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Another good article. For an example of fake news about UK economic, employment, and wage statistics, which are probably as dodgy as similar US statistics is given in Lies, Damned Lies and Media Economic Reporting.
Nafeez Ahmed explores the subject of deception in a lengthy article entitled How collective intelligence can change your world, right now. This article looks at how difficult it is for individuals to change the dangerous trajectory our global industrial civilization is on, because we are easily deceived by elite controlled media due to our inbuilt tendency to deceive ourselves. The article is effectively an attempt to show us how to avoid being deceived, and the need for effective collective action. Sadly I see little evidence of this happening any time soon.
For another useful example of how our delusional mainstream media leads readers up the garden path to fantasy land is illustrated in A dangerous Exercise in Self-delusion. It’s little wonder people fail to realise how fragile our current civilisation is becoming. My fear is we may soon all fall of the proverbial cliff if things don’t change, because the window of opportunity to mitigate the inevitable changes to our current civilisation is closing quickly, so it’s increasingly likely nature will show us the hard way.
Theresa May has drawn up plans for a secret charm offensive aimed at persuading dozens of Labour MPs to back her Brexit deal even if it costs Jeremy Corbyn the chance to be prime minister……
As Tim Morgan discusses in his latest post entitled The challenge for government on his Surplus Energy Economics website, it doesn’t really matter which UK mainstream party is in power, since neither understand the true nature of the crisis facing the country, nor do mainstream party’s in any other country.
The situation is actually far worse than a simple increase in GDP data implies, since this measure has been driven largely by increasing fiat money creation since the last Global Financial Crisis (GFC 1), in the mistaken belief that the future growth it supposedly creates enables the debt to be repaid. The fundamental error made by economists and the politicians who listen to them, is based on the belief the economy is a “money system”, when in fact it’s an “energy system”.
The problem with energy that’s the primary driver of economic growth, is that not only is it becoming increasingly unaffordable, but it’s also suffering from declining net energy, or surplus energy, meaning the discretionary energy available for everything else is decreasing. In other words it’s “delivering less bangs for more bucks”, a situation that eventually leads to disaster. When this new economic reality is taken into account, prosperity is actually declining faster than GDP growth would suggest, so most of us are all becoming poorer faster than we think.
Consequently no current mainstream political party of whatever persuasion, anywhere in the world, can reverse this situation let alone mitigate this new era of declining prosperity. Until globally, our political institutions that evolved during the era of growing prosperity over the last 200 years recognise the new economic paradigm, they will simply keep making the situation worse with their wrong headed policies. Put simply, humanity is in the early stages of colliding with Limits to Growth driven by the Second law of thermodynamics. The best we can hope for is that politicians realise this reality and begin to manage the new reality, and hopefully avoid destroying everything in a war to end all wars, i.e. WW3.
The first article in today’s post coupling “sustainable!?” to the latest stock market bubble and the second that looks at the increase in global debt, when taken together, reflect the dire state of most developed nations.
Tim Morgan (Surplus Energy Economics) using the US as an example, demonstrates just how empty claims based on “apparent” GDP growth are, in his latest article entitled Candyfloss economics, a situation that applies to many western nations. In the context of the US, the following extract reveals the paucity of genuine wealth creation based on claimed GDP growth, a situation that can be applied to most developed nations, especially the UK.
As we’ve seen, then, almost all (93%) of growth in the GDP of the United States over the last decade has come from services which Americans can sell only to each other. It must be stressed that the US is by no means unique in this. Rather, America has been used here as an example, because of the importance of its economy, and because of the exceptional availability of economic data.
The picture in other developed economies is pretty similar, with ICS activities (such as finance, real estate and government) contributing even more to growth in Britain, where manufacturing output is barely 9% of output, compared with 12% in the United States, and almost 18% in the Euro area.
What emerges is an economy which produces very little that can be offered to overseas customers at world market prices. The bulk of the economy – in the United States, 80% – consists of services which people provide to each other, either privately or through the government. Within this ICS component there are further question-marks, most notably over “imputed” output dreamed up by statisticians, and over financial and real estate services which, whilst dwarfing activities like manufacturing, are of limited value-adding capability.
Together with this goes the important observation that there are two distinctive pricing mechanisms at work. One-fifth of American output is “hard” priced by international markets, whilst the remaining four-fifths are priced locally, in a way that is both “soft” and residual. In an era of ultra-cheap money, we are entitled to question the relationship between hard and soft pricing.
All of this, of course, is on top of our understanding that “growth” is being created by spending borrowed money, and by unwinding (through ZIRP) collective provision for the future.
We can summarise the situation like this. Essentially, we in the West are deluding ourselves about how much value our economies are really adding, because much of what we do is residual activity, delivering output that cannot be marketed at prices set by world markets.
Even as they grow – courtesy of mortgaging the future – Western economies are taking themselves ever further down the gradient of added value.
You might think, considering this, that we are in a self-delusional state that isn’t sustainable. If you did think that, you’d be right.
I suspect Donald Trump will come to regret his boast the US economy is doing well under his Presidency, when this latest Ponzi debt driven bubble finally bursts.
A lot of articles these days, including many on TAE, focus on energy, the economy, why it is not growing as it should (!?), and growing inequality. This article by Nafeez Ahmed on Insurge Intelligence gives, one of the most comprehensive and concise explanation:
Inside the new economic science of capitalism’s slow-burn energy collapse: And why the struggle for a new economic paradigm is about to get real
These extracts provide a taster
Axiom: Aggregating this data together reveals that the world’s fossil fuels overall experienced their maximum cumulative EROI of approximately 44:1 in the early 1960s.
Insight: At this rate of decline, by 2100, we are projected to extract the same value of EROI from fossil fuels as we were in the 1800s.
“… advanced capitalist societies have entered a phase of declining marginal returns — or involuntary degrowth — with possible major effects on the system’s capacity to maintain its present institutional framework.”
Axiom: Complex civilizations tend to accelerate the use of resources, while diminishing the quantity of resources available for the civilization’s continued expansion — because they are continually being invested in solving the new problems generated by increasing complexity.
Insight: The US economy, he shows, appears to have reached “the peak in productivity in the 1930s, the same period in which the EROI of fossil fuels reached an extraordinary value of about 100.”
But what we can know for sure from the new science is that the era of unlimited economic growth — the defining feature of neoliberal finance capitalism as we know it — is well and truly over.
Plenty of insightful graphs given in the article, all in all, a must read article that goes to the heart of the predicament facing society today, something our political and economic elites appear to be unaware of, and those that do are afraid of sharing it with their citizens.
Another realistic assessment of a situation that will become more frequent in the future, not just in the US but for all nations. In the context of the US, Tim Morgan’s recent post (No. 104) entitled “Why Mr Trump Can’t Raise American Prosperity” on his Surplus Energy Economics website explores and quantifies the the financial issues undermining the US economy, opening with:-
With SEEDS – the Surplus Energy Economics Data System – nearing public release, this article has two purposes. It assesses the outlook for the American economy, and uses this investigation to demonstrate how SEEDS is applied to economic interpretation.
It concludes that American prosperity is in decline, and has been falling ever since it ‘peaked’ way back in 1999. This doesn’t make America unique – prosperity has long been falling across much of the developed West. But it does mean that the central economic task of President Trump, which is to make the average American more prosperous, simply is not possible.
Two main factors are driving the deterioration in prosperity. First, the underlying economy has been deteriorating, a trend disguised by the spending of borrowed money.
As has already been identified by both Raul and Nicole on TAE, the deeper largely unrecognised issue is declining net energy, or surplus energy, coupled with its steadily decline in affordability that responsible for the slow motion evaporation of genuine wealth, which leads to more and more people becoming impoverished. Global political, economic and banking elites have failed to recognised this reality, and wrongly believe creating money can compensate for this decline in net or surplus energy. This blind spot in their thinking effectively equates to providing more bucks and getting less bangs, which will inevitably end with another financial crisis. Tim Morgans latest post (no.105) entitled “Anticipating the next Crash” explores the consequences of this misguided policy, arguing the next crash may possibly be caused with a loss of confidence in money rather than banks, and opens with:-
Because the global financial crisis (GFC) was caused by a collapse of trust in banks, it can be all too easy to assume that the next crash, if there is one, must take the same form.
In fact, it’s more likely to be different. Whilst the idiocy-of choice before 2008 had been irresponsible lending, by far the most dangerous recklessness today is monetary adventurism.
So it’s faith in money, rather than in banks, that could trigger the next crisis.
The political chaos in the UK looks even more opaque with the decision by Boris Johnson, the favorite to win the election for Prime Minister, not to put himself forward as a candidate. He has always tries to present himself as the dumb, but amusing blond, when in reality he is far from dumb, and clearly smart enough to have spotted the poison pill hidden in David Cameron’s resignation speech given outside 10 Downing Street. The nature of this poison pill is clearly revealed in this comment on the article “Brexit: UK’s most senior EU official resigns after leave vote – as it happened”
As the wiley politician Boris Johnson undoubtedly is, I suspect it’s more likely he spotted Cameron’s trap and has declined to take the bait, leaving it for some other (dumb?) politician to drink from the poison chalice on offer, rather than any doubts about winning the Tory party election to become the next prime minister due to Michael Gove’s latest political shenanigans, and his decision to put himself forward as a candidate.
All of the debate and its political and economic fallout over the UK decision to leave the EU , which is far from over, given the fragile state of the global financial system, with a good exemplar being the effective insolvency of much of the European banking system, misses the bigger picture revealed by this extract from this excellent TAE article:
“At the same time the Leave campaign claims endless streams of milk and honey are in the offing, an equally unlikely proposition (is it perhaps an idea to not only talk about money or race; how about physics?)”.
The “unspoken” bigger picture against which this current UK needs to be seen agains the fading global economic growth due to Limits to Growth, see this link:-
The world is effectively saying, “Sorry, I’m finite, which means the ever expanding future you ordered is no longer available, because the affordable resources needed for its manufacture, delivery and maintenance, are running out”.
We have a choice, we can either fight each other for these remaining resources needed to run our current society or manage as humanely as possible, the inescapable consequences of transitioning to a much lower resource and energy hungry one. Unfortunately if history is any guide, we will probably opt for the first choice and simply make matters far worse.
The Brexit debate and decision to leave the EU and the political and economic fallout, which is far from over, needs to be seen against the “unspoken” bigger picture that arises from fading economic growth due to Limits to Growth. The world is effectively saying “Sorry, I’m finite, which means the ever expanding future you ordered is no longer available, because the resources needed for its manufacture, delivery, and maintenance are running out”.
We have a choice, we can either fight each other for the remaining affordable resources needed to run our current society, or manage the inescapable consequences of transitioning to a much lower resource and energy hungry one. Unfortunately if history is any guide, we will probably adopt the first choice and simply make matters worse.
The title of this article is spot on, debt is just about the only thing growing, given that the real wealth creating growth needed to repay these debts is steadily fading away. Tim Morgan recently posted an excellent overview of the situation facing us all on his “Surplus Energy Economics” blog entitled “End-Game”.
He identifies three key reasons why real wealth creating growth is fading, the first is declining net, or surplus, energy, the second is escalating debt, and the third are policies adopted to try and stimulate growth, which have only served to sabotage it!
These factors when combined together make a major financial crisis inevitable that will be one that dwarfs all previous crises. The reason is very simple, increasing global debt to record levels combined with a diminishing ability to repay them has effectively transformed the entire global financial system into a giant Ponzi scheme, and such schemes always end in disaster.
He goes onto identifies the first Nemesis of the current political/economic system describing four potential triggers, namely risk 1 “China”, risk 2 “Equity market exposure” (especially in the US), Risk 3 “Capital flows and the $7 trillion gamble”, and risk 4 “The failure of “kamikaze economics” (often referred to as Abenomics).
The second Nemesis is now becoming increasingly apparent, namely “The populist backlash”. This is being reflected in the EU with the impending Brexit referendum and in the US with the nomination of Donald Trump as the Republican candidate for the upcoming Presidential election; both represent early harbingers of things to come, so to paraphrase the alleged Chinese curse, “We all live in interesting times”.
I doubt anything in Tim’s latest blog will come as a great surprise to regular readers of TAE, but it does provide a clear and comprehensive analysis of what is going wrong and what the consequences will be.
Tsipras blamed the migrant flows on western military interventions in the Middle East, which he said furthered geopolitical interests rather than democracy. “And now, those who sowed winds are reaping whirlwinds,
It’s refreshing to see for once, an accurate analysis of the tragic consequences of the cynical geopolitics driving events in the Middle East being reported in the mainstream media.
Indigenous Australia Storytelling Accurate on Sea Level Rises 7000 Years Ago
Fascinating article. The Guardian published a must read article last July that adds urgency to the issue of climate driven sea level rise due to melting ice sheets, entitled “Scientists predict huge sea level rise even if we limit climate change”.
This Guardian article was based on a paper by A. Dutton et al entitled “Sea-level rise due to polar ice-sheet mass loss during past warm periods”, and opens with this extract:-
“Even if world manages to limit global warming to 2C — the target number for current climate negotiations — sea levels may still rise at least 6 meters (20 ft.) above their current heights, radically reshaping the world’s coastline and affecting millions in the process”
and ended with this extract:-
“We’re going to reach temperatures we had in the past periods in the next couple of decades. Understanding which are the most vulnerable sectors of polar ice sheets is critical to projecting future pattern of sea level rise regionally,” Dutton said.
The big outstanding question — and the one that’s most relevant to people living along the coasts — is just how long it could take sea levels to rise to such great heights. The process isn’t linear. It’s currently accelerating and that trend is expected to continue. Dutton said her group is working on new techniques to better define the rates of rise, but other efforts have shown tipping points could cause sudden, rapid rises faster than previous estimates.
“There are some recent modelling efforts that now show you could get a section of the Antarctic ice sheet, several meters worth of sea level rise, to go in a decade. We used to think it was centuries,” she said.August 22, 2015 at 12:46 pm in reply to: Nicole Foss: The Boundaries and Future of Solution Space #23383
Nicole’s article is a realistic, if depressing overview of a future with limited options that we are all facing. In this instant, I think she could be well cast in the role of the Count, as expressed by these two lines taken from “The St Petersburg Dialogues” by Joseph de Maistre. I came across them as the Epigraph to John Gray’s book “Black Mass: Apocalyptic Religion and the Death of Utopia”
THE SENATOR: This is an abyss into which it is better not to look
THE COUNT: My friend we are not free not to look.
It’s well worth reading anything by John Gray, especially as he was one of the few people to anticipate a major financial crisis (2007/8), as his book “False Dawn: The Delusions of Global Capitalism” written in 1998 reveals.
Nicole, you deserve a big thank you for this article, and all the other articles you and Raúl post on TAE, they have taught me a great deal over the years. Finally, I would like to say I particularly like the use of Gustave Doré’s Dante illustrations, a subtle touch.
Perhaps the difficulty the European, and other, elites (over class) have with Greek democracy in action is that it represents a potential time bomb that could blow up their manifesto, as postulated by David Malone on his Golem XIV blog, entitled “The Next Crisis – Part two – A manifesto for the supremacy of the 1%”.
This extract gives the list of key objectives for such a manifesto, which in my opinion represent a plausible list for any group planning a corporate takeover of democracy when the next financial crisis explodes, as it inevitably will, together with his core conclusion as to what it represents.
” 1) The Over Class must retain and consolidate their control over the global system of debt.
2) The power to regulate must be taken from nations and effectively controlled by corporations.
3) Professionalize governance. Democracy can be and must be neutered, and an effective way of doing this is to insist that amateur, elected officials MUST take the advice of professional (read corporate) advisors. Expand current law to enforce this.
4) The financial system badly needs un-encumbered ‘assets’ to feed the debt issuing system. A new way must be found to prise sovereign assets from public ownership. Such a new way is suggested.
5) In order to facilitate the political changes necessary, the public mind-set must be changed. National Treasures such as the NHS in Britain must be re-branded as evil State Monopolies.
6) Effective ways must be found to convince people that democratic rule is no longer sufficient to protect them.
7) An alternative to Democracy must be introduced and praised. That alternative must be the Rule of International Law as written and controlled by the lawyers of the 1%. People must be told that this is all that stands between them and an increasingly hostile and anarchic world. But that it can only keep them safe if it has absolute authority over democracy. People must voluntarily bow to it out of fear and its decisions must be as absolute and unquestionable.
In conclusion, I suggest that this amounts to a dystopian version of the old environmentalist idea of Spaceship Earth. A corporate version where we are just passengers who must pay our passage in a ship someone else owns. No longer inhabitants or citizens with the same inalienable right to be there and be heard as anyone else.”May 5, 2015 at 9:42 pm in reply to: Quote Of The Year. And The Next. And the One After #20888
Another good article that describes the unwelcome reality that is looming up in front of us. In Overshoot: The Ecological Basis of Revolutionary Change, by William R Catton, Jr., he describes our predicament in these terms. We have effectively created a phantom carrying capacity that enabled the human population to grow beyond the earth’s long term permanent carrying capacity. This phantom carrying capacity was based on “anywhere” ghost acreages, in other words current acreage not within a nation’s boundary that can provide the additional food it cannot produce for itself. The other ghost acreage was “anywhen” fossil acreage that represents prehistoric acreage that produced the biomass that became fossil fuel, because the 20th century green agricultural revolution was based on the use of increasing amounts of fossil fuel, such that today from plough to plate we use on average ~10 calories of fossil fuel energy to provide ~1 calorie of food. As the dominant species living on the earth we are rapidly changing our environment in ways that will undermine our dominance, by changing our environment and reducing its suitability for continuation of our dominance. This situation arises from the principle of ecological succession based on seral stages. In our case, the excessive production of pollutants by our industrial global society that have the potential to reduce the earths long term carrying capacity for ourselves and most other species, in this instant climate change caused by CO2 produced from burning our finite fossil fuel resources as our primary energy source.
Further, as “Will Humanity Be Left Home Alone?” by John Gray, (https://www.greatchange.org/othervoices.html ) agricultural overproduction and habitat destruction for supplying food to feed an exponentially growing human population, applies a competitive pressure on other species capable of driving them to extinction. This loss of species diversity reduces the resilience of habitats rendering them vulnerable to sudden changes such as climate and the emergence of novel pests as this extract explains:
“The lush natural world in which humans evolved is being rapidly transformed into a largely prosthetic environment. Crucially, in any time span that is humanly relevant, this loss of biodiversity is irreversible. True, life on earth recovered its richness after the last great extinction; but only after about 10 million years had passed. Unless something occurs to disrupt the trends under way, all future generations of human beings will live in a world that is more impoverished biologically than it has been for aeons.”March 14, 2015 at 11:57 am in reply to: The American Story Is A Mystery Only to Economists #19834
Raúl, I couldn’t agree more with the sentiment you express in the first line of this article. My strong suspicion is that so far as journalists are concerned, the newspapers they work for are more concerned with maintaining a good flow of advertising income, so telling it as it is would be considered unhelpful so far as this source of revenue and profit was concerned, as well as their own job security.
I must say, the Bloomberg article does take your breath away for its shear lack of insight into what is really going on, unlike Richard Koo’s pithy phrase that’s worth repeating
“When no one is borrowing money, monetary policy is largely useless…”
If I had my way, this phrase would be tattooed on the forehead of every bau neoliberal economist, politician and business journalist to ensure they could never forget it.
Study Confirms Carbon Dioxide Is Warming The Earth (Space Reporter) should not surprise anyone. With atmospheric CO2 levels at 400ppm, this means the current target of 2 degrees C is unlikely to be met, with 3 – 4 degrees C looking like more realistic targets, given the consequences described in “Global carbon dioxide in atmosphere passes milestone level”.
” …the last time so much greenhouse gas was in the air was several million years ago, when the Arctic was ice-free, savannah spread across the Sahara desert and sea level was up to 40 metres higher than today”.
“This shows that greenhouse gases are heating the climate more and more every year. For the last decade or so the oceans have kindly been sucking up this extra heat, meaning that surface temperatures have only increased slowly. Don’t expect this state of affairs to continue though, the extra heat will eventually come out and bite us, so expect strong surface warming over the coming decades.”
This level of CO2 climate forcing was last seen during the Pliocene epoch 5.3-2.6 million years ago, with the mid Pliocene warm period in particular considered to be a reasonable climate analogue for today’s conditions, as “What Does 400ppm Look Like” describes
“Recent estimates suggest CO2 levels reached as much as 415 parts per million (ppm) during the Pliocene. With that came global average temperatures that eventually reached 3 or 4 degrees C (5.4-7.2 degrees F) higher than today’s and as much as 10 degrees C (18 degrees F) warmer at the poles. Sea level ranged between five and 40 meters (16 to 131 feet) higher than today.”
The one aspect of this epoch that’s not comparable with today, is the speed at which the current 400 ppm CO2 level will be surpassed.
Good article Raúl. Despite the tsunami of propaganda, it’s still surprising the US and others wish to continue supporting a failing Neo-Nazi government that could never be described as democratic, with military (and financial aid) as “The U.S. has Installed a Neo-Nazi Government in Ukraine” (https://www.globalresearch.ca/the-u-s-has-installed-a-neo-nazi-government-in-ukraine/5371554) argues with this extract:
“We are not dealing with a transitional government in which Neo-Nazi elements integrate the fringe of the coalition, formally led by the Fatherland party.
The Cabinet is not only integrated by the Svoboda and Right Sector (not to mention former members of defunct fascist UNA-UNSO), the two main Neo-Nazi entities have been entrusted with key positions which grant them de facto control over the Armed Forces, Police, Justice and National Security.
While Yatsenuyk’s Fatherland Party controls the majority of portfolios and Svoboda Neo-Nazi leader Oleh Tyahnybok was not granted a major cabinet post (apparently at the request of assistant Secretary of State Victoria Nuland), members of Svoboda and the Right Sector occupy key positions in the areas of Defense, Law Enforcement, Education and Economic Affairs”.
Strangely, I thought WW2 was about defeating Nazism in Europe, so the fact many western nations are happy supporting Neo-Nazis c. 70 years later appears unbelievable, especially the way the Kiev government are behaving as Mish Shedlock reveals in “Emails From Kiev: Free Speech Vanishes, Total Media Thought Control; US Radar System Falls Into Rebel Hands?”
I suspect what happens next probably depends on whether the hryvnias collapses completely, or a new Kiev military offensive can be funded using conscripted soldiers and “guided” by US and UK military advisers that would likely initiate a strong Russian response. If the IMF and EU end up supporting Kiev with (unrepayable) loans, the latter becomes more likely, especially if the Ukrainian military is re-equipped with US (and UK) hardware supplied directly (UK) or via third parties like the UAE (US). On the other hand if no loans are forthcoming, then destitution for most of the Ukrainian population looms, which would likely trigger another popular uprising and corresponding round of vicious repression – Hobson’s choice if ever there was one. Geopolitics always was, and still, is a dirty game, and the instability it creates can easily become dangerous if anyone makes a serious miscalculation. The tragedy is, either way it’s the ordinary Ukrainians who will suffer, not the puppet Ukrainian elites or their covert foreign supporters.
“Ecological collapse Probability: N/A, Global system collapse Probability: N/A and Future bad governance Probability: N/A”
Perhaps it’s just me, but I’d put these three as the most probable future threats, rather than not try to assess their probability. For an antidote to this omission I would recommend reading the late William Catton’s book Overshoot: The Ecological Basis of Revolutionary Change.
The opening paragraph of the book’s preface starts with this extract:
“In a future that is as unavoidable as it will be unwelcome, survival and sanity may depend upon our ability to cherish rather than to disparage the concept of human dignity. My purpose in writing this book has been to enhance that ability by providing a clear understanding of the ecological context of human life.
It is axiomatic that we are in no way protected from the consequences of our actions by remaining confused about the ecological meaning of our humanness, ignorant of ecological processes, and unmindful of the ecological aspects of history. I have tried to show the real nature of humanity’s predicament not because understanding its nature will enable us to escape it, but because if we do not understand it we shall continue to act and react in ways that make it worse.”
Unfortunately the evidence mounts by the day that there is a massive failure of global governance to recognise, or even fully understand, the true nature of the growing threats facing us, such as extreme anthropogenic climate change (far far more probable than 0.01%) that will reduce the earths carrying capacity, declining net energy that will reduce our ability take corrective action or to grow the global economy, and finally flawed neoliberal economic and monetary policies that have simply buried nations in unrepayable debt, especially if economies fail to grow.
As William Catton states, if fail to understand the nature of the threats facing us we will continue acting in ways that will make them worse, which is just what we are doing, because if we did these threats would have been assessed.
“…… it’s the fact that we are inching ever closer to the kind of situations none of us would choose.
That is, war, people dying from sheer misery, people dying because they have no access to the services we take for granted, and even people being shelled by their own government”.
Perhaps the warped explanation for this dangerous situation that has been intentionally created, is given in this article on Zero Hedge (https://www.zerohedge.com/news/2015-02-15/only-question-about-so-called-recovery) as this extract argues
“…….now that for the first time ever, central banks are set to monetize all global government debt, something we showed previously…and leave virtually no other securities to satisfy investor demand” except a good war that would provide plenty of investible demand from the military-industrial sector of the west.
I have a growing conviction that the world is becoming increasingly irrational, so throw in the early impacts of Limits to Growth and a growing opposition to US global hegemony and it begins to look like a case of God help us all from the follies of our so called elites.
I’d like to add my thanks for your unstinting efforts running the TAE, and wish you all the best for 2015. I look forward to continuing to read your insightful articles during 2015, and strongly recommend you read this recent post on Zero Hedge
An excellent post Ilargi, spot on as usual, and reminds me of your December 2013 post, “Everything Is Fine In A Parallel Universe”.
The reality is, no amount of propaganda can alter the fact that as the widely held Enlightenment myth of perpetual economic growth collides with the second law of thermodynamics, this mythic belief will crumble to dust along with much of our current industrial global civilisation. How nations respond to this situation and what type of civilisation replaces it, is, or should be, one of the most important questions we need to ask ourselves. Unfortunately, as you point out, these are not the sort of questions the mainstream media asks, because like the financial elites that own them, they all fail to recognise the true nature of the developing reality that’s driving the deflationary black hole nations are heading into, albeit at differing rates. I always like to remind myself of Sir Arthur Eddington’s prescient quote as an antidote to this mainstream media view (oops, propaganda) that we can continue to eat ever bigger slices of nature’s finite cake without major consequences:
“If your theory is found to be against the second law of thermodynamics, I give you no hope; there is nothing for it but to collapse in deepest humiliation”.
Personally I’m sceptical we will see oil at $30 dollars/barrel let alone $40, $50 or even $60/barrel for very long, if at all, because the US shale oil industry would be bust well before the Saudi’s started to feel serious financial pain, and they too would not escape either, just arrive at the same point a little later. Gail Tverberg recently wrote a good article exploring the issues from falling oil prices in Oil Price Slide – No Good Way Out; link below.
Based on Figure 7 the article implies that Saudi Arabia needs oil prices within a range of c. $80-115/barrel, and below the lower price they too would be in trouble with the prices you suggest may be possible. The reason being that at some point they would be forced to cut back on the level of subsidies needed to keep their growing population “quiet and happy”. Interestingly Figure 6 shows that since the early 1990’s their modest increase in oil output has been taken up by increased internal oil consumption explaining why exports have remained fairly flat; a good example of the increasing impact the Export Land Model will have on exports.
Good article by Ted Dace, thanks for posting the link Raleigh. Not sure if you’ve also read the article with the same name, posted on the former Oil Drum website in 2007 by Nicole Foss.
Also, Nicholas Georgescu-Roegen’s book “The Entropy Law and the Economic Process” is worth reading, and I like his use of the Entropy hour glass described in “Beyond Growth”, p. 29, 1996, by Herman Daly (the hour glass diagram can be opened via the embedded link) in the extract of the book entitled Entropy and Economics, link below.
“Abenomics is a depressing failure, just as we knew it would be since it started almost two years ago.”
As you say Ilargi, despite its obvious failure Shinzo Abe want’s to implement an even bigger re-run of his failed policy, so perhaps someone should appraise him of Einstein’s words:
“The definition of insanity is doing the same thing over and over again and expecting different results.”
To date Angela Merkel has successfully resisted Mario Draghi’s wish to introduce a full blown European version of Abenomics, despite the fact the US has just ended their own version, which has had debatable benefit, if any, for the real US economy. Its unfortunate that mainstream economists, Central bankers and politicians don’t understand (or probably don’t even know about) the work of Sir Frederick Soddy. He clearly understood the distinction between money and wealth, with the former theoretically limitless and not subject to any physical laws, and the latter limited because we live on a finite planet, and subject to the laws of thermodynamics, in particular the 2nd law. It’s the failure by policy makers to recognise this fundamental distinction between (fiat) money or credit or debt – take your pick, and wealth created by the “real” economy that has to utilise the earths resources to create this wealth that’s at the root of the failure to restart strong economic growth. This is why current policies are doomed to fail, because as foretold by Meadows et al, “Limits to Growth” are starting to restrict the economic growth needed to pay down these debts created by massive over-expansion of credit by central banks, ultimately to detriment of future generations. Personally, I believe because these debts will never be paid off in a static/contracting economy, debt forgiveness will eventually become the de facto order of the (future) day, however I’d be interest to hear your thoughts on this possibility Ilargi.
“Not only did the pedantic Anglo-Saxon power hungry freak show of Harper, Cameron and Abbott (nobody even noticed Obama) give Vladimir V. Putin a good laugh with their empty chest thumping,….”
This extract from your article was amply reinforced by the comments by the SALON website post What really happened in Beijing: Putin, Obama, Xi — and the back story the media won’t tell you (https://www.salon.com/2014/11/13/what_really_happened_in_beijing_putin_obama_xi_and_the_back_story_the_media_wont_tell_you/ ) This article gives a realistic analysis of the unspoken events taking place at the recent APEC meeting, confirming many of the submarine currents driving global todays geopolitics are driven by US attempts to maintain its global hegemony in the face of Sino-Russian ambitions to challenge it. The article ends with these intriguing and acerbic remarks by a Chinese scholar-turned-diplomat-turned scholar made at a dinner in Beijing regarding the Ukraine, but the acerbic remarks apply to virtually everywhere where conflicts and geopolitical tensions exist:
“From our perspective, we see all of this agitation as noise at the surface,” he said. Then he cited that scene from “Macbeth” at Dunsinane Castle, “Life’s but a walking shadow, a poor player that struts and frets his hour upon the stage, and then is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing.”
The Chinese — always attuned to the long view. Who are the idiots in this man’s rendering? I leave it there.
Let’s hope it does signify nothing, during the loss of the British empire the period had two world wars and WW3 would truly be the war to end all wars.September 2, 2014 at 6:25 pm in reply to: Debt Rattle Sep 2 2014: This Is As Big As We Will Get #14949
Raúl, you are right to be concerned over the one sided picture being painted in the West regarding the Ukraine, as a number of your recent posts demonstrate. I suspect US and EU geopolitics over the Ukraine (and Middle East) can be seen in terms of a combination of the Wolfowitz doctrine and an updated version of Sir Halford Mackinder’s paper The Geographical Pivot of History that describes his “Heartland Theory”. This is a concept the Russians will be well acquainted with given his Heartland is Russia and the inner crescent includes the East European plane and Middle East. The Wolfowitz doctrine also underlines the importance of oil by clarifying the strategic value of the Middle East and Southwest Asia, including it can now be argued, the Ukraine:
Not only are times “interesting”, they are also becoming dangerous as cheap fossil fuel becomes scarce and eventually unaffordable, especially when combined with the broader impacts of Limits to Growth.