Category Archives: Financial Implications

2023: Expect a financial crash followed by major energy-related changes

Posted on January 9, 2023 by Gail Tverberg

If the world economy experiences major financial turbulence in 2023, we could be in for a rough ride. In my opinion, a major financial crash seems likely. This is could upset the economy far more seriously than the 2008 crash.

I am certain that some mitigation measures can be implemented. For example, there can be a major push toward trying to make everything that we have today last longer. Materials can be salvaged from structures that are no longer used. And some types of local production can be ramped up.

We can keep our fingers crossed that I am wrong but, with less oil and other energy resources available per person, moving goods shorter distances makes sense. Thus, the initial trends we are seeing toward regionalization are likely to continue. The move away from the US dollar as the reserve currency also looks likely to continue. Moreover, if the changes I am talking about don’t occur in 2023, they are likely to begin in 2024 or 2025. Continue reading →

Posted in Financial Implications, Oil and Its Future | Tagged , , , | 3,553 Comments

The economy is moving from a tailwind pushing it along to a headwind holding it back

Posted on December 16, 2022 by Gail Tverberg

When the Crisis Stage occurs, there are fewer goods and service per capita to go around, so some members of the world economy must come out behind. Conflict of all kinds becomes more likely. Political leaders, if they happen to discover the predicament the world economy is in, have little interest in making the predicament known to voters, since doing so would likely lead them to lose the next election.

Instead, the way the physics-based self-organizing economic system works is that alternative narratives that frame the situation in a less frightening way gain popularity. Political leaders may not even be aware of how dependent today’s economy is on fossil fuels. Researchers may not be aware that their “scientific” models are misleading because they look at too small a portion of the overall system and make unwarranted assumptions. Continue reading →

Posted in Alternatives to Oil, Energy policy, Financial Implications | Tagged , , , , | 3,874 Comments

Today’s Energy Crisis Is Very Different from the Energy Crisis of 2005

Posted on November 17, 2022 by Gail Tverberg

Back in 2005, the world economy was “humming along.” World growth in energy consumption per capita was rising at 2.3% per year in the 2001 to 2005 period. China had been added to the World Trade Organization in December 2001, … Continue reading →

Posted in Energy policy, Financial Implications | Tagged , , , , | 3,147 Comments

Why financial approaches won’t fix the world’s economic problems this time

Posted on October 18, 2022 by Gail Tverberg

Time and time again, financial approaches have worked to fix economic problems. Raising interest rates has acted to slow the economy and lowering them has acted to speed up the economy. Governments overspending their incomes also acts to push the economy ahead; doing the reverse seems to slow economies down.

What could possibly go wrong? The issue is a physics problem. The economy doesn’t run simply on money and debt. It operates on resources of many kinds, including energy-related resources. As the population grows, the need for energy-related resources grows. The bottleneck that occurs is something that is hard to see in advance; it is an affordability bottleneck.

For a very long time, financial manipulations have been able to adjust affordability in a way that is optimal for most players. At some point, resources, especially energy resources, get stretched too thin, relative to the rising population and all the commitments that have been made, such as pension commitments. As a result, there is no way for the quantity of goods and services produced to grow sufficiently to match the promises that the financial system has made. This is the real bottleneck that the world economy reaches. Continue reading →

Posted in Energy policy, Financial Implications, News Related Post, oil shortages | Tagged , , , | 3,503 Comments

Why No Politician Is Willing to Tell Us the Real Energy Story

Posted on August 23, 2022 by Gail Tverberg

Politicians want to get re-elected. They want citizens to think that everything is OK. If there are problems, they need to be framed as being temporary, perhaps related to the war in Ukraine. Alternatively, any issue that arises will be discussed as if it can easily be fixed with new legislation and perhaps a little more debt.

Most high-level politicians are aware of the energy supply issue, but they cannot possibly talk about it. Instead, they choose to talk about what would happen if the economy were allowed to speed ahead without limits, and how bad the consequences of that might be. Continue reading →

Posted in Energy policy, Financial Implications | Tagged , , | 4,427 Comments