Fossil Fuel Production Is Reaching Limits in a Strange Way

Strangely enough, the limit we seem to be reaching with respect to fossil fuel extraction comes from low prices. At low prices, the extraction of oil, coal, and natural gas becomes unprofitable. Producers go bankrupt, or they voluntarily cut back production in an attempt to force prices higher. As the result of these forces, production tends to fall. This limit comes long before the limit that many people imagine: the amount of fossil fuels in the ground that seems to be available with current extraction techniques.

The last time there was a similar problem was back in 1913, when coal was the predominant fossil fuel used and the United Kingdom was the largest coal producer in the world. The cost of production was rising due to depletion, but coal prices would not rise sufficiently to cover the higher cost of production. As a result, the United Kingdom’s coal production reached its highest level in 1913, the year before World War I started, and began to fall in 1914.

Between 1913 and 1945, the world economy was very troubled. There were two world wars, the Spanish Flu pandemic and the Great Depression. My concern is that we are again headed into another very troubled period that could last for many years.

The way the energy problems of the period between 1913 and 1945 were resolved was through the rapid ramp-up of oil production. Oil was, as that time, inexpensive to produce and could be sold for a very large multiple of the cost of production. If population is to remain at the current level or possibly grow, we need a similar “energy savior.” Unfortunately, none of the alternatives we are looking at now yield a high enough return relative to the required investment.

I recently gave a talk to an engineering group interested in energy research talking about these issues. In this post, I will discuss the slides of this presentation. A PDF of the presentation can be found at this link.

The Low Oil Price Problem

Oil prices seem to bounce around wildly. One major issue is that there is a two-way tug of war between the prices that citizens can afford and the prices that oil companies require. We can look back now and say that the mid-2008 price of over $150 per barrel was too high for consumers. But strangely enough, oil producers began complaining about oil prices being too low to cover their rising cost levels, starting in 2012. Prices, at a 2019 cost level, were at about $120 per barrel at that time. I wrote about this issue in the post, Beginning of the End? Oil Companies Cut Back on Spending. Oil prices now are in the $40 range, so are way, way below both $120 per barrel and $150 per barrel.

Interest rates and the availability of debt also play a role in oil prices. If interest rates are low and debt is readily available, it is easy to buy a new home or new car, and oil prices tend to rise because of the higher demand. When prices are too low for producers, central banks have been able to lower interest rates through a program called “quantitative easing.” This program seems to have helped oil prices to rise again, over a three-year period, after they crashed in 2008.

OPEC producers are known for their low cost of production, but even they report needing high oil prices. The cost of extracting the oil is reported to be very low (perhaps $10 per barrel), but the price charged needs to be high enough to allow governments to collect very high taxes on the oil extracted. If prices are high enough, these countries can continue the food subsidies that their populations depend upon. They can also sponsor development programs to provide jobs for the ever-growing populations of these countries. OPEC producers also need to develop new oil fields because the old ones deplete.

Oil production outside of the United States and Canada entered a bumpy plateau in 2005. The US and Canada added oil production from shale and bitumen in recent years, helping to keep world oil production (including natural gas liquids) rising.

One reason why producers need higher prices is because their cost of extraction tends to rise over time. This happens because the oil that is cheapest to extract and process tends to be extracted first, leaving the oil with higher cost of extraction until later. 

Some OPEC countries, such as Saudi Arabia, can hide the low price problem for a while by borrowing money. But even this approach does not work well for long. The longer low oil prices last, the greater the danger is of governments being overthrown by unhappy citizens. Oil production can then be expected to become erratic because of internal conflicts.

In the US and Canada, oil companies have been funded by bank loans, bond sales and the sale of shares of stock. These sources of funding are drying up, as many oil companies report poor earnings, year after year, and some are seeking bankruptcy protection. 

Chart 6 shows that the number of drilling rigs in operation has dropped dramatically in both the United States and Canada, as oil companies cut back on drilling. There is a lag between the time the number of drilling rigs is cut back and the time production starts to fall of perhaps a year, in the case of shale. These low drilling rig counts suggest that US and Canadian oil production from shale will fall in 2021.

Of course, unused drilling rigs cannot be mothballed indefinitely. At some point, they are sold as scrap and the workers who operated them find other employment. It then becomes difficult to restart oil extraction.

How the Economy Works, and What Goes Wrong as Limits Are Reached

Slide 7 shows one way of visualizing how the world economy, as a self-organizing system, operates. It is somewhat like a child’s building toy. New layers are added as new consumers, new businesses and new laws are added. Old layers tend to disappear, as old consumers die, old products are replaced by new products, and new laws replace old laws. Thus, the structure is to some extent hollow.

Self-organizing objects that grow require energy under the laws of physics. Our human bodies are self-organizing systems that grow. We use food as our source of energy. The economy also requires energy products of many kinds, such as gasoline, jet fuel, coal and electricity to allow it to operate.

It is easy to see that energy consumption allows the economy to produce finished goods and services, such as homes, automobiles, and medical services. It is less obvious, but just as important, that energy consumption provides jobs that pay well. Without energy supplies in addition to food, typical jobs would be digging in the dirt with a stick or gathering food with our hands. These jobs don’t pay well.

Finally, Slide 7 shows an important equivalence between consumers and employees. If consumers are going to be able to afford to buy the output of the economy, they need to have adequate wages.

A typical situation that arises is that population rises more quickly than energy resources, such as land to grow food. For a while, it is possible to work around this shortfall with what is called added complexity: hierarchical organization, specialization, technology, and globalization. Unfortunately, as more complexity is added, the economic system increasingly produces winners and losers. The losers end up with very low wage jobs, or with no jobs at all. The winners get huge wages and often asset ownership, as well. The winners end up with far more revenue than they need to purchase basic goods and services. The losers often do not have enough revenue to feed their families and to buy basic necessities, such as a home and some form of basic transportation.

The strange way the economy works has to do with the physics of the situation. Physicist Francois Roddier explains this as being similar to what happens to water at different temperatures. When the world economy has somewhat inadequate energy supplies, the goods and services produced by the economy tend to bubble to the top members of the world economy, similar to the way steam rises. The bottom members of the economy tend to get “frozen out.” This way, the economy can downsize without losing all members of the economy, simultaneously. This is the way ecosystems of all kinds adapt to changing conditions: The plants and animals that are best adapted to the conditions of the time tend to be the survivors.

These issues are related to the fact that the economy is, in physics terms, a dissipative structure. The economy, like hurricanes and like humans, requires adequate energy if it is not to collapse. Dissipative structures attempt to work around temporary shortfalls in energy supplies. A human being will lose weight if his caloric intake is restricted for a while. A hurricane will lose speed, if the energy it gets from the warm water of the ocean is restricted. A world economy with inadequate energy is likely to shrink back in many ways: unprofitable businesses may fail, layers of government may disappear and population may fall, for example.

In the discussion of Slide 7, I mentioned the fact that if we try to “stretch” energy supply with added complexity, many workers would end up with very low wages. Some of these low wage workers would be in the US and Europe, but many of them would be in China, India and Africa. Even though these workers are producing goods for the world economy, they often cannot afford to buy those same goods themselves. Henry Ford is remembered to have said something to the effect that he needed to pay his workers enough so that they, themselves, could buy the cars they were making. To a significant extent, this is no longer happening when a person takes into account international workers.

The high interest rates that low-wage workers pay mean that loans don’t really help low-wage workers as much as they help high-wage workers. The high interest on credit card debt and personal loans tend to transfer part of the income of low-wage workers to the financial sector, leaving poor people worse off than they would have been without the loans. 

COVID shutdowns are extremely damaging to the world economy. They are like taking support sticks out of the dome on Slide 7. They produce many more unemployed people around the world. People in low wage countries that produce clothing for a living have been particularly hard hit, for example. Migrant workers and miners of various kinds have also been hard hit.

We Seem to Be Reaching a Major Turning Point

Oil production and consumption have both fallen in 2020; oil prices are far too low for producers; wage disparity is a major problem; countries seem to be increasingly having problems getting along. Many analysts are forecasting a prolonged recession.

The last time that we had a similar situation was in 1913, when the largest coal producer in the world was the United Kingdom. The UK’s cost of coal production kept rising because of depletion (deeper mines, thinner seams), but prices would not rise to compensate for the higher cost of production. Miners were paid very inadequate wages; poor workers regularly held strikes for higher wages. World War I started in 1914, the same year coal production of the UK started to fall. The UK’s coal production has fallen nearly every year since then.

The last time that wage disparity started to spike as badly as it has in recent years occurred back in the late 1920s, or perhaps as early as 1913 to 1915.  The chart shown above is for the US; problems were greater in Europe at that time.

With continued low oil prices, production is likely to start falling and may continue to fall for years. It is hard to bring scrapped drilling rigs back into service, for example. The experience in the UK with coal shows that energy prices don’t necessarily rise to compensate for higher costs due to depletion. There need to be buyers for higher-priced goods made with higher-priced coal. If there is too much wage disparity, the many poor people in the system will tend to keep demand, and prices, too low. They may eat poorly, making it easier for pandemics to spread, as with the Spanish Flu in 1918-1919. These people will be unhappy, leading to the rise of leaders promising to change the system to make things better.

My concern is that we may be heading into a long period of unrest, as occurred in the 1913 to 1945 era. Instead of getting high energy prices, we will get disruption of the world economy.  The self-organizing economy is attempting to fix itself, either by getting more energy supply or by eliminating parts of the economy that aren’t contributing enough to the overall system. Conflict between countries, pandemics, bankruptcies and economic contraction are likely to be part of the mix.

Coal Seems to Be Reaching Extraction Limits as Well 

Coal has essentially the same problem as oil: Prices tend to be too low for producers to extract coal profitably. Many coal producers have gone bankrupt. Prices were higher back in 2008, when demand was high for everything, and again in 2011, when quantitative easing had been helpful. 

There have been stories in the press in the past week about China limiting coal imports from Australia, so as to make more jobs for coal miners in China. The big conflict among countries relates to “not enough jobs that pay well” and “not enough profitable companies.” These indirectly are energy issues. If there was more “affordability” of goods made with high-priced coal, there would be no problem.

Coal production worldwide has been on a bumpy plateau since 2012. In fact, China, the largest producer of coal, found its production stagnating, starting about 2012. The problem was a familiar one: The cost of extraction rose because many mines that had been used for quite a number of years were depleted. The selling price would not rise to match the higher cost of extraction because of affordability issues.

The underlying problem is that the economy is a dissipative structure. Commodity prices are set by the laws of physics. Prices don’t rise high enough for producers, if there are not enough customers willing and able to buy the goods made with high-priced coal.

We Have a Major Problem if Both Coal and Oil Production Are in Danger of Falling Because of Low Prices

Oil and coal are the two largest sources of energy in the world. We can’t get along without them. While natural gas production is fairly high, there is not nearly enough natural gas to replace both oil and coal.

Looking down the list, we see that nuclear production hit a maximum back in 2006 and has fallen since then.

Hydroelectric continues to grow, but from a small base. Most of the good sites have already been taken. In many cases, there are conflicts between countries regarding who should get the benefit of water from a given river.

The only grouping that is growing rapidly is Renewables. (This is really Renewables Other than Hydroelectric.) It includes wind and solar plus a few other energy types, including geothermal. This grouping, too, is very small compared to oil and coal.

Natural Gas Has a Low Price Problem as Well

Natural gas, at first glance, looks like it might be a partial solution to the world’s energy problems: It is lower in carbon than coal and oil, and it is fairly abundant. The problem with natural gas is that it is terribly expensive to ship. At one time, people used to talk about there being a lot of “stranded” natural gas. This natural gas seemed to be available, but when shipping costs were included, the price of goods made with it (such as electricity or winter heat for homes) was often unaffordable.

After the run-up in oil prices in the early 2000s, many people became optimistic that, with energy scarcity, natural gas prices would rise sufficiently to make extraction and shipping long distances profitable. Unfortunately, it is becoming increasingly clear that, while prices can temporarily spike due to scarcity and perhaps a debt bubble, keeping the prices up for the long run is extremely difficult. Customers need to be able to afford the goods and services made with these energy products, or the laws of physics bring market prices back down to an affordable level.

The prices in the chart reflect three different natural gas products. The lowest priced one is US Henry Hub, which is priced near the place of extraction, so long distance shipping is not an issue. The other two, German Import and Japan Liquefied Natural Gas (LNG), include different quantities of long distance shipping. Prices in 2020 are even lower than in 2019. For example, some LNG imported by Japan has ben purchased for $4 per million Btu in 2020.

The Economy Needs a Bail-Out Similar to the Growth of Oil After WWII

The oil that was produced shortly after World War II had very important characteristics:

  1. It was very inexpensive to produce, and
  2. It could be sold to customers at a far higher price than its cost of production.

It was as if, today, we had a very useful energy product that could be produced and delivered for $4, but it was so valuable to consumers that they were willing to pay $120 for it. In other words, the consumer was willing to pay 30 times as much as the cost that went into extracting and refining the oil.

With an energy product this valuable, a company producing it would need virtually no debt. It could drill a well or two, and with the profits from the first wells, finance the investment of many more wells. The company could pay very high taxes, allowing governments to build roads, schools, electricity transmission lines and much other infrastructure, without having to raise taxes on citizens.

Besides using the profits for reinvestment and for taxes, oil companies could pay high dividends. This made oil company stocks favorites of pension plans. Thus, in a way, oil company profits could help subsidize pension plans, as well.

Now, because of depletion, we have reached a situation where oil companies, and in fact most companies, are unprofitable. Companies and governments keep adding debt at ever lower interest rates. In fact, the tradition of ever-increasing debt at ever-lower interest rates goes back to 1981. Thus, we have been using debt manipulation to hide energy problems for almost 40 years now.

We need a way to counteract this trend toward ever-lower returns. Some people talk about “Energy Return on Energy Investment” or EROEI. I gave an example in dollars, but a major thing those dollars are buying is energy, so the result is very similar.

I think researchers have set the “bar” far too low, in looking at what is an adequate EROEI. Today’s wind and solar don’t really have an adequate EROEI, when the full cost of delivery is included. If they did, they would not need the subsidy of “going first” on the electric grid. They would also be able to pay high taxes instead of requiring subsidies, year after year. We need much better solutions than the ones we have today.

Some researchers talk about “Net Energy per Capita,” calculated as ((Energy Delivered to the End User) minus (Energy Used in Making and Transporting Energy to the End User)) divided by (Population). It seems to me that Net Energy per Capita needs to stay at least constant, and perhaps rise. If net energy per capita could actually rise, it would allow the economy to increasingly fight depletion and pollution.

Conclusion: We Need a New Very Inexpensive Energy Source Now

We need a new, very inexpensive energy source that buyers will willingly pay a disproportionately high price for right now, not 20 or 50 years from now.

The alternative may be an economy that does poorly for a long time or collapses completely.

The one ray of hope, from a researcher’s perspective, is the fact that people are always looking for solutions. They may be able to provide funds for research at this time, even if funds for full implementation are unlikely.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,885 Responses to Fossil Fuel Production Is Reaching Limits in a Strange Way

  1. Harry McGibbs says:

    “One in five young workers who were furloughed have lost their jobs even before a bleak winter that is expected to see surging unemployment, new research has revealed.

    “Youth unemployment is thought to have hit 20pc – the highest since the aftermath of the financial crisis…”

  2. Harry McGibbs says:

    “As the European Union seeks to disburse funds from its 750 billion-euro ($888 billion) recovery program as soon as next year, some of the countries hardest hit by the pandemic are struggling to work out how to best keep their finances in check once they take on billions of euros of new loans.”

    • Harry McGibbs says:

      “The day after Christine Lagarde presents the European Central Bank’s latest monetary policy decision on Thursday, new figures are expected to show the eurozone sank into its third consecutive month of deflation…

      “The challenge for the ECB president is that, with the eurozone sliding towards another downturn and governments still bickering over the details of the EU’s €750bn recovery fund, doubts are rising over the central bank’s ability to pull the economy out of the slump.”

    • No country wants more debt. They want out and out grants.

  3. Harry McGibbs says:

    “193 European Airports face insolvency in the next coming months due to the travel crisis caused by the travel restrictions amid the Coronavirus pandemic, a new report of the Airports Council International (ACI) Europe shows.”

  4. Harry McGibbs says:

    “The overhang of bad loans in the Indian banking sector has been a major factor behind the economic slowdown in the country.

    “The problem pre-dates the covid crisis.”

  5. Harry McGibbs says:

    “…the debt picture is precarious. The global debt to gross domestic product ratio is unsustainable, at over 320 per cent. Perhaps more worrying is that China’s role as a creditor now means debt concerns are not just economic, but also geopolitical. China is one of the top lenders to the US — which gives the country’s political class enormous leverage — and also now the largest lender to emerging economies.

    “Strained US-China relations, and the fact that China is also the largest trading partner and foreign direct investor for many advanced and developing countries, will limit the scope for negotiations to restructure or even a call for debt moratoriums. This strengthens Beijing’s position in setting trade terms. A debt stand-off between the US and China would have considerable contagion effects around the world, as US government treasuries remain the risk-free reference rate for most debt issuers.”

    • Harry McGibbs says:

      China, of course, has debt problems of its own:

      “Across China, Beijing has willy-nilly injected capital into failing lenders, forced state-owned enterprises to step in as shareholders and consolidated yet more institutions in a bid to stave off system-wide contagion…

      “China’s more than 4,000 regional banks, mainly city and rural commercial institutions, held almost 77 trillion yuan in assets, or roughly a quarter of the industry total as of June.

      “As more of these banks succumb to bad balance sheets and troubled funding markets, fear is growing that the People’s Bank of China lacks a coherent strategy for dealing with them.”

      • According to the article:

        The reality is that Beijing doesn’t have the wherewithal to guarantee the future of hundreds of smaller, provincial financial institutions that together sit on 73.4 trillion of yuan of total liabilities. Now stressed, these institutions have tended to extend themselves beyond their mandates. They have also become warehouses of non-performing assets. Government finances are weakening. Municipal governments and China’s big four commercial banks are strained. The funding gap for local governments could be as wide as 1.5 trillion yuan this year, based on the Ministry of Finance’s estimates. Meanwhile, China has already asked banks to surrender 1.5 trillion yuan in profits to help businesses weather the economic slowdown.

    • We don’t often think about:

      China is one of the top lenders to the US.

      China, Mainland holds $1.1 trillion of US treasuries. Hong Kong holds another $251 billion treasuries. Japan is the single largest owner of US Treasuries, with $1.3 trillion. If we add China and Hong Kong, the combination is about the same as Japan.

      I expect that quite a bit of the treasuries are used to facilitate trade. If China figures a way around using the US dollar, it would not need as many treasuries. In theory, China buying less/selling would raise US interest rates, making it more difficult for the US to carry as much debt as it does. In today’s strange world, I am not certain that interest rates would actually rise. Maybe there would be an impact on foreign trade, instead.

      • Minority Of One says:

        I have read recently that the USA is also one of the top lenders to China, but have never checked it out.

  6. I see stock market and oil are selling off again today. Dow is -727 (or 2.65%), Nasdaq is -2.92%. WTI is $37.24.

  7. Yoshua says:

    “Armenians in France were attacked by Turks with hammers during a demonstration”.

    • Back when the first round of nuclear was built, cost of nuclear was quite low. Attention to safety wasn’t very high either.

      Now, for rich nations, the cost of nuclear is a whole lot higher. I am not sure how much the cost has escalated for poorer nations. They tend to look the other way, when it comes to risks. It is now the poorer nations who are building these reactors.

      EROI calculations, as far as I know, were done when the cost of nuclear was much smaller than it is today. The cost of clean up after accidents was not included.

      • Rodster says:

        Just think if they are bypassing many safety protocols just to build their reactors are they going to do the same with regards to their “spent fuel rods”?

    • Rodster says:

      What could possibly, GO WRONG?

  8. Minority Of One says:

    Another interesting cv-19 video from an American doctor (8m 32s)

    Dr. Breggin’s (new to me) talks about how a new report he has published details how Dr. Fauci paid for the gain-of-function research in China that resulted in CV-19, and although Trump stopped that source of funding earlier this year, Fauci has found other ways to keep the funding going.

    Interesting that YT have not pulled this video. It is 6 days old, although very few have watched it.

    How Fauci Betrayed Presidents Obama and Trump

  9. Artleads says:

    This from 2017:…/self-powered-electronics…
    Your body is a big battery and scientists want to power gadgets with it

    Your body is a big battery and scientists want to power gadgets with it
    Your body is a big battery and scientists want to power gadgets with it

    Thanks. I’ll pass this around. Industrial civilization depends on mining, trucking and shipping, heating and cooling buildings, industrial ag, ETC. Running all that on human bodily heat seems far fetched.

  10. Yet another peer reviewed article showing that people with higher vitamin D levels seem to be less likely to become hospitalized COVID patients, at least in one hospital system in Spain.

    This is a link to the write-up More than 80 per cent of hospitalized COVID-19 patients had vitamin D deficiency: study

    This is a link to the academic study: Vitamin D Status in Hospitalized Patients With SARS-CoV-2 Infection


    In COVID-19 patients, mean±SD 25OHD levels were 13.8±7.2 ng/ml, compared to 20.9±7.4 ng/ml in controls (p<0.0001). Wow!

    Vitamin D deficiency was found in 82.2% of COVID-19 cases and 47.2% of population-based controls (p<0.0001). Wow!

    Paper says:

    Probably, the best approach should be to identify and treat vitamin D deficiency, especially in high-risk individuals such as the elderly, patients with comorbidities, and nursing home residents, to maintain serum 25OHD levels above 20 ng/ml, and probably with a target between 30 ng/ml and 50 ng/ml. Whether the treatment of vitamin D deficiency will play some role in the prevention of the viral disease or improve the prognosis of patients with COVID-19 remains to be elucidated in large randomized controlled trials which will be certainly necessary to precisely define the role of vitamin D supplementation in futures waves of SARS-CoV-2 infection.

    Even if the story is not 100% proven, it makes sense to get people’s vitamin D levels up.

    • Erdles says:

      I just had blood tests for vitamin D and was found to be deficient and advised to take supplements over the winter. Problem is I am already taking supplements and have done so for the for the last six months (75micro g/3000 UI per day).

      How much of this stuff can you take?

      • Kowalainen says:

        Increase the dose, distribute it evenly during the day. Do a blood test. Rinse and repeat.

      • It depends to large degree also on your life style..

        Say if you are physically active even per off/winter season (farmer, construction worker, athlete, or submerged in very stressful office job) the all spectrum vitamins and minerals drain from the body is just enormous, you are always running on deficit.

        Ever wondered why “workers” in previous centuries received good amount of beer and wine on the job, and no it was not for the alcoholic content.. Another important facet of life those fuc#. global capitalists and liberal progressivist-fantasmagoos erased from our cultures..

        In other words, try to replenish these by whatever means available to you.

        • Kowalainen says:

          I can tell from my experience is that you do indeed need eat more if you start going full bore on a bicyle at your 40km daily commute.

          Best source of rapid burning energy is a fruit smoothie juiced up with plenty of sugar. It’s like kerosene for a jet engine. It hits like a hammer, and then get on the bike to capitalize on it. Vitamins + fibres + micronutrients + sugars = nitromethane for the rapacious primate protoplasm.

          When there is plenty of sugar floating around in the body with the insulin receptors in the leg muscles wide open, you’ll feel great. You’ll crank those pedals like there is no tomorrow.

          LCHF and Atkins is BS.

        • The rapid drain issue could be another reason why dark skinned workers seem to have higher death rates. Dark skinned workers are more often in jobs that require physical labor, perhaps also keeping vitamin D buildup down (besides dark skin providing this effect).

    • Thanks for another confirmation.
      If you recall in late winter/early spring very few suspected or advised about this, while nowadays it’s becoming common knowledge all these supplements are flying off the shelves like crazy, no wide spread shortages though. There is evidently spike in demand both from retail (pharmacies) as well as already hospitalized (procurement).

  11. misanthropr#7 says:

    • Bei Dawei says:

      @#$%! I thought from the date that Russia must have intervened in the Karabakh war. But no, these are just clips from this year’s military exercises.

  12. Late to the Party says:

    Neil McCoy Ward is an investor who puts out videos. He seems more sensible than most business people.He says he is totally out of the stock market fearing crash. This video he show how dead downtown London is, Trafalgar square, and the subway etc. Eye opening to me how bad it is (and also how beautiful the buildings are). He has previously called for a real estate crash/collapse early 2021. He predicts deflation, but doesn’t ever mention the energy component to the economy. The second video he gives his analysis and prediction.

    • Lidia17 says:

      Thanks for the videos. There’s something particularly poignant about the electronic ads in the subway and Picadilly billboards displaying their messages to no-one.

    • Interesting! London looks more empty than the Wall Street area of New York City.

      People in the UK are having their salaries paid through the end of October. Expect a big falloff in employment at that time. Many workers will see their incomes fall, making the situation much worse. (I think Europe and Australia are somewhat similar.)

      People are being told to stay inside with harsh penalties because of the current spike in COVID cases. They are being told to be terribly afraid of going out.

      Small and medium sized companies hire a surprisingly large share of workers (60% in UK), and pay a disproportionate share of taxes. They are the ones that are in danger of failing. The loss of all of these businesses and jobs will lead to deflation.

      • Erdles says:

        The chancellor announced a new package of payments for areas in tier 3 lockdown, soon to be most. It pretty much replicates the furlough scheme which is to be wound down in a few days.

    • Erdles says:

      The segment opens with a clip that says ‘peak hour’ but actually the clocks on the tube say1122. Not surprising there are no commuters around and the train is empty.

    • Kowalainen says:

      In summary of those videos.

      Return to LTG Scenario 2/3.

    • Minority Of One says:

      Very good videos.

  13. avocado says:

    Russia and China getting a bit closer

    • The way I am reading this, it is more about a common currency for some countries that used to be part of the Soviet Union, so that they don’t have to switch back and forth to the US dollar.

      The Eurasian Economic Union (EAEU), an analogue to the EU in the post-Soviet space, should begin using its own currencies in trade, rather than the Euro and Dollar, which dominate commerce between the member states and China.

      That’s a consensus agreed upon at a virtual forum on Monday, dedicated to integrating the five EAEU member states with China’s flagship foreign policy initiative, ‘One Belt, One Road’. Founded in 2010, The EAEU is made up of Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, and in recent years has actively sought a closer relationship with Asia, especially Beijing.

      This same currency would be used in trade with China, cutting the US dollar out of the picture. I am sure the US will not be happy about this either.

      I have written about more local alliances, instead of the globalization we have been seeing. I think that this is part of it. Financial systems start being more local as well.

      • avocado says:

        It seems it doesen’t happen elsewhere. It’s a bit of comeback of Ussr and a lot of China’s growing influence.

        In Latam there are no internal currency swaps, not even at Mercosur, the biggest free trade agreement. Not even talks about it. But there are currency swaps with China. It’s likely that Argentina, for exemple, will pritty soon be a province of China, reg. financial issues. CB has almost zero reserves, usd bonds price is falling and ability to borrow from IMF is likely exhausted. Everybody seems to agree that China is the only path left, also because their demand of goods still grows and all the rest shrinks because of the pandemic

  14. Yoshua says:

    Mass protests in Poland.

    This time ignited by a abortion law.

    • I don’t blame them. Parents want some control over the number of children they have. Birth control too often doesn’t work. If a couple is depending on the wife’s income, and she is out with a baby, this causes a problem.

      • Dennis L. says:

        Interesting point of view. One wonders how our grandparents did it living on a farm with no available childcare at first. Throw the baby out with the bathwater and one has no available labor in the pipeline. Wife there too was an important part of the family income, or family survival both in childbirth and other chores.

        It is difficult to understand why compared to fifty years ago we are having so many problems making our way, going back another generation and my grandparents certainly had much less per capita energy, somehow more things seemed to work.

        We seem to be going back that way, finding solutions would be helpful.

        Dennis L.

        • info says:

          @Dennis L

          “Wife there too was an important part of the family income, or family survival both in childbirth and other chores. ”

          Women contributed more manual labor in history alongside being more specialized in childcare. Paying others to raise one’s own children was often more likely to be for those who were very wealthy.

          And I think that the wife didn’t handle the children alone. Other female relatives would have pitched in.

          But the Husband did the majority of the work in bringing in income.

          • Lidia17 says:

            Depends on the culture. In some places, women do the bulk of the work while the men laze around (kind of like the lion paradigm).

            • info says:

              That’s why the Patriarchy was created:

              When Men get Headship over their own families with children that they know are of their blood.

              Men will put in the work of providing for the family and nurture their offspring.

              Hence also the rise of chastity culture to ensure Paternity certainty.

            • info says:

              You know the relationship between the Alpha and the group of males that he leads?

              And the implication of the natural instinct of being loyal to and taking care of his group?

              Now apply that to the family.

            • Slow Paul says:

              Interesting read regarding the rise and fall of patriarchy. My take is that we live in an age of abundance (compared to pre-industrial civilization) and that man and woman are no longer in dire need of each others full commitment and partnership for survival. You can go out, copulate with whoever, go eat a burger, survival ensured. Let kindergarden and school raise your offspring. In hunter gatherer times, the man would hunt for food while the woman raised the offspring. A mutual contract were necessary for survival.

            • Lidia17 says:

              Yes, Slow Paul.. the State has taken over the function of the Patriarch. That’s the “contract” that is coming into question for energetical reasons (which will translate into political reasons).

      • Sorry, the genuine issue of stricter abortion regulation there (sidestepped for ages by “tourist abortions” done elsewhere in EU) is hijacked for yet another “color revolution” escapade. It’s the very same people, foreign NGOs, behind it as well as the similar profile of their foot soldiers (not very bright and gullible segment of the youth) on the ground.

  15. Malcopian says:

    ‘Sleeping giant’ Arctic methane deposits starting to release, scientists find.

    • It sounds like something else that is not really fixable.

      • Malcopian says:

        In fact, researcher Malcolm Light has been thinking about fixing it for long enough. This article is from 2015.


        “I and some other workers have designed a radio-laser Atmospheric methane destruction system based on the early Russian radio-wave induced conversion of methane to nano-diamonds. This radio-laser system can be installed on nuclear powered boats such as the 40 Russian Arctic ice breakers and start immediate work on destroying the atmospheric methane clouds that are building up in the Arctic. An abstract about the system is attached and it has been accepted for presentation at a congress of the American Meteorological Society to be held on January 10 – 14, 2016 at New Orleans in Louisiana, U.S.A. This system should be mounted on the nuclear icebreakers and used onshore. Once the methane is brought under control there should be a reduction in the massive fire hazards, heat waves and severe storms systems that are plaguing Russia and the rest of the world.”


        My own comment: such actions would undoubtedly also have unintended effects that cannot be foreseen or modelled. However, perhaps NOT doing it might have worse effects. Let’s see if Elon Musk gets wind of this plan and tries to put together a system to implement it.

      • Malcopian says:

        Here’s how to fix it:

        It’s expensive, though, and will have to come out of Gail’s pocket money.

  16. Dennis L. says:

    For those of you interested in sustainable building, this is a course at MIT, either free, or you can get a certificate for $99.00, 13 week course. MIT seems to really have distance education down, at least from what I have taken to date.

    This stuff is not trivial and it is very expensive and it doesn’t work as well as a simple, modern heating system.

    Good luck,

    Dennis L.

    • Kowalainen says:

      Overly complex which simple stuff like thickly insulated walls solves. If it works? Just have a look at the regular villa in northern scandinavia. Heat pumps and thick walls. It isn’t rocket science, folks.

      What is this thing about building houses with thin walls and then stuffing them full of silly gear? Could it be because it is difficult to add some insulating materials and thermal zoning and air ducts to circulate air to avoid mould? Or is it this eternal pandering to gizmos and hopium peddling while keeping the fundamentals of construction as cheap and jank as possible?

      Just build houses properly insulated. It keeps the cold and heat out.

      Yes, you Anglo Saxons suck at building houses. So do East Asians, their “houses” cold as F during winter, and hot as H, during summer.

      You might disagree with me, but you already know the consequences of that.

      • Dennis L. says:


        My, my. Bored this PM but still Minnesota nice.

        I have built a reasonable number of structures, some with professional engineers and architects. There are serious issues with building tight buildings, have you built much yourself?

        Won’t go further, if it is easy, build one – my advice which you can ignore, bring twice as much money as you think necessary and then put aside the original estimate for cost over runs.

        Dennis L.

      • misanthropr#7 says:

        Good post. if you live where its cold once you live in a good r house U WILL NOT GO BACK. r 40 wall r60 ceilings minimum. And get rid of those stud and rafter thermal bypasses!

    • How about looking at the designs early settlers used in different parts of the country? These would be not too complex, and would use local materials.

      • misanthropr#7 says:

        Early settler got one thing right. They built small basically shacks. Even a plywood shack with no insulation is very pleasant with a 100,000 btu wood stove in it. Just like the early settler had abundant calorie resources running about in food they had abundant heating calories in wood available. The native americans used snow in there designs. snow is a good insulator if you place your shelter where it will drift and surround your house. Settler designs just do not compare to even a shoddy built modern house. Log homes suck. I wont go into it. about your 7th time staining… If you really are hung up on local materials you look for scoria or perlite in a earthbag design. with a r of 1-1.5 a 24 inch wall does ok. Straw bale still king. Earthbags can be domed but they dont shed water well. By far earthbag and straw bale are at their best with conventional truss roofs. And this is the most important insulation value. your NOT going to put 67 tons of scoria load on your trusses. Whats going to be up there? Fiberglass or cellulose. Now if you are really really insane sawdust from the mill is not a terrible insulator with borax added. NOT recommended. I saw many a old house insulated with newspaper. NOT NOT NOT recommended.
        Sure build your 8×12 sod shack. great fun! Even useful because it is so small it can be heated. Look at a ice fishing shack. If you can throw in some scavenged rigid polyiso insulation you just took it from a curiosity to something.
        Re Sustainability. Martin Holliday is a pioneer in Green building. A honest man. “the most sustainable choice is not to build”. If you really want to be sustainable live in a apartment in the city with lots of roomates. Most of what passes for “GREEN” “Sustainable” is a lie a serves to pamper guilty conscience. That doesn’t make the people who buy it bad.

      • Dennis L. says:

        In Westby the first settlers lived in bark huts(bark off trees, local materials), WI was a lumber source in the later 1800’s. My grandfather’s house had no insulation save some newspapers, and a cook stove in the kitchen which sort of heated the upstairs. Plumbing was an outhouse, there was one cold water tap in the kitchen, cistern fed, same as for the cows.

        Bottom line, it was very efficient energy wise. I seriously think it is the only solution which is economical, well insulated homes with good interior air quality are a rich man’s privilege.

        Mom moved from the farm, to the city, converted former whore house, I guess one could say it was hot. Octopus furnace wrapped in asbestos, fired up in the AM, I sat in front of a heat register to warm up winter mornings, heated with good, clean coal – ahead of our time if presidential campaigns are be believed.

        It was not complex, temperature controlled by the number of shovels full of coal each day, plus minus 10 degrees was considered exceptional.

        Dennis L.

        • Kowalainen says:

          “Insulation is a rich man’s privilegie?” Not anymore it isn’t.

          It’s merely a matter of incompetence and an affinity to build jank that last max 30 years, consumerist bonanza style, before the next yahoo owner shows up at the front porch and decideds to tear it down. Then proceeds with building a new “house” with the same cheap, jank materials.

          I recall a short stay I had in Newbury, the landlord ran in red in face and told me that I forgot to turn off the heater after I returned in the evening.

          I thought WTF, this is worse than Swedish housing in the 50’s. At least at that stage we weren’t fully electrified and burned oil to heat our homes in the north, yeah it was cheap back then. Nobody switched off the burners when leaving the house. Back in Newbury: In the bath room, two dedicated taps, one for hot and the other for cold water. Yup, that was also Sweden in the 50’s. However, I got news for you, this is 2020.

          Insulation and heat pumps. Stop being so notoriously and obstinately jank with your cars and houses. Save up to 90% of the energy used in housing by, dunno, copy Scandinavia perhaps? No?

        • misanthropr#7 says:

          Your right about air quality being counterproductive to insulation. Take that beautiful old poorly insulated home. Drafts all over the place. fresh air. Thats a healthy home! A energy pig but healthy. Now take a home sealed up. Convection is the greatest heat loss. You HAVE TO introduce air. The other thing about high insulation values. Take a r13 fiberglass wall assembly. Vapor drive adds moisture in winter but sun drys it out in spring. Now make it r40. Suns energy cant get to the moisture to dry it out. The higher the R the more problems. If you live where its cold and have high R walls and ceilings your not going back to low r. Low r sucks. It doesnt cost that much more. The problems have solutions.

          • Kowalainen says:

            Bad ‘air quality’ in scandinavian houses? Have you ever been inside a newly built one? Warm, cozy, the scent of wood, silent. Lasts for a century and then some. Proper thermal zoning and ventilation is key. But that is a bygone era of problems.

            However, Anglo Saxon and East Asian houses, hot, cold, drafty and generally moist, mouldy and miserable. Not exactly a “home”, but rather a temporary shed with some bells, whistles and chrome on top, that lasts for 30 years before falling to pieces.

        • misanthropr#7 says:

          “rich mans privledge” A home is becoming a rich mans privilege period. The cost in the ceiling of blowing in another foot of cellulose or glass is negligable. NADA. The walls are more dificult because of space constraints. It is more expensive to go double stud to get space for glass or cellulose OR add the rigid insulation to the outside. Where is the real $ on new construction? Its the finish work for the ooohs and awwws and $. Simple houses of 1000 to 1200 sq feet with good r values and lots of south facing glazings dont cost that much. The storage space should be in a separate uninsulated shed. DUH. Those house are not being built. BECAUSE ITS ALL ABOUT THE $. Buy a manufactured home. Contract it without siding. Blow the attic full of cellulose. Add 4″ of poly iso to exterior. add a appropriate cladding. Done.

          • Dennis L. says:

            Okay, this can go on forever. I have recently done this, I am very aware of costs. There are also sales taxes around 8% in our area and if you diy then transportation costs.

            Wrapping it with poly iso – how do you account for the windows?

            4″ iso? clad with plywood to hold the siding, need to screw the siding to “hang” it, plywood doesn’t hold nails well.

            Go double stud and you have extension jams for the windows, even with 6 studs, jams are more expensive.

            Looked cellulose up for cost, about $2K installed for 1000 ft sq., or $2/sq foot, it will always be more.

            Have fun, there is not cheap way to do it, materials are too expensive now.

            All the best,

            Dennis L.

            • Kowalainen says:

              “How do you account for the windows”

              Exactly like in scandinavia. Make em’ small. At least 3 sheets of glass for every window.

              The problems with Anglo Saxons is even worse in that of the Norsemen from the north, stop pretending being rich. Living large with rickety albatross sized houses leaky as MS Estonia after being torpedoed.

              @misanthropr#7, in scandinavia the concrete fundament gets isolated with poly iso.

              Most new houses over here does not even have radiators, rather heated floors. Heat exchangers and heat pumps is the norm. The walls are thermal zoned to mitigate the dew point.

              If you live in Minnesota, there is no excuses to follow the jank “house” construction of the Anglo Saxons. Yeah, they are cool and all that, but can’t build houses worth a cr@p.

            • misanthropr#7 says:

              Sure there are costs. My reference was to new construction. $2 a square foot is not a lot compared to the other costs. A large part of that is labor.There certainly ARE cheap ways to do it but they take some effort not just calling the contractor. You can look on craigs list for fiberglass bats. Ditto fior cellulose and rent a blower.

              Compared to the overall value of the house these are small costs. I assume there is some insulation in your ceiling. When the house was built more could have been added at not much more cost. Labor is a large part of the cost.

              If you have fiberglass insulation in your ceiling a cellulose layer on top will increase the effectiveness of your fiberglass my limiting the inherent convection losses of fiberglass while still allowing it to breath.

              “accounting for windows” You flash them of course. This is not rocket science.

              Rigid foam is installed with long screws with large plastic washers, If stucco is the cladding they go through the lathe and felt too. 4 ” is a lot of insulation because there IS a lot of weight on the end of those fasteners. Most only do 2″. “outsilation” is done all the time. Its not my favorite.

              Ive seen retrofits done on the inside with rigid and mobile homes also. Screw the rigid to the walls and add drywall. Your better adding more insulation in ceiling above the rafter because of drywall weight.

              You can add interior insulation via 2×6 fiberglass added and drywall. Easy its non structural. Ive done it. 2×6 4′ on center.

              Convection losses are the biggest. You start there. Air is introduced through a heat exchanger. This can be via tubes ala earthship or simply cracking a window during the warm part of the day.

              The easiest way to make a home warmer in cold climates is to make it smaller. This can be done by simply adding a non central heating source to the kitchen. The great room of old. Core area. Temperature can be lower in the bedrooms because your under blankets. The rest of the house does need to be kept well above freezing for the plumbing.

              You can add interior insulation to a core area via 2×6 fiberglass added and drywall. Easy its non structural. Ive done it. 2×6 4′ on center studs. Just making a box to hold the glass and screw the drywall to.

              All of this can be designed in. Limiting where the plumbing goes to core areas. High r values. south facing glazings. It doesnt have to be taken to a extreme. Just common sense. Yes retrofitting is a pain.

              If you like your house the way it is more power to you. Anyone with a house is blessed. We are not helpless. We dont have to build 3000 sq feet houses with low r values. We dont have to go crazy eliminating every single energy loss eithor. Common sense.

            • JesseJames says:

              Good luck with insects and critters on the cellulose.

          • misanthropr#7 says:

            “Good luck with insects and critters on the cellulose.” The boric acid acid asses to cellulose has had some people comment that it is a rodent and insect repellent. If you live rural any cavity and any loose fill type insulation is vulnerable to rodents and insects. Its a BIG advantage to a solid fill design like earthbag, If there is a rat that chews scoria i would not want to meet him. Every cleaned pounds of rodent poop of a log cabins rafters? I have. Where I live most people keep a dozen semi wild barn cats. problem solved. All indications are rodents dont like cellulose. They dont like sprayed foam either . i never seen even one bite out of spray foam or poly iso for that matter. They say they get into straw bale. Ive never seen it with a standard lime plaster finish.

        • misanthropr#7 says:

          “Mom moved from the farm, to the city, converted former whore house, I guess one could say it was hot.” Now theres a sustainable energy source!

        • Lidia17 says:

          One of the videos posted on an earlier thread here showed Australian aboriginals girdling trees to create temporary shelter. They’d use a 5′-6′ tall swath of bark (the entire circumference of the tree) as curved sections of roofing in a very casual and disposable hovel. Biodegradable yes, and deforestation, too.

          I believe this was the video, with Peter Finch (of “Network” fame) narrating.
          The segment I was thinking of starts at around 4:00′

      • Lidia17 says:

        A big issue is cost/time. Apparently, Americans move on average once every five years. There is little incentive to invest in infrastructure that you are going to leave behind soon; it’s cheaper just to pay a little more in utilities. Europeans historically seem to stay in the same dwelling for many decades.

        I added a lot of insulation to my current house, but won’t recoup any of that value upon sale, nor will I have re-couped it in fuel savings by the time I will need to sell it.

  17. Oh dear says:

    That was an unbelievable torrent of hatred toward me over the last two days after I posted the ONS stats that suggested that Chinese, Indian and black African kids do better on average in UK schools, and likely have a higher IQ, than English kids. And yet many of those same posters would have been eager to hear that whites have higher IQ – that sort of thing is often posted and no one has a meltdown – do not even try to deny that. Really. Shoot the messenger much. The resentment, the torrent of hatred was unbelievable.

    • Black African kids do better? I missed that one. I thought that the results were the same as elsewhere, which we have seen before.

    • Malcopian says:

      “The resentment, the torrent of hatred was unbelievable.”

      I don’t believe it.

      • Robert Firth says:

        I don’t believe it either, and I followed that thread quite carefully. I also don’t believe the statistics: the UK educational system is institutionally corrupt, and a teacher who graded a “minority” as they deserved would be keel hauled on a charge of systemic racism.

        • All is Dust says:

          Oh dear, if you are referring to me, I didn’t even read what you posted about IQ statistics. Not that interested to be honest. My issue was two-fold, 1) you were being dismissive of other people on the forum (referring to one as ‘trash’). 2) I wanted to engage you in dialogue regarding dissipative systems in relation to Brexit, as that context was missing from your comments.

          For an internet forum, I think our conduct is generally pretty good (I think Gail’s patience sets a gentle tone which most of us follow).

          • Robert Firth says:

            I have just reviewed every on of my comments on this topic, and in none of them does the word “trash” appear, in any contest or about any thing, animal, vegetable, or mineral. Given the tone of your accusation, I respectfully request a retraction and apology.

            • Minority Of One says:


              I think All is Dust’s email was directed at oh dear, not you. I can see why you got confused. Or maybe I am confused.

            • All is Dust says:

              Robert, my comment is clearly addressed to Oh Dear. What is going on here lately? Is everyone OK?

        • Erdles says:

          Robert, teachers don’t grade the children. The age 11 SATs are independently marked.

    • Artleads says:

      I experience that torrent of hatred quit a lot. You say something that challenges a comfortable bubble in which it is forbidden to think differently from the insiders, and watch out!.

      It’s very clear that black Africans are “smarter” than Western Hemisphere blacks who have learned to belittle and disrespect themselves (and to have lost cultural values that teach logic and precision). This is not at all the case with black Africans.

    • Oh dear says:

      Perhaps we can all ‘get over’ the ‘drama’ and ‘move on’.

  18. Harry McGibbs says:

    “A $50 billion bond market once heralded as the future of housing finance has been stuck in limbo since the start of the coronavirus crisis, and now proposed regulatory changes have left investors worrying that they might be left holding the bag.

    “At issue are so-called credit-risk-transfer securities offered by Fannie Mae and Freddie Mac. They are tied to Fannie and Freddie’s mortgage-backed securities and pay investors principal and interest as long as the borrowers don’t default…

    “If Fannie and Freddie stop issuing new securities, it could become increasingly difficult for investors to trade the CRT bonds they already own as the market and investor base dwindles. Investors, for their part, say they see evidence of the market breaking down.”

  19. Harry McGibbs says:

    “Is Russia’s Housing Market Facing a Coronavirus Bubble?

    “Mortgages have never been cheaper and lending is growing at an eye-watering pace. Is it sustainable?”

    • Harry McGibbs says:

      “After a near-miss debt crisis in 2015-16 Russia’s Ministry of Finance cracked down and introduced a “manual control” control system after several of Russia’s poorer regions nearly went bankrupt.

      “The next few years saw the system put back on its feet. But since the start of the coronavirus (COVID-19) epidemic earlier this year many of the regions are being rocked by the shock of the extra spending needed to combat the virus, and a new debt crisis is looming.”

      • Harry McGibbs says:

        “Russia’s East is Fed Up:

        “…The protests [in Khabarovsk] are a symptom of a nation-wide disillusionment with their declining quality of life and lack of political voice, but they are equally an insight into the dysfunctional state of relations between Moscow and its regions.”

      • The 2015-2016 period is when oil prices were very low before. Low oil (and gas) prices now are a problem for Russia. The pandemic adds to the problem.

      • From the article:

        “Russia’s total outstanding mortgage debt should come in this year at around 8% of GDP, compared to 50% in the U.S. and 30-40% across Europe.”

        This fits with my understanding of the situation. Russia does not have a very long tradition of buying homes using mortgages. The government either built homes, or people built homes a piece at a time, as their accumulated wages permitted.

        Salaries are low. It will be hard for very many to afford homes, even if they are built. We saw on a chart yesterday that a large share (50%?) of workers are concerned about losing their current job. But many other countries have used subsidized mortgages to push start growth. Remember the US subprime housing? Mortgages were issued to many people without little evidence of income.

  20. Harry McGibbs says:

    “Europe’s biggest shopping centre landlords face a gruelling 12 months, as coronavirus and a boom in online shopping push more retailers towards collapse.

    “Moody’s Investors Service has warned that a perfect storm unleashed by the pandemic will hit the credit quality of mall owners including Hammerson, Unibail-Rodamco-Westfield and Klépierre.”

  21. Harry McGibbs says:

    “Euro zone banks tightened access to credit in the third quarter of the year and expected to continue doing so in the remainder of the year as they grew more worried about the impact of the coronavirus pandemic, a European Central Bank survey showed on Tuesday.”

    • Harry McGibbs says:

      “ECB: the EU needs a regional ‘bad bank:

      “…we cannot rule out a weak recovery with a significant build-up of bad loans. The European Central Bank estimates that in a severe but plausible scenario non-performing loans at euro area banks could reach €1.4tn, well above the levels of the 2008 financial and 2011 EU sovereign debt crises.

      “While we can hope for the best, we must prepare for the worst.”

      • Harry McGibbs says:

        “It looks as if the historic transmission mechanism between money supply growth and inflation has broken. A double-digit money supply growth with negative inflation is unprecedented in the history of the Eurozone.”

        • There is a difference between the extra money going into asset price inflation and the extra money going into commodity price inflation. The extra money, now, seems to be going into asset price inflation (stock market, homes, farms). Commodity prices tend to be falling too low for producers.

    • Tightening access to credit can only make the situation worse.

  22. Harry McGibbs says:

    “Countries have not yet come to a consensus on how to safely restart travel amid the coronavirus crisis, and this could cost the global economy trillions of dollars, according to the chief executive of Dubai Airports.

    ““We don’t have an agreed testing procedure for a reliable, accurate and scalable test, and that needs to happen,” Paul Griffiths told CNBC’s Hadley Gamble on Monday.”

    • Harry McGibbs says:

      “Germany’s Lufthansa has warned that 30,000 jobs are under threat as it scaled down its winter schedule to levels not seen since the 1970s as demand for travel collapses because of the coronavirus pandemic.”

      • Without the travel industry, there is an amazing number of jobs that are likely to be lost.

        • i get the impression that whereas humankind evolved through millennia within an environment of self sustainment, we have now moved into the terminal phase of our existence where we believe that our prime survival function is to be found in moving ourselves from a to b and back again.

          we build bigger better faster machines and pay ourselves wages to do it.

          then human movement suddenly stops, and the means to pay those wages is no longer there

    • As the article says:

      “The big problem at the moment is globally, governments are looking at risk elimination,” he said. “My view is, we’re never going to get there.”

      Instead, he added, countries should be managing risk and striking a balance between safety and kick-starting the global economy.

      The tests simply aren’t good enough to eliminate the risk.

  23. Tim Groves says:

    Jordan Peterson, psychologist, gentleman, scholar, YouTube lecturer, hammer of the SJWs, serial depressive, Renaissance man, has been having a very hard couple of years after becoming addicted to benzodiazepines and then trying to come off them too fast. But now he’s finally recovered enough to get back to work. In this 8-minute video, he talks about his struggles and about what he’s planning to do next. Hint, it will include analyses of first the Book of Proverbs and then Exodus.

    Let this be a warning to all you nervous wrecks out there. Stay away from the Valium, the Xanax, the Clonopin and the rest of the Benzos, apart from for very short-term use. It’s a lot easier to get on them than to get off.

    • Harry McGibbs says:

      Poor man. What an utterly miserable year or two he must have had. I am surprised that someone as keen witted and astute as him fell into this trap, as the damage of long-term benzo use is well documented these days.

      He says he took the medication as directed. If so, he had an ill-informed and irresponsible physician. Perhaps he just fell in love with the anxiolytic effects and went into some denial about his use. I guess we all have feet of clay.

      I hope he recovers well and without any cognitive blunting.

      • Xabier says:

        Always amused to note that caring (TM) physicians and Big Pharma seek to put us on highly dangerous crap like that, but want to ban nice things like red wine, which they delight in calling ‘poison’.

        Many a soul has been eased and delighted by a little wine, music and exercise, which would have been destroyed by their prescriptions.

  24. Minority Of One says:

    Robert Kennedy Jnr delivered an excellent speech a couple of days ago, about covid-19 and the way big pharma et al are using it to bring on dictatorships everywhere. “An International Message of Hope for Humanity From RFK, Jr.”. It was on behalf of the USA-based “Children’s Health Defense”, which I have not heard of before, but he hits the various nails on the head. I recommend watching the whole 18m 50s.

    Article including video:

    Video on YT:

    • It is indeed a worthwhile video to watch. Of course, the underlying issue is not enough energy per capita, making it impossible to continue our current path.

      The video is arguing against just allowing big government, big pharmaceuticals, and very wealthy men (like Bill Gates and Anthony Fauci) take over, and push their agendas down the throats of everyone. The tool that authoritarian governments everywhere use is fear. Robert F. Kennedy points to Naomi Klein’s book, Disaster Capitalism, for more information on this. He asks the question, “Why is $18 billion being spent on vaccines, but only $1.8 billion being spent on therapeutic drugs? Why are the rich and powerful, like the heads of Facebook, allowed to censor messages that they don’t like?”

      He says that his group will report the stories that are getting suppressed elsewhere.

      • Minority Of One says:

        >>the underlying issue is not enough energy per capita, making it impossible to continue our current path.

        In the section re fear, Robert refers to how the Nazis found it easy to take power, and get away with what they did with the German people, despite how well-educated the German population was.

        Seems to me like history is repeating itself. Various members of the global elite have learnt lessons from this. Some of them are clearly aware of falling energy availability, and have decided their route out of this is to follow the example of the Nazis, spreading fear, for starters. They already control the MSM, and their pals in social media, which is just another form of MSM. Interesting to see what comes next, as in next year.

        • Well, he just provides hints and snippets directly from family history, the very same uniparty oligarchy and nazi remnant network deleted JFK, RFK .. That was almost six decades ago, if you ever wondered how we ended up here.. such path dependency is locked, it can’t be just “magically” cured by now. Good luck and good night.

    • Ed says:

      Excellent, if only he were running for president.

    • doomphd says:

      Civilization on the Moon. oh good grief… might last about 30 days without Earth support.

      • Dennis L. says:

        doom, you are a heck of a lot smarter than I am, so who am I to argue?

        1. There were stories we put man in space inorder to get it financed, space science has long been done mostly by machines, and seemingly good science. Maybe this is a replay of a strategy that worked in the past.

        2. There are great number of moon mentions beginning to appear, coincidence?

        3. I searched but could not find the cost of a reactor core as a percent of actual construction of a plant. Earlier I suggested forget about safety, forget about shielding, forget about waste disposal, put manufacturing and associated power on the moon, only ship a finished product(no, I don’t have a clue how to handle personal income economics). On the moon, who is going to object? Under those conditions, nuclear power might be too cheap to meter at long last.

        4. We seem to be tied to existing technology with some advanced engineering, there isn’t time to invent much that is new, we go with what we have and know.

        4. I don’t see civilization on the moon, I see civilization on a refurbished spaceship earth. But, copper ores now have less copper than tailings of say the fifties(a guess), OFW has beaten oil to death and the “experts” have gone from a high of $300/barrel to present $40 give or take and one quote recently of a negative price. There is not much stuff left on earth, we have 7B people and the job of culler is not going to be one that brings fame and fortune.

        5. Financially, it appears most businesses don’t work, costs are greater than income, it is all papered over with “finance,” otherwise known as kick the can down the road.

        5. It doesn’t seem we have much to lose, pundits are now beginning to talk about WWIII, that is crazy! Do you see a general idea that works?

        Dennis L.

        • doomphd says:

          I wish I were a whole lot smarter than I am, Dennis. I guess that busy hands are happy hands, but we should try to guide the activity towards something more sustainable. lead by example, I suppose.

          I guess that Moon and Mars projects are uplifting to the human spirit, assuming we can still afford to do them. when I was a boy, I used to do Cape Kennedy countdowns to lift myself out of bed in the morning.

      • Dennis L. says:

        Found this after last post, seems to be a great deal of work being done on the moon and what is there, more coincidences.

        Dennis L.

    • The TED Talk folks don’t have much good sense, I am afraid.

    • Seneca’s Cliff says:

      It took a team of 650 of the best engineers America could produce and thousands of workers 7 years to produce the first Lunar Lander. It would take years for US universities to turn out that many extra good engineers let alone build the gear to fly to, land, and live on mars. Space is unforgiving, 737 Max style work won’t cut it.

  25. Yoshua says:

    Even the young and beautiful are getting dark as we die.

  26. Dennis L. says:

    This may be relevant to MG’s post on Slovakia. Basically relating intermixing of Homo sapiens with Neanderthals.

    “The at-risk genes are strongest in the kind of Neanderthal that lived around Croatia, in Southeast Europe, about 50,000 years ago. This Neanderthal—known as the Vindaja 33.19—carried 11 of the 13 polymorphisms (forms of a gene) that are associated with severe Covid-19 symptoms.”

    It is a good idea to chose one’s parents wisely. I didn’t check this one closely, I am from Scandinavia, supposed actual Viking stock, we were very picky.

    An aside, received one of my Ancestry reports, genetically related to area around St. Petersburg as well as Norway, supposedly or possibly Russians are of Viking stock(maybe a bit of a stretch). Some interesting stuff on YouTube ancient history. Much fighting, many wars.

    Dennis L.

  27. Dennis L. says:

    I don’t agree with everything CHS says, but today’s OTM seems relevant.

    “Central banks can’t “print” creditworthy borrowers, solvent companies, real-world collateral, risk-free “investing,” oil, jobs, trust in failed institutions, social cohesion or anything else of importance that is now scarce.

    The belief that central banks printing currency can “buy/fix” everything that’s broken, lost or scarce is the ultimate in denial, fantasy and magical thinking. All that was unsustainably fragile, corrupt and brittle is unraveling, and thinking that ending the lockdowns, approving a vaccine, etc. will stave off causality is the supreme indulgence in denial, fantasy and magical thinking.”

    It is a bear to find “stuff” to invest in, everything requires people, building trust takes a long time, losing it is easy.

    It appears we also have a case of “voters regret.”

    “As politicians pushed the constituents throughout the summer to vote early, and by mail – driving early vote totals to exceed 2016 levels nine days before Election Day, some people are having second thoughts.”

    We have lost trust, people seem to be trying to return to smaller groups be it Spain, United Kingdom or whatever.

    The trust comment is not meant as a political comment, more a reflection on how one holds a society together through a very difficult time and perhaps a partial reasoning on the dissolution for existing countries into separate parts.

    • It sounds like CHS has it right with his comment, “Central banks can’t “print” creditworthy borrowers, solvent companies, real-world collateral, risk-free “investing,” oil, jobs, trust in failed institutions, social cohesion or anything else of importance that is now scarce.”

      The rest of the quote is good, too.

  28. MG says:

    As the situation in the Central Europe worsens, the crufew was introduced in Slovakia, with the defined exceptions like shopping foods in the nearest shop, pharmacy visit etc.

    The pilot project of the mass testing similar to China was carried out in the most affected districts this weekend. The rest of the population will be tested next weekend.

    “The pilot nationwide testing in the hardest-hit regions of Slovakia ended on October 25.

    Altogether 136,904 people were tested by 17:00 on October 25. 5,298 people (3.87 percent) had positive results.

    Defence Minister Jaroslav Naď (OĽaNO) said the testing went better than expected.

    “People were very responsible,” he said, adding that he hopes the nationwide testing scheduled for the following two weekends will be problem-free

    PM Igor Matovič (OĽaNO) was also pleased with the testing and praised the army for organising it well.

    Čítajte viac:

    • Good luck!

      I wonder how accurate the tests will be. Will they miss cases? I suppose the idea is to get the number of cases down somewhat, not to find all of the cases.

      • MG says:

        The PCR test is used.

        “Synthesis of evidence

        The PCR technique for coronavirus diagnosis provides a sensitivity of 86% and specificity of 96%; however, it should be applied in contexts of a high prevalence of coronavirus infection (not specific of SARS-Cov-2). When there is uncertainty regarding the diagnosis, a second sample collection can be indicated to confirm the diagnosis. Moderate quality of evidence.”

      • MG says:

        As I have learned, not the PCR test is used, but Antigen test, providing results within 30 minutes, which is less precise.

    • Rodster says:

      A really disturbing trend is developing over something that is no worse than the flu. And the sheep will follow orders and do as they are told. Now the Army is being called in just to show more authority so that the people won’t resist. This whole thing just looks like another “that Saddam has weapons of mass destruction”. Keep repeating the lie and it takes hold.

      I wonder why we didn’t have the same worldwide response to TB?

      • Tim Groves says:

        Good post, Rooster. The Covid response should be disturbing to anyone who doesn’t want to live in a totalitarian society. Looks like most of us aren’t going to get much choice though.

        • Tim & Rodster> Exactly, by now it’s self evident.

          Therefore we should ask about the next steps, chiefly about the organizational skills needed to keep both austerity and falling energy availability working in some sort of totalitarian setup or there is eventually (soon) just a default road for disorderly chaos out of this situation..

          On the first option, Max Keiser made great comment recently that the changes after 1987 market crash, i.e. phasing in gov-CB plunge protection team, big finance allowed and encouraged to proceed with illegal activities at token fines, rise of Asian production (west de-industrialization), and “the internet dividend” – allowed for extra few decades.. While nothing major of such sort to extend and pretend seems to be on the horizon for today.

      • JMS says:

        I wrote once an allegorical piece about sheep, shepherds and wolfs that i believe fits nicely here. May I?

        Machiavelli in the Church of Santa Croce

        At first its surprising to find here,
        in Santa Croce’s sheepfold, the cenotaph
        of the Fox, who said once to the Wolf:

        «Don’t be discouraged, Sir, for the staff
        of the Shepherd was meant for timorous,
        obliging and toothless sheep.
        To someone like you, with such beautiful teeth,
        frankly, it’s almost silly to fear them.
        Trust me: make the Shepherd a sharing
        proposal that he cannot refuse,
        and you’ll see how the old bastard,
        in the end, will even thank you. »

        At first, I said, it was surprising to see him here.
        Then we understood the joke and only found
        intriguing that he hasn’t been put on the altar.

        (translated, awfully, from the portuguese)

  29. Dennis L. says:

    Since end of 2019, DJA down about 3.4%, dividend yield about 2.98%. Yawn.

    Maybe there isn’t anything that makes money, what if the best one can do is lose more slowly than one’s neighbor?

    Stuff is hard to protect, store, etc.

    Stimulus, shimulus, it is moving numbers on a screen, converting capital to cashflow, it works until it doesn’t.

    A guess is the best one can do is trade some paper wealth today for some stuff that may be useful, find a group and share some of that stuff and maybe get a return of a daily meal and a roof along with some goodwill put into the pot which can be withdrawn later. The last clause is to me what makes society work, if one constantly gives or constantly receives it becomes tedious to the giving party.

    A corollary, what does a billionaire talented in derivatives have to offer New Zealand? Probably nothing, he/she is an expense, expenses generally get cut when things get tough.

    Dennis L.

    • Hubbs says:

      They are called apex parasites. They are enabled by a corrupt, debt-based central bank fiat currency system supercharged by the internet and computers which allow millisecond trades, exotic financial instruments that casinos at Las Vegas and Macau could only dream about.

    • Tom says:

      Gold is up 20% year on year and silver is up 33%.. Those might be your short term investment opportunities. In the medium term you need to cobble together a community strategy to provide food and water and heat if in the north.

      • Xabier says:

        Gold leaf, which I use in bookbinding and restoration, has gone up by at least 33% -that’s the cheapest I can find, from my regular bulk supplier. I shopped around, but others were 40-45% up! Possibly also reflects some supply difficulties.

  30. I see that the Dow Jones is down a little more than -730 so far today. West Texas Intermediate is $38.54. People are not optimistic about stimulus being passed quickly.

  31. avocado says:

    While advanced by many theorists, separatism is not succeeding anywhere because the cores of the countries resist it, and because the international community is reluctant to recognize more entities. The UK already was a country, but even the Brits can’t still manage to get out of the EU

  32. MG says:

    Thailand’s king should not reign from German soil, Berlin says

    Thousands of protesters have taken to the streets in Thailand to demand reform. Their grievances focus on Thai King Maha Vajiralongkorn, who spends long stretches of time in Germany. Berlin has also expressed concerns.

    • MG says:

      “A German retreat
      Since 2007, the Thai king has spent long periods of time in Bavaria in southern Germany. He owns a villa in the lakeside town of Tutzing, but recently also sojourned at the Sonnenbichl Hotel in Garmisch-Partenkirchen. The king’s 15-year-old son even goes to school in Bavaria.

      The king’s presence in the region is often reported on in German tabloids, and photos of the monarch riding his bicycle in the area have surfaced online.

      Thai protesters have criticized both his absence from Thailand and the cost of his stays in Germany.”

      • avocado says:

        I don’t know if there were demonstrations against him before, but abandonning his country is the best way to loose the crown. The very good novel The Windup Girl is located in a rather post carbon Thailand, and the Crown plays a major role in it; but now it’s looking outdated

      • misanthropr#7 says:

        This guy strikes me as a total and complete ass. Thailand is a awesome country. It kicks ass. Military kicks ass. Women kick ass. Even its democratic tendencies kick ass. This guy is the fricken king. He could be doing everything he could to serve his wonderful country and be having a incredible life. Instead he steals billions from his poor country and inhabits Germany?????????????????????????????????? What a moron. Morons like this give monarchy a bad name.

  33. MG says:

    Poland abortion ruling: Protesters disrupt church services

    Protesters have disrupted church services across Poland in the latest show of discontent against a court’s near-total ban on abortion.

  34. MG says:

    The clash at the Slovak University of Technology (STU) in Bratislava, Slovakia: lowering numbers of students due to the population decline and the ensuing fight over power and orientation, future development of the University. With the assistance of police:

    Even the technical subjects, which, due to their exact nature, represented stability in comparison to humanities in the past, are subject to serious disturbances connected with the ageing world.

  35. MG says:

    A Slovak blogger of Roma origin, Jozef Kmeto, dies on coronavirus. Here is a video, where he warns about the coronavirus shortly before he was taken by the ambulance, in which he died:

  36. Malcopian says:

    Well, now, how to get round those lockdown restrictions? If you can get past the (deliberately) silly man’s introduction on this video, you will see how the (ahem) ‘beautiful’ people do it.

  37. avocado says:

    As I understand, Japanese are those coping better with degrowth. Their economy has tanked in the last 40 years, so they know about it. They don’t receive immigration (don’t know if they are though on it, but I suppose they don’t try to have it), and population reduces slowly. There are no social conflicts because it’s the individual who cope with the problems (whoever gets out of the system commits suicide). So, they don’t need epidemics to control the situation and don’t allow them

    • Japan has a huge amount of debt and keeps adding to it. It has virtually no energy supplies of its own. I am afraid it will have trouble making it through the coming bottle neck.

      • Minority Of One says:

        Japan has the highest debt-to-GDP ratio in the world, has had for a few years. Now over 200% of GDP (

        The rest of the world with an average debt-to-GDP ratio of 125% (I think this is what one of the articles posted yesterday stated) may well think they have plenty of leeway, but I am not too sure that that is how it works. I guess we will find out soon enough.

        • Harry McGibbs says:

          “Tumbling numbers of pregnancies and marriages in Japan during the coronavirus pandemic are likely to intensify a demographic crisis in the rapidly ageing nation.

          “Japan has the most aged society in the world, with more than 35% of its population expected to be 65 and over by 2050, a trend that poses risks for economic growth and straining government finances.”

        • Ed says:

          Is the debt owed to people in Japan or to people outside Japan. If it is owned internally they are fine the old die with the help of CV19 and the young start fresh.

        • Nehemiah says:

          The authors of _This Time Is Different_ examine a large number of historical cases and calculate from those cases that when public debt to GDP exceeds 90%, economic growth is very slow in most cases. The higher the debt, the harder it is for the economy to expand.

          Japan’s credit bubble popped in 1990 and since then its economic growth has been essentially flat, but it cycles stochastically between periods of growth and periods of contraction that completely cancel out the periods of growth.

          In some ways, the country is coping remarkably well and unemployment is generally very low, but it depends on massive and still growing public debt. I think the biggest risks to Japan are debt and the fact that the country is a net food importer. At least they are blessed not to be divided or “diversified” by ethnic, regional, religious, and other identities. It is one of the world’s most homogenous nations, definitely a valuable asset during periods of stress.

    • avocado says:

      They can kick the can of debt to 500% GDP, no problem with that, it’s yen nominated (but I guess their economy is doing better right now, without lockdowns). Population is shrinking… which is good. Lots of old people, that won’t protest if they ever have to be “haircutted”, unlike younger people elsewhere that tend to protest and disturb. No indigenous energy, that’s a problem but they have cutting edge tech to trade with. Still the most stable place on Earth (others are in dire social situations with only 120% debt), and I bet they will continue to do fine

  38. Harry McGibbs says:

    “Nigerian security forces are struggling to contain increasing cases of looting on government-run warehouses across the country, in the latest incident of unrest following widespread, youth-led protests against police brutality…

    “…it emerged this week relief items were still stored in some of these facilities, as well as the private homes of politicians. The news angered many in the country with the biggest number of people living in extreme poverty globally.”

  39. Harry McGibbs says:

    “The first large-scale study of the risks that countries face from dependence on water, energy and land resources has found that globalisation may be decreasing, rather than increasing, the security of global supply chains.

    “Over the past several decades, the worldwide economy has become highly interconnected through globalisation: it is now not uncommon for each component of a particular product to originate from a different country. Globalisation allows companies to make their products almost anywhere in the world in order to keep costs down.

    “Many mainstream economists argue this offers countries a source of competitive advantage and growth potential. However, many nations impose demands on already stressed resources in other countries in order to satisfy their own high levels of consumption.

    “This interconnectedness also increases the amount of risk at each step of a global supply chain.”

    • Harry McGibbs says:

      “China’s government is discussing permits for millions of tonnes of additional corn imports over the next year, three industry sources told Reuters, amid a surge in animal feed demand and after storms and drought damage tightened domestic supplies.

      “A round of new import orders from China would make it the world’s top importer of corn for the first time and likely drive up global prices of corn and other grains.

      “That would amplify food inflation caused by disruptions to global supply chains due to the coronavirus pandemic.”

      • It sounds like China’s need for corn imports could escalate in the next couple of years. US farmers could certainly use higher prices for corn. I suppose that there could be an indirect impact a ethanol, since quite a bit of US corn (40%?) is used for ethanol. When oil prices are low, and corn prices are higher, it would seem to make sense to cut back on ethanol production.

        • Lidia17 says:

          There are legal fuel-ethanol mandates in place, though, from the GWB era. A significant amount of corn product *must* be burned off in cars, by law.

          This site lists US monthly fuel-ethanol production. In Feb. 2020 it was 30.5million barrels, which dropped to 16.9 in April, but now we are back up to 27.9 as of July (latest figure reported here). Not sure how much corn that represents.

          It’s complicated by the fact that ethanol production uses just the starch, so there is some animal-feed by-product. Also, the US exports ethanol. China in theory “needs” US ethanol, but imported basically none since they placed a 45% tariff on it, according to this article from 4/2019:

          I wonder to what degree old artificial impositions will constrain needed production and policy flexibility as our context changes from years past.

          • hkeithhenson says:

            US gasoline actually needs ethanol as an octane booster. There are other ways to boost octane, but it would take reorganizing refineries if they didn’t have alcohol to blend.

        • Minority Of One says:

          China’s corn fields were devastated by 4 hurricanes that came onshore just before the crops ripened. I never actually saw any figures but it was not trivial.

  40. Harry McGibbs says:

    “No commercial aircraft were ordered last month as the global aviation industry recorded its worst ever quarter on record due to the coronavirus pandemic.”

  41. Harry McGibbs says:

    “German business morale fell for the first time in six months in October, weighed down by companies’ concerns about rising coronavirus infection rates that are making them more cautious about the coming months, a survey showed on Monday.”

    • Harry McGibbs says:

      “In recent months Rome has taken advantage of Brussels’ willingness to overlook the state of Italy’s public finances during the pandemic to exert greater control of businesses deemed strategically important — pumping billions of euros into some companies and making it harder for foreigners to take over others.”

    • It is hard to just ignore rising infection rates. The article says:

      Ifo economist Klaus Wohlrabe forecast fourth-quarter growth of 2.1%, but said that could prove too optimistic if rising infection rates triggered a second lockdown. Rising infections in France, Italy and Spain were also hitting exports, he added.

      “The real hit would come if schools and kindergartens had to close,” he said. “That would have a massive impact on the economy and industry.”

      The economy really needs free childcare services. Closing schools eliminates this benefit for working mothers.

      • Lidia17 says:

        Are these “infection rates” actual illnesses, or just positive PCR tests?
        How much longer can we keep going around this mulberry bush?

        • Karl says:

          Well, anecdotally, I know 6 people who have gotten it. 1 had a mild cold. 3 said it was the worst cold/flu they have ever had. 2 died (though admittedly both were elderly). Seems to me Covid isn’t the black death, but is still orders of magnitude worse than the regular flu, especially for old people. Still, the economy is more important at this point in collapse. I’m still wearing a mask, but if the rest of the herd wants party like it’s 1999, that’s fine by me. It’s a bit like frugality, I save for the future and value money in the bank so that I don’t have to worry about debt collectors or eating cat food when I’m old. If everyone else wants to live paycheck to paycheck and then subsist on $1000 per month social security in their dotage, it’s no concern of mine.

      • info says:

        If childcare subsides go away in Europe and gets decimated by the pandemic. Those countries may end up re-balancing their populations subsequently at a lower level.

  42. Harry McGibbs says:

    “Local lockdowns and working from home could be hampering Britain’s jobs recovery, new research suggests [academic research hardly seems necessary to draw this conclusion!].

    “…workers have again been encouraged, if possible, to do their jobs from home. The result is deserted high streets and city centres, leaving some service industry businesses struggling that rely on catering for office workers.”

  43. Harry McGibbs says:

    “Dollar-denominated debt in emerging markets has risen past $4 trillion for the first time following a surge in issuance during the COVID-19 crisis, data from the Bank for International Settlements (BIS) has shown.”

  44. Harry McGibbs says:

    “Commercial real estate prices have plunged this year as people stopped going into offices, and retail businesses were disrupted. That could lead to a significant amount of losses for banks, according to a recent report.

    “In previous downturns, commercial property loan losses were “heavy” and there are worrying signs that such a trend could be repeated this time during the coronavirus-induced slowdown, Oxford Economics’ Adam Slater said in a report.

    “In a worst-case scenario, Slater said these loan losses would “materially erode” bank capital.”

    • Harry McGibbs says:

      “Now would be a crazy time for banks to resume dividends.

      “…bankers’ claims that the worst is over ignores the reality of second-wave problems, and the deferred impact on the budgets of companies and individuals that has been cushioned by government aid. That helps in the short term but will not last for ever.”

    • If businesses can get along without many of their workers coming into the office, the value of office buildings very much erodes. Government regulators can try to hide this situation for a while, by pretending that the problem will go away “soon.” But if it doesn’t, banks are in big trouble.

    • Minority Of One says:

      I think someone pointed out recently that the large majority of commercial office space for rent is owned by pension funds (in the UK).

  45. Harry McGibbs says:

    “Investors have thronged the largest hedge funds since the last financial crisis as they sought safety in size. Now, they’re paying a hefty price.

    “Supersized funds are failing their clients during a period of market upheaval that in theory should pose an unprecedented chance to make money. Instead of profiting, though, some of the world’s biggest hedge funds have barely managed to protect their investors from losses…

    “A reckoning looms as clients accelerate their flight. Investors pulled $89 billion from hedge funds in the first nine months of the year.”

    • According to the article:

      One reason why smaller funds are doing better is that they’re jumping on very niche trading opportunities that just don’t have capacity for the billions of dollars their larger peers need to invest.

  46. Harry McGibbs says:

    “As Chicago grapples with a second wave of the coronavirus pandemic, a Wall Street ratings agency fired a shot across the bow as aldermen prepared to start a month of hearings Monday morning on Mayor Lori Lightfoot’s $12.76 billion spending plan for 2021.

    “Standard & Poor’s, one of a handful of major ratings agencies, warned in a special report issued Friday that the city could see its credit rating — which the firm already considers negative — drop further.

    “That rating helps determine how much the city has to pay in interest to borrow money, much like an individual’s credit score.”

    • Harry McGibbs says:

      “Despite the headline ‘historically fast’ recovery, actual employment remains in dire state…”

    • Part of the problem is this:

      Chicago finance officials project that 10% of property owners won’t pay their tax bills in 2021 — although in a typical year, approximately 3% of property owners do not pay their taxes.

      A person wonders whether this situation will get better in 2022. The need to repay debt with higher interest, because of the lower rating, will make the problem worse.

      While the federal government can delay payments by renters, they cannot really delay tax payments by property owners. This pushes the problems down to the local governmental level.

      • a city can only sustain itself through the energy input of the people who live there

        yet another immutable law

        • I think the law might need to be a modified a bit, to something more like, “A city can only sustain itself through the energy input of the people and corporations residing there, plus whatever input can be gained from people traveling through.”

          For example, according to Wikipedia, the Atlanta Metropolitan Area was estimated to have a population of 6,020,364 in 2019, while the City of Atlanta was estimated to have a population of 506,811. Thus, Atlanta has only about 8.4% of the area’s population.

          It is home to a much larger share of the large businesses operating in the area, and it has many people passing through the area, who can pay taxes, such as hotel taxes and airport fees. This is a link to its budget for Fiscal Year 2021.

          While taxes on residents are a big source of funds, as are permits for new building, quite a bit of the income comes from fees of various kinds. These apply to businesses using city provided services, as well as to individual citizens. People passing through pay revenue to the city, in the form of parking fees, hotel fees, and airport fees. Of course, businesses pay taxes on their real estate as well.

          • comes to much the same thing

            corporations and ‘travellers through’ depend on the viability of the city-structure, which in turn depends on the people living there

            cities always grew our of trading pinch-points, ports, river crossings mainly

            people lived there to benefit from the ensuing trade, and thus collectively act to build-expand the footprint of the city

  47. All is Dust says:

    Oh Dear, I see a lot of your recent posts are around Brexit. Quick question for you, do you think energy systems influence political systems or not? Your posts imply that you do not understand the interface between energy and politics, but I just wanted to hear you out before reaching that conclusion.

    • Oh dear says:

      Politics is epiphenomenal to the dissipative system.

      Is there not some childrens TV on to entertain you? Something that demands a shorter concentration span?

      Hey, toughen up.

      • avocado says:

        Not sure politics is epiphenomenal. Look at Catalan independentism. They had absolutely no chance to be successful, zero, but they still insisted and created mayhem. Obviously authorities prefered an epidemic than a civil war. Perhaps Scotland’s case is different, but as far I can see separatism is always of the richest (the Brits not the Greeks, the Scots not the Welsh, Basques and CAtalans not Andalousians, wealthy Bolivians from the East not those of the mountains, east Ukrainians with coal not the farmers of the west; even Iraq’s Kurds held a referendum a couple of weeks after getting hold of some oil wells). But it can backlash

        • Oh dear says:

          A, my guess is that Spain, like UK and ultimately other ‘national states’, is spent as an integral dissipative structure. Its energy consumption per capita has fallen since 2005, the peak of conventional oil production. The tendency will be for dissipative structures to devolve into simpler, less centralised, regional parts in order to dissipate less energy.

          As you say, it tends to be the richest regions that want to detach. I suppose that ‘dissipative epiphenomenalism’ does not imply that the entire existent structure acts with a single ‘will’. Its local tendencies depend on the local dissipative conditions. The overall structure is comprised of interconnected local structures that are ‘held together’ by the ‘center’.

          The movement toward devolution implies the ‘inchoate’ formation of separate local structures, expressing their own local tendencies, pulling in a contrary direction to that of the center. There is a dynamic between the tendencies of the (inchoate) local structures and the existing structure, that epiphenomenally manifests as a political struggle between the region and the political ‘center’.

          ‘Dissipative epiphenomenalism’ does not imply that every tendency, like that of the (inchoate) regional structure, prevails at all times over all other tendencies. There is an interplay that plays out relative to their political ‘strength’. Sometimes independence will succeed, and other times it will not.

          But at the end of the day, the continuation of the decline in the consumption of energy per capita will result in the formation of simpler, regional dissipative structures – once that tendency has ‘gone far enough’ and regionalisation becomes the ‘dominant dynamic’. The center eventually ‘gives way’, once its dissipative conditions are gone.

          Obviously ‘dissipative epiphenomenalism’ is a new theory and it has to be ‘developed’ to fit with all the facts – which is the whole point of any theory. As Gail points out, it is probably enough to speak of physical necessity in order to understand physical systems – but that is pretty much the same point as epiphenomenalism, which is its correlate.

          Does that help?

          • avocado says:

            Yes, it helps to understand it’s just an abstruse theory not supported by any single fact, not a single successful separatism. Occam’s razor is coming to haunt your nights, I am affraid

            In case the global system ever lacks the energy to sustain it’s actual form it will just disappear. Multipliying state entities consumes more energy, nor less, because it requieres more bureaucracy. If any path is left to evolve, it’s in the direction of a more centralized world government, with less employees than the sum of 200 states (let alone 500). But it won’t happen, unless CCP manages to finally rule the world

            • Oh dear says:

              Well, to be fair, the argument that social dissipative structures shed centralisation in order to dissipate less energy is actually Gail’s theory, not mine. Dissipative structures universally increase in complexity in order to dissipate more energy and they reduce in complexity to dissipate less. It is just an energetic principle of how the cosmos functions that is supported by the evidence of all energetic phenomena. Thanks.

          • avocado says:

            Or we avoid CCP rule with IMF’s SDR in case USD is to ever fall. Don’t know, it’s a very complex thing. But I can assure you that more entities require more energy

            • avocado says:

              Separatisms fail because, even being the richest regions, they have not enough energy as to override the cores of the countries. Catalonians are richer, but not enough as to defeat all the rest of Spain toghether

            • avocado says:

              But it’s possible that if we wait for USD to collapse in order to use SDRs (expanded perhaps to other currencies) it will be too late to avoid CCP/Renminbi rule, given the current situation

              It’s very complex thing, but I know many people that would be glad having RMB and not USD, but they can’t because CCP don’t allow them to use their currency because, I think, it is betting it will get total control, which it can’t have at the present moment

            • avocado says:

              When I talk about CCP rule I mean dismantling of other bureaucraties, such as armies. Don’t know if it will happen, but I can’t see the world evolving in another direction. Perhaps it will just continue as it is now, or perhaps it’s already too late to avoid CCP rule, but it won’t multiply the entities, that’s the only thing I’m sure

        • Erdles says:

          The Scots are only rich because of the largesse of the English. They receive £2000 per head more in government services than the average Englishman does whom indeed pays much more taxation.

          • Oh dear says:

            Many smaller countries in EU have a much higher productivity and wealth per capita than UK. Scotland also can do better for itself outside of UK – and then the English tax payers could keep their money.

            Scots are quite capable of doing better for themselves. Economic development has been concentrated in London and the SE for generations, because that has given the maximum short-term return.

            The development of Scotland has been limited to what has suited UK in short-term thinking. It can better be developed with regard to its own interests. Your point about its financial dependence on England only emphasises that point.

            I do not object to your personal attachment to the British state, though I wonder how rational that attachment is and whether you have really thought that one through, I just think that it is not apposite to the question.

            • What makes you think that Scotland can do better for itself outside the UK? Do you think that the rest of the EU will hang together? Do you think that Scotland can provide for its own needs, with minimal imports?

            • Oh dear says:

              Hi Gail, thanks for your questions.

              The argument of E, that Scotland is presently dependent on England, assumes the status quo and that per se is no argument against a change in the status quo, which simply is not logical. It does not establish that Scotland cannot be independent of England – which is what you ‘cut’ to.

              The simple answer is that many smaller countries in EU do indeed do better per capita than those within the UK, indeed all of those in Northern Europe. In part that is because they have an eye to their own development and the wherewithal to pursue that. Admittedly that is an analogical argument but it does have some weight. Detailed arguments would have to be detailed.

              I think that the rest of the EU will hang together for a time, though I could not put a date to it. That will depend on the political, economic and financial situation, which in turn will depend on the energetic situation. It will be ‘pop corn’ to see what happens.

              Scotland can no doubt provide for its own needs with minimal imports, but those ‘needs’ may need to change.

              Sorry if that is vague but I am sure that you get the drift – the situation is in flux and it is likely to become less stable as energy declines. Perhaps you could give a more detailed perspective? Do you personally see Scottish independence as likely?

              Thanks as always for your input.

            • Minority Of One says:

              The large majority of Scotland is either hilly or mountainous. That is why the population density is about a sixth of England’s (67.5/km2 v 432/km2). Not much high quality farming land.

              Once the fossil fuels have gone, sometime this century, and we return to the hunter / gatherer lifestyle, I should image the population will be not much more than 5,000. But we’ll be independent. Viva Nicola!

            • Oh dear says:

              That is the spirit M, enjoy the struggles of independence while you can. There will be plenty of time for collapse when that comes. – Ecclesiastes.

              Of if you are not so inclined, do not. Whatever suits you.

      • avocado says:

        Not sure politics is epiphenomenal. Look at the Catalans, they had zero chance of independence but still insisted and created mayhem. But obviously authorities will prefer an epidemic than a civil war. It’s always the richest who want independence, but it can backlash

        • avocado says:

          Gail you can remove the second version, the first didn’t showed up so I put another

          • Nehemiah says:

            @avocado, Don’t fee too embarrassed, I have made this mistake on a few occasions recently. I think I have finally learned just to be patient and it will eventually show up.

      • All is Dust says:

        Your diatribe aside, would you not want to explore that concept further? As in, how do systems dissipate? Gail’s theory (and one that I subscribe to) is that as systems dissipate they become less complex. In my mind that include supra-national structures (e.g EU and perhaps the UN) must go (or at least be reformed). I suspect a struggle for value lies ahead – i.e. those in representative systems will have to demonstrate the value they add to those who vote them into office. Unless of course one takes the CCP approach…

        P.S. Ephiphenomenal is in relation to the mind-body problem – e.g. that mental states in the brain are causal to biochemical events. If you’re going to revert to sophism at least get the terminology right.

        • Nehemiah says:

          all is dust wrote: “those in representative systems will have to demonstrate the value they add to those who vote them into office.” — I think as long as a political entity demonstrates its value to the ruling oligarchs and their lackeys who fill the elective and appointive offices, it will tend to hold together unless the people decide to revolt en masse.

          • All is Dust says:

            Nehemiah, it’s a good point – essentially, who do the ruling bodies deliver value for? I guess that depends on how representative the system is. Can those who act on behalf of oligarchs / corporations hold onto the levers of power? Or will more disruptive elements seize the mechanisms of state?

            Here in the UK, coronavirus is bringing to light the flaws of our devolved system – namely, the devolved powers (Northern Ireland, Scotland, Wales) can ‘out-lockdown’ each other at Westminster’s expense. I think that might be the model going forward – i.e. take what you can get and make others pay for it.

      • According to the Stanford Encyclopedia of Philosophy,

        Epiphenomenalism is the view that mental events are caused by physical events in the brain, but have no effects upon any physical events. Behavior is caused by muscles that contract upon receiving neural impulses, and neural impulses are generated by input from other neurons or from sense organs. On the epiphenomenalist view, mental events play no causal role in this process. Huxley (1874), who held the view, compared mental events to a steam whistle that contributes nothing to the work of a locomotive. James (1879), who rejected the view, characterized epiphenomenalists’ mental events as not affecting the brain activity that produces them “any more than a shadow reacts upon the steps of the traveller whom it accompanies”.

        Miriam Webster’s dictionary gives an example of the word used in a sentence:

        The new conspiracism is more than simply an offshoot or epiphenomenon of other forces such as authoritarianism or strident populism.

        Perhaps the word “offshoot” might explain what you are saying. If politics is an offshoot of the dissipative system, I would think it would be greatly influenced by the energy consumption per capita. In fact, I have shown in prior posts that politics varies a great deal with energy consumption per capita.

        Or would the word “aspect” be a better word? Politics represents the result of feedback loops within the economy, based on the underlying physics of the economy. I have shown in previous posts that that if world energy consumption per capita is falling, there tend to be overthrown governments and wars among countries.

        • Harry McGibbs says:

          Given, Oh Dear’s fondness for philosophy, I would guess he is using it in the philosophical sense. From Wiki: “An epiphenomenon [politics] can be an effect of primary phenomena [ie energy dissipation], but cannot affect a primary phenomenon.”

          Politics certainly can affect energy dissipation – we have just seen Trump’s tax cuts “goose” the US economy, for example, but because political movements and policies tend themselves to be responses to the quantity and availability of energy and resources, politics is perhaps best understood as a secondary driver of events or a surface manifestation of more fundamental, biophysical realities.

          • avocado says:

            As shown in both definitions advanced by Gail and Harry epiphenomena is stuff that emerge from some situation without affecting it. But I am not sure politics is one of them; whatever the case I hope the Scots doesn’t cause more mayhem

            • avocado says:

              We can’t compare politics to a shadow, because you can have a body without shadow (if there is no light), but you can’t have a society without a political structure

            • Oh dear says:

              I have explained that below, and I will quote myself for clarity to the point.

              > All is physical, dissipative and structural, there is no ‘magical’ or undetermined human conscious element ‘outside’ of the physical dissipative structure that ‘directs’ the structure, that is just an illusion. The cosmos is an energetic ‘monad’ that proceeds according to physical laws, as does society, and the illusions of consciousness are acausal, at least in their conscious aspect. Brains are physical and persons do have physical effects however. The ‘reality’ is a physical dissipative structure in which brains are networked.

              When I say that ‘politics is epiphenomenal’, I mean as conscious phenomena, not as networked, physical brain activity. I am not giving a ‘name’ to the latter in so far as it is beyond consciousness. At best we would ‘name’ it by analogy with conscious phenomena, and then we would call it, by analogy, ‘politics’ (lol).

            • Minority Of One says:

              >>whatever the case I hope the Scots doesn’t cause more mayhem

              What mayhem?

          • All is Dust says:

            But the argument I am making is that the cause is a physical one (conversion of energy sources into ‘useful’ work) and not a philosophical one. People can conduct as much intellectual masturbation as is their pleasing, but unless it aids in energy extrapolation I don’t see what value it adds (in the context of our discussion on dissipative systems). It is this that influences political systems and not the other way around.

          • avocado says:

            @Minority, I was refering to the Catalonian mayhem, to which the Scots seem to be willing to ad another. Elites don’t want troubles in the First World, it’s the worst scenario they have. Gilets Jaunes were perhaps right opposing the Ecotaxe, but no only they repealed it and even got more from the gov, but still remained in Champs Élisées, protesting for nothing. That’s the kind of things Elites dislike very much, I suppose

        • Oh dear says:

          Gail, ‘epiphenomenal’ has a particular use in political philosophy. You may remember that I gave a link a few weeks back to a paper on Marx and epiphenomenalism. It implies that tendencies in the physical system (economy) play out according to their own laws and that ‘ideas’ (like ‘right’) are secondary and a product of the physical system. ‘Ideas’ do not themselves ‘guide’ the system forward but rather express its current tendencies in consciousness. I am using the term in an analogous manner, to that in which it is used with regard to Marx, with regard to dissipative structures.

          As H points out, humans are a part of the wider dissipative structure and their acts affect that structure. Their brains are also physical parts of the wider physical, dissipative structure. Epiphenomenalism does not imply that physical brains have no effects, or that persons have no effects on the wider dissipative structure, rather that conscious, mental phenomena are secondary, acausal phenomena to the brain in its interaction with the environment.

          So, the ‘point’ is the primacy of the wider physical dissipative system, including brains that are networked physical parts of it, and that ‘politics’ is a conscious, ideational expression of the workings of brains as networked within the wider dissipative structure. All that is really happening is that the dissipative structure (of which brains are a part) is adjusting to its current dissipative conditions. It is the wider dissipative structure itself that is locally ‘thinking’ through the brains that are a networked part of it.

          All is physical, dissipative and structural, there is no ‘magical’ or undetermined human conscious element ‘outside’ of the physical dissipative structure that ‘directs’ the structure, that is just an illusion. The cosmos is an energetic ‘monad’ that proceeds according to physical laws, as does society, and the illusions of consciousness are acausal, at least in their conscious aspect. Brains are physical and persons do have physical effects however. The ‘reality’ is a physical dissipative structure in which brains are networked.

          When I say that ‘politics is epiphenomenal’, I mean as conscious phenomena, not as networked, physical brain activity. I am not giving a ‘name’ to the latter in so far as it is beyond consciousness. At best we would ‘name’ it by analogy with conscious phenomena, and then we would call it, by analogy, ‘politics’ (lol)

          As you say, it is probably enough simply to speak of physical laws that govern dissipative structures, including societies. Epiphenomenalism is a corollary. As H points out, my use of the word is due to my own interests (although I am not misusing it, just using it in a new context), and I have no desire to impose words on people. You should, as you indicate, use whatever words you personally find most useful and agreeable. I have entered the subject now simply because I was asked for my own opinion, which I have expressed in my own way. Believe me, I am not telling anyone what words to use.


  48. Harry McGibbs says:

    “Bond Defaults Deliver 99% Losses in New Era of U.S. Bankruptcies:

    “Market prices, derivative auctions imply debt may be worthless…

    “Three cents. Two cents. Even a mere 0.125 cents on the dollar. More and more, these are the kinds of scraps that bondholders are fighting over as companies go belly up.”

    • The chart shown seems to indicate that back in 2008, bond defaults led to something between 60% and 80% return of the principle amounts. Now, the median bond default return seems to be about 3.5%.

      Bank loans do better than this for recoveries, but they are down as well.

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