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Are we heading for a global economic slump, or can current problems be explained away in terms of ‘non-recurring events’, such as the war in Ukraine?
Do the authorities have the tools and the understanding required to navigate the current economic storm? And what is the outlook for inflation?
These are valid questions, and I’m well aware that, whilst many visitors to this site are interested in economic principles, theory and detail, others prefer succinct statements of situations and prospects.
That’s understandable – these are deeply worrying times.
The aim with what follows is to (a) set out a brief summary of the economic and financial outlook, as seen through the prism of the SEEDS economic model, followed by (b) a succinct commentary on how these conclusions are reached.
And the consequences of this additional cost are the inflation – as energy cost increases drive up the cost of every product and service which uses energy – and the stagnation – as ever more of us are obliged to switch spending away from discretionary purchases in order to manage the rising cost of essentials – which is set to plunge the western economies into a depression worse than the 1930s.
I must apologize for the Dr. Morgan quote I posted this morning. It is his quote just not the one for The Consciousness of Sheep. It was in reply to:
Pause for Thought: Money without Value in a Rapidly Disintegrating World
The quote for The C of S was :
drtimmorgan
on June 5, 2022 at 7:15 am said:
This is a particularly good article by Tim Watkins.I think he said, in a recent article, that the British economy is “collapsing”. I wouldn’t argue with that. The current government seems remarkably incompetent. But Mr Johnson was given an emphatic majority by the voters, and Labour seems to offer nothing, in the economic sphere, that is really different.
For things to be different – in this context meaning “better” – the public, in this case the British public, have to want things to be different. I’ve yet to be convinced that they do. Perhaps they want to stick with things as they are?
@phoenixvoice
I’m close to off grid here at almost 44 degrees North. Stuck out in the North Atlantic of eastern Canada. Have been since ’07. I’m running 5.4 kilowatts of solar with propane for my hot water, cooking, clothes dryer and a 7kw gen. The gen sees some use between early November and early February. I use lead acid batteries, 8 200 amp hour in series for 48vdc.the battery cost is/was $320C with an expected life span of seven years. Six is all I can get. No ac here as we don’t receive enough really hot days to make it pay, yet! We budget $100 a month to cover our propane and expected battery replacement costs. The gen runs at times of low light, the above mentioned period. It comes on automatically when the battery bank voltage hits certain points for specified times, programable by me. When it runs the inverter charges the bank while the house is powered, it takes two to three hours to fully charge the bank. Entire system cost approx. $25,000 gen included. We watch all the TV we care to and have a fridge with an ice maker, other half insists on ice. Two small freezers for our garden production, still eating last years haul of veggies and such. I planted carrots in a raised bed in the green house last July and we ate the last of them last week. Carrots keep really well in the ground if they don’t freeze, same with parsnips. If you allow them to start growing again in the spring they will flower and go to seed, which I did last year and have planted that seed in the outside garden yesterday. We still have frozen carrots as well. New head lettuce and spinach rolling in now, just finished the outside garden planting today. Rhubarb is ready for processing and still have some in the freezer from last year. I do envy the growing season you and Dr. John have but not the heat. Our life style is somewhat Spartan compared to others however we enjoy much more leisure time than all but the fully retired. We no longer travel much or great distances but present times sort of dampened that anyway.
@dr-d
No argument about the amount of oil still in the ground it’s the energy cost of getting it. Not dollars but energy. Dollars are fiat and as such are of no value when it comes right down to it. They are a believe system, as long as most believe in them they have value until they don’t. Our present set of living arrangements require the same amount of energy input to maintain during its lifetime as it took took put it in place. As soon as energy is no longer put in it starts to decline, think of it as maintenance. In our growth to infinity and beyond system every increase in prosperity requires the same amount of energy over its life span that was used to create it. Hence the need for more oil to be pumped daily then was pumped daily some years ago. The world can’t get by on 80 million barrels a day now because it was using 90 plus before the shut down. It needs 90 to stay even and 100 to regain growth. If it gets to 100 in a few years it will need a few million more for more growth. These need to have a replacement value in joules with at least the same excess joules that the oil had that made them. The west and N.A. in particular built most of our infrastructure will 90 plus excess joules per joule used to get them excess little buggers. So now we are maintaining that infrastructure with 40 or less excess joules and want added growth to boot. These numbers aren’t hard and fast, not at my finger tips right now, but you get my drift I’m sure. I see the Russians are said to be able to produce oil for profit at $40. Whose dollars? Are they 1910 dollars or 2010 dollars. Not the same thing. Inflation! It takes energy to get energy not dollars or rubles or lira or any fiat. Joules or calories burned is the only way. I’ve read in one of my agricultural manuals that in 1900 for every calorie burned on the farm they received back approx. 10 in return. With the advent of industrial ag it is now the reverse and may be worse. Energy is neither created nor destroyed, it is merely changed from a dense form to a less dense form until it is spread so thin as to be of no use to us.Dr. Morgans reply to the above post at his site.
“drtimmorgan
on June 5, 2022 at 7:07 am said:
Thanks. This is certainly an interesting article, and is persuasive on the ways in which ‘the powers that be’ are trying to hold back the tide.Whilst individual politicians may be advocates of change – imagine if Britain had elected Mr Corbyn, or America Mr Sanders – systems themselves are always defenders of the status quo.
It seems pretty clear that ‘things are starting to fall apart’, and that excuses are being sought (covid, Ukraine) to explain away this process as no more than ‘a little local difficulty’.
It isn’t clear to me – at a first read – whether the article says that the collapse being held at bay is caused by capitalism itself, or by other factors (the kind of energy, resource and environmental constraints that I see as the issues).
My view is that we have reached the point at which prior growth in economic prosperity has gone into reverse. This itself is physics (thermodynamics) rather than politics. But our political and financial systems are based on the assumption of ‘growth in perpetuity’.
Extremism is seldom optimal, and our political norm is ‘extreme liberalism’, which yet – ironically – no longer holds to the tenets of market capitalism. But the same indictment might have been made against extreme collectivism in the USSR.
My hope – and I stress it’s more hope than expectation – is that what emerges is a mixed economy, balancing the best of the public and private sectors.
Speaking of return on energy and complexity:
“This morning I am reminded of the words of the British foreign secretary Edward Grey on the eve of the First World War: “The lamps are going out all over Europe, we shall not see them lit again in our lifetime.” Not, in this instance for reasons of war, but for the more mundane – though ultimately catastrophic – observation that my local council has begun to randomly turn off residential street lighting in an attempt to save on its massive electricity bill.”
In Brief: The lamps are going out… Dear Keith, leave this well alone
A bit more from Tim Morgan on the energy cost of energy. A lot to unpack at his site, I’ve been following him for seven or eight years now. Having some understanding of the energy cost of energy before discovering his site it intrigued me. The simple concept that lead me there was the idea put forth by others is that industrial civilization needed a return of some where between 1:10 and 1:15 at the well head to maintain our complexity . That’s for every barrel of oil equivalent there had to be somewhere between 10 and 15 barrels returned, surplus energy. Put simply below these numbers things like higher education and health care would start to suffer. Starving things like the military industrial complex first would save a lot but won’t happen. The stuff of tar sands is somewhere around 1:3 or less depending on whose calculations you read. Deep sea isn’t much better. So going after these sources is technically wasting high return fuels on low return fuel. It’s a spiralling decent into a nasty hole.
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Understood in this way, any given quantity of energy divides into parts. One of these is the cost element, known here as ECoE. The other – whatever remains – is surplus energy. This surplus drives all economic activity other than the supply of energy itself. This makes surplus energy coterminous with prosperity.We can, of course, use this surplus wisely or foolishly, and we can share it out fairly or inequitably. But what we can not do is to “de-couple” economic output from energy or, to be more specific about it, from surplus energy.
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2.1. The short versionIf you want a succinct answer to this question, it is that ECoE (the Energy Cost of Energy) is rising, relentlessly and exponentially. The exponential rate of increase in ECoE means that this cannot be cancelled out by linear increases in the aggregate amount of total or gross (pre-ECoE) energy that we can access. The resultant squeeze on surplus energy has been compounded by increasing numbers of people seeking to share the prosperity that this surplus provides.
As a result, prior growth in prosperity per person has gone into reverse. People have been getting poorer in most Western advanced economies (AEs) since the early 2000s. With the same fate now starting to overtake emerging market (EM) countries too, global prosperity has turned down. One way of describing this process is “de-growth”.
“..the smart thing to do today would be to simplify our way of life..”
The process of simplification is well under way as I type this and has been for some time. Find yourself a less complex way of living that suits your particular self and keep looking for less complexity. Less is more if properly visioned.
The only thing that the oppressed seem to learn from being oppressed is, given the chance, how to oppress.Take twenty five minutes and watch this summary and analysis of the davos crowd crowing.
The worst is yet to come. Brace for impact! This shit is about to become surreal.
They will fix this next year after the first wave of culling. I know I’m being very morbid here but the dots are connecting and can someone please counter this view with something positive I’m missing?
https://www.world-grain.com/articles/16979-un-russia-in-discussions-about-increasing-ag-exports
The following makes no sense if you understand anything at all about energy return energy on energy invested (EROEI). Time to take up knitting we may need a few sweaters!
“Boosting energy transition in shipping is about creating incentives and recognition for upstream enablers like investors in plants and renewable electricity installation equipment needed for the production of green fuels, and also operators of distribution vessels bringing the green fuels to main hubs of shipping activities like ports.”
I have to ask why this is happening in the long game sense. Just look at this lineup of articles: https://climateandeconomy.com/2022/06/02/2nd-june-2022-todays-round-up-of-economic-news/
One hell of a coincidence if it hasn’t been arranged somehow! No food no fuel busted immune system with residual traces of whatever in the system. Have a lot been primed to shuffle of this mortal coil. They needed to be helped!
Yesterdays six legged horse, maybe the artist was crosseyed.From the Guardian: “They don’t have any way they can tackle this problem.”
They are tackling it right now! By they I mean TPTB. Billions were going to be returned to the earth this decade with or without “their” help and “they” know it. TPTB were afraid without their help it would be them along with the rest. They don’t realize that with their help it is more likely they will helped along too!
Some laymen talk of the position the industrial civilization finds itself in.
“A human being has about 45 working years. This computes to around 4 barrels of oil equivalent which, at today’s price, equates to a value of $440 for a lifetime of human labour! This sobering estimate brings into sharp focus how and why our modern world works so well to deliver a lifestyle beyond the measure that a king would experience just two centuries ago.”
So the National Post says it’s time to end the mandates because everything that was done was successful!
“even if a year on from initial doses and post-Omicron, the effectiveness of vaccines to prevent infection and transmission is greatly diminished.”
“The primary toll of the pandemic was in death, illness and physical suffering. Pandemic restrictions were intended to reduce that, and they largely succeeded.”
“to enforce a vaccine mandate that has outlived its usefulness?”
@dr-d-rich: “Surgeons are in the top 5 professions for aspiring psychopaths” god complex!
“The Irish Times living along side clown world” Try living along side the usa! Speaking from Canada it’s interesting. I should think the Mexicans and Cubans may have an opinion less than shiny on that topic as well.
The following are todays entries and one on the Greek tankers seized by Iran where it would appear it might have been Trumps fault. There’s that finger pointing again!
“The low numbers of bulker new buildings bode well for the future, as supply is expected to be kept tight, with owners’ focus being container and LNG ships.”
Russia tanker business is alive and well. Oil exports ‘remain strong’
in International Shipping News 28/05/2022Supply chains set for “substantial” restructure
in International Shipping News 28/05/2022Russia’s Seaborne Oil Flows Changing Patterns
in International Shipping News 28/05/2022Iran says it has seized two Greek tankers in Persian Gulf
in International Shipping News 28/05/2022“There have been numerous attacks in the Persian Gulf since former US President Donald Trump unilaterally withdrew in 2018 from the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). However, there has not been a significant incident in months.”
@dbentonsmith: A.I. I’m with ya!
@willem: The site is UK centred but has lots of articles that can be applied further out. “no human accountability” agreed and I would add that the “no accountability” issue doesn’t start or stop at AI. I’ve seen lots of things go wrong solely on human error and no one will shoulder the fault. Lots of finger pointing but never owning the issue. It’s always someone else’s fault. Integrity is the difference between doing what’s convenient and doing what’s right. Look around critically ….. see much that’s right?
Integrity seems to stem somewhat from morals, don’t see much of that anymore either. Cultural differences play a roll as well. What’s moral here can be sacrilege 5000 kms away.
Here in the west it’s become one big FUBAR. The mindset of our esteemed leaders seems to be one of “kill ’em all and let their god sort ’em out!”.This stark conclusion appears to be the first time that the UN has issued a flagship global report finding that existing global policies are accelerating toward the collapse of human civilisation. Yet somehow this urgent warning has remained unreported until now.
The report does not suggest that this outcome is inevitable or specify how close to this possibility we are. But it does confirm that, without radical change, that’s where the world is heading.
UN Warns of ‘Total Societal Collapse’ Due to Breaching of Planetary Boundaries
That is, while there may be roughly as much fossil fuel in the ground as we have consumed in the course of three centuries of industrialisation, we also burned our way through the cheap and easy deposits first. Consider this an issue of “socially necessary exergy” – nobody was going to buy or even extract oil from deep beneath the North Sea or from hydraulically fractured shale deposits while it was still possible to obtain all the oil you needed by knocking a pipe into the ground. We will, of course, continue to extract ever more difficult and expensive fossil fuels, but their extraction will remorselessly consume an ever-greater part of the exergy previously available to the wider economy. Which, in turn, means that the wider economy is going to shrink… and we have no economic theory to explain how we are going to handle this.
https://www.indexmundi.com/agriculture/?commodity=wheat&graph=exports
1 Russian Federation 39,000
2 EU-27 36,000
3 Australia 24,000
4 Canada 24,000
5 United States 21,092
6 Argentina 14,000
7 Ukraine 10,000The above numbers are metric tons so far this season. According to this site the Ukraine exported 18,000 MT in 2021. Lots of year left yet to get those numbers up. There is this little nugget as well: “I’m really not that hyped up about the new crop supply impact, specifically for wheat,” said Rich Nelson, Allendale Inc.’s chief strategist.
That is because more than 95 percent of Ukraine’s crop is winter wheat and it was already in the ground before the conflict began.
The fate of that crop is more likely to be determined by spring rains than war, he said.
https://www.producer.com/news/fate-of-ukrainian-wheat-crop-remains-uncertain/
Western society is being played big time, I know, preaching to the choir for the most part here.
Oxy baby! “don’t care”. I know it’s getting harder to give a shit. Those who have managed to stay natural are going to have to care for the damaged at some point, most likely. Hope I’m wrong as I’m not much of a “people” person. If however it comes to that I’ll do what I can. As for educating the mindless I say don’t waste your time. Find constructive ways to help them with seemingly unrelated things that you may see as related without mentioning the jabs. Also trying to connect the dots of jabbed with bad outcomes I’ve found thatij the cases of unexpected deaths I ask ” was it covid”. The answers can tell a lot, “oh no they were all jabbed up” or some such with add ons such as it was a fast acting cancer or heart issues that were undiagnosed etc. Another tell here In Canada is air travel, if anyone you know flies anywhere they are “up to date” because you have to be to get on a plane.
https://consciousnessofsheep.co.uk/category/in-brief/
In Brief: Hot air and false optimism
Windfall hot air Even now, the political class is treating rising energy prices as temporary – just like they thought inflation was temporary this time last year. They would like you to believe that Russia – which has continued to supply oil and gas (which were expressly excluded from sanctions)
The fake horsemen of the apocalypse
Apocalyptic, however, our latest versions of pestilence, war and famine are certainly not. For sure, a lot of people died from the Covid. And at an individual and family level, every death is a tragedy. But at a national, international and civilisational level, the truth is that many of those who succumbed to the Covid would have died within the next twelve months anyway. Deaths as a percentage of the population make Covid one of the least deadly pandemics we have ever experienced. Six to seven million (those who died “of” rather than “with” Covid) out of a population of nearly eight billion pales compared to the Spanish flu’s 40-50 million out of a population of less than two billion. The Spanish flu, in turn, was a mere echo of the fourteenth century Black Death which wiped out some two-thirds of the European population – and likely as many in Africa and Asia too, although the records are less definitive.
At any given moment there is an orthodoxy, a body of ideas which it is assumed all right-thinking people will accept without question. It is not exactly forbidden to say this, that or the other, but it is “not done” to say it, just as in mid-Victorian times it was “not done” to mention trousers in the presence of a lady. Anyone who challenges the prevailing orthodoxy finds himself silenced with surprising effectiveness. A genuinely unfashionable opinion is almost never given a fair hearing, either in the popular press or in highbrow periodicals. – George Orwell, “Freedom of the Press”
https://www.globalresearch.ca/freedom-convoy-collapse-canadian-liberalism/5781208
“Worse, some in the media insisted that questions and suspicious happenings should not be investigated even if the outcome would reassure a skeptical public the election was fair. To feel otherwise, we were told, was to be a conspiracy theorist of the worst kind bent on treason or the fall of democracy itself.”
It has fallen some time back!
“The 5G telecommunications network is designed to use geolocation and behavioural tracking that will connect your digital identity to your individual behaviour and facilitate the carbon footprint tracing process..”
I haven’t a mobile so tracking me will be a bit more difficult.
NEW YORK, NEW YORK, US — Global wheat inventories currently stand at about 10 weeks of global consumption, a food supply expert said during a special meeting of the United Nations Security Council on May 19.
Sara Menker, chief executive officer of Gro Intelligence, an organization that gathers and analyzes global food and agricultural data, said she disputes official government agency estimates that put global wheat inventories at 33% of annual consumption, countering inventories are closer to 20%.
https://www.world-grain.com/articles/16941-food-supply-expert-paints-grim-global-picture
The White House has become increasingly aware of the “worrisome decline” in diesel inventories in the Northeast. According to sources cited by CNN, the White House is considering a release of strategic stockpiles to combat the crisis. Given the reduction in East-coast diesel inventories of ~45mb, and given the size of the strategic “home heating oil reserve” of ~1mb, its unlikely the measure will fix existing imbalances.
https://seekingalpha.com/news/3841709-white-house-considers-burning-home-heating-oil-reserve-to-reduce-diesel-pricesAhh that’s it boys, burn through next years stocks cause the plebes don’t need no stinkin’ heat next winter they’ll all be dead according to the plan.
Mastercard is trialling a biometric payment system that could see customers just use their face rather than contactless cards, smartphones or PINs.
Fuck mastercard and all the rest of these companies that survive because most cannot do a simple monthly budget. They’re all about to become fossilized dino shit and worth a lot less than a real fossil. They can put their plastic where the sun never shines. People stop using this crap and it will wither and vanish. No monthly payment schemes beyond a place to live.
https://www.theepochtimes.com/all-about-the-newest-covid-pills-should-you-take-them_4460839.html?
Despite its horrible track record, the U.S. government actually pays hospitals a 20% upcharge for sticking to the remdesivir protocol, plus an additional bonus.6,7,8 Hospitals must also use remdesivir if they want liability protection.
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Bloomberg describes the post-Paxlovid rebound of David Ho, a virologist at the Aaron Diamond AIDS Research Center at Columbia University:20“Ho said he came down with COVID on April 6 … His doctor prescribed Paxlovid, and within days of taking it, his symptoms dissipated and tests turned negative. But 10 days after first getting sick, the symptoms returned and his tests turned positive for another two days.
Ho said he sequenced his own virus and found that both infections were from the same strain, confirming that the virus had not mutated and become resistant to Paxlovid. A second family member who also got sick around the same time also had post-Paxlovid rebound in symptoms and virus, Ho says.
‘It surprised the heck out of me,’ he said. ‘Up until that point I had not heard of such cases elsewhere.’ While the reasons for the rebound are still unclear, Ho theorizes that it may occur when a small proportion of virus-infected cells may remain viable and resume pumping out viral progeny once treatment stops.”
It’s the loophole they built in after realizing that Europe couldn’t find enough fuel to replace what they said they could do without. Ship to ship transfer in a third country and the Greece shipping industry, arguably the biggest in the western world, would be only to happy to do that work!
“In April, shipments of Russian fuel oil with Greece as a destination reached nearly 0.9 million tonnes, about double March levels and could reach new records in May, according to Refinitiv data.
The bulk of this was shipped from Russian ports to Greece’s Kalamata port, the data showed.
The Greek energy ministry declined to comment on what it said was private companies’ business.”
Greece emerging as new hub for Russian ship-to-ship fuel oil exports, data shows
https://www.world-grain.com/articles/16933-wheat-tour-forecast-reflects-impact-of-drought-in-kansas
The impact of severe drought was evident in western and central parts of the state, but some participants were surprised at how far east they had to go before seeing a noticeable improvement in the crop.
……and this:
https://www.world-grain.com/articles/16932-eu-feed-demand-forecast-to-fall“Germany’s upper house of parliament approved the move on Friday, following on from the Bundestag on Thursday. The scheme will cost the government €2.5 bn as it is due to pay back to transport companies the shortfall in income as well as the cost of administering the sale, including giving back to commuters who already have season tickets, the amount they are effectively out of pocket.”
What does the government create for sale to earn that money to pay back the transport companies? Oh right ideology. Except they don’t sell “it”. They gaslight the ideas and charge you taxes to implement them across the board one size firs almost all! Just not those who come up with the notions.
https://www.theguardian.com/world/2022/may/20/germany-public-transport-boost-9-euro-month-ticket
Just three headlines from:
The whole list today reads, big trouble starting to show up, regardless of looking the other way.
“Biden’s in Asia right now. Wonder what drugs they give him on these long flights.”
Probably sleeping meds as he isn’t required at the meetings.I have no love for Musk but this is familiar ground ” The incident, which took place in 2016, is alleged in a declaration signed by a friend of the attendant and prepared in support of her claim. The details in this story are drawn from the declaration as well as other documents, including email correspondence and other records shared with Insider by the friend.”
A friend? Even if it isn’t more gaslighting does it mean the twatter followers are suddenly real?
Message: Don’t f#@k with the controllers!@dbentonsmith
Yes it did! All things headed toward singularity? Just the way TPTB want it. So long as they get to describe the singularity.
P.S. (Had to throw in another acronym for fun!)DBS not bad and sorry for all the acronyms. MIC= military industrial complex APC= armoured personal carrier. The rest are what I meant.
Micheal R that is some crazy shit that some of us seen coming as well, but this is a little further along than one would hope considering the lag time for most.This one is something!
Yuval Harari is considered to be a brilliant futurist by Klaus Schwab.
Listening to him is like getting a glimpse into how these Globalists think. Theirs is a vision of the world that is entirely materialistic, mechanistic and utterly devoid of all heart and soul.Yuval Noah Harari | What To Do With All of These Useless People?
Dr. D “What will happen? Where will we go? I’ll vote for “devolution”, “relocalization”, because they will have no energy, no power, and no legitimacy to tell anyone what to do.”
Legitimacy? TPTB haven’t any now and aren’t trying to change that opinion. I know most still seem to be hypnotized, I think that is wearing off now as well.
I’ve long said, (since the eighties at least), to any willing to listen that when the high return FF i.e. diesel start to show signs of diminishing that the plebes will have to go without first and long before the MIC runs out. If the supply is already tight and forecast to run near to out by mid century why would TPTB let the useless ones go to the movies in their new ICE vehicle while the tanks and APC’s can’t move? Look back, way back, the peasants didn’t have work horses but the knights of the realm had war horses to stomp the useless ones back in line. Farming is the same, all that food isn’t worth the diesel when most aren’t even with us anymore, or soon to be the dearly departed! A lot less diesel, fertilizer, farmland and water will be needed when the global population is somewhere between 200 million and one billion. I know those numbers sound unbelievable but if you start doing calculations on what is sustainable with what isn’t degraded beyond function one billion will be a challenge due to numerous issues that have already been created and will be with the planets surface for some time to come.
