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. “The unemployment rate in New York City is 16 percent, twice as high as the rest of the country. Personal income tax revenue is expected to drop by $2 billion this fiscal year. Only a third of hotel rooms are occupied, and apartment vacancies in Manhattan have hit a peak.

    “New York, more than any large city in the world, has been forced to grapple with the coronavirus outbreak’s dual paths of devastation…”

    • “…we may have a Dark November: disbelief, ambiguity, rage, resistance, depression. A contested election piled on to economic and racial turmoil, destruction and trauma from epic wildfires out West, and a possible third wave of the coronavirus — all while colder weather traps us in our homes and shorter days rob us of light and warmth.”

      https://www.washingtonpost.com/lifestyle/style/november-may-be-the-darkest-month-americans-have-seen-in-a-long-time/2020/09/27/c60e72d8-fdaa-11ea-9ceb-061d646d9c67_story.html

      • I can’t see it does any good to talk about a Dark November for Americans: after all, it’s not the Lebanon -not quite yet…..

        Too spoiled for our own good?

      • Hopefully November will be a bright month when Trump is re-elected. There is not really any racial turmoil, only Soros funded Pretend Marxist’s fomenting violence by a very tiny group of people. Most blacks do not support the violence. It is indeed an effort at a color revolution, but it is against the populist rising in America.
        Our true war is against the neoliberal globalist oligarchs and their bought and paid for governments lackeys, and their bought and paid for media.

        • Yes but many have drank the coolaid. Whatever the outcome the other side will call fraud. Conflict will intensify.

    • The fall – if it happens – of the city which once represented everything exhilarating and energetic about America’s civilisation (even sophisticated visitors from Europe in the 1920’s-50’s were astonished, if sometimes repulsed, by it) will be full of symbolic meaning for the world.

      • Xabier, it will. For some reason this Douglas Adams’ quote from “The Hitchhiker’s Guide to the Galaxy” popped into my head:

        “…on the planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much—the wheel, New York, wars and so on—whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man—for precisely the same reasons.”

        • Perfect, Sir Harry

          I venerate Douglas Adams, to my mind the most distinguished alumnus of my old College: there are some empty niches on the Victorian chapel, and to my mind it would be wonderful to have a statue of him – maybe with the famous towel and cup of tea – inserted there.

          After all, the dolphins wouldn’t give a flipper for all the dreary theologians, mathmos and physicists usually commemorated, and they might well be right…..

        • Harry,

          “whilst all the dolphins had ever done was muck about in the water having a good time.”

          On a similar vein why not remain high on cocaine? I seems to me that every so often a great white shark gets hungry and grabs a nearby dolphin by the a…..

          Dennis L.

      • And after these things I saw another angel come down from heaven, having great power; and the earth was lightened with his glory.

        And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird.

        For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies.

        (Revelation xviii 1 to 3)

        • The same chapter goes on to explain what the collapse of Babylon looked like, and perhaps might look like again. Revelation 18: 11-13 NIV

          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.

          The problem will be low demand and low prices.

            • None of what you just wrote is true. Many parts of the Bible feature very fine writing indeed. May I direct you to the Psalms? In fact, so memorable and often so apposite is the Bible that many phrases from the Bible have entered the language. I am sure that you use some of them daily yourself. And Homer’s stories are full of violence too, obviously, alhough why that is either here or there is not clear to me.

              Clearly, you are not in fact actually familiar with the contents of the Bible.

              Why do people say such obviously stup1d and incorrect things? Do they feel – in this rush-to-do-nothing-that-couldn’t-wait world – that they do not have time even for a moment’s sober consideration before they put finger to keyboard to give us all their very important opinions?

              Is it simply narcissism?

              Is it emotionally drive, the desperate need to get that rush of moral superiority, of being so daring as to be rudely dismissive of people one doesn’t know from behind the protection of a far-away computer screen?

              But adolescent-defiant hipsterish pose-striking is no replacement for knowledge and thoughtfulness. Not even in the age of anti-fash and the rona fraud.

              Your stated view of the Bible is simply, objectively wrong. Even I, an atheist, know that.

            • indeed, the Bible contains many chapters of amazingly inventive fiction, starting with Genesis 1.

              but for violent fiction, does anything top the Noah’s Ark story where the supposedly “real God” drowns the entire human race, except for Noah and his family?

            • For Kim:

              The bookmark in my copy of the Book of Common Prayer, bought in Bath Abbey on 26 July 2006, (the day is dedicated to Saints Anne and Joachim, the parents of the Blessed Virgin, and the Abbey was founded by Abbess Berta in 675 AD under the patronage of King Osric), reads thus:

              “Thy word is a lantern unto my feet, and a light unto my path” (Ps cxix:105)

              After many years as an atheist, I rediscovered religion under the prompting of a certain person, in whose honour I later left a pink rose on the altar of her temple at Philae, rededicated by Ptolemy III Euergetes and his queen Berenice. I may have backslid more than once, but I have never looked back.

  2. “Angola’s state oil giant made no money from core oil activities last year, a Reuters analysis of its full accounts shows, as billions of dollars of debt repayments ate up profits.

    “The bleak disclosure within the company’s 121-page annual financial results published in Portuguese last week underlines the perils facing the impoverished, oil-dependent nation, even before oil prices plunged due to the coronavirus outbreak.”

    https://www.reuters.com/article/angola-oil-sonangol/angolan-energy-giant-made-no-money-from-oil-in-2019-as-debt-bites-idUSL8N2GP4V2

      • But – for those who may recall the old ad (this dates me!) – are the Aussie girls knocking back more of the sweet sherry?

    • I’m happy to report that my local drug dealer seems able to deliver without any problems. Indeed, yesterday I took delivery of Napoleon Brandy (70 cl for EUR 10.35) and Laika Vodka (1 litre for EUR 12.50). Presently drinking a cocktail of the latter: my own invention, I call it a “Groodriver”. Vodka, grapefruit juice, and a lot of ice.

      Named in honour of “Groo the Wanderer”, one of the best comic book anti heroes of all time.

      • As an aside, I never got why one would waste time elaborating fine cocktails, when we can simply gulp everything (whiskey, vodka, gin) with fruit juice and it’s done. But I suspect I am a brute unrefined person. Anyway in this respect i fully agree with the great portuguese poet Fernando Pessoa: What does it matter if the wine is white or red? It’s to throw up. 🙂

  3. Perhaps a real time experiment with COVID.

    The Villages in Fl is bringing back entertainment in the squares as well as polo, etc. Social distancing is to be enforced, etc. The Villages for those unaware is a semi private community in FL with a supposed entry age of 55, it is a retirement community. This is a “vulnerable” population given age and health issues, the gatherings are open air. Overall population of The Villages is in excess of 100K.

    The simple test of the severity of the disease may be RE prices, if too many people pass, prices might decline.

    FWIW last spring our math class missed one close call when an Asian student was quarantined in Korea at the end of spring break having visited China, my dance teacher was quarantined for two weeks after one of her students tested positive and after one dance/group lesson party everyone was advised that an attendee had tested positive and I think contact tracing was done(I was not in attendance).This disease seems to be real and is associated with large groups.

    If there is no increase in COVID cases secondary to opening entertainment with a vulnerable group, it would seem it might be safe to venture out.

    Dennis L.

    • If there is no increase in COVID cases secondary to opening entertainment with a vulnerable group, it would seem it might be safe to venture out.

      In my opinion, If you get your vitamin D level up and are in reasonably good health, you probably can venture out, even at age 73. The likelihood of you catching the disease will go down as will the severity if you catch it. Vitamin D may work better than the proposed vaccines with 50% effectiveness.

      The simple test of the severity of the disease may be RE prices, if too many people pass, prices might decline.

      What do you mean by RE? Is RE short for “real estate?” If so, I would tend to agree with you. This is a link to a site that tracks The Village Market Trends. https://www.redfin.com/city/25985/FL/The-Villages/housing-market

      Of course, many of the people who buy at The Villages are likely looking for activity. Some of them may not really care if participating in activities increases their chance of death. They will also see that a vast majority of their friends do not die when they catch COVID-19. This is an affluent group; likely many already take vitamin D. There are relatively few of the residents who are dark skinned and thus more at risk for low vitamin D levels, I expect.

    • The governor of Florida recently tweeted out these stats from the CDC:

      CDC recently updated estimated infection fatality rates for COVID. Here are the updated survival rates by age group:

      0-19: 99.997%
      20-49: 99.98%
      50-69: 99.5%
      70+: 94.6%

      https://www.cdc.gov/coronavirus/2019-ncov/hcp/planning-scenarios.html

      I don’t think this is exactly going to cause a real-estate crash.
      If anything, people are leaving lockdown cities and states where possible, and fleeing TO Florida because Florida is open.

      • Time will tell, it is an experiment, with each experiment we learn a bit more, or the practice of medicine.

        With regards to a crash, perhaps I was not clear, if the death, sickness rate went up and were large gatherings not possible in a community that is based on interaction, one might expect to see less demand to live in that community.

        We are learning, sometimes by our mistakes.

        Dennis L.

  4. I read that the building of a lot of houses in Kent, Sussex and other areas surrounding London destroys British society.

    Well, I would say, good riddance.

    British society is still medieval. All these lords, etc. Many of them by-products of the sexual liaisons of the monarch and his mistresses.

    Medieval land ownership laws which led to horrible housing conditions in many locales.

    Now it is finally trying to enter the 21st century and the ‘traditionalists’ are complaining.

    The truth is, Great Britain was already unable to feed its population by 1900, and it has seriously overestended. Its empire long gone, its social and financial structures still not reflecting these changes.

    England (by that time Scotland and Wales will go their own way) will return to the days of the Stuarts, as if the Glorious Revolution and everything which came after never existed.

    • when I was first taught the population of the UK at school, it was 51 million. Now it is 67 million. So of course we need more houses. But why did the population rise so fast? Because of mass immigration, which provided more demand and cheaper work, to pump up the profits of the capitalists.

      • But don’t forget the ‘No borders, we should share our privilege, the nation state is a patriarchal and fascist construct ,etc’ nuts on the Left – just as culpable.

      • Yes, TP is funded by organised capital. It is a capitalist state party that exists to advance the interests of capital.

        The capitalist state relies on perpetual GDP growth to maintain the profit and growth based capitalist economy, and to raise the taxes needed to service the structural public debt of the capitalist state.

        The state Office of Budget Responsibilities calculates the number of workers that it will need to maintain the capitalist system decades in advance, regardless of what anyone votes for.

        TP pledged in four successive GE manifestos to severely reduce the inflow of workers but it raised it to record levels and it has now agreed with CBI to lift any cap.

        TP gets its orders from CBI, and bourgeois sham ‘democracy’ is just a front for organised capital. The moralistic ‘leftists’ are no more than useful props in the show, it is all about more money for the capitalists.

        …. How has the CBI influenced post-Brexit immigration?

        – Through public interventions, evidence-submissions and private lobbying, the CBI has secured several policy wins which mean the new immigration system will be more flexible, fair and responsive to the economy than it would have been under earlier government plans.

        – Reduced the salary threshold so that £20,480 is now possible – the government originally set the salary threshold at £30,000, which would have excluded 60% of medium skilled jobs being eligible for overseas workers. Under the new system overseas workers are eligible for a visa if they earn above the minimum salary threshold of £20,480 (and meet criteria for top-up ‘points’). They are guaranteed a visa if they earn over £25,600

        – Secured commitment to a genuine points-based route in the future – while it won’t be ready from day one, an individual will have the right to work in the UK based solely on their individual characteristics (like qualifications, age, work experience), rather than the job they are coming to do. This is a ‘genuine’ points-based route, similar to Australia, and will enable more flexibility in the new system

        – Gained assurance that free movement continues for a further six months – although the new immigration system technically comes into force on 1 Jan 2021, the government have confirmed that the checks employers must carry out when hiring EU nationals won’t change until 30 June 2021 (to align with deadline for the EU Settlement Scheme). Employers will still be able to hire EU nationals based solely on their passport/ID card for an extra six months (over which period EU nationals still have visa free travel to the UK)

        – Secured an extension to the post-study work visa – students can now stay and apply for work in the UK for up to two years after their University course ends (up from six months). This is especially important for businesses that hire graduates, and the Higher Education sector.

        https://www.cbi.org.uk/articles/government-announces-the-new-immigration-system-design/

        • I have long held the opinion that the welfare system of advanced countries is mostly a way to breed consumers.

      • Mass immigration because Britain used soldiers from the colonies, who had to be compensated with something once their countries became independent, and the soldiers brought their families and that went on and on.

        • Not so, I fear. Most shamefully, the British government reneged on its promise to allow serving colonial soldiers to resettle in Britain. Joanna Lumley fought a long and ultimately successful fight to force he government to keep its promise to the Gurkha regiments, perhaps the fiercest and noblest of our allies. She did so out of loyalty also to her father, who served with the 6th Gurkha Rifles. But in those days, there were still people with honour, and governments capable of shame. Days long gone.

        • “Mass immigration because Britain used soldiers from the colonies, who had to be compensated with something”

          They were mercenaries who were compensated with money. No need to bring them over here to the UK.

      • You have done well going only from 51 to 67. When I was a boy the population of Australia was six million. Today it is 25 million. The topsoil has got no thicker.

        • Wow! Surely you must in your nineties. Australia has a lot of minerals, particularly metals, I understand, but most of the interior is desert. And those horrendous fires recently!

  5. Has anyone looked into the work of Thomas Gold and the abiogenic formation of fossil fuels theory?

    “Gold theorized that since petroleum and its component hydrocarbons were present across the entire universe, there was no reason to believe ‘that on Earth they must be biological in origin’. Gold proposed that fuels were trapped inside the core of the Earth in randomized molecular form nearly 4.5 billion years ago. Over time, the extreme heat of the core ‘sweated’ the rocks that contained these molecules, pushing them up through the porous layers of the Earth. As they move up toward the surface, the hydrocarbons fueled the development of large microbial colonies, which served as the basis for life on Earth. The migrating fossil fuels collect biological remnants before becoming trapped in deep underground reservoirs. Soon after Gold started publishing his theories, researchers discovered a number of ecosystems functioning under ‘conditions of heat and pressure once thought impossible to sustain life’. In addition, Gold discovered that the location of major oil-producing regions in the Middle East and southeast Asia was defined by large scale patterns in surface geology and topography, such as deep fault lines. He also pointed to the abundance of helium in oil and gas reserves as evidence for ‘a deep source of the hydrocarbons’. Moreover, a few oil reserves thought to have been exhausted were suddenly generating vast amounts of crude oil. From this, Gold proposed that the Earth may possess a virtually endless supply – suggesting as much as ‘at least 500 million years’ worth of gas’ – of fossil fuels.

    Gold was accused of plagiarizing the abiogenic theory from Soviet geologists who first published it in the 1950s, but the accusations were refuted. After first publishing his views on abiogenic petroleum in 1979, Gold began finding the papers on the subject by Soviet geologists and had them translated. He was both disappointed (that his ideas were not original) and delighted (because such independent formulation of these ideas added weight to the hypothesis). He always credited the Soviet work once he knew about it. His 1987 book Power from the Earth devoted five pages to describing important Russian contributions to the field, including those by Mendeleev, Sokoloff, Vernadsky, Kudryavtsev, Beskrovny, Porfir’ev, Kravtsov, Kropotkin, Valyaev, Voronoy, and Chekaliuk.”

    https://en.wikipedia.org/wiki/Thomas_Gold

    • It is an interesting idea, given the moons of Saturn, Titan for example have literal rains of hydrocarbons and no apparent bacteria, algea, etc. One might guess it is the rate which is an issue. The coincident helium with natural gas in the US might raise questions, so far no helium producing bacteria have been found.

      Dennis L.

      • Dennis, I read Gold’s thesis and did not find it convincing. But concerning helium: it stays around because it is a renewable resource. Every atom of U238 in its standard decay mode creates 8 atoms of helium. We just have to wait for them to migrate to the surface.

    • The issue is not whether or not oil supply is endless. It is whether an economy can be built using a variety of fossil fuels that will keep oil prices high enough for producers. It is evident now that, after a point, they cannot.

      There is no problem with oil running out. The problem is overshoot and collapse. The problem we are facing is closer to a problem of affordability.

      • Globally, peak production of oil was in November of 2018.
        It is in the rear view mirror (we are millions of barrels below that now).
        Affordability?
        That is a different question.

        • The price of oil has been too low for a very long time. November 2008 was just before OPEC started cutting back on what they were producing, because prices were too low.

          Oil companies were complaining loudly back in 2012 and 2013 that oil prices were far too low. Now the prices are much lower.

          The issue with oil is more than affordability, I agree. If governments close borders, then less oil can be used. That is another way to destroy demand.

          We have no way to get demand (and prices) back up to 2008 levels, or higher. I agree we are past peak oil. This occurs because of low prices.

    • “Has anyone looked into the work of Thomas Gold and the abiogenic formation of fossil fuels theory?”

      I doubt the abiotic theory, but anyway:

      the world was using 100 million barrels per day, and that’s now down to about 90.

      for the world to continue its 2019 level of prosperity, what is needed is oil that is inexpensive to produce, perhaps in the range of $10 to $20 per barrel.

      because the production price needs to be much lower than the buyer price, which doesn’t seem to be affordable to the world economy unless it’s in the $40s.

      if the abiotic theory is true, it doesn’t matter, because it’s not creating these massive amounts of cheap oil.

      where’s all the cheap oil?

      • I came across a comment a few days ago in which the author stated that the global shutdown had extended our oil supply by an additional three years. No sources cited for that claim.

        “If the abiotic theory is true, it doesn’t matter, because it’s not creating these massive amounts of cheap oil. Where’s all the cheap oil?”

        Good question. If the abiotic theory is true, perhaps we’ve simply been sucking the straws too hard relative to the rate of fossil fuel regeneration deep within the earth. At what rate would abiotic oil rise to the surface? How much time would we have to sit on our hands and wait before abundant, cheap, easy to extract oil lay just below the surface? 50 years? 100 years? 1,000 years?

        I have no idea. I’m approaching the subject from a rudimentary point of view: do we even know what fossil fuels are and how they are generated?

        The more I research the more I discover that we really don’t have a firm understanding of a lot of natural processes on Earth. For example, research from the Kola Superdeep Borehole provided some astonishing results that defied multiple scientific predictions:

        “Because of higher-than-expected temperatures at this depth and location, 180 °C (356 °F) instead of the expected 100 °C (212 °F), drilling deeper was deemed unfeasible. The unexpected decrease in density, the greater porosity, and the unexpectedly high temperatures, caused the rock to behave somewhat like a plastic, making drilling nearly impossible. Drilling was terminated in 1992.

        To scientists, one of the more fascinating findings to emerge from this well is that no transition from granite to basalt was found at the depth of about 7 km (4.3 mi), where the velocity of seismic waves has a discontinuity. Instead the change in the seismic wave velocity is caused by a metamorphic transition in the granite rock. In addition, the rock at that depth had been thoroughly fractured and was saturated with water, which was surprising. This water, unlike surface water, must have come from deep-crust minerals and had been unable to reach the surface because of a layer of impermeable rock.

        Microscopic plankton fossils were found 6 kilometers (4 mi) below the surface.

        Another unexpected discovery was a large quantity of hydrogen gas. The drilling mud that flowed out of the hole was described as ‘boiling’ with hydrogen.”

        https://en.wikipedia.org/wiki/Kola_Superdeep_Borehole

        When looking through the lens of “settled science,” the Earth sure is full of fascinating anomalies.

        • The idea of extending our oil supply for three years comes from the “running out” theory.

          If the problem is really low prices keeping us away from a huge amount of fossil fuel resources in the ground, then this idea makes no sense. Low prices lock fossil fuel resources in the ground.

          • Have we not effectively engaged in a kind of oil rationing during the scamdemic? Through demand destruction?

            From, “COVID-19 mitigation efforts result in the lowest U.S. petroleum consumption in decades”

            “U.S. consumption of petroleum products has fallen to its lowest level in decades because of measures that limit travel and because of the general economic slowdown induced by mitigation efforts for the coronavirus disease 2019 (COVID-19)”

            https://www.eia.gov/todayinenergy/detail.php?id=43455#:~:text=U.S.%20consumption%20of%20petroleum%20products,2019%20(COVID%2D19).&text=Motor%20gasoline%20consumption%20has%20declined%20the%20most%20in%20absolute%20terms.

            And if this is true, then haven’t we “saved” a large number of already existing oil barrels from being consumed?

            From, “Oil stockpiles during pandemic to weigh on market beyond end of 2021”

            “Surplus stockpiles of crude and refined products built up around the world during the depths of the Covid-19 pandemic still won’t be cleared by the end of next year, even if the OPEC+ countries stick rigorously to their output curbs. That’s the conclusion from the latest monthly reports from two of the world’s three big oil forecasting agencies.

            The oil supply/demand balances from the International Energy Agency and the Organization of Petroleum Exporting Countries both indicate that, even assuming OPEC oil production at target levels through the remainder of this year and throughout 2021, global inventories will still be above the levels seen at the end of 2019 (see chart above). The size of the surplus ranges from 106 million barrels seen by the IEA to almost 500 million barrels in the OPEC forecast.”

            https://www.houstonchronicle.com/business/energy/article/Covid-19-Oil-Stockpiles-to-Weigh-on-Market-15571538.php

            • The situation reminds a person of what happened during the Depression of the 1930s. Oil stocks were very high then:

              There was also a huge amount of food that went to waste because it could not be sold.

              What happens ultimately with the oil in the ground remains to be seen. A new civilization that follows our could perhaps figure out a different way to use it. Otherwise, it may be there for good. We don’t know. The “system” needs to work to get the price up high enough to extract the oil.

  6. Here’s one for the food and dietary enthusiasts. I notice that whenever I eat broccoli, it more or less kills my dandruff for a couple of days. If I wanted to buy a dietary supplement to do the same, who knows what the active anti-dandruff ingredient/mineral/vitamin is in broccoli?

    I also take a large daily capsule of cod liver oil, which helps to an extent in this regard, as I don’t like fish.

    • Broccoli is high in sulfur, and I think some anti-dandruff treatments advertise a sulfur component. You could try other brassicas like cabbage and kale, and see if you get the same effect.

      • Sulfur/ sulphur. I’m looking for a supplement, since I only eat two meals a day (the only way to keep the weight off in my early old age) and don’t want to eat the same (or similar) vegetables every day.

      • Web MD says:

        What does sulfur do for the body?
        It is the third most abundant mineral in the human body. Sulfur seems to have antibacterial effects against the bacteria that cause acne. It also might help promote the loosening and shedding of skin. This is believed to help treat skin conditions such as seborrheic dermatitis or acne.

        That sounds promising.

        Also, I suffered from dandruff and other forms of dermatitis for many decades but these days my skin is fine. It maybe because I’ve finally gotten through the male menopause, let alone puberty, or more likely, it may be due to the supplements I take, of which vitamin D and the B vitamins are known to be especially good for the skin. It may be that no one approach is perfect, but a number of things taken together over an extended period can do wonders.

        • I found that my eczema was related partly to stress, but more to, guess what? the level consumption of very fresh greens and fruit.

          Above a certain level, none at all, below, it breaks out again here and there.

          How telling that no doctor since childhood looked at the balance of my diet -which was all home-cooked and fresh, but just not enough of the right stuff.

          It didn’t help that my poor mother had no idea at all how to make a salad interesting and appealing, but that wasn’t a forte of 19th British cooking which is what she knew, taught by my gt-grandmother born in 1870, who herself learnt secretly from the cook of a neighbour, as she had been forbidden to learn something so utterly common as cooking, unbefitting to a lady -but she was for some reason curious !

          Even now she calls the salads I eat ‘adulterated’, with olive oil and vinegar -incredible but very Victorian in fact. I wonder if this stems from the real adulteration scandals of Victorian times?

    • Think of the number of calories expended to get there vs. the calories in the food box. MEPP for the win.

    • And the problem isn’t really over yet. The pandemic isn’t gone. Many people are afraid to walk outside their doors. Many businesses are still propped up with loans or they are very much behind on their rent. These businesses are likely to fail as well, laying off even more workers. The financial system has not seen the end of this either.

      • And we’re still this side of Winter. This is sizing up to be a real harsh winter for a lot of people & businesses. By the time we get to January another stimulus of 2-3 trillion will be needed beyond the one their working on now. Debt piled upon debt. April seems to be the consensus of a viable vaccine in sufficient numbers to inoculate most people, then the hard work of jolting the economy back into coherence begins in earnest. But by the time we get to April a lot of wrecked lives and businesses will be on the scrap heap.

        One of the weird things that has recently happened is the mutation the virus went through making it approx. 10 times more contagious in Europe and the US.

        https://www.hospimedica.com/covid-19/articles/294783255/mutated-coronavirus-in-us-and-europe-10-times-more-contagious-than-original-strain.html

        ‘Mutated Coronavirus in US and Europe 10 Times More Contagious Than Original Strain’

        “A tiny genetic mutation in the SARS Coronavirus 2 variant circulating throughout Europe and the US has significantly increased the virus’ ability to infect cells.”

        • One supposes that would help to explain how the Chinese were able to use the Wuhan lock-down with success, if we can believe their figures – less infectious.

          But what really matters -and is lost sight of n all the fuss about ‘steeply rising’ cases- is how likely is a healthy person of working age to die or suffer serious long-term effects, rather than infectiousness per se.

        • well, there are plenty of American zombie corporations, but the entirety is still alive, though not so well.

          alive, because of the vast FF resources.

          the USA is not yet walking dead, and same for Australia and the UK, the countries of origin for most of us OFW readers.

          along with the USA, the UK and Australia should be able to hang on as viable countries for a decade or two.

          it will be interesting to see if these countries fall together, or in a series.

          • “the USA is not yet walking dead, and same for Australia and the UK,”

            That depends on how one defines “dead”.

            This axe has been in my familiy for generations. It has had five new handles and two new heads, but it has been a fine axe.

            • cool, I like that metaphor.

              I think the definition of “dead” is “dead”.

              the USA and UK and Australia et al have another axe head and handle or two ahead in the next few decades.

            • Yes, most likely this is still merely the warm up phase..

              Wake me up when MIC has to resort to hard triage and put ~75% of pop on soup/bread lines only, and or fence (itself) them off completely.. There are still several decades into this system if well played. Specifically, as the US is now likely to reverse tables – dominate in affordable space cargo lift capacity via reusable rocketry – hence there are tempting possibilities of collecting direct tribute from the RoW. It can work as follows, putting several “US Spaceforce” stationary orbit installations say above Russian, Chinese and Gulfies territories and decree: “… nice megacity you have down there it would be a shame to pummel it with mininukes from space in just few sec.. now you ants pay us tribute in raw..”

              As the reaction time to launch – distance traveled is way longer for possible counter measures mounted by said states (even the next gen Russian beyond hypersonic missiles or kinetic satellite weapons all rendered useless), so as powerless to respond, opting for impoverishing their societies and rather pay the tribute as ordered. Now the clincher being the US society demoralization is so advanced it could be even openly announced as foreign policy at that stage; this stuff will take only a decade to build, so ~BAU can kicking towards ~2030 is of paramount importance.

            • There are still several decades into this system if well played.

              If the only thing we had to worry about was money, then, perhaps. But it’s not, is it?

            • That would be very crude behavior, even from the Americans.

              If those installations were in a geosynchronous orbit, they would be 22,236 miles (35,786 kilometers) above Earth’s equator. From that height it would take a lot of seconds for a projectile to reach the surface. It would probably take about four hours at free-fall speed, much less if the projectile was powered.

              If those installations were closer to the surface, it would take fuel to keep them “hovering” in place. Or else the Americans could threaten to pummel your megacity next time their installation was in range.

              But I think the Russians and the Chinese would be counteracting any such American threat with their own nuclear, chemical and biological weapons, EMP bombs, and by interfering surreptitiously in US elections to insure that their people were put into in power.

    • This pictured scene – if legit as traffic jamming motorized public supposedly in seek of food help – is very powerful indeed.

      One could perhaps (re)en-vision old ancient civilization’s near collapse moment as inhabitants in good wardrobe (+ perfumes, jewelry, bellies filled up..) from foreign/distance resource base are suddenly impoverished and flocking into some local food relieve distribution point in the city center, while the option is open for them..

      In essence very similar or at least comparable situations.

    • Better to provide vouchers to the flying public to travel.
      Airline workers in the above case will work empty flights and get paid. That is not only silly and stupid but a waste.
      At least if folks travel they will spend..multiplyer .
      P.S. thank you Mr and Mrs future taxpayer for the loan, which won’t get paid back like all the rest of the debt that is bring created

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