be increasingly difficult to do. In many cases, when homes are sold, the selling prices will fall below the balance of the debt outstanding. Governments will pass laws not allowing financial institutions to try to obtain the shortfall from citizens, at least until the crisis is over.

[7] Some businesses, such as restaurants without enough patrons and colleges without enough students, will need to close. Clothing stores without enough sales will also need to close, as will retirement homes without enough residents. All of these closures will lead to a huge amount of excess commercial space. It will also lead to the loss of more jobs, raising the number of unemployed people.

With these closed businesses, the price of commercial real estate will tend to fall. Lenders will be encouraged to “extend the loans” and “pretend that asset prices will soon recover,” when renewing loans. Even this approach won’t be enough in many cases, as businesses file for bankruptcy.

[8] With fewer residences and business properties occupied, the amount of electricity required will fall. Wholesale prices for electricity will tend to fall, pushing ever more fossil fuel and nuclear electricity providers out of business. Electricity outages will become an increasing problem, as renewables become a larger share of the electricity mix and are unable to increase supply when needed. Rolling outages will become more common.

[9] Pensions of all kinds will become more difficult to pay. Government programs, such as Social Security in the US, will have less revenue to pay pensions. There are funds set aside in the Social Security Trust Fund to cover a shortfall in funding, but these funds are simply non-marketable US government debt. In theory, the US government could add more debt to the Trust Fund and make payments on the basis of this added debt. Otherwise, the US will likely need to either raise taxes or increase the “regular” government debt level, in order to continue to pay Social Security pensions as planned.

Private pensions, backed by bonds and shares of stock (and perhaps other assets), will find the values of their available assets are falling. Governments, if they are able to, will try to hide this problem. For example, regulators may develop a new way to value assets, so as to make pension funding shortfalls mostly disappear.

In the case of pension bankruptcy, government insurance is often theoretically available. In the US, Pension Benefit Guaranty Corporation provides coverage; other countries may have similar programs. Unfortunately, this program is not set up to handle a large influx of new bankrupt plans, without raising taxes. The problem then will be raising taxes enough so that one year’s pension benefits can be paid, pushing the problem down the road a bit longer.

Bank accounts have similar guarantees, with similar funding problems. The guarantee organization has very little funds available, without raising taxes or somehow increasing debt.

[10] Stock market prices will tend to fall, leading those who have purchased shares using debt to want to sell quickly, pushing the stock market down further. Currency relativities will fluctuate wildly. Derivatives of many kinds will encounter payment problems. Many ETFs likely won’t work as planned. Governments will try to figure out ways to somehow mitigate these problems to the extent possible. For example, stock markets may be closed for a time to hide the problems. Or, additional time may be given to settle purchases, so that perhaps the deficiencies can be corrected. Eventually, some banks may be taken over by governments, to assure the operation of the parts deemed essential.

[11] Eventually, governments may find it necessary to nationalize a wide range of essential businesses. These could range from trucking companies to banks to oil companies to electricity transmission repair companies. If the balance sheets of these companies are too bad, governments may simply stop publishing them.

[12] These types of actions will mostly be available to “rich” countries. Poor countries can tap their “rainy day” funds, but these will soon be exhausted. In this case, poor countries will find that there is little they can do unless international organizations bail them out. Because of cutbacks in tourism and in orders of finished goods, such as clothing, these countries are likely to encounter high levels of unemployment. Without aid, the poorer citizens of these countries will find it impossible to afford an adequate diet. With inadequate nutrition, the health of low income citizens will decline, and they will easily succumb to communicable diseases, such as tuberculosis and malaria. Death rates are likely to skyrocket.

[B] What Happens When an Economy Outgrows Its Resources? 

Most people think that the issue we are dealing with is a temporary problem associated with a new coronavirus. I think that we are dealing with a much worse problem: The world’s population has outgrown the world’s resource limits. This is why our current problems look so difficult to solve from a financial point of view. This is part of the reason many people feel that shutting down the economy for COVID-19 is a good choice. There are really many reasons for the shutdowns, besides preventing the spread of COVID-19: Keeping people inside stops the many protests related to low wages. The shutdowns appear to restore order to a troubled system. Broken supply lines from shutdowns elsewhere reduce raw materials availability, making it more difficult to keep production in one part of the world operating, when others are closed.

Overshoot and collapse is a problem that many smaller economies have encountered over the years. If I am right that we are now encountering a similar situation, there is a big change ahead. The change will not be instantaneous, however. The big question that arises is, “Over what time scale does such a collapse take place?” If it takes place over a number of years, it may look more like “overshoot and decline” than “overshoot and collapse” to those who are living through the era.

A recent partial collapse was that of the Soviet Union in 1991. The Soviet Union was an oil exporter. Oil prices had hit a high in 1981 and had been declining for 10 years when the Soviet Union collapsed. With low oil prices, it had been difficult to earn enough revenue to reinvest in new oil fields to replace the production that naturally declines as oil is extracted. Oil, directly and indirectly, had provided many jobs for the Soviet Union. After ten years of stress, the central government of the Soviet Union collapsed in 1991.

Low oil prices first slowed production growth between 1982 and 1987 (Figure 2). Oil production began to decline in 1988, three years before the government collapsed. Production gradually rose again in the early 2000s, as oil prices rose again.

Figure 2. Oil production and price of the former Soviet Union (FSU), based on BP’s Statistical Review of World Energy 2015.

What was surprising to me was the fact that consumption of all types of energy by the Soviet Union fell at the time of the central government collapse in 1991, even hydroelectric. The overall level of energy consumption never bounced back to its previous level.

Figure 3. Former Soviet Union energy consumption by fuel, based on data of BP’s Statistical Review of World Energy 2018.

What happened was that many inefficient industries were forced to close. Some of these industries were in the Ukraine; others were in Russia and elsewhere. As they closed, less electricity and less oil and gas were used.

The loss in energy consumption was pretty much permanent. The manufacturing that left the Soviet Union was replaced by other, more efficient, manufacturing elsewhere. Also, without their previous manufacturing jobs, the people of the former Soviet Union were poorer. They could not afford to buy cars and homes, keeping fuel consumption lower.

Another indicator regarding the speed of collapses is the analysis done by researchers Peter Turchin and Sergey Nefedov, regarding collapses of eight agricultural economies from earlier periods. I compiled the information they provided in the book Secular Cycles in the chart shown in Figure 4. In the cycles they analyzed, the “crisis period” seemed to last 20 to 50 years. One thing that is striking in their analysis is that epidemics often played a major role in the declines. As wage disparity grew, poorer workers ate less well. They became more vulnerable to epidemics and often died.

Figure 4. Chart by author based on information provided in Turchin and Nefedov’s book, Secular Cycles.

In these early cycles, the major industry was farming. These collapses were in the days before electricity use. In these situations, collapses tended to play out over 20 to 50 years. Our more modern economy, with its just-in-time supply lines, would seem likely to collapse more quickly, but we can’t know for certain. This analysis is thus another data point that suggests that what may be ahead could be closer to “overshoot and decline” than “overshoot and collapse.”

[C] What May Be Ahead

[1] We are likely to experience the collapse of central governments of several of the oil exporting nations, in a manner not entirely different from the collapse of the Soviet Union in 1991.

Oil prices have been low for a very long time, since 2008, or at least since 2014.

Figure 5. Weekly average spot oil prices for Brent, based on data of the US Energy Information Administration.

Most OPEC oil producers seem to require prices in the $100+ per barrel range in order to be able to fund the programs their people expect (Figure 6). One important program provides subsidies for imported food; other programs provide jobs. Without these programs, revolutions to overthrow the current leaders seem much more likely.

Figure 6. Estimate of OPEC break-even oil prices, including tax requirements by parent countries, from APICORP. Figure is from 2014.

At this point, oil prices have been below $100 per barrel since 2014, a period of 6 years (Figure 5). Stress is increasing; OPEC producers have cut production in an attempt to try to get prices up. Prices are now in the low $40s.

We should not be surprised if, over the next few years, oil production starts to fall in several areas around the world because of internal problems. Another possible impetus for the drop in production may be wars with other nations. Some such wars might be started simply to try to get the price of oil up to a more acceptable level.

We have been falsely led to believe that oil is not important; renewables can handle our needs in the future. In fact, oil is essential for today’s farming. It is essential for transportation of goods and services of all kinds. It is essential for the construction industry and for mining. Researchers in academic institutions have received grants, encouraging them to put together models regarding what could be ahead. These models tend to be extremely unrealistic.

One of the most absurd models is by Mark Jacobson. He claims that by 2050, the world economy can operate almost entirely using wind, solar, and hydroelectric. Unfortunately, we don’t have until 2050; world oil, coal, and natural gas supplies look likely to decline in the 2020 to 2025 timeframe because of low prices. Another problem with this approach is that there is not very much fossil fuel to extract, because most of what appears to be available from resource studies cannot really be extracted at the low prices set by physics. 

The underlying problem is confusion about which direction prices go, as an economy reaches limits. Economists assume that scarcity will cause prices to rise; the real story is that fossil fuel prices are set by the laws for physics because the economy is a dissipative structure. As the economy approaches limits, prices tend to fall too low for producers, rather than rise too high for consumers.The sad truth is that we can’t even count on the continued extraction of the small amount of fossil fuels that Jacobson assumes will exist after 2050.

[2] We are likely to see a huge change in the international financial system and in the international trade system in the next few years. 

As long as there were plenty of resources, relative to the world population, the optimal approach was to do as much international trade as possible. This approach would maximize world GDP. It would also add jobs in developing areas of the world without too huge an impact on job availability in the countries moving their manufacturing to lower-cost areas.

In the last few years, it has become increasingly evident that there aren’t enough jobs that pay well to go around. This is really the underlying problem with respect to the increased hostility among nations, such as between the US and China. Tariffs are being used to try to bring jobs that pay well back to those who need them. Strange as it may seem, it takes fossil fuels to create jobs that pay well.

Figure 7. World Trade as a percentage of GDP, based on data of the World Bank.

Figure 7 shows that international trade was rising as a percentage of GDP for many years, and it hit a high point in 2008. Since then it has bounced around a little below that high point. In 2020, it will clearly take a big step down because of all of the cancellation of trade related to COVID-19 restrictions.

We saw earlier that commodity prices tend to fall too low for producers. Indirectly, this means that profits tend to fall too low. Interest rates tend to follow these low profits down, since businesses cannot afford to pay high interest rates.

With these low profits and low wages, the financial system gets strained. “Debt and more debt” seems to be the way to fix the system. Growing debt at ever-lower interest rates is encouraged. These low interest rates tend to raise asset prices because monthly payments to buy these assets fall with the falling interest rates. Stock markets tend to rise, even when the economy is doing poorly.

If the many strange approaches I outlined in Section A are used to add even more debt to keep the system afloat, eventually some part of the system is going to “break.” For example, banks will stop issuing letters of credit with respect to purchases made by buyers that don’t seem sufficiently creditworthy. Banks may stop trusting other banks, especially if the banks do not really seem to be solvent. At some point, the international financial system seems likely to start “coming apart.” Eventually, the US dollar will stop being the world’s reserve currency.

My guess is that a new two currency system will develop. Governments will issue a lot of currency for local use. It will not be useful for buying goods from other countries. Much of it will be used for buying locally produced food and other locally produced goods.

Very little international trade will be done. Any international trade that will be done will occur between trusted partners, at agreed upon exchange rates. Perhaps a special currency will be used for this purpose.

In this new world, individual countries will be very much on their own. With very little fossil fuel, countries will tend to lose electricity availability very quickly. Transmission lines will go unrepaired. It will become impossible to fix existing wind turbines. Road repair will become impossible. Electric cars will likely be as unusable as gasoline powered ones.

There will likely be fighting about resources that are available, leading to countries subdividing into smaller and smaller units, hoarding what little resources they have available.

Note:

1Energy prices tend to fall too low because, as the economy gets more complex, wage and wealth disparity tend to grow, reflecting differences in training and responsibility. The problem occurs because low-paid workers cannot afford to buy very large quantities of goods and services produced by the economy. For example, many cannot afford a car or a home of their own. The spending of high-paid workers does not offset the loss of demand by low-paid workers because high-paid workers tend to spend their wages more on services, such as advanced education, which require proportionately less energy consumption. Ultimately, the lack of demand by low-paid workers tends to pull down the prices of oil and other commodities below the level required by producers.

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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.

2,450 thoughts on “Reaching the End of Early Stimulus – What’s Ahead?

  1. Thank you, Gail. Once again a most thoughtful and thought provoking essay. Since it is now evening on the first day of “winter”, I shall contemplate your ideas overnight. May all be well with you.

  2. Gail, I have been following you closely now for a couple decades and your work is SUPERB without a doubt the best there is, so THANKS MUCH.
    The world is getting bagged big time on the virus cases. I read the CARES act law, and it provides $90 for virus testing. No surprise that immediately there were massive virus test stations for car drive through, everywhere. The documentation for false positives on those tests with numerous new labs, etc is no surprise. Testing for antibodies that have been present for how long from what? The iron law applies: “Anything the government subsidizes you will get a huge supply of is well known.” Virus tests, Windmills, solar panels, electric cars, legally mandated corn ethanol for gasoline, (thanks to ADM lawyering lobby efforts), etc., whatever is fashionable to push.
    When the wind don’t blow and the sun don’t shine there is no power produced.
    Aid to dependent children creates…….more dependent children. The ONLY profit Tesla has ever made is from selling their government tax credits!

    The new Marxists / Socialists have acknowledged that the barking insane stupidity of the “Green New Deal” is not about anything Green at all, but the take over of the economy.

    The other iron law of economics is the cure for low prices is LOW PRICES, as we all know. However this time looks to be VERY different with the world wide DEMAND Destruction for Oil especially. Most of the past down drafts were to over supply, or deliberate manipulation
    THANKS again for all the Brilliant work

      • Seems a little unnecessary; once you can test everyone, you should be able to get the virus under control in a few weeks.

      • “we hope it will be possible through technology and new tests to have a test which works by not having to return the sample to a lab.”

        I hope it is a saliva test that they are hoping to do. If they are trying to cut corners and not have medical professionals administer them, it would seem like it would be quite easy to get a lot of false negatives, simply by not getting the swab to the correct location.

        I have also read about an inexpensive quick test that gives a lot of false positives.

        Either way, with false positives or false negatives, the test results don’t mean what a person hopes they really will mean.

      • Or the working class -and the more unruly and less educated of the ethnic minorities – in Britain could wash their hands more often, wear cheap masks, and be provided with efficacious vitamin supplements, at next to no cost.

        There is a very clear social divide here in matters of hygiene, as in — before COVID – healthier living in general. In this village all those who cycle regularly, jog and are not obese are middle class.

        They are also the ones wearing masks scrupulously in confined spaces, and less likely to parrot the cruder ‘COVID is a fraud’ meme and take every opportunity to discard masks or claim they are exempt for health reasons.

  3. Brilliant analysis Gail.

    I’m not too sure about the overshoot and decline scenario – once people realise how compromised their future will be, they might lose faith in the system and involuntarily precipitate its downfall, don’t you think ? Countries that are totally depending on oil importations are also risking a brutal shift once they will be on their own.

    Many thanks for the good article.

    • People seem to believe whatever they are told. Even if the economy is in terrible decline, few people will understand the situation that way. They will say, “It is all the fault of such and such leader, who made a bad decision.” Or they will say, “The situation will be better tomorrow.” We seem to be programmed not to understand problems of this sort. It just can’t be!

      I think that perhaps people might get depressed and drink too much, if they do understand that the situation is bad. This could lead to a higher death rate. In fact, I think this is part of what seems to have happened in the former Soviet Union. In fact, this can happen even if a person doesn’t understand the overall situation. All they need to understand is that their current job has disappeared, and their prospects for getting a new one are low.

  4. Hi Gail,
    I only recently found your work and consider it excellent. Do you think hyperinflation or deflation will likely result from our hitting such a lot of resource limits?

    We had a shallow well dug on our farm and are getting a hand pump. We are not certain how much longer we will be getting hydro-electric power as we are at the end of the grid here in British Columbia or if the currency will inflate past our ability to pay for electricity.
    Maxine

    • It is probably not a bad idea to have a hand pump as backup. Broken transmission lines could cause a problem, if nothing else.

      Hydroelectric does tend to be reliable, but the quantity can be low, relative to what is needed for a large group of customers. This could cause electricity rates to temporarily spike, if utilities try to use price to ration what is available for consumers.

      Normally, I think of hydroelectric power as the least expensive form of electricity. The issue that could happen is that repairs for the dam need to be done, but the repairs are not possible because of some imported part that is not available. I would worry more about income (and perhaps savings) disappearing more than I would worry about the price of hydroelectricity rising too high. But I don’t know your particular situation.

      • BC Hydro has around 10,000 employees keeping the grid up and running. Good thing it is hydro generated but that many employees are using a whole lot of parts not to mention good ol’ fashion fuel to keep thousands of trucks on the road. BC is a huge province!

    • Agreed, but meanwhile instead of simply ‘contracting’, those citizens in very poor countries will be migrating to the richer countries in greater and greater numbers. Forget about small boats carrying 30 people across the English Channel. What happens when a cruise ship is rented in Lagos and jam packed with 10,000 migrants heading straight to UK (or New York)? And the same the next day, and the next. I see very troubled times ahead.

      • your point is taken

        i can only assume that ‘rent a cruise ship’ is meant as black humour

        If that comment isn’t meant as a joke, what would be done with it?–run it aground somewhere so all the migrants can run ashore?

        then the captain is thrown in jail?

      • Yes yes re cruise ships that’s what I too have been thinking – fuel enough for a one way trip ending with a firm beaching. Or cheap prison hulks.

      • What happens is that the ship is sunk. Just as the ships were sunk at the Battle of Lepanto, and for the same reasons.

        • I don’t see that modern Europeans have anything close to the stomach needed for that kind of operation; by and large. Judging from my extended family in Italy, the younger generation avidly worships other races over their own, and will kneel at Their Feet just as the Pope has done.. just as our National Guard, police, and mayors in the US have knelt, and they will all congratulate themselves for doing so.

          The vital energy behind Western Civilization no longer exists, I don’t think, so it’s possible that they are channeling that intrinsic impotence unconsciously. Freaks who attempt self-defense will be arrested and charged with murder, like Kyle Rittenhouse. For all that USians are armed while Europeans largely are not, it’s not doing us any good at the moment.

          My Italian husband is philosophical, noting that Italy, at least, has always been over-run by invaders from North, South, East and West. The modern lack of European religiosity paired with strength of Islamist, communist, Hebraic, etc. feeling is not a great combination if one is on the European side. I ran out of fingers and toes counting the number of beheadings, truck-of-peace deaths and mutilations, and other “Allahu Akbar” murders that decorous and soft-headed Europeans choose to write off entirely as “mental illness”.

          ===
          Something else to consider in our modern house of informatical mirrors: what are the odds that the First Lady of the US would “just happen” to be boating down the Seine precisely concurrent to the destruction of Nôtre Dame, such that it be poignantly reflected in her (celebratory?) glass of wine? Seriously, now.

  5. in very basic terms,our civilisation requires that we expend energy to create jobs to pay ourselves wages by which we can access more energy to create more jobs to pay ourselves increased wages in order to access more energy—-ad infinitum.

    time to pause for breath here.

    because covid 19 has slammed the unexpected brakes on in a way that no one anticipated—so sudden as to cause humankind to hit the windscreen of our infinite forward motion vehicle.

    (we weren’t wearing seatbelts)

    which is why we now find ourselves in an unemployed tangled heap, fighting to get out of the economic truck that’s beginning to burn.

    but by some means as yet unexplained, we are still expecting to extract the ‘wages’ part of the games of ‘pass the parcel’ described above, but without the energy and jobs part being involved. (rather like an unexpected form of UBI)

    Covid 19 has done in weeks what humankind has promised itself to do for decades past, and made promises for decades hence.

    We didn’t do it, so it’s being done for us.

    A plague has been introduced from which the wealthy cannot insulate themselves. Without the forward motion of energy conversion and world commerce, Bezos becomes a pauper, as do the sheiks of Araby–just like the rest of us.

    There will be wars of denial–the political antics in the USA right now prove that.
    Things look like turning ugly—but whatever happens it still represents denial of reality.

    Our fuel burning is depleting, and without energy, money-value will evaporate. Or at best reduce to the level of muscle input, rather than engine-input.

    We reached our productive peak, covid 19 pointed the way down.

    Still—we had a little while to enjoy the view.

    • So true, and nice very erudite way of saying we are totally fucked.

      Pls, don’t mistake my honesty for crudeness or a mean spirit. Those who survive the collapse will have made real friends, not discussion-group neighbors.

    • Norman, it isn’t a “plague”, and the virus didn’t *do* anything to shut the economy down—global policymakers did. It’s a controlled demolition.

      • A novel virus breaks out in Wuhan, the chinese government impose a lockdown to stifle the spread – sounds like a rational response when you have to deal with an unknown virus.

        Rest of the world witnesses the lockdown and think this is the most appropriate response until more is known about the virus – lockdowns imposed almost everywhere.

        Now the virus is raging all across the globe but we know it isn’t as lethal as what was initially thought – no government has imposed a second lockdown beside Israël and possibly a few others, but they are the exception.

        All this mess comes from panic response triggered by instant media communication. A worldwide echo chamber.

        Controlled demolition would have been a continuous lockdown with enforced propaganda to scare people. It didn’t happened, even though MSM keep us fed with fear-mongering news on a daily basis – but that has been their tactic to push sales and clicks for a long time now. Nothing new here.

        “Logic and intellect are not fruits of the same tree” as Norman pointed below. I couldn’t agree more.

        • whether global lockdown was the appropriate response, i am not qualified to say.

          But the virus was instrumental in making it happen, right or wrong.

          that said, humankind has a ‘reflex’ to save lives at any cost if we have the means to do so. So if ‘saving lives’ meaning committing economic suicide, we do that, with the thought that somehow our economic system will ‘freewheel’ for a year or so and then resurrect itself when this is all over.

          We do that because to let the virus run through the population we effectively be to allow people to die who otherwise wouldn’t.

          the consensus of medical opinion seems to agree that it is a nasty infection that kills people.
          I don’t go along with ‘world conspiracies’ to bring about lockdown, What would be the purpose behind that?

          Don’t know what the reference to sales and clicks is all about. Hope it isn’t some Amazonic plot to stop us buying in stores and do everything online—or something?

          when a virus infects 30 m people in a few weeks, that must be defined as a plague of some kind

      • Yep, it’s a scenario with high degree of probability, say >25% (in my book at this time and limited vantage point). The global coordination and focus especially on attempted triage in demand of “frivolous” activities seems very peculiar.

        Perhaps, we can prepare an additional test, e.g. lets say when W. countries also start to phase in “social-credit score point system” as existing in China, we would have the final prove. Basically, getting ~confirmation we are corralled into authoritarian – degrowth pattern on purpose.

        Perhaps the already applied censorship on various global, yet originally western “asocial networks” is the first signal.

    • because covid 19 has slammed the unexpected brakes on in a way that no one anticipated

      Now you mention it, this scenario wasn’t as totally unexpected as you seem to think it was. I overheard two blokes in a pub discussing the following scenario in January 2010.

      B: Hm. So you’re saying that because in this meeting that you attended, Russia wasn’t mentioned as a major factor.

      W: No, none at all. The only way it was mentioned is that the whole idea is to create a condition of chaos throughout the world. It would mean the later use of biological weapons, widespread food shortages, which will affect vulnerable countries across the globe, followed by mass starvation and disease.
      The only mention that Russia gets in here is an odd one which I can’t explain and maybe someone else can. I can’t really get my head around this. But within this meeting it was mentioned: “to cause the Chinese military to attack Eastern Russia”. Now, I can’t qualify that and why that was mentioned at the meeting — I just don’t know.

      B: Okay. So just to go back to what I mentioned a minute ago, about two birds with one stone. One goal here, then, is to establish a united alliance of Western countries with a kind of totalitarian “emergency war footing”, heavy control aspect to it. And the other aspect is actually to light the fire of this war, which will result in all kinds of chaos and presumably an enormous number of people dying somewhere.

      W: Yes.

      B: The Chinese population? Or everyone on the planet? Is this part of the population reduction plan? What did they say?

      W: Well, there was talk about biological agents being used, described as being flu-like and it would spread like wildfire. Now, they didn’t mention it at this meeting, but I know now that it will attack people genetically, not everybody together. How that would happen… I’m not a geneticist, I really don’t know. One can only assume that it’s linked to DNA in some way.

      B: Mm hm.

      W: And the differences that are found in DNA. These differences have been identified and the viruses can be made that could kill a person off and do it quite quickly.

      B: And so the viruses are genetically targeted is what you’re saying?

      W: Yes.

      B: Genetically targeted for racial type, or more specific even than that?

      W: Racial type. I can be quite definite on that. They’re talking about extinction of a whole part of the human race, doing so genetically.

      B: Really? Did they mention that in this meeting, in those terms?

      W: Not exactly. Those are my terms. But this is how it was mentioned, and this is my recall of it and how this came out and how I’ve interpreted it.

      B: Okay.

      W: But that’s what it most definitely alluded to.

      B: Are they talking about getting the Chinese out of the way because they’re an inconvenient major group that’s not playing ball with the global plans? Or are they talking about this as an excuse to thin down the entire world’s population, including that in the Western countries?

      W: Well, it’s a very good question and as far as I can see, it’s a hypothetical one. Again, I can’t give you an answer to that one. From a personal point of view, it definitely appears to be a thinning of the world’s population and it’s getting it down into a controllable size for this government that’s going to come, in order for them to have the control that they wish for. Otherwise, they wouldn’t have it.
      It even sickens me to speak about this now, it really does. It sickens me no end that they would go ahead and do this sort of thing; that such things have actually been spoken about. They’re bringing the population down to what they coldly believe to be a “manageable level”.

      B: Can you reference in this meeting that you attended to those levels, or the numbers, or the percentages, or anything tangible that you can remember?

      W: Yes. They’re talking about half.

      B: Wow. That’s a lot of people.

      W: Yes. It is.

      B: Okay.

      W: That’s bringing it back down by half.

      B: So that’s more than the Chinese, then. That answers that question, doesn’t it?

      W: Well, in a nuclear exchange — and I believe there will be a limited nuclear exchange — there will be some sort of ceasefire. That was spoken about; they anticipated a quick ceasefire, but not before millions had already died, principally in the Middle East. So we’re probably talking about Israel here, the population in Israel being sacrificed. Also places like Syria, Lebanon, possibly Iraq, definitely Iran, you know, the towns and major cities, power plants and so forth, that sort of thing. And then a ceasefire before it goes full-out.

      B: A cease…? Wow. Sorry, I’m interrupting you, I do apologize. A ceasefire before it goes full- out?

      W: Yes, it’s like some sort of game of poker where they already know what hands are going to be dealt. They know what’s going to be dealt. They know that scenario could be brought about and that scenario can be ended again with a ceasefire. So we’ll have the ceasefire, and it’s during this time of the ceasefire that events will start to really take off.

      B: Do you know how?

      W: Yes. This is when biological weapons will be used.

      B: Oh…

      W: This will create the conditions where biological weapons can be used. And here you’ve got to imagine a world, now post-nuclear war, or limited nuclear war, in chaos, financial collapse, totalitarian governments coming into place.

      B: And a lot of damage to infrastructure.

      W: People living in total fear and panic — this is what’s going to happen next. You’ll have a scenario… and this again was talked about, and I can go into some detail about how people will become more controllable with no one coming out in contention about what’s going to happen because their own safety and security has now being placed firmly in the hands of those who are saying they can protect it best.
      And it’s in this ensuing chaos of a post-nuclear exchange that these biological weapons will be deployed in such a fashion where there will be no structure, no safety-nets, for anybody to counter this type of biological onslaught.
      And it should be mentioned, for those who are not aware, that biological weapons are just as effective as nuclear ones; it just takes a while longer — that’s all.

      B: Yes. Now, the deployment of the biological weapons following the ceasefire, is that something that happens covertly, like all of a sudden people will start getting ill and no one knows where it came from? Or is this an overt weapon deployment that would be very obvious?

      W: I don’t think it would be overt, because the Chinese people are going to be hit by the flu! So there’ll be a worldwide flu epidemic, perhaps, with a country like China — or China, because China is mentioned — being the one that’s going to suffer most.

      • The first days, weeks of the outbreak in China with footage showing people being forcefully locked down in their apartment towers or dragged in the street, indeed seemed as the shocking real deal, closer to script you mentioned. But there are so many other scenarios and plots possible..

        – Genuine outbreak out of wet market or mil facility
        – Planned outbreak (self harming act) aka ~two decades ago elsewhere, changing the paradigm, crashing markets and curbing demand in specific activities, industries
        – Planned outbreak/attack by foreign power, there were supposedly some int mil games in the Wuhan region, easy contamination possible
        – Planned outbreak (fake or real) in coop with foreign power faction
        ..
        .

      • I am afraid I am not as much into conspiracy theories as you are. The virus seems to have been much more severe in China, compared to how it behaved after it mutated to become more contagious and less severe. No one could have planned this.

        I listened to the first minute or two of the video. The speaker said that there was a transcript available. Do you have a link to it?

        • I’m quite sure Xi was in the dark about this until SHTF and he had to deal with the fallout. It is why POTUS isn’t directly putting the blame on him.

          • In my opinion, virtually all of the available evidence suggests that SARS-CoV-2 was engineered. I have been stumped by China’s reaction to COVID, but now I speculate that the CCP’s response was similar to that of other governments. If the virus was accidentally released, Xi realized that he could use it for political purposes (like most governments across the world did, too). Since COVID erupted, he has greatly consolidated his power, both formally and informally. That is, he’s sidelined potential rivals. On the other hand, the virus could have been released intentionally — not as international aggression, but for domestic political purposes. The Wuhan lab had strong military connections. Maybe some in the military wanted to challenge Xi, released the virus to create chaos, and sought to make a move. If this were the case, Xi could use the lockdown to isolate rivals and quietly remove them. Regardless of the origins of the epidemic, Xi has improved his position substantially from COVID, like many dictators, such as Duterte in the Philippines.

  6. That is an excellent analysis, Gail. Careful re Mark Z Jacobson – he can get litigious if you critique him too fiercely!

    “Mark Z. Jacobson, a Stanford University professor who has prominently contended that the United States can fully power itself with wind, water and solar energy, is suing the National Academy of Sciences and the lead author of a study published in its flagship journal that criticized Jacobson’s views…”

    https://www.google.com/amp/s/www.washingtonpost.com/news/energy-environment/wp/2017/11/01/stanford-professor-files-libel-suit-against-leading-scientific-journal-over-clean-energy-claims/%3foutputType=amp

      • Intellect can be bought. Logic does not concern itself with money and ideology. Much in the same spirit as thermodynamics. It just does not care, it is.

    • I think I fly under most people’s radar. Litigation against me would not be attractive to most lawyers. They would much prefer to sue someone who has an extravagant lifestyle and clearly has “deep pockets.”

          • Hah! So true! I console myself with the knowledge that the comment block means Gail is toiling away in the Tree of the Keebler Elves to provide us with new content. 🙂

          • The “comments” section would simply pop up somewhere else, for example reddit, 4-chan or what have you.

            Gail, perhaps it is time to set up some fallback, “Plan B” tactic in case WordPress goes full mentally ill.

    • Which alone proves that Mark Z. Jacobson is a charlatan. Why is Stanford University employing charlatans? If he cannot defend his thesis in open debate, the presumption must surely be that his thesis is a lie. An the motto of the Royal Society of London says: nullus in verba

  7. Thanks for the article.
    Pls allow for few comments:

    [A.10] On the fall of stock market prices, lot of big players talked about scenario when eventual market volatility forces them taking their companies private, out of the market, e.g. Musk/TSLA and others. Commentators such as M. Keiser mentioned it recently as possible megatrend also in slightly different wider context of the crumbling economies – forcing shareholders (aka unwashed masses) out.

    [B] The correlation of int oil price and USSR debacles is clear, however there were several additional factors at play. If I’m not mistaken there was some sort of embargo in place on enhanced recovery tech exports, which at the minimum disadvantaged them against OPEC and others. Also by mid-late 1980s the USSR elites were undertaking some sort of internal readjusting-reformation process, which was not executed well at all, as opposed to the earlier started Chinese reforms; and or in comparison to recently performed modernization of the core Russian industrial base.

    ps/btw accidentally watched some earlier ~2020s interviews w. J. Kunstler and he very nicely recommended your work..

    • Regarding taking companies private, I think that these folks might be right. If debt at a low enough interest rate is available, it may make sense to make an above-market price offer for the shares of the company. Additional funding, if needed, can presumably be obtained from the debt market as well. If some debt is actually negative, this brings costs even lower. There would no longer be a need to file all kinds of accounting statements any more, except to the extent that there are multiple buyers, and they demand to see accounting statements. The cost of funding would be very low using this model, and any benefits would flow back to the private owners.

      Regarding the former Soviet Union situation, it is always possible to look back at a situation and say, “So and so did this, and someone else did that, and their actions are what allowed the situation to turn out the way they did.” Self-organizing systems are very strange. They allow/encourage people to get into power who make the decisions that they do. It is almost as if there is someone directing how this whole system works. A person starts believing in “preordination” based on energy supplies. The fact that the Soviet Union’s energy supplies were left in the ground until later has been tremendously helpful in allowing the world economy to keep operating until 2020.

      I am glad to hear that Kunstler is recommending me. I have known him, and I have occasionally corresponded with him, for many years. His book, “The Long Emergency” really struck a chord with me. One of the things that the mentions is the fact that if the interior temperature of homes drops below the freezing point in winter, water pipes will freeze. This means that enough of a heating system must be maintained to keep homes “sort of warm” in winter, if we expect to have water pipes within a home. By the way, I don’t think that we can do this with wind, water, and solar in cold parts of the world in winter. People would need to cut down a lot of trees instead.

      • A very good point from Kunstler.

        Most earlier forms of housing, of course, lacked this intricate network of pipes (and wires) , and were that much more sustainable and resilient in all conditions as a result.

        The water supply? One’s wife and daughters lugging buckets and jars.

        I was alerted to the fact that the modern dwelling is really a machine requiring a flow of spare parts when the crappy system in this house broke down bit by bit and I didn’t have the cash to get anything repaired – zero plumbing skills.

        Like the fish in the fable, I ‘didn’t know what water is.’

        Since then, everything I have done has been on a minimum of parts and multiple back-ups basis: even down to having a 200 yr-old brass mortar and pestle rather than an electric coffee grinder.

        • Fair comment, Xabier. My kitchen also had a brass mortar and pestle, and no coffee grinder (and no instant coffee, ugh!). But I confess it did have a drinks blender, used for making daiquiris just before the Saturday 1800 showing of Doctor Who. And sausage rolls for all, hand made by me. But the youngest of those five children is now 40. Ah, memories.

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