Jun 132023

Edward Hopper The Circle Theater, New York 1936


Joe And Hunter Biden Caught On 17 Recordings With Burisma Owner (WE)
Comer Says Will View Additional FBI Documents on Possible Biden Crimes (Sp.)
The Democrats Versus Trump: A Bad Horror Movie? (Ron Paul)
Donald Trump’s Indictment Case has a Looming 2024 End Date (Turley)
Trump Promises “Final Battle” To “Demolish The Deep State” (SN)
We’re Not Finished (Jim Kunstler)
‘Cynical’ Ukrainian Counteroffensive Takes ‘Horrific’ Casualties (Tweedie)
Ukraine’s Counteroffensive To Last For Weeks Or Months – Macron (TASS)
Americans in Pain (Mazzarino)
Fox Sends Tucker Carlson Cease-and-Desist Letter (Axios)
Debt Crisis Was Bipartisan Excuse to ‘Cut Social Spending,’ Not Defense Budget (Sp.)
How The BRI Train Took The Road To Shangri-La (Pepe Escobar)
US Attempts ’Divide and Conquer’ Strategy Against BRICS (Pepe Escobar)





Oliver Stone





Ed Dowd





Sy Hersh Zelensky Embezzling $400 Million from US






Blood clots





Insurance policy.

Joe And Hunter Biden Caught On 17 Recordings With Burisma Owner (WE)

A top Senate Republican revealed Monday that an FBI informant said the Ukrainian oligarch involved in an alleged “criminal bribery scheme” with Joe and Hunter Biden also claimed to have 17 recordings of his conversations with the president and his son. Sen. Chuck Grassley (R-IA) revealed on the Senate floor that a largely unredacted version of the bureau’s FD-1023 confidential human source form said that “the foreign national who allegedly bribed Joe and Hunter Biden allegedly has audio recordings of his conversations with them — 17 such recordings.” The Republican senator said, “These recordings were allegedly kept as a sort of insurance policy for the foreign national in case he got into a tight spot.”

Mykola Zlochevsky, the Ukrainian owner of Burisma, was the “foreign national” involved in the alleged “criminal bribery scheme” detailed in the FBI form, and Zlochevsky referred to Joe Biden as the “big guy” during a conversation several years before the June 2020 date of the bureau document, according to sources familiar with the FBI record who described its contents to the Washington Examiner. Grassley added Monday that, according to the FD-1023, “the foreign national possesses 15 audio recordings of phone calls between him and Hunter Biden” and “two audio recordings of phone calls between him and the-Vice President Joe Biden.” The senator also said the FBI record “also indicates that then-Vice President Joe Biden may have been involved in Burisma employing Hunter Biden.”

The U.S. Attorney’s Office in Delaware is handling the ongoing federal criminal investigation into Hunter Biden. It is allegedly up to U.S. Attorney David Weiss, a Trump-appointed holdover, to decide whether to indict the president’s son. In February 2021, Joe Biden asked all Senate-confirmed U.S. attorneys appointed by Trump for their resignations, with Weiss a rare exception. “What is U.S. Attorney Weiss doing with respect to these alleged Joe and Hunter Biden recordings that are apparently relevant to the high-stakes bribery scheme?” Grassley asked Monday. Sources previously told the Washington Examiner that the Burisma owner discussed an alleged bribe of $5 million to Joe Biden and of $5 million to Hunter Biden, according to the paid FBI informant who said he heard this from Zlochevsky. The sources said Zlochevsky said he believed it would be difficult to unravel the alleged bribery scheme for at least 10 years because of the number of bank accounts involved.


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“Now, the FBI has told me there are more 1023 forms. I will be granted access to these additional docs..”

Comer Says Will View Additional FBI Documents on Possible Biden Crimes (Sp.)

US House Oversight Committee Chair James Comer said on Monday that he will be granted access to additional FBI documents that contain allegations of potential criminal activity by President Joe Biden in his previous capacity as vice president. Earlier this month, lawmakers on the Oversight Committee were granted access to an FD-1023 form, which is used by the FBI to record information from confidential human sources, that alleged then-US Vice President Joe Biden engaged in a bribery scheme involving a foreign national. “Now, the FBI has told me there are more 1023 forms. I will be granted access to these additional docs,” Comer said in a statement via Twitter. The document alleges that the president and his son Hunter received a total of $10 million to help end a probe into Ukrainian energy industry holding company Burisma, US Congresswoman Marjorie Taylor Greene said last week.

The head of Burisma purportedly told the FBI’s confidential source that the executive retained evidence of the payments to Joe and Hunter Biden, Greene said, characterizing the alleged actions as a “political bribery pay-to-play scheme.” There were two footnotes in the FD-1023 form made accessible to lawmakers that referenced other 1023s, Comer said on Sunday in an interview with Fox News. “There are a lot more of these than what the federal government wants to admit, and the question is, why hasn’t the federal government done anything about it?” Comer said. Biden called the allegations of a bribery scheme involving Burisma “a bunch of malarkey,” when asked about the situation on Thursday.

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“Democrats were furious that Trump was less than enthusiastic about their plans to use Ukraine as a proxy to go to war with Russia.”

The Democrats Versus Trump: A Bad Horror Movie? (Ron Paul)

The Democrats and Donald Trump reminds me of a bad horror movie, where the hapless protagonists only make the monster stronger with each attempt to eliminate it. So goes the Democrats’ endless attempts to finally rid America of the “scourge” of Donald Trump. Thanks to the Durham Report we now know they started even before Trump was elected president. Hillary Clinton’s campaign – with the full knowledge of the candidate and the sitting president, Barack Obama – cooked up a “dirty trick” to portray Trump as an agent of Russia in their effort to deny Trump the White House. When that didn’t work they weaponized the FBI, CIA and the rest of the “deep state” to undermine and hobble his presidency. They spied on Trump and his campaign staff using false information manufactured by the FBI.

When that didn’t work they impeached him under the false charge that he sought foreign assistance for his 2020 re-election bid. This time a spy, in the person of NSC staffer Alexander Vindman, was sent to listen in on Trump’s phone call with Ukrainian president Zelensky and then make all manner of false charges against Trump based on it. Democrats were furious that Trump was less than enthusiastic about their plans to use Ukraine as a proxy to go to war with Russia. Vindman, though an active-duty US military officer, was of Ukrainian background and was loyal to the country of his origin rather than the country of his citizenship. He also openly defied the military chain-of-command and his commander-in-chief. Trump’s lack of enthusiasm for their “Project Ukraine” infuriated Vindman and he sought his revenge against the US President.

When that didn’t work they impeached Trump again over the false charge that he led an “insurrection” against the US government on January 6, 2021. The more surveillance video we see of this “insurrection,” the more it looks like a false-flag operation cooked up perhaps by Nancy Pelosi and the rest of the Washington swamp to finally be rid of Trump. Hundreds of political prisoners have been held in solitary confinement on false accusations that they tried to overthrow the US government. When that didn’t work and Trump’s re-election numbers looked more and more favorable while Biden’s approval rating continued to linger in the political basement, the Democrats have now indicted him over some classified documents apparently discovered in his residence in Florida.

[..] Suddenly Donald Trump, who polling suggests would obliterate Joe Biden in a fair US election, faces 100 years in prison! Where else would you see the head of one political party arrest his main political opponent on cooked up charges? A banana republic! For those of us who love this country, it is truly shocking to see this abuse of power. But there’s one thing these dirty tricksters never seem to understand: the more false evidence and false charges they cook up against Trump, the stronger Trump becomes. With these outrageous and continuous attacks on Trump, the Democratic Party (and plenty of Republicans) has lost all credibility. When this plan fails, and it will, I am afraid to think what they might try next.

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“..this is a prosecution entirely removed from recent history..”

Donald Trump’s Indictment Case has a Looming 2024 End Date (Turley)

When Special Counsel Jack Smith walked before cameras on Friday after the release of the Trump 44-page indictment against former President Donald Trump, he started with arguably his most difficult case to make. He declared “we have one set of laws in this country and they apply to everyone.” After years of scandal and documented political bias by key Justice officials, the line likely left many skeptical, assuming many were even watching. The indictment was clearly a pitch to the public that this is a prosecution entirely removed from recent history. We’re also meant to not think about the fact that the Biden Administration is charging the leading candidate opposing him in the upcoming election.

This indictment has merit, but the Justice Department lost the right to expect trust from the citizens years ago — long before the damning Inspector General’s Report and the recent report of Special Counsel John Durham. To make matters worse, the same suspects have surfaced to celebrate Trump’s expected demise — and remind the public of the perceived double standard in Washington. Peter Strzok, the FBI special agent who was fired over his anti-Trump bias in the Russian collusion investigation, cheered the indictment by tweeting a photo of handcuffs with Trump’s image. Strzok seems to think that it is a good thing for Smith to remind everyone of how he promised his colleague and lover Lisa Page that she did not have to worry about Trump being elected because they had an “insurance policy” to “stop it.”

Hillary Clinton went on social media to hawk her line of merchandize mocking the case against her for storing classified material on her personal server and then destroying tens of thousands of emails sought by the Congress. She sent out a picture mocking Trump while wearing her “But Her Emails” hat. With millions of Americans wondering why Trump is being charged but Clinton was given a pass, Clinton decided to do a victory lap. And hey, why not: James Comey is back. [..] In April, Trump pleaded not guilty to 34 felony counts brought by Manhattan District Attorney Alvin Bragg related to hush money payments made to porn star Stormy Daniels prior to the 2016 election. Nevertheless, Comey chose this month to declare that, in the 2024 election, “it has to be Joe Biden.” For critics, that is consistent with his views and actions before he was fired as FBI director.

After Trump was indicted in a raw political prosecution in New York, Comey also went public to declare it a “good day.” So in the court of public opinion, past history and hypocrisy may mean that few are swayed about whether they back Trump or not. Which leaves the criminal court. This indictment has some devastating elements, including an audiotape in which Trump tells two visitors about a highly classified attack plan on Iran while admitting that it remained classified. That tape directly contradicts his past claims of declassification and suggests that Trump was using the document as a type of trophy. There are also damaging statements from former staff and counsel alleging that Trump actively sought to conceal documents. Smith is now left in a battle not with Trump but time.

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He already had 4 years to do it.

Trump Promises “Final Battle” To “Demolish The Deep State” (SN)

During a speech in North Carolina this past weekend, President Trump promised to “demolish the deep state” in what will be “a final battle.” “We are a failing nation. We are a nation in decline. And now these radical left lunatics want to interfere with our elections by using law enforcement. It’s totally corrupt and we can’t let it happen,” Trump told the crowd. “This is the final battle,” he further urged, adding “With you at my side, we will demolish the Deep State, we will expel the warmongers from our government, we will drive out the globalists, we will cast out the communists, we will throw off the sick political class that hates our country.” Trump continued, “We will roll out the fake news media, we will expose the RINOs for what they are, we will defeat Joe Biden and we will liberate America from these villains once and for all.” “We’re going to liberate our country. The silent majority is rising, and under our leadership, the forgotten man or woman will never be forgotten again,” Trump vowed.

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“..what is so striking in Mr. Kennedy’s performance so far is an absence of fakery. It’s more than refreshing, it’s… startling..”

We’re Not Finished (Jim Kunstler)

[..] we need somebody to steer. Mr. Trump has volunteered to try doing it again. The first time, forces in every quarter of American power set out to bushwhack, sandbag, harass, hector, and hound him. In the process, they just about destroyed the rule of law. Then they simply dis-elected him surreptitiously, something you’re not supposed to say, but there it is, like so much meat on the table. Now they’re trying to hoo-rah him into jail. Whatever you think of his, er, complex personality, you must admire his perseverance through adversity. If he somehow manages to wriggle through the present obstacle course of Lawfare chicanery, his next term would be an extravaganza of retribution. The spectacle would provide much satisfaction but, in the end, it would just be a sideshow, and it is not the same thing as taking care of business.

“Joe Biden,” of course, the man who is not really even there, is only pretending to run for reelection, or at least a coterie around the Oval Office is pretending for him while they try to figure out what to do. They’re in an awful quandary. They hold all the levers of power and they have no other credible candidate, not a living soul, in their own official hatchery. Outside of that ghastly edifice, Robert F. Kennedy is making a determined flanking move, an end-run near the sidelines. The Democratic Party in all its florid and mendacious lunacy is pretending to not notice him, especially their praetorian news media that is the vector for America’s mass mental illness. Mr. Kennedy put it so simply in April when he announced a run to preside over the stupendous mess that is our government.

He said his mission is an experiment to see what happens when you tell Americans the truth. Hold that thought. How long has it been since you thought anything like that was possible? There’s a broad-based assumption across the land, derived from our fading prime artform, the movies, that Americans can’t handle the truth. Like so much else in our national life, that is probably erroneous… fake truth. And what is so striking in Mr. Kennedy’s performance so far is an absence of fakery. It’s more than refreshing, it’s… startling. Makes you blink, a little bit. Makes you remember what it’s like to not be lied-to incessantly. Makes you want to see more of it because it gives you strength when you thought you were finished. Get this now: our world is changing, and deeply, but we’re not finished.

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“..right now the strategy that the Kiev regime appears to be using to clear the minefields is over the vehicles and bodies of its territorial defense units..”

‘Cynical’ Ukrainian Counteroffensive Takes ‘Horrific’ Casualties (Tweedie)

The Kiev regime appears to be cynically throwing men and machines against solid Russian defenses — but all may not be as it seems, a military commentator says. One week into the Ukrainian counteroffensive and the Ukrainian army has already lost thousands of casualties, along with up to 15 of the vaunted German Leopard 2 tanks, 13 M2 Bradley infantry fighting vehicles (IFVs) supplied by the US and five of the French AMX-10 RC light tanks. Security Analyst Mark Sleboda told Sputnik that Ukraine’s military chiefs were to blame for sending their troops into the killing fields. “Currently there is fighting along pretty much every line of engagement between Russia and Ukraine right now, except for the Kherson area where the recent flooding has made combat impossible,” Sleboda noted.

He said the Kiev regime was sending troops forward in NATO-supplied IFVs and armoured personnel carriers (APCs), supported by tanks and artillery — including US-made HIMARS rocket launchers. “But they’re doing it into echelon to Russian defenses that have been formed over months,” Sleboda stressed. “Five layers of defense, trenches, concrete fortifications, pillboxes, bunkers, tank obstacles like dragon’s teeth.” But he said that most significant was that Russian forces had “created mazes of minefields” which have taken a significant toll on attacking Ukrainian vehicles. “[..] it sounds rather cynical, but right now the strategy that the Kiev regime appears to be using to clear the minefields is over the vehicles and bodies of its territorial defense units,” Sleboda said. “And the horrific casualties that are resulting from this are pretty high.”

He said the Ukrainian plan right now appeared to be based on “hoping to punch a hole in the line somewhere.” “And then presumably a very large reserve force, supported by a the majority of the western main battle tanks, will seek to exploit that,” Sleboda ventured. “But then even so, to make it even through one line of defense and to face several lines more, each actually progressively more significant than the others, It seems a very bad situation.” But the security expert warned against complacency on the Russian side, saying he expected “something more cunning” from the Ukrainian armed forces.

“Once the waters recede from the destruction of the Kakhovka dam, I expect some kind of multiple pronged attack, including amphibious assaults against a lower Kakhovka reservoir towards Energodar and the Zaporozhye nuclear power plant,” he said. “But I would presume that Russia is also prepared to defend that there as well.” “NATO has been wargaming this out for half a year. This is the most hyped, announced offensive in world history,” Sleboda stressed. “I’m expecting that there has to be a curveball. It can’t be this straight up playing exactly into Russia’s defenses. There’s going to be something. We just haven’t seen it yet.”

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We want peace, but first we want to kill some more people…

Ukraine’s Counteroffensive To Last For Weeks Or Months – Macron (TASS)

Ukraine’s counteroffensive will last for several weeks or months and France hopes that it will help create conditions for future peace talks, French President Emmanuel Macron told a news conference on Monday. “Ukraine’s counteroffensive began several days ago. It has been thoroughly planned,” he said. “This counteroffensive will last for several weeks or months. We did our best to help it happen within the frames outlined by us since the conflict beginning: to punish Russia in order to stop its military effort, to help Ukraine resist and win back its territory, but to never attack Russia and avoid any forms of escalation of this conflict.”

He reiterated commitment to the long-term support for Kiev and expressed the hope that the Ukrainian army’s offensive operations will be successful as “the transition to the phase of talks in favorable conditions” will depend on that. “It is clear today that Ukraine will not be conquered, that the only peace that is acceptable today is the one which is based on international law and the sovereign choice of the Ukrainian people,” he stressed. “Our enduring support for Ukraine must continue for a long time, be it political, military, economic, humanitarian assistance or assistance linked with [Ukraine’] restoration.”.

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“it’s easy enough not to meet stressed-out military service members and their families..”

Americans in Pain (Mazzarino)

America’s War on Terror, launched in response to the September 11, 2001, attacks on the World Trade Center and the Pentagon, has had a staggering impact on our world. The Costs of War Project at Brown University, which I helped found, paints as full a picture as possible of the toll of those “forever wars” both in human lives and in dollars. The wars, we estimate, have killed nearly one million people, including close to 400,000 civilians in Afghanistan, Iraq, and Pakistan alone. Worse yet, they sickened or injured several times more than that — leading to illnesses and injuries that, we estimate, resulted in millions of non-battlefield deaths. And don’t forget that those figures include dead and wounded Americans, too. Most of us, however, have little awareness of any of this.

If you live outside the archipelago of American military bases that extends across this country and the planet — an estimated 750 of them outside the U.S. on every continent except Antarctica — it’s easy enough not to meet stressed-out military service members and their families. It’s easy enough, in fact, not to grasp just how America’s wars of this century rippled out to touch military communities. In recent times, those bases have become ever more difficult for the public to enter and often aren’t close to the cities where so many of us live. All of this means that, if you’re a civilian, the odds are you haven’t met the grieving spouses of the soldiers who never came home or the shaken children of the ones who did, forever changed, sometimes with amputated limbs or post-traumatic stress disorder (PTSD). I’m thinking of the ones with those far-off gazes and the pain they have to deal with in their heads, their limbs, their backs.

Personally, I find it overwhelmingly hard to write about such human-shaped holes in our disturbed world. That’s probably why the Costs of War Project has a 35-person (and counting) team of journalists, physicians, social scientists, and other experts to portion out the research and the pain that goes with it as they deal with the fact that the monumental death and injury counts they’ve produced are likely to be underestimates.

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“Tucker will not be silenced by anyone … He is a singularly important voice on matters of public interest in our country, and will remain so.”

Fox Sends Tucker Carlson Cease-and-Desist Letter (Axios)

Fox News has sent a cease-and-desist letter to Tucker Carlson as he ramps up a competing series on Twitter that drew a combined 169 million views for its first two episodes, Axios has learned. The contract battle between Fox and its former top host — who was taken off the air in April, after the network’s historic Dominion settlement — has mighty repercussions for the conservative media ecosystem. With “Tucker on Twitter,” Carlson and his growing production team are working to elevate Elon Musk’s social media site as a news platform. Fox is continuing to pay Carlson, and maintains that his contract keeps his content exclusive to Fox through Dec. 31, 2024. Carlson is making a First Amendment argument for posting on Twitter, and asserts that Fox has committed material breaches of his contract.

Carlson’s first two Twitter episodes were straight-to-camera monologues. He plans to keep iterating with longer, more varied episodes and the addition of guests, Axios is told. Justin Wells, Carlson’s executive producer, tweeted yesterday: “Next Episode of Tucker on Twitter coming Tuesday: Tucker’s response to the indictment of President Donald Trump. Harmeet Dhillon, a lawyer who represents Carlson along with Bryan Freedman, said in a statement to Axios: “Fox News continues to ignore the interests of its viewers, not to mention its shareholder obligations.” “Doubling down on the most catastrophic programming decision in the history of the cable news industry, Fox is now demanding that Tucker Carlson be silent until after the 2024 election,” the statement continued. “Tucker will not be silenced by anyone … He is a singularly important voice on matters of public interest in our country, and will remain so.”

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“Biden wants a free hand to continue to give billions every week to finance the Ukraine proxy war, and he’s got that free hand now..”

Debt Crisis Was Bipartisan Excuse to ‘Cut Social Spending,’ Not Defense Budget (Sp.)

Democrats and Republicans have used the recent debt ceiling stand-off as a pretext for cutting social spending while inflating the military budget. The latest threat of a US Treasury default due to wrangling over the budget between the Democrat-held White House and Republican-controlled Congress has been averted after House of Representatives Speaker Kevin McCarthy and President Joe Biden struck a deal on limited spending cuts. But economist Dr. Jack Rasmus told Sputnik that poverty alleviation programs were the casualty of that battle, while the Pentagon’s budget emerged unscathed and even boosted. “You’ve got to understand that both Democrats and Republicans, a majority of them in Congress, liked the debt ceiling situation because it allows them to put pressure on social programs’ spending,” Rasmus said.

“You know, defense spending is never affected by these deals. That always goes through. You can see it in this deal here, 11 percent in the first year increase in the Pentagon budget alone, not the other defense spending.” But the saga and its outcome was nothing new in Washington DC, the academic pointed out. “You go back to Obama in 2011, last time we had this, and the defense spending increase just blew right through. It had no effect. They only cut a trillion dollars out of social programs spending.” However, the Democratic leadership will be happy as the final budget deal does nothing to rein in their pet project of arming the Kiev regime for a proxy conflict with Russia.

“Biden wants a free hand to continue to give billions every week to finance the Ukraine proxy war, and he’s got that free hand now,” Rasmus said. “And both sides never even made an effort to do any cuts here on the defense side. So Biden got his blank check for raising Pentagon and war spending and financing Ukraine. And the Republicans got all the rest. “So Democrats got what they wanted, at least the corporate Democrats running the party. And the Republicans got a you know, a big bite of the apple of cutting social spending,” he added. “And they’re going to get another bite here when it comes later in the year for passing the budget for the next year.”

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“..the US/NATO proxy war against Russia in Ukraine is simultaneously a war designed to interrupt the progress of China’s Belt and Road Initiative (BRI)..”

How The BRI Train Took The Road To Shangri-La (Pepe Escobar)

It is important to recognize that the US/NATO proxy war against Russia in Ukraine is simultaneously a war designed to interrupt the progress of China’s Belt and Road Initiative (BRI). As we approach the 10th anniversary of the BRI, to be marked by the third Belt and Road Forum later this year in Beijing, it is clear the original Silk Road Economic Belt – announced by President Xi Jinping in Astana, Kazakhstan, in September 2013 – has traveled a long way. By January this year, 151 nations had already signed up to the BRI: No less than 75 percent of the world’s population that represents more than half of the global GDP. Even an Atlanticist outfit such as the London-based Center for Economic and Business Research admits that the BRI may increase global GDP by a whopping $7.1 trillion a year by 2040, dispensing “widespread” benefits.

Included in the Chinese Constitution since 2018, BRI constitutes the de facto overarching Chinese foreign policy framework all the way to 2049, marking the centenary of the People’s Republic of China. The BRI advances along several overland connectivity corridors – from the Trans-Siberian to the “middle corridor” along Iran and Turkiye and the China-Pakistan Economic Corridor (CPEC) all the way to the Arabian Sea. Meanwhile, on the waterways front, the Maritime Silk Road offers a parallel network from southeast China to the Persian Gulf, the Red Sea, the Swahili Coast, and the Mediterranean Sea. All that is mirrored by the Russian-driven Northern Sea Route, connecting the eastern and western sides of the Arctic, and reducing to and fro sailing time from Europe to Asia from one month to less than two weeks.

Such a massive Make Trade Not War project, centered on connectivity, infrastructure building, sustainable development, and diplomatic acumen – focusing on the Global South – could not but be interpreted by western elites as a supreme geopolitical and geoeconomic threat. And that’s why every geopolitical turbulence across the chessboard is directly or indirectly linked to BRI. Including Ukraine.

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Meeting without Russia.

US Attempts ’Divide and Conquer’ Strategy Against BRICS (Pepe Escobar)

Something extraordinary, at least on the surface, happened on the sidelines of the Shangri-La Dialogue in Singapore earlier this month – a somewhat pompous affair self-described as “Asia’s premier defense summit”. Intel heads of 24 nations met in de facto semi-secrecy, because in the end the event was duly leaked (Western spin qualified it as an “informal” meeting). Among the 24, the real deal comprised the US and all the other Five Eyes, plus representatives of two BRICS members, China and India. All the others were not identified with certainty or preferred to remain anonymous – presumably due to their “hanger on” status. Crucially, key BRICS member Russia was not represented. Reuters swore the information about the not-so-secret gathering came from five different – unnamed – sources.

A Southeast Asian diplomat independently confirmed the presence of the Five Eyes, China, India and Singapore – and that was it. The de facto sponsor of the meeting was Singapore’s Ministry of Defense. Things gets curioser and curioser when we examine the leak a bit closer. So many sources basically corroborating each other point to a concerted spin – practically on an official level. If this was meant to be really secret, as in the past, that would have been the case, with every involved lip conveniently sealed. So why leak it? Such spy vs. spy meetings, historically, take ages to prepare, especially one involving 24 nations and featuring superpower rivals US and China. That implies countless qualified sherpas redacting documents; very complicated logistics; an ultra-secure environment; and an extremely detailed script covering every intervention.

All of that must have been discussed in excruciating detail for months, side by side with putting together the larger agenda for the Shangri-La Dialogue: and all the while there were no leaks. And then what was leaked, after the meeting, was just that it happened. With only selected participating players fully identified. There’s absolutely nothing on substance. It beggars belief that the Five Eyes would openly discuss Western security fears and/or procedures openly with the Chinese, not to mention the other minor hangers-on. After all the Beijing leadership is fully aware the US-UK is engaged in full hybrid war against China, with the Five Eyes and containment mechanisms such as Quad and AUKUS in tow. The main reason for the leak is a dead giveaway when we see what US Think Tankland is spinning: the US was talking security with China and India behind Russia’s back. Translation: the US is trying to undermine the BRICS and the Shanghai Cooperation Organization (SCO) from the inside.

This is purely wishful thinking – because no one knows anything about the substance of the discussions. The meat of the matter was not leaked on purpose. The dead giveaway about the leak being engineered to undermine the BRICS – at least in the Western public sphere – would have to come from the usual suspects themselves: US think tanks, inserted in what the indispensable Ray McGovern, a former CIA analyst, christened as MICIMATT (Military-Industrial-Congressional-Intelligence-Media-Academia-Think Tank complex).

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Octopus moonwalk



Cookie monster



The South Philippine Dwarf Kingfisher was first described 130 years ago and has eluded scientists for over 100 years because of its behavior. Thanks to Miguel David De Leon we get a glimpse of the beautiful bird that is sadly threatened with extinction





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Mar 022017
 March 2, 2017  Posted by at 10:13 am Finance Tagged with: , , , , , , , ,  2 Responses »

DPC League Island Navy Yard, Philadelphia. USS Brooklyn spar deck 1898


Trump Will Create a Debt Crisis Like Never Before – David Stockman (Fox)
The End Of A 100 Year Global Debt Super Cycle Is Way Overdue (EC)
US Personal Income Climbs 0.4% In January, More Than Expected (RTT)
US Real Personal Spending Crashes Most Since 2009 (ZH)
Will Trump Build A Wall Protecting US Banks From Global Rules? (Davies)
Once Again, Trump Succeeded Where He Was Supposed To Fail (WaPo)
Greece’s Latest Drama Imperils Banks’ Baby Steps Toward Recovery (BBG)
Juncker: Greek Prime Minister Loves Me Deeply, And So Do Greeks (KTG)
Jean-Claude Juncker Sets Five Paths For EU’s Future (BBC)
They Really Knew How to Do Populist Revolts in 1672 (BBG)
World’s Oldest Fossils -4 Billion Years- Found In Canada (G.)
Overfishing Wipes Out 90% Of Caribbean Predatory Fish (DM)



I think Trump should start inviting Dave over to the White House. You know, just listen. Reagan’s budget director knows how things work.

Trump Will Create a Debt Crisis Like Never Before – David Stockman (Fox)

While President Trump is expected to tout his administration’s accomplishments one month into his term during a speech before a joint session of Congress Tuesday night, former Reagan Budget Director David Stockman said he doesn’t see much progress being made. “I’ve thrown in the towel because he’s not paying attention and he’s not learning anything and he’s making ridiculous statements,” Stockman told the FOX Business Network’s Neil Cavuto. During the address, Trump is expected to talk about the new budget blueprint, which Stockman said doesn’t add up. “We don’t need a $54 billion increase in defense when the budget already is ten times bigger than that of Russia. We don’t need $6 trillion of defense spending over the next decade because China is going nowhere except trying to keep their Ponzi scheme together.”

President Trump will also talk about the GOP replacement for Obamacare. Stockman said he wasn’t sold on Speaker Ryan’s plan. “If you look at the Ryan draft that came out over the weekend, it’s basically Obamacare-like. It’s not really repealing anything,” he said. “It’s basically reneging and turning the Medicaid expansion into a block grant, turning the exchanges into tax credits [and] it’s still going to cost trillions of dollars.” Last week, Trump’s Treasury Secretary Steven Mnuchin, told FOX Business the administration is “focused on an aggressive timeline” to produce a tax reform plan by August, but in Stockman’s opinion, tax reform won’t happen this year. He also warned that the administration’s run up against the debt ceiling this summer could lead to a debt crisis. “I don’t think we will see the tax cuts this year at all,” he said. “There is going to be a debt ceiling crisis like never before this summer and that’s what people don’t realize. They’ve burned up all the cash that Obama left on the balance sheet for whatever reason.”

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“..the question is not what could go wrong since it is guaranteed that all these liabilities will implode at some point. And when they do, it will bring misery to the world of a magnitude that no one could ever imagine.”

The End Of A 100 Year Global Debt Super Cycle Is Way Overdue (EC)

Central banks are designed to create debt, and since 1913 the U.S. national debt has gotten more than 6800 times larger. But of course it is not just the United States that is in this sort of predicament. At this point more than 99% of the population of the entire planet lives in a nation that has a debt-creating central bank, and as a result the whole world is drowning in debt. When people tell me that things are going to “get better” in 2017 and beyond, I find it difficult not to roll my eyes. The truth is that the only way we can even continue to maintain our current ridiculously high debt-fueled standard of living is to grow debt at a much faster pace than the economy is growing. We may be able to do that for a brief period of time, but giant financial bubbles like this always end and we will not be any exception.

Barack Obama and his team understood what was happening, and they were able to keep us out of a horrifying economic depression by stealing more than nine trillion dollars from future generations of Americans and pumping that money into the U.S. economy. As a result, the federal government is now $20 trillion in debt, and that means that the eventual crash is going to be far, far worse than it would have been if we would have lived within our means all this time. Corporations and households have been going into absolutely enormous amounts of debt as well. Corporate debt has approximately doubled since the last financial crisis, and U.S. consumers are now more than $12 trillion in debt. When you add all forms of debt together, America’s debt to GDP ratio is now about 352%. I think that the following illustration does a pretty good job of showing how absolutely insane that is…

If your brother earns $100,000 in annual income and borrowed $10,000 on his credit card, he could consume $110,000 worth of stuff. In this example, his debt to his personal GDP is just 10%. But what if he could get more credit year after year and reached a point where his total debt reached $352,000 but his income remained the same. His personal debt-to-GDP ratio would now be 352% If he could borrow at super low interest rates, maybe he could sustain the monthly loan payments. Maybe? But how much more could he possibly borrow? What lender would lend him more? And what if those low rates began to rise? How much debt can his $100,000 income cover? Essentially, he has reached the end of his own debt cycle.

The United States is certainly not alone in this regard. When you look all over the industrialized world, you see similar triple digit debt to GDP figures. When this current debt super cycle ultimately ends, it is going to create economic pain on a scale that will be unlike anything that we have ever seen before. The following comes from King World News…

“That is the inevitable consequence of 100 years of credit expansion from virtually nothing to $250 trillion, plus global unfunded liabilities of roughly $500 trillion, plus derivatives of $1.5 quadrillion. This is a staggering total of $2.25 quadrillion. Therefore, the question is not what could go wrong since it is guaranteed that all these liabilities will implode at some point. And when they do, it will bring misery to the world of a magnitude that no one could ever imagine. It is of course very difficult to forecast the end of a major cycle. As this is unlikely to be a mere 100-year cycle but possibly a 2000-year cycle. It is also impossible to forecast how long the decline will take. Will it be gradual like the Dark Ages, which took 500 years after the fall of the Roman Empire? Or will the fall be much faster this time due to the implosion of the biggest credit bubble in world history? The latter is more likely, especially since the bubble will become a lot bigger before it implodes.”

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The next two items struck me as a combination: income goes up (take that with a truckload of salt), but spending goes down. Confidence indicator?!

US Personal Income Climbs 0.4% In January, More Than Expected (RTT)

While the Commerce Department released a report on Wednesday showing a slightly bigger than expected increase in U.S. personal income in the month of January, the report also showed that personal spending rose by less than expected. The report said personal income climbed by 0.4% in January after rising by 0.3% in December. Economists had been expecting another 0.3% increase. Disposable personal income, or personal income less personal current taxes, rose by 0.3% for the second straight month. Real spending, which is adjusted to remove price changes, actually fell by 0.3% in January after rising by 0.3% in December. With income rising faster than spending, personal saving as a percentage of disposable personal income ticked up to 5.5% in January from 5.4% in December. A reading on inflation said to be preferred by the Federal Reserve showed that core consumer prices were up 1.7% year-over-year in January, unchanged from the previous month.

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What made Americans stop spending? I thought Trump made them feel so good?

US Real Personal Spending Crashes Most Since 2009 (ZH)

While the key number analysts were looking for in today’s Personal Spending data was the PCE Price Index, both headline and core, which rose by 1.9% and 1.7% respectively, the latter coming in as expected, just shy of the Fed’s 2.0% inflation target, the internals on US incomes and spending were just as notable. Here, the silver lining of a rise in incomes (+0.4% MoM vs +0.3% exp) was dashed by a disappointingly slow growth in spending (+0.2% vs +0.5% prev). With incomes rising more than spending, the savings rate predictably ticked up from multi year lows, rising from 5.4% to 5.5% in January.

On the income side, the increase in personal income was almost entirely from service-producing industries wages, which increased by $22.5BN, while Goods-producing was higher by just $4 billion. Additionally, Social Security transfer benefits added another $9 billion. However, for the ‘average joe’, facing a rising cost of goods, real personal spending plunged 0.3% in January: the biggest drop since September 2009.

Finally, as a result of surging inflation, and disposable incomes suddenly unable to keep up, the real annual growth in disposable income per capita fell to just 1.5%, the weakest in over 3 years and a red flag for those calling for another renaissance for US consumers.

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It’s about the Fed.

Will Trump Build A Wall Protecting US Banks From Global Rules? (Davies)

As President Trump struggles to staff his administration with sympathisers who will help transpose tweets into policy, the exodus of Obama appointees from the federal government and other agencies continues. For the financial world, one of the most significant departures was that of Daniel Tarullo, the Federal Reserve governor who has led its work on financial regulation for the last seven years. It would be a stretch to say that Tarullo has been universally popular in the banking community. He led the charge in arguing for much higher capital ratios, in the US and elsewhere. He was a tough negotiator, with a well-tuned instinct for spotting special pleading by financial firms. But crocodile tears will be shed in Europe to mark his resignation.

European banks, and even their regulators, were concerned by his enthusiastic advocacy of even tougher standards in Basel 3.5 (or Basel 4, as bankers like to call it), which would, if implemented in the form favoured by the US, require further substantial capital increases for Europe’s banks in particular. In his absence, these proposals’ fate is uncertain. But Tarullo has also been an enthusiastic promoter of international regulatory cooperation, with the frequent flyer miles to prove it. For some years, he has chaired the Financial Stability Board’s little-known but important Standing Committee on Supervisory and Regulatory Cooperation. His commitment to working with colleagues in international bodies such as the FSB and the Basel Committee on Banking Supervision, to reach global regulatory agreements enabling banks to compete on a level playing field, has never been in doubt.

Already, some of those who criticised him most vocally in the past are anxious about his departure. Who will succeed him? The 2010 Dodd-Frank Act created a vice-chair position on the Federal Reserve Board – which has never been filled – to lead the Fed’s work on regulation. Will that appointee, whom Trump now needs to select, be as committed as Tarullo to an international approach? Or will his principal task be to build a regulatory wall, protecting US banks from global rules? We do not yet know the answers to these questions, but Fed watchers were alarmed by a 31 January letter to Fed chair Janet Yellen from Representative Patrick McHenry, the vice-chairman of the House committee on financial services. McHenry did not pull his punches. “Despite the clear message delivered by President Donald Trump in prioritising America’s interest in international negotiations,” McHenry wrote, “it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability, or the authority to do so. This is unacceptable.”

In her reply of 10 February, Yellen firmly rebutted McHenry’s arguments. She pointed out that the Fed does indeed have the authority it needs, that the Basel agreements are not binding, and that, in any event, “strong regulatory standards enhance the stability of the US financial system” and promote the competitiveness of financial firms. But that will not be the end of the story. The battle lines are now drawn, and McHenry’s letter shows the arguments that will be deployed in Congress by some Republicans close to the president. There has always been a strand of thinking in Washington that dislikes foreign entanglements, in this and other areas. While Yellen’s arguments are correct, the Fed’s entitlement to participate in international negotiations does not oblige it to do so, and a new appointee might argue that it should not.

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Nice piece. What you see when you take a step back. And this is from WaPo.

Once Again, Trump Succeeded Where He Was Supposed To Fail (WaPo)

There’s a confusion at the heart of every presidential address to Congress. It’s supposed to be a grave occasion of solidarity around the principles of our shared republic, but it has the cheesy and disingenuous air of a campaign event. The address combines the solemnity of ceremony with mindless hyperpartisan hoopla — the shouting and booing, the symbolic gimmickry and, above all, the absurd tradition of signifying one’s agreement or displeasure by either standing to applaud or remaining seated after every phrase of the speech. The address is designed for a traditional Democratic or Republican president. He’s meant to embolden his party and browbeat the opposition, with a few light gestures at unity and consensus. His allies are supposed to look gleeful and applaud his every gesture; his opponents are supposed to sit glumly on their hands and show the nation that they, at least, aren’t engaging in this misguided hysteria.

The address is designed, in other words, for a more or less ideologically coherent speech. But Donald Trump, as everybody knows, doesn’t care about ideological coherence. His ideas don’t fall along recognizable philosophical lines, with the result that his audience of lawmakers, ready to boo or cheer in the usual ways, often seemed unsure how to respond. Once again, then, Trump succeeded in a setting where nearly everybody — including me — thought he would fail. The Democrats looked especially awkward. So much of their detestation of Trump arises not from policy differences but from horror at his gaucherie and bizarre rhetorical excesses. But none of that is relevant in a State of the Union-style address. Subtract the issues of Obamacare repeal, immigration and the president’s hard-line policies on domestic security — the latter two of which don’t lend themselves to clear ideological allegiances — and much of what Trump had to say could have been said by any Democratic president.

Even on the topic of health care, Trump offered several proposals that, taken on their own, most Democrats probably wouldn’t object to, hence making it rather difficult for them to do what they would have preferred to do, namely glower at the president’s let-them-eat-cake obstructionism. What were Democrats supposed to do when, for instance, Trump vowed “to make child care accessible and affordable, to help ensure new parents have paid family leave, to invest in women’s health, and to promote clean air and clear water, and to rebuild our military and our infrastructure”? I guess … we’ll applaud? Clap, clap? Republicans, meanwhile, found themselves applauding for something not very unlike President Obama’s stimulus plan of 2009. “To launch our national rebuilding,” Trump said, “I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States — financed through both public and private capital — creating millions of new jobs.”

I’m not sure what “financed through both public and private capital” means, but Trump’s jobs plan sounded to my ear like some socialist Five-Year Plan from the 1970s — making it all the more entertaining to watch congressional Republicans cheering like football fans who misheard the penalty call. I wonder if Tuesday night’s address was a kind of adumbration of Trump’s presidency — his adversaries deprived of half their reasons for hating him, his allies stupidly wondering what happened to their principles, the nation’s commentators once again explaining why the president succeeded when he was supposed to fail, and voters reluctantly appreciating this hyperactive agitator who — for all his problems — at least keeps things interesting.

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Give Greece full access to all European finance tools while it’s in the eurozone, or at some point it won’t be.

Greece’s Latest Drama Imperils Banks’ Baby Steps Toward Recovery (BBG)

Since the last eruption of Greece’s long-running crisis in 2015, banks in Europe’s most troubled economy have shored up capital, staunched losses and set up a plan to reduce their mountains of bad debt. Now, fresh tensions over the country’s bailout are putting that progress at risk. About 1.3% of deposits were pulled from the banks in January, while bad loans crept higher, an increase Bank of Greece Governor Yannis Stournaras blamed on borrowers using the deadlock with creditors as an excuse to avoid making their payments. Greek officials are meeting in Athens this week with representatives of the euro area and IMF to set out the policies Greece must undertake to unlock more loans. The government foresees an accord in March or early April, but the scale of pending issues raises concerns they may be politically hard to sell at home.

“The longer it takes for the impasse to be concluded, the more damaging it will be for the banks,” said Federico Santi, an analyst with Eurasia Group. The biggest lenders – Piraeus Bank, National Bank of Greece, Eurobank and Alpha Bank – made headway since 2015, when 26% of total deposits fled on concern Greece might abandon the single currency. That run was only halted when the banks were shut for three weeks, controls were placed on withdrawals and the movement of money abroad and Greece agreed to an €86 billion bailout, its third since 2010. A €14.4 billion recapitalization in November 2015 by the government-owned Hellenic Financial Stability Fund and private investors strengthened the banks’ balance sheets. The HFSF – funded through euro-area loans – remains the largest investor in all but one of the banks.

For the first time since 2010, three of the four are expected to report an annual profit when they announce results starting next week. Crucially, the banks are embarking on a three-year plan, overseen by regulators, to shrink their bad loans. [..] Until the banks begin offloading this bad debt, there’s scant chance they’ll be able to provide businesses with the credit they need to grow. “These NPLs are clogging the wheels of the entire economy,” said Paris Mantzarvas, an analyst at Athens-based Pantelakis Securities.

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“I’m the most popular European politician in Greece.”

Juncker: Greek Prime Minister Loves Me Deeply, And So Do Greeks (KTG)

European Commission President Jean-Claude Juncker said on Wednesday he is the most popular European politician in Greece during a joint press conference with European Parliament President Antonio Tajani in Brussels, following the presentation of the Commission’s “White Paper” on the future of the EU. Asked by a journalist why he does not comment on France’s domestic politics where presidential hopeful Marine Le Pen has announced a referendum for an exit from the EU if elected, when he had intervened dynamically against the position of Greek Premier Alexis Tsipras when he announced a referendum in 2015, Juncker replied:

“You’re the only person in Europe who believes I was among those who criticized the Greek prime minister. The Greek prime minister loves me deeply, and so do Greeks. I’m the most popular European politician in Greece. You should have known that, if you have seen by relationship with the Greek prime minister, who I greatly value. Just as I have deep sympathy or even love for the Greek people.” He then pointed at Commission spokesman Margaritis Schinas and said he is briefed by him on daily developments in Greece. Concerning Le Pen, Juncker said he doesn’t want to become part of her propaganda.

[..] Outlining the five options of Europe’s future, Juncker acknowledged the existential struggle the EU is facing due to crises over Brexit, migration and the eurozone. He said it was not a “definitive view” from the Commission but a way to “make clear what Europe can and cannot do.” Among others, Juncker said: “The future of Europe should not become hostage to elections, party political or short term views of success.” “However painful Brexit may be, it will not stop the EU as it moves forward into the future.” “Summit after summit we promise we will bring down the unemployment figures, particular youth unemployment … but the EU budget provides only 0.3% of European social budgets: 99.7% is with the national governments.” “We must make clear what Europe can and cannot do.” “Permanent Brussels-bashing makes no sense because there is no basis for it.”

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It’s falling apart in his hands.

Jean-Claude Juncker Sets Five Paths For EU’s Future (BBC)

European Commission President Jean-Claude Juncker has revealed his five future “pathways” for the European Union after Brexit. His white paper looks at various options, from becoming no more than a single market to forging even closer political, social and economic ties. The 27 leaders of EU countries will discuss the plans, without Britain, at a summit in Rome later this month. The meeting will mark the EU’s 60th anniversary. Germany’s foreign minister, Sigmar Gabriel, has already responded to dismiss the idea of the EU purely being a single market.

Path one: ‘Carrying on’ – The remaining 27 members stick on the current course, continuing to focus on reforms, jobs, growth and investment. There is only “incremental progress” on strengthening the single currency. Citizens’ rights derived from EU law are upheld.

Path two: ‘Nothing but the single market’ – The single market becomes the EU’s focus. Plans to work more on migration, security or defence are shelved. The report says this could lead to more checks of people at national borders.Regulation would be reduced but this could create a “race to the bottom” as standards slip, it says. It becomes difficult to agree new common rules on the mobility of workers, so free movement of workers and services is not fully guaranteed.

Path three: ‘Those who want to do more’ – If member countries want to work more with others, they can. Willing groups of states can form coalitions on key areas, such as defence, internal security, taxation and justice. Relations with outside countries, including trade negotiations, remain managed at EU level on behalf of all member states.

Path four: ‘Doing less, more effectively’ – The EU focuses on a reduced agenda where it can deliver clear benefits: technological innovation, trade, security, immigration, borders and defence. It leaves other areas – regional development, health, employment, social policy – to member states’ own governments.EU agencies tackle counter-terrorism work, asylum claims and border control. Joint defence capacities are established. The report says all this would make a simplified, less ambitious EU.

Path five: ‘Doing much more together’ – Feeling unable to meet the today’s challenges alone or as part of the existing group, EU members agree to expand the union’s role. Members agree “to share more power, resources and decision-making across the board”. The single currency is made central to the project, and EU law has a much larger role.

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Great piece of history from my place of birth. Well, bit bloody…

They Really Knew How to Do Populist Revolts in 1672 (BBG)

Johan de Witt, the boy wonder who effectively ran the Republic of the Seven United Netherlands from 1653 to 1672, was an early believer in inbox zero. In his office in the westernmost corner of the Binnenhof, the complex of buildings in The Hague that is still the nerve center of the Dutch government, Johan worked until his desk was empty: the official letters that he had read aloud during the meeting, the envelopes from relatives, friends and other contacts, his list of decisions taken and his notes from the last meeting. He didn’t go home until everything had been dealt with. As soon as a note was finished, he scattered sand over the lines to dry the ink, and he hung it on a wall-mounted wire – many of Johan’s surviving letters have holes in them. This hanging stack, called a lias, also had the advantage that everything was arranged nicely together and finished work wasn’t in the way.

When Johan was finished, the clerks could go to work copying everything according to his strict instructions. That’s my translation of a passage from Dutch journalist-turned-historian Luc Panhuysen’s 2005 double biography of De Witt and his older brother and right-hand-man, Cornelis. The book is titled “De ware vrijheid,” which means “the true freedom,” Johan de Witt’s term for the two decades during which he managed his country on behalf of its merchant class, and the noble House of Orange had no say. The brilliant, hard-working, hyper-organized Johan used that freedom to build what in modern parlance we might call a meritocratic technocracy, bent on globalization and economic growth. For a while, it was spectacularly successful. It didn’t end well, though! The brothers were killed not far from the Binnenhof in August 1672 and cut to pieces by an angry mob, with body parts finding their way to buyers as far away as England.

In these days of populist revolts against globalizing technocratic elites, the De Witts’ story seemed like it might be worth revisiting. That, and it provided a great excuse to walk around The Hague on Tuesday with the erudite and engaging Panhuysen, who has gone on to write books about the “disaster year” of 1672 and the long-running conflict, beginning the same year, between Dutch prince (and eventual English king) William III and French King Louis XIV. “What Johan and Cornelis de Witt had to deal with was that they were regular civilian boys who at the same time had to govern and exude authority,” Panhuysen said. Political opponents could say: “God sent us the House of Orange to break us free from the Spanish. Who are these De Witt brothers?”

The De Witt boys weren’t self-made men – their father was a successful wood merchant who bought his way into government – but Johan in particular did rise to the top largely on merit. He was a brilliant mathematician, a translator and elaborator of the geometry of Rene Descartes. A government report that he wrote on annuity pricing is now seen as one of the founding documents of both actuarial science and financial economics. In 1650, at age 25, Johan was chosen as raadpensionaris – a sort of city manager – of his hometown of Dordrecht, the oldest city in Holland, which was by far the richest and most powerful of the seven Dutch provinces. In 1653, representatives of Holland’s other cities asked him to become the province’s raadpensionaris, sometimes translated as grand pensionary. After taking 10 days to think it over, he accepted.

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The secret of life will never cease to fascinate.

World’s Oldest Fossils -4 Billion Years- Found In Canada (G.)

Scientists say they have found the world’s oldest fossils, thought to have formed between 3.77bn and 4.28bn years ago. Comprised of tiny tubes and filaments made of an iron oxide known as haematite, the microfossils are believed to be the remains of bacteria that once thrived underwater around hydrothermal vents, relying on chemical reactions involving iron for their energy. If correct, these fossils offer the oldest direct evidence for life on the planet. And that, the study’s authors say, offers insights into the origins of life on Earth. “If these rocks do indeed turn out to be 4.28 [bn years old] then we are talking about the origins of life developing very soon after the oceans formed 4.4bn years ago,” said Matthew Dodd, the first author of the research from University College, London.

With iron-oxidising bacteria present even today, the findings, if correct, also highlight the success of such organisms. “They have been around for 3.8bn years at least,” said the lead author Dominic Papineau, also from UCL. The team says the new discovery supports the idea that life emerged and diversified rapidly on Earth, complementing research reported last year that claimed to find evidence of microbe-produced structures, known as stromatolites, in Greenland rocks, which formed 3.7bn years ago. However, like the oldest microfossils previously reported – samples from western Australia dating to about 3.46bn years ago – the new discovery is set to be the subject of hot debate.

The discovery of the structures, the authors add, highlights intriguing avenues for research to discover whether life existed elsewhere in the solar system, including Jupiter’s moon, Europa, and Mars, which once boasted oceans. “If we look at similarly old rocks [from Mars] and we can’t find evidence of life, then this certainly may point to the fact that Earth may be a very special exception and life might just have arisen on Earth,” said Dodd. Published in the journal Nature by an international team of researchers, the new study focuses on rocks of the Nuvvuagittuq supracrustal belt in Quebec, Canada.

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When I read things like this: ‘A live shark is worth over a million dollars in tourism revenue over its lifespan’, I lose all hope. It’s valuing nature in dollars that dooms it. And then you get this from the guys trying to save it.

Overfishing Wipes Out 90% Of Caribbean Predatory Fish (DM)

While predatory fish are key to the Caribbean’s ecosystem and coastal economy, researchers have worryingly found that 90% have been wiped out by over-fishing. But experts say there is hope for Caribbean reefs yet, as they have identified large reefs, known as ‘supersites’, which can support huge numbers of predatory fishes. If the dwindling fish species are reintroduced, they could help repair the damage inflicted by over-fishing. ‘A live shark is worth over a million dollars in tourism revenue over its lifespan because sharks live for decades and thousands of people will travel and dive just to see them up close,’ said study coauthor and marine biologist Dr Abel Valdivia. ‘There is a massive economic incentive to restore and protect sharks and other top predators on coral reefs.’

The University of North Carolina team’s work suggests that supersites – reefs with many nooks and crannies on their surface that act as hiding places for prey – should be prioritised for protection. Other features that make a supersite are the amount of available food, size of the reef and proximity to mangroves. ‘On land, a supersite would be a national park like Yellowstone, which naturally supports an abundance of varied wildlife and has been protected by the federal government,’ said coauthor and marine biologist Professor John Bruno. The team surveyed 39 reefs across the Bahamas, Cuba, Florida, Mexico and Belize to determine how many fish had been lost.

They compared fish biomass on pristine sites to fish biomass on a typical reef. They then estimated the biomass in each location and found that 90% of predatory fish were gone due to over-fishing. What they didn’t expect to find was a ray of hope – a small number of reef locations that, if protected, could help the predatory fish populations recover. ‘Some features have a surprisingly large effect on how many predators a reef can support,’ said study coauthor Dr Courtney Ellen Cox. For example, researchers believe that the Columbia Reef within the fisheries closures of Cozumel, Mexico, could support an average of 10 times the current level of predatory fish if protected.

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Jan 092014
 January 9, 2014  Posted by at 1:44 pm Finance Tagged with: , , , , ,  33 Responses »

Dorothea Lange “Mr. Dougherty and kid. Warm Springs, Malheur County, Oregon” October 1939

David Holmgren, for whom I have the utmost respect, is best known as one of the co-originators of the permaculture concept. Permaculture is an ecological design method for regenerative agriculture, where the principles of natural systems are employed in order to create a self-sustaining means for food production while building soil fertility.

I am increasingly involved with permaculture (teaching it in Belize this February), as it represents one of the most important paths towards building workable life-support systems in our era of limits to growth. We are rapidly running out of options as we deplete our natural capital worldwide. While we badly need to make some informed hard choices, we collectively do not, as our consumptive system has tremendous inertia. As we reach the limits that lie in our not too distant future, permaculture can be of tremendous use, for those who implement it, in mitigating the impacts and facilitating rebuilding from the bottom-up.

David Holmgren’s Future Scenarios

Aside from his main body of work, Holmgren has also devoted significant consideration to exploring possible future energy descent scenarios, grounded in the twin threats of peak oil and climate change. See Future Scenarios from 2009. His thought modelling looks at how these limiting factors might intertwine with sociopolitical responses to create four classes of potential outcome.

The Brown Tech scenario was seen as one of modest energy supply decline combined with rapid climate change, in a centrally controlled, corporatist context emphasizing the development of unconventional fossil fuels and nuclear power. The impact of climate disruption and other discontinuities would lead to a greater need, and support, for large-scale government intervention. This scenario summarized as top down constriction of consumption.

The Green Tech route was envisaged as gradual energy descent, gradual climate impact, and would be typified by a controlled powerdown based on a shift towards renewable energy and electrification. The minimally disruptive move towards smaller-scale, relocalized, and distributed adaptations was seen as leading to greater egalitarianism.

Earth Steward describes a situation of rapid energy supply decline leading to economic collapse and major upheaval, reducing emissions sufficiently to address climate change, but eliminating larger political power structures. A rebuild from the bottom up would be required and would allow for design principles such as permaculture to be applied.

The final scenario – Lifeboats – involves both rapid energy supply collapse and severe climate impacts. Violent collapse would result in civilizational triage in isolated locations, with small-scale attempts to preserve knowledge through a long dark age.

Holmgren points out that these scenarios operate at inherently different scales in terms of energy density and organizational power, with Brown Tech operating at national scale, followed by Green Tech at city state scale, Earth Steward at the level of local community and finally Lifeboat at household scale. As such they can be described as nested. This is interesting as it is analogous to the nested adaptive cycles inherent in a fractal view of human and natural systems that we have described at The Automatic Earth . Scale is indeed a critical factor, and is primarily a function of energy availability. Holmgren argues that to some extent all scenarios are emerging simultaneously, operating at their different scales.

The initial scenario work was followed up in 2010 by a new essay, Money vs Fossil Energy: The battle for control of the world, looking at the financial system, and its interactions with the energy sector, as an additional important and limiting factor in models of how the future might play out in practice.  This perspective has recently been combined with an updated version of the scenario paper in Crash on Demand: Welcome to the Brown Tech Future. In this latest essay, Holmgren acknowledges he draws on our work here at The Automatic Earth, particularly in relation to projections for the global financial system and its role as a driver of global economic contraction. As such it seems appropriate to respond in order to extend the discussion.

In his recent essay, Holmgren says that he had initially been expecting a more rapid contraction in available energy, and with it a substantial fall in greenhouse gas emissions. Instead, new forms of unconventional fossil fuels have been exploited, sustaining supply for the time being, but at the cost of raising emissions, since these fuels are far more carbon intensive to produce. Holmgren understands perfectly well that unconventional fossil fuels are no answer to peak oil, given the terribly low energy profit ratio, but the temporary boost to supply has postponed the rapid contraction he, and others, had initially predicted. In addition, demand has been falling in major consuming countries as a result of the impact of financial crisis on the real economy since 2008, further easing energy supply concerns. For this reason, the Green Tech and Brown Tech scenarios, based on modest energy decline, appear more plausible to him than the Earth Steward and Lifeboat scenarios predicated upon rapid energy supply collapse. However, Green Tech would have required a major renewable energy boom sufficient to revitalize rural economies, and he recognizes that there appears to be no time for that to occur. Nor is there the collective political will to take actions to power-down or reduce emissions.

He concludes that the Brown Tech scenario appears by far the most likely, and is, in fact, already emerging. Rather than geological, biological, energetic or climate limits striking first, he suggests, in line with our view at TAE, that perturbations in the highly complex global financial system are likely to shape the future in the shorter term. As such he has become far more interested in finance, recognizing that the world has been pushed further into overshoot by throwing money at the banks, while transferring risk to the public on a massive scale, which is setting us up for a major financial reset. In combination with the climate chaos Holmgren anticipates that governments will need to assume control, moving from a market to a command economy.

Finance, Energy and Complexity

There is much I agree with here, most notably the primacy of financial collapse as a driver of short term change. The situation we find ourselves in is at such an extreme in terms of comparing the enormous overhang of virtual wealth in the form of IOUs with the actual underlying collateral that the reset could be both rapid and devastating. This could produce a number of cascading impacts on supply chains in a short space of time, as Holmgren acknowledges in citing David Korowicz’s excellent essay on the subject – Trade Off. This is likely to make governments choose to take control, but also likely to make that very difficult, and therefore very unpleasant. In some places control may win out, leading to a Brown Tech type of outcome after the dust has settled, and in others a more chaotic state may dominate, leading to more of a Lifeboat scenario. The difference may not hinge on energy supply alone, although this may well be a significant factor in some places.

It is our view at TAE that for a time energy limits are not likely to manifest, as lack of money will be the limiting factor in a major financial crisis. At the present time, with modestly increasing energy supply, the delusion of far greater increases to come, and falling demand, energy is already ceasing to be a pressing concern. As liquidity dries up, and demand falls much further as a result of both lack of purchasing power and plummeting economic activity, this will be even more the case. The perception of glut lowers prices, and this will hit the energy industry very hard due to its rapidly increasing cost base, and therefore its dependency on high prices. As prices fall and the business case disappears, much of the expensive supply will dry up, including most, if not all, of the unconventional fossil fuels currently touted as the solution.

Prices are likely to fall faster than the cost of production, leaving profit margins fatally squeezed. While money remains the limiting factor, few may worry about the energy future, but the demand collapse will lead to a supply collapse in the future due to lack of investment for a long time, the concurrent decay of existing infrastructure no one can afford to maintain, transport disruption due to a lack of letters of credit, and the impact of intentional damage inflicted by angry people. Financial crisis takes the pressure off temporarily, but a the cost of aggravating the energy shortfall, and the impact of that shortfall, in the longer term.

Producing energy from “low energy profit ratio” energy sources requires a financial system capable of providing copious amounts of affordable capital, and is dependent on the availability of cheap conventional fossil fuels in order to supply the up-front energy necessary for what are highly energy intensive processes. In energy terms, low energy profit ratio energy sources are nothing more than an extension of the current high energy profit ratio conventional fossil fuel era, which is what sustains the current level of socioeconomic complexity. The financial system is one of its most complex manifestations, and therefore one of its most vulnerable.

Once the financial system has the accident that is clearly coming, we will be looking at a substantial fall in societal complexity, but that fall in complexity will eliminate the possibility of engaging in such highly complex activities as fracking, horizontal drilling, exploiting the deep offshore or producing solar photovoltaic panels and inverters. “Low energy profit ratio” energy sources cannot by themselves maintain a level of socioeconomic complexity necessary to produce them, hence they will never be a meaningful energy source.

This is true of both unconventional fossil fuels and renewable power generation. The development of low energy profit ratio energy sources rests largely on Ponzi dynamics, and Ponzi schemes tend to come to an abrupt end.

Once this becomes clear, the gradual fall in supply is likely to morph into a rapid one. As the ability to project power at a distance depends on energy supply, and that may be compromised, perhaps within a decade, maintaining any kind of large scale command economy may not be possible for that long. However, consolidating access to a falling energy supply at the political centre under a command scenario, at the expense of the population at large, may sustain that centre for somewhat longer.

Seen through an energy profit ratio and complexity lens, a Green Tech scenario appears increasingly implausible. Green Tech – the use of technology to capture renewable energy and convert it into a concentrated form capable of doing work – is critically dependent on the fossil fuel economy to build and maintain its infrastructure, and also to maintain the level of socioeconomic complexity necessary for it, and the machinery it is meant to run, to function. A renewable energy distant future is certainly likely, but not a technological one. One can have green or tech, but ultimately not both.

Scale, Hierarchy and ‘Functional Stupidity’:

A substantial point of agreement between Holmgren’s work and ours here at TAE is that the scale Brown Tech would operate on in a constrained future would be national rather than international. There are many who worry about One World Government under a fascist model. This may have been the trajectory we have been on taken to its logical conclusion, but if crisis is indeed proximate, then we are very unlikely to reach this point. We have likened layers of political control to trophic levels in an ecosystem, as all political structures concentrate wealth at the centre at the expense of the periphery which they ‘feed upon’:

The number of levels of predation a natural system can support depends essentially on the amount of energy available at the level of primary production and the amount of energy required to harvest it. More richly endowed areas will be able to support -more- complex food webs with many levels of predation. The ocean has been able to support more levels of predation than the land, as it requires less energy to cover large distances, and primary production has been plentiful. A predator such as the tuna fish is the equivalent, in food chain terms, of a hypothetical land predator that would have eaten primarily lions. On land, ecosystems cannot support that high a level predator, as much more energy is required to harvest less plentiful energy sources.

If one thinks of political structures in similar terms, one can see that the available energy, in many forms, is a key driver of how complex and wide-ranging spheres of political control can become. Ancient imperiums achieved a great deal with energy in the forms of wood, grain and slaves from their respective peripheries. Today, we have achieved a much more all-encompassing degree of global integration thanks to the energy subsidy inherent in fossil fuels. Without this supply of energy (in fact without being able to constantly increase this supply to match population growth), the structures we have built cannot be maintained.

The international level of governance is comparable to a top level predator. When the energy supply at the base of the pyramid is reduced, and the energy required to obtain it increases, as will inevitably be the case in this era of sharply falling energy profit ratios, the system will lose the ability to support as many layers of ‘predation’. We are very likely to lose at least the top level, if not more levels on the way down as energy descent continues. A national level of Brown Tech may last for a while, but as energy descent continues, so will the diminution of the scale and complexity at which society can operate.

Living on an energy income, supplemented with limited storage in the form of grain or firewood or water stored high in the landscape, and also limited ability to physically leverage effort with slavery or the use of draft animals, does not provide the same range of possibilities as living on our energy inheritance has done. Without fossil fuels, the technology of the ancient world (Rome for instance) is probably the most that an imperial degree of energy concentration can provide. Greater concentration is possible when a wide geographical area comes under a single political hegemony and feeds a single political centre at a high level of political organization. Lower levels of political organization (ie during the inter-regnem in between successive imperiums) would provide for less resource concentration and therefore would sustain a lower level of socioeconomic complexity and ‘technology’.

Energy is not the only factor determining effective organizational scale, however. The functionality of the financial system is a major determinant of the integrity of supply chains, and hence social stability. Societal trust is vital, and can be extremely ephemeral. The more disruptive a future of limits to growth, across a range of parameters, the further downward through Holmgren’s nested scenarios we are likely to go.

In building scenarios, I would add rapid versus gradual financial crisis as a separate parameter. Personally, I believe a rapid financial crash combined with an initially slow, but then increasingly rapid fall in energy supply is the most likely scenario. Financial crisis can cause many of the effects Holmgren discusses in his scenario work in relation to energy and climate impacts.

This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!

As for the climate change portion of the analysis, Holmgren points out that mainstream policy is shifting from mitigation to adaptation, in recognition of the failure to achieve any kind of progress on emissions control at the international level. Substantive action to reduce emissions is seen, for obvious reasons, as precipitating economic contraction, and no government is prepared to take that risk, especially when so many are on the edge financially in any case. Holmgren also addresses the growing realizations that reductions in emissions in one region may be bought at the expense of increases in another, with no net decrease overall, and that no decoupling between resource use and economic growth is feasible.

This is very much a position I would agree with. Decoupling is nothing but an illusion. There has always been a very close correlation between energy use in particular and economic growth. In the era of globalization we claim to have reduced the energy intensity of our developed economies, but we have in fact merely displaced the energy used to the new manufacturing centres. We import goods manufactured on some other economy’s energy budget (and water budget and other resources as well). The prospects for any kind of international agreement on emissions reduction, or any kind of efficacious top-down policy response at all, seem to be bleak to non-existent.

Internationally, no one party will agree to disadvantage itself in a competitive global economy when it does not trust that others will do the same. Nationally, policies favour growth and profit. Even policies ostensibly conceived to increase energy efficiency and reduce emissions may well be implemented in a manner having the opposite effect because some aspect of that implementation was profitable for some well connected party. For instance, a policy mandating high-tech smart metering for electricity requires complex manufacturing facilities a great cost in terms of both money and energy, but can deliver only minor load shifting, leading likely to a net increase in both energy use and emissions. Low-tech metering with consumer feedback could achieve far more in terms of energy savings at far less energy cost up front, but is less profitable, and so is not implemented.

Expecting governments to deliver any improvement whatsoever in this regard appears to be quite unrealistic. Governments achieve the exact opposite of their stated policy goals with remarkable regularity, all too often making bad situations worse as expensively as possible. Dimitri Orlov quotes, and further develops, a convincing explanation for this phenomenon or large scale ‘functional stupidity’:

Mats Alvesson and André Spicer, writing in Journal of Management Studies (49:7 November 2012) present “A Stupidity-Based Theory of Organizations” in which they define a key term: functional stupidity. It is functional in that it is required in order for hierarchically structured organizations to avoid disintegration or, at the very least, to function without a great deal of internal friction. It is stupid in that it is a form of intellectual impairment: “Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications.” Alvesson and Spicer go on to define the various “…forms of stupidity management that repress or marginalize doubt and block communicative action” and to diagram the information flows which are instrumental to generating and maintaining sufficient levels of stupidity within organizations.

Hence any meaningful change will need to come from the bottom-up.


I do not focus on climate change in my own work, partly because top-down policies vary between useless and counter-productive, and partly because, in my opinion, the science is far more complex and less predictable than commonly thought, and finally because success in generating a genuine fear of climate change is likely to produce human responses that achieve far more harm than good.

Many people seem to believe there is a linear relationship between carbon dioxide as a driver and increasing temperature as the result, but if there is one thing we know about climate it is that it is not linear. The models, while complex, have not been accurate predictors of the current situation and are therefore incomplete. As for the future, the models do not include factors such as the impact of an economic collapse or a large fall in energy use. There are multiple complex feedback loops that are not well enough understood, all of which interact with each other in highly complex ways. There is also a very long term cycle of natural forcings (note the time scale in thousands of years) providing the backdrop to anthropogenic impacts, and that is also not well enough understood. The net effect of the the very long term natural cycle and the much shorter term anthropogenic impacts is unknown. Global dimming, due to particulate matter in the atmosphere, affects incident solar radiation reaching the Earth. This could change on a much faster time scale than carbon dioxide, which has a very long residence time in the atmosphere, under conditions of economic collapse. This is also not adequately modelled.

In my view the situation is too complex and chaotic to make reliable predictions. In some ways what we think we know, on the basis of assuming a system to be simpler than it actually is, can be more dangerous than what we acknowledge we do not know, as we may take entirely the wrong actions and end up compounding the problem. See for instance Allan Savory’s excellent lecture on the attempt to reverse desertification (a major source of greenhouse gas emissions) through culling fauna, finding it had the opposite effect, and now attempting to remedy the situation while haunted by regret. His talk illustrates both a very important, but mostly ignored, factor in relation to climate change, and also the dangers inherent on relying on received wisdom. Overly simplistic models are often flawed, and applying them can easily cause, or fail to avoid, substantial harm that may then be difficult to reverse.

Apocalyptic predictions of near term human extinction have been made by some commentators, and drastic ‘solutions’ proposed as a result. I would regard such predictions as unlikely, disempowering and dangerous, in the sense that they could, when fear is in the ascendancy anyway, provoke a disproportionate fear response that could in itself be very destructive. When people become collectively fearful, they tend to over-react as a crowd, potentially causing more damage through that over-reaction than might have been caused by the circumstance itself. Fear can be exploited to provide a political mandate for extremists who would then be able to wreak havoc on the fabric of society. Fear needs no encouragement at such times. It will get more than enough traction, and do more than enough damage, all by itself. Actively undermining it is a better approach, as may keep more people in a constructive headspace.

If fear of apocalyptic climate change did grab the collective imagination, there are a number of outcomes which seem particularly plausible. All of them are counter-productive in some way. The first we have already seen – carbon trading system ponzi schemes. This involves financializing yet another aspect of reality, when over-financialization, and the consequent ballooning of virtual wealth, are what have led to our current debt crisis. Financialization is popular with the powerful, because it generates substantial, and concentrable, profits, feeding greater central control by Big Capital. It would probably also generate far more greenhouse gas emissions. Carbon trading allows the wealthy to continue business as usual while paying the poor to address the problems caused, but there is no guarantee that doing so would be effective. Perverse incentives would probably see the funds used for very different purposes.

The second predictable action is massive infrastructure investment in adaptation, which could consume large amounts of finite resources and generate substantial emissions. Large scale public procurement contracts are profitable, secure sources of on-going corporate income and are highly sought-after, as we have seen in Iraq for instance. Companies able to exploit the fear could benefit very handsomely today by building things that may or may not have any value in the future. They would have an incentive to play up the fear in order to extract contracts, and this would be harmful in itself.

The third possibility is widespread geo-engineering – the deliberate release of particulate matter into the atmosphere in order to increase global dimming. This amounts to interfering in a complex and delicate system with a blunt instrument, but it fits with the prevailing technological hubris and would probably generate substantial profits for someone, hence it is all too likely to catch on. The mentality behind it is that the problems of complexity can always be addressed with greater complexity, or in other words, business as usual must continue at any price, and the consequences can always be dealt with through technological intensification. Those consequences are unpredictable and could be disastrous.

The fourth plausible response is eco-fascism, along the lines of Holmgren’s Brown Tech scenario, but with a greenwash. Times of economic contraction tend to be times when people seek control over others, and control over access to the remaining supply of resources. Any excuse will do as a pretext for establishing command and control. Eco-fascism is simply fascism at the end of the day – a mechanism for depriving the masses and consolidating, and generally abusing, tight control in the hands of the few. It would make quality of life immeasurably worse and probably not reduce carbon emissions significantly, as control mechanisms are energy intensive.

Finally, we could see a mood of collective self-flagellation take hold, with the impulse to destroy what we have built on the grounds that it is purely destructive of the natural world. Being destructive in order to remedy destructiveness seems perverse, but is already being presented as a serious imperative in some circles. If implemented it would probably lead to the general demonization of environmentalists and the full range of ideas they propose, as well as do great harm to those least able to get out of the way.

Given that these five possibilities seem the most likely responses to real fear of climate change, and that all of them are likely to make the situation worse in some way, generating fear of climate change seems to be a counter-productive strategy. We could even see several of them at once, for a truly ghastly outcome causing harm on many fronts, and at many scales, simultaneously.

Where awareness is raised without visceral fear, climate change still does not seem to be a motivator for the kind of constructive behaviours that might make a difference in the aggregate. The scale is too large for people to feel that individual actions could ever be useful, which is disempowering. The time-frame is too remote, leading to complacency, and the consequences are not perceived as personal. As humans we are not typically very good at addressing problems which are neither personal nor immediate.

The economic contraction that is coming is very likely to have a far more substantial impact on emissions than any deliberate policy or collective action. The combination of this contraction and constructive collective action could be very powerful indeed, but achieving the latter action is not best done on the grounds of climate change. The same actions that would best address climate change in the aggregate are also the prescription for dealing with financial crisis and peak oil – hold no debt, consume less, relocalize, increase community self-sufficiency, reduce dependency on centralized life-support systems.

The difference is that both financial crisis and peak oil are far more personal and immediate than climate change, and so are far bigger motivators of behavioural change. For this reason, addressing arguments in these terms is far more likely to be effective. In other words, the best way to address climate change is not to talk about it.

Grass Roots Initiatives

Holmgren argues that time is running out for bottom-up initiatives to blunt the impact of falling fossil fuel supply. While simpler ways of doing things at the household and community level could sustain a less energy dependent world, uptake is limited and time is short. Holmgren points out that during the Soviet collapse, the informal economy was the country’s saving grace, allowing people to survive the collapse of much of the larger system. For instance, when the collective farms failed, the population fed themselves on 10% of the arable land by gardening in every space to which they had access. This kind of self-reliance can be very powerful, but the ability to adapt is path-dependent. Where a society finds itself prior to collapse – in terms of physical capacity, civil society and political culture – determines how the collapse will be handled. Dale Allen Pfeiffer’s excellent book Eating Fossil Fuels, comparing the Cuban and North Korean abrupt loss of energy supplies, makes this point very clearly. Cuba, with its much better developed civil society and greater flexibility was able to adapt, albeit painfully, while the rigidly hierarchical North Korea saw very much larger impacts.

Dimitri Orlov has argued very persuasively that the Soviet Union was far better prepared than the western world to face such circumstances, as the informal economy was much better developed. The larger system was so inefficient and ineffectual that people had become accustomed to providing for themselves, and had acquired the necessary skills, both physical and organizational. Their expectations were modest in comparison with typical westerners, and their system was far less dependent on money in circulation. One would not be thrown out of a home, or have utilities cut off, for want of payment, hence people were able to withstand being paid months late if at all and were still prepared to perform the tasks which kept supply chains from collapsing.

The economic efficiency of western economies, with very little spare capacity in a system operating near its limits, is their major vulnerability. As James Howard Kunstler has put it, “efficiency is the straightest path to hell”, because there is little or no capacity to adapt in a maxed out system. The combination of little physical resilience, enormous debt, substantial vulnerability even to small a small rise in interest rates, the potential for price collapse on leveraged assets, a relatively small skill base, legal obstacles to small scale decentralized solutions, an acute dependence on money in circulation and sky high expectations in the context of widespread ignorance as to approaching limits is set to turn the collapse of the western financial system into a perfect storm.

Time is indeed short and there will be a limit to what can possibly be accomplished. However, whatever people do manage to achieve could make a difference in their local area. It is very much worth the effort, even if the task at hand appears overwhelming. Given that a top-down approach stands very little chance of altering the course of the Titanic, we might as well direct our efforts towards things that can potentially be successful as there is no better way to proceed. Reaching limits to growth will impose severe consequences, but these can be mitigated. Acting to create conditions conducive to adaptation in advance can make a difference to how crises are handled and the impact they ultimately have.

Holmgren argues that collapse in fact offers the best way forward, that a reckoning postponed will be worse when the inevitable limit is finally reached. The longer the expansion phase of the cycle continues, the greater the debt mountain and the structural dependence on cheap energy become, and the more greenhouse gas emissions are produced. Considerable pain is inflicted on the masses by the attempt to sustain the unsustainable at any cost. If we need to learn to live within limits, we should do so sooner rather than later. Holmgren focuses particularly on the potential for collapse to sharply reduce emissions, thereby perhaps preventing the climate catastrophe built into the Brown Tech scenario.

He raises the possibility that concerted effort by a large enough minority of middle class westerners to convert from dependent consumers to independent producers could derail an already over-stretched and vulnerable financial system which requires perpetual growth to survive. He suggests that a 50% reduction in consumption and a 50% conversion of assets into building resilience by 10% of the population of developed countries would create a 5% reduction in demand and savings capital available for banks to lend.

This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!

An involuntary demand collapse is, in any case, characteristic of periods of economic depression. Conversion of assets from the virtual wealth of the financial world to something tangible would have to be done well in advance of financial crisis, as the value of purely financial assets is likely to evaporate in a large scale repricing event, leaving nothing to convert. There are far more financial assets that constitute claims to underlying real wealth than there is real wealth to be claimed, and only the early movers will be able to make a claim. This is already well underway among the elite who are aware that financial crisis is approaching. In a world where banks create money as debt at the stroke of a pen, a pool of savings is not actually necessary for lending. Lending rests to a much greater extent on the perception of risk in the financial system. The impacts of proposed actions would not be linear, as the financial system is not mechanistic, meaning that quantitative outcomes would not necessarily be predictable. Holmgren recognizes this in his acknowledgement that small changes in the balance of supply and demand can have a disproportionate impact on prices.

Holmgren realizes the risks inherent in explicitly advocating such an approach, both at a personal level and in terms of the permaculture movement as a whole. These concerns are very valid. Permaculture has a very positive image as a solution to the need for perpetual growth, and this might be put at risk if it became associated with any deliberate attempt to cause system failure. While I understand why Holmgren would open a discussion on this front, given what is at stake, it is indeed dangerous to ‘grasp the third rail’ in this way. This approach has some aspects in common with Deep Green Resistance, which also advocates bringing down the existing system, although in their case in a more overtly destructive manner. In a command economy scenario, which seems at least temporarily likely, such explicitly stated goals become the focus, regardless of the least-worst-option rationale and the positive means by which the goals are meant to be pursued. A movement best placed to make a difference could find itself demonized and its practices uncomprehendingly banned, which would be simply tragic.

Decentralization initiatives already face opposition, but this could become significantly worse if perceived to be even more of a direct threat to the establishment. While they hold the potential to render people who disengage from the larger system very much better off, on the grounds of increased self-reliance, they also hold the potential to make targets of the early adopters who would be required to lead the charge. Much better, in my opinion, to continue the good work with the declared, and entirely defensible, goals of building greater local resilience and security of supply while preserving and regenerating the natural world. While almost any form of advance preparation for a major crisis of civilization would have the side-effect of weakening an existing system that increasingly requires total buy-in, there is a difference between side-effect and stated goal.

The global financial system is teetering on the brink of a major crisis in any case. It does not need any action taken to bring it down as it has already had easily enough rope to hang itself. Inviting blame for an inevitable outcome seems somewhat reckless given the likelihood that many will be casting about for scapegoats. Holmgren argues that, as those who warn of a crash are likely to be blamed for causing it anyway, they might as well be proactive about it. Personally, I would rather not provide a convenient justification for misplaced blame.

Holmgren discusses the case for seeking disinvestment from fossil fuel industries, citing the report Unburnable Carbon 2013: Wasted Capital and Stranded Assets. The premise of this report is that 60-80% of the fossil fuel reserves on the books of energy companies could become worthless stranded assets if governments implemented decisive action on climate change. If this perception caught on, the authors suggest it might cause investors to dump the sector rapidly, causing a proportionate loss of share value as a result. Financial markets do not work this way. Prices are not based on the fundamentals, and the prevailing positive feedback dynamics cause disproportionate reactions in both directions. Shares in fossil fuel companies will never be valued rationally in accordance with the supposedly predictable impacts of government regulation. Just as they are over-valued at times when commodities are prices peaking on fear of imminent shortages, they become undervalued in the following bust. First they are bid up beyond what the fundamentals would justify, then they crash to far below.

Personally, I regard the probability of governments acting to actually constrain emissions as negligible in any case, for reasons already discussed. Comprehensive regulatory capture has ensured that Big Capital writes the rules by which it is regulated. It is not going to impose controls which harm its own profitability. Energy is inherently valuable, and will only become more so in an energy constrained future. (However, the value of energy and the value of energy companies are not the same thing.) While low energy profit ratio energy sources are only a manifestation of the current bubble, and will eventually be abandoned out of necessity, remaining high energy profit ratio energy sources are highly unlikely to be left underground in the longer term, whatever the impact of burning them might be.

Their exploitation may well be delayed during a period of economic depression where demand would be low, financial risk would be high as price would fall faster than the cost of production, and economic visibility would be low. Very little investment occurs during contractionary times, but as the economy eventually moves into a form of limited recovery, demand would pick up and resource constraints would reassert themselves as limiting factors. At that point, anything which could be exploited almost certainly would be, and there may well be conflict over the right to exploit resources. Oil remains liquid hegemonic power and adequately accessible reserves will never become stranded assets.

In a world of short term priorities, longer term considerations are not taken into consideration, and the destabilization inherent in a period of crisis only aggravates short-termism by causing discount rates to spike. Unfortunately, environmental concerns are longer term.

Holmgren emphasizes the need to prioritize local investment in the real economy, with which I very much agree. He points out that affluent nations have a long history of extracting wealth from the informal household and community sectors for the benefit of the formal, monetized economy, but that we have little experience of reversing that trend. Michael Shuman’s excellent book Local Dollars, Local Sense makes the case for the substantial benefits that could be achievable if such a shift were to take place. Of course, as already discussed, time is short, but still, any informed action taken in advance of crisis could have disproportionately beneficial effects later on. For instance, promoting business entities with a cooperative structure can be a powerful tool for maintaining relatively local control.

One way to promote local spending is to introduce a local currency. While it may well be impossible to persuade people to spend national currency only locally if it meant paying more or limiting choices, a local currency must be spent locally as it would not be accepted elsewhere. Every monetary unit spent, and therefore circulating, locally has far more beneficial effect than one spent outside the area. External spending siphons wealth away from communities, and we have been encouraged to spend almost everything externally in recent years. Cheaper alternatives operating with economies of scale have deprived local business of a market for their goods and services, often eliminating those local options over time. This is how the centre thrives at the expense of the periphery. Reversing this trend may well require instituting a monetary system which removes the option to spend it elsewhere. This, if it can persist for long enough, should act as a driver for the provision of local goods and services.

Local currencies can run in tandem with national currencies and can act to expand the money supply in a defined area. As such they can be particularly useful to address the artificial scarcity of a liquidity crunch, where people and resources still exist, but cannot be deployed for lack of money in circulation. Local currencies can be designed to depreciate, which acts as an explicit support for the velocity of money. However, this may cause difficulties if local and national currency are convertible and the national currency does not depreciate. On the other hand, lack of convertibility could make it more difficult to confer value and full acceptability on the local currency. An alternative currency which can be used to pay local taxes will have a distinct advantage in terms of acceptability as was the case in the classic example – the depression-era Austrian town of Wörgl.

Of course a money monopoly is a very significant power, and as such is very likely to be defended, as indeed it was in depression-era Austria. This limits the prospects, and likely the duration, for alternative currencies, but they nevertheless achieve a great deal while they operate, as they currently are doing in Greece. Eventually, in a period of sufficient upheaval, a money monopoly may be impossible to sustain, then local currencies would be freer to operate. They would still be subject to distortions for political gain, money printing and ponzi dynamics over the longer term, given that they would still be operated by corruptible human beings, but at least these would exist on a smaller scale, not representing systemic risk as the flaws in the larger financial system currently do. Essentially there is no such thing as an inflation-proof, peer to peer system which would be expected to be stable over the long term, as monetary systems move in cycles of boom and bust. It is our job to navigate the waves of expansion and contraction which we cannot eliminate.

Any initiative which reduces our dependence on national currency in circulation is going to be useful in this regard, including barter networks, time-banking, tool and seed libraries, and gifting. There are already well established barter networks in some countries operating at a national scale, for instance Barter Card in New Zealand and the WIR network in Switzerland. Additional networks at a local scale could also be very useful, although more inherently limited in scope. Time-banking, libraries and gifting are more profoundly local, and act not just as means of exchange without the need for money, but also as mechanisms to build trust and community cohesiveness. This is a tremendous benefit in its own right, as a major boost for local resilience.

Holmgren points out that holding cash under one’s own control, outside of the banking system can greatly increase resilience by reducing dependency on the solvency of middle men. This is very much in accordance with our position at TAE, as cash is king in a period of deflation. People who spend in cash tend to spend less as it feels more like spending than electronic payments do. They tend therefore to be less likely to be overstretched and vulnerable to a financial collapse.

Building Parallel Systems

Holmgren stresses the urgent need to opt out of the increasingly centralized and destructive mainstream though building parallel systems prior to the advent of a Brown Tech future, which he feels could last many decades before descending further into a low-energy Lifeboat scenario. He points out that at the moment we have the luxury of keeping one foot in each camp, so that we have the opportunity to develop alternatives before we have to rely on the results. We can experiment, but with a safety net.

I am in agreement, with the exception of the timeframe for the longevity of a Brown Tech system. The scale of the coming disruption, albeit initially due to financial rather than energy crisis, is likely to be large enough to shorten the length of time the political centre can maintain the ability to project power at a distance. Learning curve time for opt-out solutions, short as it may be, could be very valuable. Unfortunately, attempting to straddle two worlds simultaneously can involve all the work of both with few of the benefits of either, hence moving over as far as possible to concentrate on the opt-out position is probably more adaptive.

As Buckminster Fuller said, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” In other words, change comes incrementally and organically from the bottom-up, rather than by fighting to change top-down policies. Initially, pushing for grass roots change can require considerable human energy input, but once a critical mass is reached the movement can take on a life of its own very rapidly, especially if it suddenly coincides greater advantage as prevailing circumstances shift. The proactive phase is difficult, as people rarely prepare in advance for approaching change, but proactive can become reactive as the change is reached, and the earlier effort can help to shape the direction that eventual reactive response will take.

Ideas that hit the zeitgeist can become fashionable, and this imparts much greater momentum. For instance, the tiny house movement is making it a matter of pride to live in smaller and simpler dwellings, with greater emphasis on good design than physical space. More and more young people are choosing to opt out of the path taken by their peers, as that path towards debt slavery becomes ever more obviously disadvantageous. The non-passive portion of this  group is looking for direction, and is prepared to find it in non-mainstream places. Providing this could amount to seeding very fertile ground.

Being beneath the notice of larger powers hoping to maintain monopolies and control can be protective. Hence working at small scale, but in many locations simultaneously, could allow systems conferring greater local independence and resilience to become established with a lower likelihood of being suppressed as a threat by the powers-that-be.  

Permaculture should be a major building-block of any kind of system reboot following the operating system crash that a financial crisis represents. After all, once we navigate that period of artificial scarcity, we will have to address the real scarcity inherent in looming resource limits. We will have to deal with the fact we are far into overshoot in comparison with the carrying capacity of the Earth, even with the artificially boosted carrying capacity we have thanks to fossil fuels (where about half of the nitrogen in the food supply comes from the artificial fixation of nitrogen from fossil fuels for instance). We have been strip mining soil fertility with intensive agri-business, disrupting the critical nitrogen cycle and poisoning the soil micro-organisms critical for fertility with pesticides such as round-up. We will have to undo all of the damage, but it will take us a very long time, and in the meantime we have over 7 billion mouths to feed. Permaculture, with its emphasis on soil regeneration, is the best possible way (click for video) to do this. If we are ever to approximate, at least temporarily, an Earth Steward scenario (in the distant future, once the dust has settled), this is the path we must take.

As Holmgren says, “A permaculture way of life empowers us to take responsibility for our own welfare, provides endless opportunities for creativity and innovation, and connects us to nature and community in ways that make sense of the world around us.” Motivated by enlightened self-interest, and operating at a manageable human scale, we can apply our knowledge of natural and human systems in the real world, without being overwhelmed by the task of feeling we are personally responsible for saving the whole world. It can be difficult to let go of the top-down approach, to stop putting all our efforts into trying to change government policies or get the ‘right’ people elected, as if this would somehow solve our problems.

We need to get down to the business of doing the things on the ground that matter, and to look after our own local reality. We can expect considerable opposition from those who have long benefited from the status quo, but if enough people are involved, change can become unstoppable. It won’t solve our problems in the sense of allowing us to continue any kind of business as usual scenario, and it won’t prevent us from having to address the consequences of overshoot, but a goal to move us through the coming bottleneck with a minimum amount of suffering is worth striving for.

This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!