Mar 152019
 


Raphael The miraculous draught of fishes 1515

 

 

There are days, though all too scarce, when very nice surprises come my way. Case in point: yesterday I received a mail from David Holmgren after a long period of radio silence. Australia’s David is one of the fathers of permaculture, along with Bill Mollison, for those few who don’t know him. They first started writing about the concept in the 1970s and never stopped.

Dave calls himself “permaculture co-originator” these days. Hmm. Someone says: “one of the pioneers of modern ecological thinking”. That’s better. No doubt there. These guys taught many many thousands of people how to be self-sufficient. Permaculture is a simple but intricate approach to making sure that the life in your garden or backyard, and thereby your own life, moves towards balance.

My face to face history with David is limited, we spent some time together on two occasions only, I think, in 2012 a day at his home (farm) in Australia and in 2015 -a week- in Penguin, Tasmania at a permaculture conference where the Automatic Earth’s Nicole Foss was one of the key speakers along with Dave. Still, despite the limited time together I see him as a good and dear friend, simply because he’s such a kind and gracious and wise man.

In his mail, David asked if I would publish this article, which he originally posted on his own site just yesterday under the name “The Apology: From Baby Boomers To The Handicapped Generations”. I went for a shorter title (it’s just our format), but of course I will.

Dave has been an avid reader of the Automatic Earth for the past 11 years, we sort of keep his feet on the ground when they’re not planted and soaking in that same ground: “Reading TAE has helped me keep up to date..”

In light of the children’s climate protests today, which I have yet to voice my qualms about (and I have a few), it only makes sense to put into words a baby boomer’s apology. To have that phrased by someone with the intellect and integrity of David should have everyone sit up and pay attention, if you ask me. And perhaps it would be good if more people would try and do the same: apologize to those kids.

Here’s my formidable friend David Holmgren:

 

 

David Holmgren: It is time for us baby boomers to honestly acknowledge what we did and didn’t do with the gifts given to us by our forebears and be clear about our legacy with which we have saddled the next and succeeding generations.

By ‘baby boomers’ I mean those of us born in the affluent nations of the western world between 1945 and 1965. In these countries, the majority of the population became middle class beneficiaries of mass affluence. I think of the high birth rate of those times as a product of collective optimism about the future, and the abundant and cheap resources to support growing families.

By many measures, the benefits of global industrial civilisation peaked in our youth, but for most middle class baby boomers of the affluent countries, the continuing experience of those benefits has tended to blind us to the constriction of opportunities faced by the next generations: unaffordable housing and land access, ecological overshoot and climate chaos amongst a host of other challenges.

I am a white middle class man born in 1955 in Australia, one of the richest nations of the ‘western world’ in the middle of the baby boom, so I consider myself well placed to articulate an apology on behalf of my generation.

In the life of a baby boomer born in 1950 and dying in 2025 (a premature death according to the expectations of our generation), the best half the world’s endowment of oil – the potent resource that made industrial civilisation possible – will have been burnt. This is tens of millions of years of stored sunlight from a special geological epoch of extraordinary biological productivity. Beyond our basic needs, we have been the recipients of manufactured wants and desires. To varying degrees, we have also suffered the innumerable downsides, addictions and alienations that have come with fossil-fuelled consumer capitalism.

It is also true that our generation has used the genie of fossil fuels to create wonders of technology, organisation and art, and a diversity of lifestyles and ideas. Some of the unintended consequences of our way of life, ranging from antibiotic resistance to bubble economics, should have been obvious, while others, such as the depression epidemic in rich countries, were harder to foresee. Our travel around the world has broadened our minds, but global tourism has contaminated the amazing diversity of nature and traditional cultures at an accelerating pace. We have the excuse that innovations always have pluses and minuses, but it seems we have got a larger share of the pluses and handballed more of the minuses to the world’s poorest countries and to our children and grandchildren.

We were the first generation to have the clear scientific evidence that emergent global civilisation was on an unsustainable path that would precipitate an unravelling of both nature and society through the 21st century. Although climate chaos was a less obvious outcome than the no-brainer of resource depletion, international recognition of the reality of climate change came way back in 1988, just as we were beginning to get our hands on the levers of power, and we have presided over decades of policies that have accelerated the problem.

Over the years since, the adverse outcomes have shifted from distant risks to lived realities. These impact hardest on the most vulnerable peoples of the world who have yet to taste the benefits of the carbon bonanza that has driven the accelerating climate catastrophe. For the failure to share those benefits globally and curb our own consumption we must be truly sorry.

 


David Holmgren

 

In the 1960s and 70s, during our coming of age, a significant proportion of us were critical of what was being passed down to us by our parent’s generation who were also the beneficiaries of the western world system, which some of us baby boomers recognised as a global empire. But our grandparents and parents had been shaped by the rigours and grief of the first global depression of the 1890s, the First World War, The Great Depression of the 1930s and, of course, the Second World War. Aside from those who served in Vietnam, we have cruised through life avoiding the worst threats of nuclear annihilation and economic depression, even as people in other countries suffered the consequences of superpower proxy wars, coups, and economic and environmental catastrophes.

While some of us were burnt by personal and global events, we have mostly led a charmed existence and had the privilege to question our upbringing and culture. We were the first generation in history to experience an extended adolescence of experimentation and privilege with little concern or responsibility for our future, our kin or our country.

Most baby boomers were raised in families where commuting was the norm for our fathers but a home-based lifestyle was still a role model we got from our mothers. In our enthusiasm for women to have equal access to productive work in the monetary economy, few of us noticed that without work to keep the household economy humming we lost much of our household autonomy to market forces. By our daily commutes, mostly alone in our cars, we entrenched this massively wasteful and destructive action as normal and inevitable.

As we came into our power in middle age, the new technology of the internet, workshop tool miniaturisation and other innovations provided more options to participate in the monetary economy without the need to commute, but our generation continued with this insane collective addiction. In Australia, we faithfully followed the American model of not investing in public transport, which moderated the adverse impacts of commuting in European and other countries not so structurally addicted to road transport. By failing to build decent public transport and the opportunities for home-based work, and wasting wealth in a frenzy of freeway building that has choked our cities, our generation has consumed our grandchildren’s inheritance of high quality transport fuels and accelerated the onset of climate chaos. For this we are truly sorry.

In pioneering the double income family, some of us set the pattern for the next generation’s habit of outsourcing the care of children at a young age, making commuting five days a week an early childhood experience. This has left the next generation unable to imagine a life that doesn’t involve leaving home each day.

These patterns are part of a larger crisis created by the double income, debt-laden households with close to 100% dependence on the monetary economy. Without robust and productive household economies, our children and grandchildren’s generations will become the victims of savage disruptions and downturns in the monetary economy. For failing to maintain and strengthen the threads of self-provision, frugality and self-reliance most of us inherited from our parents, we should be truly sorry.

 

Some of us felt in our hearts that we needed to create a different and better world. Some of us saw the writing on the walls of the world calling for global justice. Some of us read the evidence (mostly clearly in the 1972 Limits To Growth) that attempting to run continuous material growth on finite planet would end in more than tears.

Some of us even rejected the legacy of previous generations of radicals’ direct action against the problems of the world, and instead decided we would boldly create the world we wanted by living it each day. In doing so, we experienced hard-won lessons and even created some hopeful models for succeeding generations to improve on in more difficult conditions. That our efforts at novel solutions often created more sound than substance, or that we flitted from one issue to another rather than doing the hard yards necessary to pass on truly robust design solutions for a world of less, leaves some of us with regrets for which we might also feel the need to apologise.

These experiences are shared to some degree by a minority in all generations but there is significant evidence that the 1960s and 70s was a time when awareness of the need for change was stronger. Unfortunately, a sequence of titanic geopolitical struggles that few of us understand even today, a debt-fuelled version of consumer capitalism, and propaganda against both the Limits to Growth and the values of the counterculture, saw most of us following the neoliberal agenda like sheep into the 1980s and beyond.

 

 

After having played with the privilege of free tertiary education, most of us fell for the propaganda and sent our children off to accumulate debts and doubtful benefits in the corporatised businesses that universities became. We convinced our children they needed more specialised knowledge poured down their throats rather than using their best years to build the skills and resilience for the challenges our generation was bequeathing to them. For this we must be truly sorry.

Many of us have been the beneficiaries of buying real estate before the credit-fuelled final stages of casino capitalism made that option a recipe for debt slavery for our children. Without understanding its mechanics we have contributed to – and fuelled with our faith – a bubble economy on a vast scale that can only end in pain and suffering for the majority. While some of us are members of the bank of Mum and Dad, when the property bubble bursts we could find ourselves following the bank chiefs apologising for the debt burden we encouraged our children to take on. Some of us will also have to apologise for losing the family home when we went guarantor on their mortgages. For not heeding the warnings we got with the GFC, we will be truly sorry.

Some of us have used our windfall wealth from real estate and the stock market to do good works, including creating small models of more creative and lower footprint futures that have inspired the minority of the next generations who can also see the writing on the wall. But most of us used our houses as ATMs for new forms of consumption that were unimaginable to our parents, from holidays around the world to endless renovations and a constant flow of updated digital gadgets and virtual diversions. For this frivolous squandering of our windfall wealth we must be truly sorry.

 

While our parents’ generation experienced the risks of youth through adversity and war we used our privilege to tackle challenges of our own choosing. Although some of us had to struggle to free ourselves from the cloying cocoon of middle class upbringing, we were the generation that flew like the birds and hitchhiked around the country and the world. How strange that on becoming parents (many of us in middle age) we believed the propaganda that the world was too dangerous for our children to do the same around the local neighbourhood. Instead we coddled them, got into the chauffeuring business, and in doing so encouraged their disconnection from both nature and community. As we see our grandchildren’s generation raised in a way that makes them an even more handicapped generation, we must be truly sorry for the path we took and the dis-ease we created.

After so many of us experimented with mind-expanding plants and chemicals, some of us were taken down in chemical addictions, but it was dysfunctional and corrupt legal prohibitions more than the substances themselves that were to blame for the worst of the damage. So how strange that when in middle age we got our hands on the levers of power, most of our generation decided to continue to support the madness of prohibition. For this we must be truly sorry: to have seen the light but then continued to inflict this burden on our children and grandchildren. For having acquiesced in the global ‘war on drugs’ that spread pain and suffering to some of the poorest peoples of the world we should be ashamed.

When the ‘war on drugs’ (a war against substances!) became the model for the ‘war on terror’ (war against a concept!) some of us reawakened the anti-war activism of the Vietnam years but in the end we mostly acquiesced to an agenda of trashing international law, regime change, shock and awe, chaos, and the death of millions; all justified by the 9/11 demolition fireworks that killed a small fraction of the number of citizens that die each year as a result of our ongoing addiction to personal motorised mobility.

While the shadow cast by climate change darkens our grandchilden’s future, the shadow of potential nuclear winter that hung over our childhood as not gone away. Many of us were at the forefront of the international movement to rid the world of nuclear weapons and thought the collapse of the Soviet Union had saved us from that threat. Coming into our power after the end of the cold war, our greatest crime on this geopolitical front has perhaps been the tacit support of our generation for first, the economic rape of Russia in the 1990s, and then its progressive encirclement by the relentless expansion of NATO. In Australia we have meekly added our resources and youth to more or less endless wars in the Middle East and central Asia justified by the fake ‘war on terror’. For this weakness as accessories to global crimes wasting wealth and lives to consolidate the western powers’ control of the first truly global empire, we should hang our collective heads in shame.

While some of our generation’s intellectuals continued to critique the ‘war on terror’ as fake, the vast majority of the public intellectuals of our generation, including those on the left, have supported the rapid rise of Cold War 2.0 to contain Russia, China and any other country that doesn’t accept what we now call ‘the rules based international order’ (code for ‘our empire’). This is truly astonishing when looked at in the context of our lived history. Let us hope that sanity can prevail as our empire fades and future generations don’t brand us as the most insane, war-mongering generation of all time. For our complicity in this grand failure of resistance we should be truly sorry.

 


click to order David’s latest

 

On another equally titanic front, the mistake of giving legal personhood to corporations was not one that our generation made. However most of us have contributed our work, consumption and capital to assist these self-organising, profit-maximising, cost-minimising machines of capitalism morphing into emergent new life forms that threaten to consume both nature and humanity in an algorithmic drive for growth. At a time of our seniority and numbers, we failed to use the Global Financial Crisis as an opportunity to bring these emergent monsters to heel. Do our children have the capacity to tame the monsters that we nurtured from fragile infants to commanding masters?

And if they do find the will to withdraw their work, consumption and capital enough to contain the corporations, will the economy that currently provides for both needs and wants unravel completely? This is a burden so great most of us continue to believe we have no responsibility or agency in such a dark reality. We trust that history will not place the burden of responsibility on our generation alone. But for our part in this failure of agency over human affairs we apologise. Further, we should accept with grace the consequences for our own wellbeing.

Most of us feel impotent when thinking of these failures to control the excesses of our era, but on a more modest scale we have mindlessly participated in taking the goods and passing on the debt to future generations. No more so than in our habitual acceptance of antibiotics from doctors to fix the most mundane of illnesses. For our parents’ generation, antibiotics represented the peak of medical science’s ability to control what killed so many of their parents and earlier generations.

For us, they became routine tools to keep us on the job and our children not missing precious days at school. Through this banal practice we have unwittingly conspired with our doctors to rapidly breed resistance to the most effective and low-cost antibiotics. We took for granted that future generations would always be able to work out ways to keep ahead of diseases with an endless string of new antibiotics. For having squandered this gift we are truly sorry.

 

Further, despite the fact that some of us have became vegetarian or even vegan, our generation’s demand for cheap chicken and bacon has driven the industrial dosing of animals with antibiotics on a scale that has accelerated the development of antibiotic resistance far faster than would have been the case from us dosing ourselves and our children. For supporting this and other such obscene systems of animal husbandry we apologise to our grandchildren and succeeding generations and hope that somehow an accommodation between humanity, animals and microbes is still possible.

We experienced and benefited from the emergent culture of rights and recognition for women, minorities and the people of varied abilities, and many of us who fought to extend and deepen those rights have pride in what we did. However some of us are beginning to fear that in doing so we contributed to creating new demands, disabilities, and fractious subcultures of fear and angst unimagined in previous generations. While we might not be in the driving seat of identity politics and culture wars, we raised our children to demand their rights in a world that is unravelling due to its multiple contradictions.

In this emerging context, strident demands for rights are likely to be a waste of valuable energy that younger people might better focus on becoming useful to themselves and others. For overemphasising the demand for rights and underplaying the need for responsible self- and collective-reliance, perhaps we should also be sorry.

And is this escalating demand for rights by younger people itself connected, even peripherally, to the increasing callous disregard for the rights of others? Especially in the case of refugees, this careless disregard has allowed political elites to use tough treatment of the less fortunate to distract from the gradual loss of shared privilege that once characterised the ‘lucky country’. To the shame of those in power over the last two decades (mostly baby boomers) those policies are now being adopted on a larger scale in Europe and the US.

 

 

In our lifetimes religious faith has declined. For many of our generation, this change represents a measure of humanity’s progress from a benighted past to a promising future. But the collective belief in science and evidence-based decision making has now become a new faith, “Scientism”, which seeks to drive out all other ways of thinking and being from the public space. At the same time, religious fundamentalism is now resurgent. Is this too something that our generation unleashed by preaching tolerance while enforcing an ideology we didn’t even recognise as such?

A significant sign of the good intentions of our generation has been our recognition that the ancient war against nature, which has plagued human life since the beginnings of agriculture, and indeed civilisation, must end. One powerful expression of our efforts has been the valuing of the biodiversity of life, especially local indigenous biodiversity. In the ‘New Europes’ of North America and the Antipodes, seeking to save indigenous biodiversity has grown into an institutionalised form of atonement for the sins of the forefathers.

While this seems like one of our achievements, even this we have bastardised with a new war against naturalised biodiversity. Perhaps the worst aspect of this renewed war against novel ecologies is that we have accepted the helping hand of Monsanto in using Roundup as the main weapon in our urban and rural habitats. The mounting evidence that Roundup may be worse than DDT will be part of our legacy. While history may excuse our parent’s generation for naïve optimism in relation to DDT, our generation’s version of the war on nature will not save us from harsh judgement. For this we should be truly sorry.

Of course any public apology in this country invites comparisons to the apology by governments to the stolen generation of Australian indigenous peoples for the wrongs of the past. This unfinished sorry business is beyond the scope of this apology, but it is an opportunity to reflect critically on our common self-perception of supporting indigenous peoples’ rights in contrast to the normalised racism of previous generations.

 

Our generation’s invitation to, and enabling of, Australians of indigenous descent to more fully participate in mainstream Australian society may have been a necessary step towards reconciliation; or could it have been a poison chalice drawing them even deeper into the dysfunctions of industrial modernity that I have already outlined. We can only hope that people with such a history of resilience and understanding in the face dispossession will take these additional burdens in their stride.

In any case, this apology is not one that comes from a position of invulnerable privilege, giving succour to those who are no threat to that privilege. For many baby boomers, now caring for parents and dealing with their deaths, we are more inwardly focused. For some of us, especially those estranged from parents, through this both painful and tender processes we are finally growing up. But a comic tragedy could play out in our declining years if a combination of novel disabilities, the culture of rights and amplified fears lead to our children and grandchildren’s generations mostly experiencing harder times as far worse than they might really be, and deciding we are the cause of their troubles.

We baby boomers will increasingly find that in our growing dependence on young people we will be subject to their perspectives, whims and prejudices. Hopefully we can take what we are given on the chin and along with our children and our grandchildren’s generations we can all grow up and work together to face the future with whatever capacities we have.

We might hope this apology is itself a wake-up call to the younger generations that are still mostly sleepwalking into the oncoming maelstroms. In raising the alarm we might hope our humble apology will galvanise the potential in young people who are grasping the nettle of opportunities to turn problems into solutions.

We hope that this apology might lead to understanding rather than resentment of our frailty in the face of the self-organising forces of powerful change that have driven the climaxing of global industrial civilisation. Finally, the task ahead for our generation is to learn how to downsize and disown before we prepare to die, with grace, at a time of our choosing, and in a way that inspires and frees the next generations to chart a prosperous way down.

 

 

Feb 062019
 
 February 6, 2019  Posted by at 2:52 pm Finance Tagged with: , , , , , , , , , , , , , ,  


Salvador Dali Portrait of Gala with Two Lamb Chops Balanced on Her Shoulder 1933

 

 

Ilargi: It’s been quite a while since we last heard from Dr. D. He was probably busy growing stuff. But he’s back now, and with something dear to my heart: the craziness of our food production systems. Answers to which are not always what most people think, to put it mildly.

 

 

Dr. D:

Eat less meat to save the planet – report (1)
The new diet that could save the planet (2)
What to eat to save the planet: Report urges ‘radical changes’ to world’s diet – less meat, more veggies (3)

 

These headlines, likely sourced from a recent article from “The Lancet” (4) are a regular feature of our time, in diet, in environmentalism, and in global warming. They are well-researched, sourced by the world’s experts, and put forward with the highest intentions. However, they are also completely wrong – dangerously, ignorantly wrong.

Like most industries, agriculture and food production is a specialty, with its own language and details. I don’t attempt to tell the Lancet how to perform heart surgery, for to do so would be ridiculous, dangerous, outside of my expertise. I wouldn’t tell a geologist how to interpret the magnetic layers of rock, or how oceanographers should properly interpret sea water samples to guide us on fishing or pollution. Yet this is what they do for farmers.

The primary drive of most such articles is that, with so many people, and so much hunger, we find that it takes “2,500 gallons of water, 12 pounds of grain, 35 pounds of topsoil and the energy equivalent of one gallon of gasoline to produce one pound of feedlot beef.” that “64% of US cropland produces livestock feed.” (5) That it takes “20 pounds corn [to make] 1 pound beef.” (6) Or that you can get 15lbs of beef per acre, but 263lbs of soybeans. (7) Also that cattle are the primary reason for deforestation, and a major cause of methane.

From these numbers, it’s simple to see that meat, particularly cattle, is anti-environmental, and even anti-human, and it would be the pinnacle of irresponsibility to encourage or even allow them to be eaten. It is a direct affront to the poor, the hungry, and even other citizens in developed countries like ourselves, even though we may be able to afford such things. Simple. A lock. Slam-dunk. No further research required.

Setting aside that we waste half our food, the food we do have is maldistributed, and that we haven’t tapped a fraction of the land we did in say, WWII Britain, setting aside that the water doesn’t vanish, but returns to the water table to be used again, setting aside that the methane released does not contribute to global warming since it is exclusively carbon captured by the grass earlier that year, setting aside that the argument is the same one Malthus had, 250 years wrong, or that removing cattle would amount to the permanent extinction of more than a thousand breeds of animals with a lineage thousands of years old … even all that aside, their argument shows they don’t know anything about land, food, or the process of creating it.

Some other major concerns of economists and environmentalists are 1) environmental destruction from drilling 2) peak oil, 3) production of toxic waste, 4) plastics packaging, 5) dependence on imported energy, 6) CO2 from cars and transportation, and 7) BTUs per calorie of food eaten, as popularized in Kunstler’s “3,000 mile Caesar salad” (8) and this is where our story starts.

 


Deck Family Farm

 

On a farm, one of the major input costs every year is fertilizer, nitrogen, and this is presently produced almost exclusively from a feedstock of natural gas. That is to say, food in the modern agricultural system is literally the eating of unsustainable oil wells. And it’s even worse than that: agriculture is so dependent on synthesized, centralized petroleum fertilizer that it’s no exaggeration to say that without massive, uninterrupted supplies of cheap oil and gas there would be no food. Yields could easily drop by 30%, causing an unprecedented human catastrophe.

What’s more, another of the environmentalists’ grave concerns, topsoil loss and soil depletion would immediately come to the fore, as the only thing keeping today’s depleted fields in production are the artificial inputs directly from oil fields, mostly imported. –And that’s ABOVE the oil needed for the tractors, for the harvesters, for the delivery, for the centralized plant, for the parts, the buildings, food wrapping, for the creation of pesticides, herbicides, the centralized seed production, centralized grain mills…no. For the purposes of this article, we are only talking about cows.

Of course, mankind didn’t start this way, unable to eat a lettuce leaf without a 10,000-mile chain of energy use from foreign, occupied nations and the unwavering support of the worldwide industrial society that supports it. Originally the cows stood on the very grass they ate, eating contentedly, and were butchered and sent to market locally, using not a drop of oil. They did not disturb the fields but indeed enriched them with their foot-traffic and manure. So how did we go from a 0 mile, 0 grain, 0 cost, 0 oil food source to a food that reportedly starves continents and will destroy the world? That is, if cows were good and worked before, maybe the problem lies not with the meat or the cow, but with rabid industrialism?

If petroleum-based fertilizer is our major weakness, the single import that can be shut off to kill billions, surely it’s our duty — a national security emergency even — to close this weakness and find ecological alternatives. And for fertilizer, we have two: one, you can rotate crops to keep fields fallow in rotation, or two, you can replace synthetic fertilizer with animal manure. In fact, synthetic fertilizer is but a poor, harmful replacement for the manure farmers have used for 5,000 years – it has only nitrogen, potassium and potash, and nothing of the thousand other nutrients required of healthy soil.

 

It has no biosphere, no heat, no water, and no organic matter. The resulting soil depletion is a prime cause of desertification and topsoil loss, to say nothing of constantly lower yields. Its very use destroys the soil in the way steroids destroy health while giving the illusion of strength. They should probably be banned not for environmental reasons, but for long-term efficiency and national security. And there is only one replacement for this toxic, destructive, unreliable, expensive input: animal manure.

Worse, this cannot be chicken, sheep, or pig, adequate as they are. Pig and chicken are too concentrated and toxic and require other petroleum processes to dilute and deliver. Sheep is too mild and not in quantity, for sheep do not favor containment. Home composting could never produce a fraction of the volume needed for the world’s fields without the same massive petroleum inputs in tractors, trucks, chippers, conveyors, and all the factories, railways, and steel mills that create them. That leaves largely one source: cattle.

So in this new ecological world we imagine, we would have to grow cattle simply for the required fertilizer. And these cattle cannot be far! Unlike synthetic fertilizer, manure is wet, heavy, and dilute. It cannot be centralized into today’s poisonous sewage ponds, nor shipped coast to coast: it must be created near the fields that require it. As the world is enormously varied, you must also have breeds attuned to each locality’s weather and needs, perhaps creating a thousand unique varieties.

Tiny Kerry cattle for the bogs of Ireland, bony Longhorns for the deserts of Texas, Alpine Braunvieh for the steep mountains of Switzerland, or a hearty Fjäll for the frozen lands of Sweden. Nor can the farms be concentrated or specialized: without mass inputs of machinery or petroleum, and lacking harmful dry fertilizer, the farms must be small, dispersed, and varied, local in scope, diverse in production, specializing in their region and feeding only people nearby. Once you can’t ship mass quantities virtually for free, from reliable, nearly free energy, there is no other way.

 


Earth Repair Corps

 

Now you can’t get that fertilizer for nothing, and we don’t get it for nothing now. You have to have input costs for our fertilizer factory. And for cattle that input is grass; fields and fields of it, probably near 1-2 acres per cow. Is that bad? Irresponsible? How does that compare to drilling in ANWAR, and delivering via the Exxon Valdez? How is the sourcing from Iraq, transported via Syria, or the digging of tar with a payloader in the freshwater swamps of Alberta?

Now you can get 1, 2, even 3 cuttings a year of hay in temperate climates, and the cow is happily producing this valuable fertilizer all the time, without embargoes, financial disruptions, or delivery costs. But nevertheless, 25% of your fields will be put out of service in order to environmentally, sustainably source this necessary input for next year’s grain.

But not to fear! You know what? You can EAT the components of this essential, life sustaining fertilizer production factory! Yes, you can! Even better, you can eat butter, cheese, yogurt and yes, even ice cream! These very things you would NOT have without running this fertilizer mill that you would be forced to run even if they did nothing at all. Even more, you can down-stream the whey from your milk-preservative process to feed pigs! I’m not making this up!

Yes, by the very fact of creating fertilizer you had to produce in any case, you can also eat bacon! And you essentially have to, because otherwise this valuable milk-byproduct will go to waste. Nor can the pigs be far. You must have farms that are small in scale, varied in production, and local to the community. This will, of course, make them especially resilient to every challenge: financial, ecological, or human, be it from global warming or global warring.

The diverse, smaller-scale of these farms unfortunately require smaller business units to run them, such as the millions of local families presently unemployed, and sadly force cattle and other animals to free-range on the fields in the sunshine, as their ancestors did. But we all make sacrifices.

 

More, this small, diverse, decentralized food production system cannot aggregate mass quantities for mass market. Cows are not all the same, arriving by tens of thousands in the same 100-acre slaughterhouse, but because dissimilarity hampers assembly-line processes, the food would be produced in smaller batches, closer to home, more directly, without the wasting fuel and CO2 to ship them worldwide, and without the 31 flavors of plastics packaging which don’t make economic sense at this scale. –The French market model, as it were, local in the streets of your own town, fresh and unique.

You see, what they didn’t ask and forgot to research is that in order to grow those 263lbs of soybeans, you have no alternative but to have 1:4 of your fields fallow, resting, doing nothing. That’s now 197lbs per acre. Neither can you do that every year without input, so using another field to add this fertilizer, you have 131lbs/acre, really. The fallow land required of a world without oil inputs means 1/2 of the world’s production is offline at any given time, starving people.

What a drag! But you COULD, if you’re very clever, plant a wild, nitrogen-fixing plant on that fallow ground, creating both green manure for next year’s soybeans, AND running your cattle-driven fertilizer factory at no additional cost! Not only do you get the ONE field green-manured, and ANOTHER field cow-manured, but you could, if you’re very smart, get that otherwise useless, fallow field to grow ANOTHER crop of milk and beef, and downstream, chickens and pigs, absolutely FREE! THREE fields for the price of one.

What would you expect to pay for this richness, this agricultural, ecological magic trick? $1 trillion? $5 trillion for our green-energy, planet-saving, CO2-reducing “Green New Deal”? One that’s proven and can actually work because it follows the laws of thermodynamics? Surely it’s worth any cost if it saves the planet and takes a huge chunk off oil drilling, oil wars, and global warming.

Answer is: nothing. What I’ve just described is western agriculture, as developed since the 1500s. Anyone who’s ever looked at a farm, read a wikipedia entry, or took a history class knows this. Every medieval peasant knows this. Every hillbilly farmer from Iowa knows this. Except for all the modern journalists and The Lancet, all of whom all eat these very foods every day without the slightest spark of where they come from.

 


Night Owl Farm

 

You see, it doesn’t matter if cows are less efficient than soybeans, they exist in a SYSTEM, and that system has many inputs and many parameters. Reading a statistic doesn’t grow a plant to market any more than my reading about scalpels makes me a surgeon. There are many other possibilities, requirements, inputs: they speak of overgrazing, such as dry lands in Africa, when in fact, rotational OVERgrazing replenishes the soil and INCREASES the yields.

What’s more, a very great deal of the reported “arable” land on earth is not productive. It is too dry, such as Texas; too steep, such as Colorado; too variable cold, like Montana; or too far from market, like Afghanistan. You can’t grow soybeans or corn there even if you wanted, and you couldn’t ship kale from Kabul to London at cost, so their “statistics” about arable land and production mean nothing. …Worse than nothing, as they are so misleading as to be completely wrong.

Wrong in the way that enormous, world-changing decisions, subsidies, and wars are made, wrong in the way Stalin thought to modernize and mechanize agriculture in the Ukraine to get it out of the 1500s, and killed 7 million people in a single year. Wrong because not every square mile of land is equivalent, and only the crop that grows and has enough value to ship can be produced there. That’s why they make whiskey in the Appalachians and cheese in the Alps: the value to market has to be so much higher, high enough to transport, or no food will be produced at all.

 

That’s why they grow wild pigs in the Dehesa of Spain: because otherwise those forests would feed no one. But scientists and journalists don’t know this, even though it’s on the Food Channel each night.

What’s more, their scientific white-room system is orders of magnitude less efficient than the medieval method. Hundreds of random foods are wasted on the farm. Should they be dropped, as the labor cost/hour is too high to economically recover them? Should we waste the time and petrol to compost them into biogas? No. Farm waste, and waste through every warehouse, rail car, grocer, and restaurant can be eaten by chickens. Then not only do you get the compost anyway, in manure, not only do you also get a lifetime of eggs, for free, YOU GET A CHICKEN. All from the grass, the seeds, the bugs…and the food waste they already abandon.

But this doesn’t come without a cost. Brace yourself for this, people, because in order to achieve this level of bounty and efficiency, you will have to EAT these animals rather than let them die of old age and disease and be eaten by dogs and beetles. You, yes you, if you want an ecological, happy-animal, local-economy, sustainable, anti-CO2, food-producing world, not only CAN eat meat, but you are REQUIRED to. …As did a thousand generations of your ancestors, back to the very first day of man, slashing and clearing a field so the deer would come.

So try to be at least as smart as an illiterate medieval peasant and grow your food the natural way: locally, seasonally, independently, with happy animals in a rich green world of fields, trees and farms enriched with thousands of subvarieties of biodiversity in hedgerows so rich they have yet to be fully cataloged. A far cry from the hardened, drilled, paved, expensive, destructive, unsustainable, dangerous, lethal, impoverished way promoted by the scientific experts and the journalists who cover them.

 

 

Nov 112018
 
 November 11, 2018  Posted by at 10:39 am Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Christ in the garden of olives 1889

 

China Can Never Allow Its Housing Bubble To Burst (ZH)
One Thing Unites Britain (O.)
Four UK Ministers On Verge Of Quitting, EU Rejects Latest Plan (R.)
Top Tory Says Theresa May Is ‘Handing Power To EU’ In Brexit Deal (G.)
Khashoggi Murder Fails To Stop Britain Selling Arms To The Saudis (O.)
Saudi Arabia Wants To Cut OPEC Allies Oil Output By Up To 1 Million Bpd (R.)
Court Clears Rome’s Mayor Of Cronyism And Abuse Of Power (G.)
2 Koreas Complete The Disarming Of 22 Guard Posts (AP)
Moorside’s Atomic Dream Was An Illusion. Renewables Are The Future (G.)
Next Generation ‘May Never See The Glory Of Coral Reefs’ (G.)
Why Women Have Better Sex Under Socialism (G.)

 

 

50 million empty apartments. ‘Real’ estate holds 75% of Chinese private ‘assets’. There can hardly be a more dangerous concept for the global economy.

China Can Never Allow Its Housing Bubble To Burst (ZH)

Back in 2017, we explained why the “fate of the world economy is in the hands of China’s housing bubble.” The answer was simple: for the Chinese population, and growing middle class, to keep spending vibrant and borrowing elevated, it had to feel comfortable and confident that its wealth would keep rising. However, unlike the US where the stock market is the ultimate barometer of the confidence boosting “wealth effect”, in China it has always been about housing as three quarters of Chinese household assets are parked in real estate, compared to only 28% in the US, with the remainder invested financial assets. Beijing knows this, of course, which is why China periodically and consistently reflates its housing bubble, hoping that the popping of the bubble, which happened in late 2011 and again in 2014, will be a controlled, “smooth landing” process.

For now, Beijing has been successful in maintaining price stability at least according to official data, allowing the air out of the “Tier 1” home price bubble which peaked in early 2016, while preserving modest home price appreciation in secondary markets. How long China will be able to avoid a sharp price decline remains to be seen, but in the meantime another problem faces China’s housing market: in addition to being the primary source of household net worth – and therefore stable and growing consumption – it has also been a key driver behind China’s economic growth, with infrastructure spending and capital investment long among the biggest components of the country’s goalseeked GDP.

One result has been China’s infamous ghost cities, built only for the sake of Keynesian spending to hit a predetermined GDP number that would make Beijing happy. Meanwhile, in the process of reflating the latest housing bubble, another dire byproduct of this artificial housing “market” has emerged: tens of millions of apartments and houses standing empty across the country. According to Bloomberg, soon-to-be-published research will show that roughly 22% of China’s urban housing stock is unoccupied, according to Professor Gan Li, who runs the main nationwide study. That amounts to more than 50 million empty homes.

Read more …

Britain is shrinking away from not just Europe, but the world, unable to focus on anything other than its domestic squabbles.

One Thing Unites Britain (O.)

[..] Theresa May has always hung on in the belief that, when it came to the crunch moment, when a deal was on offer that would take the UK out of the EU on 29 March next year, her party and the country would unite sufficiently behind her to allow a withdrawal agreement to pass through parliament. The country would rally behind her vision of Brexit. But instead, as people become more aware of what leaving the EU entails, many MPs believe the reverse may be happening. [..] With more Tory Remainers and Leavers now opposing her, May’s task is daunting. Downing Street’s immediate task is to get her deeply split cabinet to unite around the final unresolved element of a potential deal with the EU: the legally complex issue of how to avoid a hard border between Northern Ireland and the Republic after Brexit.

Downing Street knows it is in a race against time. May is desperate to put a motion before the House of Commons before Christmas, in the hope that, somehow, it will pass. No 10 has pencilled in a cabinet meeting for early this week, probably on Tuesday. But disagreements remain among her most senior ministers over how the UK would exit from the so-called “backstop” agreement, under which the whole of the UK would remain in the EU customs union until a final UK-EU trade deal is struck. Several cabinet ministers are unhappy with what they fear will be fudged wording in the withdrawal agreement that fails to chart a clear path to exit the backstop. They want to see the full legal advice and want guarantees that the EU will not be able to prevent the UK breaking free from its system once and for all, so that it can strike its own trade deals.

Read more …

It’s still the Irish hard border. And they’re still no closer to a solution.

Four UK Ministers On Verge Of Quitting, EU Rejects Latest Plan (R.)

Four British ministers who back remaining in the European Union are on the verge of quitting Theresa May’s government over Brexit, the Sunday Times reported, as pressures built on the prime minister from all sides. The newspaper also said that the European Union had rejected May’s plan for an independent mechanism to oversee Britain’s departure from any temporary customs arrangement it agrees. The newspaper sourced the development to British sources, and not sources in the EU team. May is trying to hammer out the final details of the British divorce deal but the talks have become stuck over how the two sides can prevent a hard border from being required in Ireland.

Britain has proposed a UK-wide temporary customs arrangement with the EU to resolve the issue but Brexiteers in her party want London to have the final say on when that arrangement would end, to prevent it from being tied indefinitely to the bloc. A senior cabinet minister was quoted in the paper as saying: “This is the moment she has to face down Brussels and make it clear to them that they need to compromise, or we will leave without a deal.” An EU diplomat told Reuters earlier on Saturday that they were cautiously hopeful that an EU summit could happen in November to endorse the deal but that the volatile situation in Britain made it very difficult to predict.

Read more …

Well, May herself doesn’t appear to know what to do with that power.

Top Tory Says Theresa May Is ‘Handing Power To EU’ In Brexit Deal (G.)

Theresa May was accused last night by a former cabinet colleague of planning the “biggest giveaway of sovereignty in modern times”, as she faced a potentially devastating pincer movement from Tory remainers and leavers condemning her Brexit plans. The day after Jo Johnson, the pro-remain brother of former foreign secretary Boris Johnson, resigned from the government and called for a second referendum on Brexit, former education secretary Justine Greening launched an attack on the prime minister, saying her plans would leave the country in the “worst of all worlds”. Piling yet more pressure on May, Greening – who resigned from the cabinet in January – backed the former transport minister’s call for another public vote and said MPs should reject the prime minister’s deal.

Greening told the Observer: “The parliamentary deadlock has been clear for some time. It’s crucial now for parliament to vote down this plan, because it is the biggest giveaway of sovereignty in modern times. “Instead, the government and parliament must recognise we should give people a final say on Brexit. Only they can break the deadlock and choose from the practical options for Britain’s future now on the table.” Greening added: “Like many of us, Jo Johnson is a pragmatist on Britain’s relationship with the EU. But Conservative MPs can increasingly see that this sovereignty giveaway from No 10 leaves our country with less say over rules that govern our lives … That is not in the national interest, it’s the worst of all worlds and it resolves nothing.”

Read more …

Even as the UK has also received the audio from Turkey.

Khashoggi Murder Fails To Stop Britain Selling Arms To The Saudis (O.)

Britain has pursued its assiduous courtship of Saudi Arabia despite the murder of the journalist Jamal Khashoggi, with diplomats and Ministry of Defence officials meeting their counterparts in the kingdom to discuss closer economic, military and political ties. The discussions have taken place as Britain enters the final phase of negotiations to sell more Typhoon jets to Riyadh. They are similar to those used in the Saudi-led bombing of Yemen in a war that has caused a humanitarian disaster.

Britain sells billions of pounds of weapons to the countries bombing Yemen and is keen to strengthen its ties after Brexit. In July last year, the government confirmed it had created a dedicated Gulf region working group to promote “high-level dialogue with key trading partners to progress our trade and investment relationships”. Since then, civil servants have regularly visited the region for confidential talks to prepare for future deals once Britain leaves the European Union. A delegation from the Department for International Trade visited the Eastern Province chamber of commerce in Dammam in Saudi Arabia on 2 October – the day Khashoggi was murdered.

Alastair Long, the UK’s deputy trade commissioner for the Middle East and director of trade for Saudi Arabia, stressed that Britain was keen to create alternative markets and that Saudi Arabia “is at the head of these markets”. On 31 October, another UK government delegation visited Riyadh for a meeting with the Gulf Cooperation Council secretariat. A press release from the council said the meeting discussed expanding “the horizons of political, security, military and commercial cooperation”

Read more …

Much discussed before: smaller producers have only one reaction to falling prices: produce more (if they can).

Saudi Arabia Wants To Cut OPEC Allies Oil Output By Up To 1 Million Bpd (R.)

Saudi Arabia is discussing a proposal to cut oil output by up to 1 million barrels per day by OPEC and its allies, two sources close to the discussions told Reuters on Sunday. The sources said the discussions were not finalized as much depended on the reduction in Iranian exports. “There is a general discussion about this. But the question is how much is needed to reduce by the market,” one of the sources said, speaking in Abu Dhabi where a market monitoring committee is due to be held on Sunday, attended by top exporters Saudi Arabia and Russia.

Asked by reporters in Abu Dhabi if the market is in balance, Saudi Energy Minister Khalid Al-Falih said: “We will find out. We have our meeting later.” Al-Falih last month said there could be a need for intervention to reduce oil stockpiles after increases in recent months. The United States this month imposed sanctions curtailing Iran’s oil exports as part of efforts to curb Tehran’s nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.

Read more …

Smearing M5S has become less easy.

Court Clears Rome’s Mayor Of Cronyism And Abuse Of Power (G.)

The Rome mayor, Virginia Raggi, has been cleared of cronyism and abuse of power after a judge ruled that the alleged offence did not constitute a crime. Prosecutors had called for a 10-month jail term over allegations that Raggi, from the anti-establishment Five Star Movement, lied to investigators over the appointment of Renato Marra, the brother of one of her close aides, as Rome’s tourism chief. His brother Raffaele, the former head of staff at Rome city hall, faces separate corruption allegations. The accusations emerged not long after Raggi was elected as Rome’s first female mayor in June 2016. Had she been convicted she would have been forced to resign as mayor, in line with the Five Star Movement’s code of ethics.

She wept upon hearing the ruling, saying afterwards: “This sentence wipes out two years of mud-slinging. We’ll go forward with our heads held high for Rome, my beloved city, and for all citizens.” Luigi Di Maio, the Five Star Movement leader and Italy’s deputy prime minister, celebrated the court ruling while using the opportunity to criticise journalists whom he accused of “attacking Italy’s most massacred mayor” for two years and generating “fake news” to bring her down. “Go Virginia! I am happy for always having defended you and believed in you,” he wrote on Facebook.

Read more …

There are people who genuinely want peace. Get out of their way.

2 Koreas Complete The Disarming Of 22 Guard Posts (AP)

The North and South Korean militaries completed withdrawing troops and firearms from 22 front-line guard posts on Saturday as they continue to implement a wide-ranging agreement reached in September to reduce tensions across the world’s most fortified border, a South Korean Defense Ministry official said. South Korea says the military agreement is an important trust-building step that would help stabilize peace and advance reconciliation between the rivals. But critics say the South risks conceding some of its conventional military strength before North Korea takes any meaningful steps on denuclearization — an anxiety that’s growing as the larger nuclear negotiations between Washington and Pyongyang seemingly drift into a stalemate.

South Korea reportedly has about 60 guard posts — bunker-like concrete structures surrounded with layers of barbed-wire fences and manned by soldiers equipped with machine guns — stretched across the ironically named Demilitarized Zone. The 248-kilometer (155-mile) border buffer peppered with millions of land mines has been the site of occasional skirmishes between the two forces since the 1950-53 Korean War. The North is believed to have about 160 guard posts within the DMZ.


In this Nov. 4, 2018, photo provided by South Korea Defense Ministry, a yellow flag is raised at a guard post of South Korea in the demilitarized zone, South Korea. A South Korean Defense Ministry official said on Saturday, Nov. 10, 2018, the North and South Korean militaries have completed withdrawing troops and firearms from 22 front-line guard posts as they continue to implement a wide-ranging agreement reached in September to reduce tensions. The flag marks the post that is to be dismantled so that each side can observe the work in progress.

Read more …

Sorry, but no. Using much less energy of any kind is the future. Voluntarily or forced. That’s what we should prepare our societies for.

Moorside’s Atomic Dream Was An Illusion. Renewables Are The Future (G.)

Toshiba’s decision to pull out of building a nuclear power station in Cumbria last week will cause shockwaves far beyond the north-west of England. The outcome is a disaster for the surrounding area, which is heavily reliant on the nuclear industry for jobs and prosperity. Local politicians admit it is a blow and a disappointment for Cumbrians hoping for roles at the proposed Moorside plant. They say they genuinely believe a new buyer for the site will come forward. But that looks like wishful thinking. To an extent, the demise of Moorside can be attributed to problems with it as a specific project. It has looked doomed since Toshiba’s US nuclear unit, Westinghouse, declared bankruptcy in 2017 and the company ruled out new nuclear investments outside of Japan.

Efforts to woo the South Korean energy company Kepco as a buyer then floundered. The executive leading the sale for Toshiba blamed the failure to find a buyer on being “caught between a series of unplanned and uncontrollable events”. But the end of Moorside is also emblematic of the wider challenges that new nuclear faces. It took a decade from Tony Blair signalling the UK’s renewed interest in nuclear power in 2006 for France’s EDF Energy and the British government to sign a generous subsidy deal and green-light Hinkley Point C, the UK’s first new nuclear plant in a generation. In all likelihood, it will not be generating electricity until 2027. Ministers insist new nuclear power stations are still an essential way of hitting the country’s greenhouse gas emission targets and providing energy security as old plants are switched off in the 2020s.

Losing Moorside means there are just five other new nuclear projects planned, including Hinkley Point C. Eyes will now turn to Hitachi’s proposed Wylfa Newydd plant on Anglesey. The project is the furthest along the line after Hinkley, but it’s far from a done deal. The new nuclear drive was meant to be solely funded by the private sector, but the government has already made a striking exception in the case of Wylfa. Ministers have promised Hitachi they will use public money to take a £5bn stake in the scheme. Such a dramatic U-turn on policy is explained by the fact that Wylfa is about more than the UK’s desire for new nuclear: it is also about cooperation with Tokyo and bringing forth other investment from Japanese firms, such as carmakers, after Brexit.

Read more …

We get the drift, but we also know only a small part of 1 or 2 generations of mankind have ever ‘seen’ coral reefs. And most people only do ‘see’ them in pics and movies. You might want to think about that. it’s definitely not about you ‘seeing’ coral reefs or rhino’s or orangutans. It’s about something else.

Next Generation ‘May Never See The Glory Of Coral Reefs’ (G.)

Children born today may be the last generation to see coral reefs in all their glory, according to a marine biologist who is coordinating efforts to monitor the decline of the world’s most colourful ecosystem. Global heating and ocean acidification have already severely bleached 16 to 33% of all warm-water reefs, but the remainder are vulnerable to even a fraction of a degree more warming, said David Obura, chair of the Coral Specialist Group in the International Union for the Conservation of Nature. “It will be like lots of lights blinking off,” he told the Observer. “It won’t happen immediately but it will be death by 1,000 blows. Between now and 2 degrees Celsius, we will see more reefs dropping off the map.”

Obura added: “Children born today may be the last generation to see coral reefs in all their glory. Today’s reefs have a history going back 25 million to 50 million years and have survived tectonic collisions, such as that of Africa into Europe, and India into Asia. Yet in five decades we have undermined the global climate so fundamentally that in the next generation we will lose the globally connected reef system that has survived tens of millions of years.”

Read more …

Headline obviously for effect. But interesting theme. Still, is it capitalism that is to blame for suppressing women, or patriarchy?

Why Women Have Better Sex Under Socialism (G.)

This book has a simple premise: “Unregulated capitalism is bad for women,” Kristen Ghodsee argues, “and if we adopt some ideas from socialism, women will have better lives.” Ghodsee is an ethnographer who has researched the transition from communism to capitalism in eastern Europe, with a particular focus on gender-specific consequences. “The collapse of state socialism in 1989 created a perfect laboratory to investigate the effects of capitalism on women’s lives,” she writes. Less regulated economies, she finds, place a disproportionate burden on women. Women subsidise lower taxes through their unpaid labour at home. Cuts to the social safety net mean more women have to care for children, the elderly and the sick, forcing them into economic dependence.

Ghodsee contends that without state intervention, the private sector job market punishes those who bear and raise children and discriminates against those who might one day do so. The government is better at ensuring wage parity across different groups than the private sector, and economies with more public sector jobs tend to have more gender equality, too. Women bear the brunt of capitalism’s cyclical instability, and are often the last to be hired and the first to be fired in economic downturns. They are paid less, they have less representation in government and, she writes, all of this affects their sexuality. The less economic independence women have, the more sexuality and sexual relationships conform to the marketplace, with those who are disadvantaged in the free market pursuing sex not for love or pleasure but for a roof over their heads, health insurance, or access to the wealth or status that capitalism denies them.

Read more …

Oct 092018
 
 October 9, 2018  Posted by at 1:03 pm Primers Tagged with: , , , , , , , , , ,  


Pieter Bruegel the Elder Two monkeys 1562

 

And there we go again. Another IPCC report, and they all keep getting more alarming than the previous one. And then nothing substantial happens. Until the next report is issued and makes everybody’s headlines for a day, or two. Rinse, spin and repeat. “Now we really have to do something!”. “World leaders have a moral obligation to act!”.

Oh boy. To start with that last bit, world leaders don’t act because of moral obligations. They act to stay in, or get in, power. And they all know that to achieve that goal they must keep their people happy, even if dictators do this differently from ‘democratically elected’ leaders.

The first tool they have for this is control of the media, control of the narratives that define -or seem to- their societies. If a society is in bad shape, they will control the media to show that it is doing fine. if it’s actually doing fine, they will make sure all the praise for this is theirs and theirs alone.

So what makes their people happy? One thing far ahead of anything else is material comfort. If leaders can’t convince people that they’re comfortable, their power is in danger. Once enough people are miserable or hungry, a process is set in motion that threatens to push leaders aside in favor of someone who promises to make things better. There’s never a shortage of those.

 

Leaders, politicians, think short-term. They may see further into the future than the next election, but that is not useful information. If they enact measures aimed at 10 years from today or more, they risk being voted out in 2 years, or 4. It’s not even their fault, it’s how the system works. It is different for dictators, but not even that much.

The general notion is clear. But that means we can’t rely on our leaders to act against the climate change the IPCC keeps warning of. because is has a -much- longer time window than the next elections -or the next coup in dictator terms. Even if every IPCC report depicts a shorter window than the last one, it’s still not inside those 4-year election cycles (numbers vary slightly, 4 is typical).

A typical ‘response’ to the climate threat are the COP meetings and agreements. I have fulminated plenty against COP21, the Paris accord, even named it CON21. Because that was signed by those very leaders tied down in their election cycles. Completely useless. That most of the other signees were business leaders who represent oil companies, airlines and Big Tech with huge server parks seals the reality of the deal.

These are not the people who will solve the problems. They have too much interest in not doing so. The CEO’s have their profits to think about, the politicians their elections. They should be kept out of the decision-making process. But they’re the only ones who are in it.

I still think the issue was never better epitomized than in the December 2016 piece in the Guardian by Michael Bloomberg and Mark Carney entitled “How To Make A Profit From Defeating Climate Change” , about which I said at the time:

These fine gents probably actually believe that this is perfectly in line with our knowledge of, say, human history, of evolution, of the laws of physics, and of -mass- psychology. All of which undoubtedly indicate to them that we can and will defeat the problems we have created -and still are-, literally with the same tools and ideas -money and profit- that we use to create them with. Nothing ever made more sense.

That these problems originated in the same relentless quest for profit that they now claim will help us get rid of them, is likely a step too far for them; must have been a class they missed. “We destroyed it for profit” apparently does not in their eyes contradict “we’ll fix it for profit too”. Not one bit. It does, though. It’s indeed the very core of what is going wrong.

Profit, or money in general, is all these people live for, it’s their altar. That’s why they are successful in this world. It’s also why the world is doomed. Is there any chance I could persuade you to dwell on that for a few seconds? That, say, Bloomberg and Carney, and all they represent, are the problem dressed up as the solution?

This week’s IPCC report says the efforts to keep warming at acceptable levels (1.5ºC) will cost many trillions of dollars every year. But a billionaire publisher and a central bank head want to make a profit?! Hey, perhaps they can, as long as you and I pay… But they won’t solve a thing. if only because not doing that will be too profitable. Still, while they’re at it, maybe they can do us a favor.

You see, what is hardly ever mentioned, let alone acknowledged, is that we have more than one major existential problem, and they exist in such a form of symbiosis that solving only one doesn’t make much difference.

We have a changing climate, we have accelerating species extinction, we have plastics in our fish, and we have a global economy that’s about to topple over. The common thread in all these is an overkill in energy use and therefore an overkill in waste. Thermodynamics, 2nd law. Waste kills. By raising temperatures, finishing off wildlife, plugging rivers and oceans with plastics, making increasing amounts of people economically miserable.

But as I wrote a while ago, our economies exist to produce waste, it’s not just a by-product -anymore-. If we stop making things we don’t need, and things that do harm to our world and our lives, our economies will collapse. We must continue on our path or see our lifetstyles plummet. They will anyway, we’re just delaying the inevitable, but we’re stuck.

And politicians are utterly useless and utterly unfit in situations like this. But ask yourself: are you any better? If you were told that in order to ‘save the planet’, you’d have to cut your energy use in half, which would take away many of your comforts and luxuries, would you do it?

A better question yet is, if you would agree to do that, and then see that your neighbor does not, would you still cut your driving and flying and electricity? That’s hard enough on an individual level, but how about if one nation does, while another refuses? Or when nations that have much lower per capita energy consumption tell the West: you go first?

 

What do you think the odds are that we’ll find a global solution, approach, before the 2030 cutoff date the IPCC provides in its latest report? While the likes of Bloomberg and Carney still talk about climate change as a profit opportunity? I know what I think.

The report says we need to drastically ‘reform’ our economies and lifestyles. Cutting our energy use in the West in half won’t be enough, if only because billions of people demand more energy at their disposal. Will you cut into your lifestyle, will your children, when they see their neighbors increasing their energy use, when they see entire nations increase theirs?

We don’t have ‘leaders’ that can stop species extinction or a warming planet or an economic collapse, because they either are clueless or they will be voted out of power if they tell the truth. Extend and pretend is a term that’s used to describe economic policies a lot, but it actually paints an accurate picture of everything we do.

“Free”, surplus, energy can come in the shape of sugar in a petri dish full of bacteria, or of stored carbon on planet earth. In both cases, the outcome is as predictable as can be. Can we, with our billions of cars and billions of miles flown every year, and billions of phones and computers, return to the energy use of only 100 years ago? Don’t think so.

On the contrary, we’re constantly increasing our energy consumption. Just like the bacteria do in the petri dish. Until they no longer can, until reality, physics, thermodynamics, sets a limit. One of my favorite themes is that we are the most tragic species ever because we can see ourselves doing things that we know are harmful to us, but we can’t stop ourselves from continuing.

The best we can hope for is that tomorrow morning everything will be the same again as where we started today. But no, that’s not sufficient, either, many of the things we’ve unleashed have 20+ year runtimes, and they’re already baked into the cake of our futures. We can’t start afresh every morning, no Groundhog Day for us. Every morning the alarm goes off things have gotten worse. And we can’t stop that.

 

 

Jun 222018
 
 June 22, 2018  Posted by at 8:08 am Finance Tagged with: , , , , , , , , , , , , ,  


Wassily Kandinsky Yellow-Red-Blue 1925

 

Could China’s Next Target Be the US Housing Market? (Forsyth)
Next Central Bank Puts QE Unwind on the Calendar (WS)
Eurogroup Deal For Greece Clinched After Marathon Session (K.)
IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)
Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)
Greek GDP Is Low, But Food Prices Are High (K.)
EU Is Getting Ready For No-Deal Brexit – Juncker (G.)
Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)
Energy Is The Primary Driver Of The Economy (EI)
Italy To Pick Up Migrants, Impound German Charity Ship (R.)
People Donate Millions To Help Separated Families (AP)
2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)
Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)
India Is Facing Its Worst-Ever Water Crisis (ZH)

 

 

They can’t really sell Treasuries. MBS, though…

Could China’s Next Target Be the US Housing Market? (Forsyth)

While so much attention is focused on foreign purchases of Treasuries, the big action has been in U.S. agencies, most of which consist of mortgage-backed securities from government-sponsored Ginnie Mae, Fannie Mae, and Freddie Mac. In April, overseas investors bought $20 billion of agencies, bringing their 12-month total to $186 billion, or over $100 billion more than Treasuries. Asia accounted for $160 billion of those purchases, including $24 billion from China. U.S. corporations also get key support for their borrowing habit from abroad. Foreign investors bought $128 billion of corporate bonds in the latest 12 months, although just $1.6 billion in April. As for equities, overseas investors bought $82 billion ($6 billion in the latest month).

The numbers show that, even more than Uncle Sam, U.S. home borrowers depend on the kindness of strangers. China could retreat from bolstering the American housing market merely not reinvesting the monthly MBS interest and principal payments, resulting in a stealth tightening of mortgage credit. The housing market is already in the doldrums, as May’s weaker-than-expected existing home sales at an annual rate of 5.43 million, 100,000 less than forecast and below April’s 5.45 million annual pace. That disappointing home sales pace comes with unemployment at just 3.8%. But with single-family home prices up 5.2% from a year ago, home sales are sluggish. A further push up in mortgage rates, already at seven-year highs, would further crimp this key sector of the U.S. economy.

Read more …

Do we see nerves there?

Next Central Bank Puts QE Unwind on the Calendar (WS)

Markets were surprised today when the Bank of England took a “hawkish” turn and announced that three out of nine members of its Monetary Policy Committee – including influential Chief Economist Andrew Haldane, who’d been considered dovish – voted to raise the Bank Rate to 0.75%, thus dissenting from the majority who kept it at 0.5%. This dissension, particularly by Haldane, communicated to the markets that a rate hike at the next meeting in August is likely. The beaten-down UK pound jumped. But less prominent was the announcement about the QE unwind. Like other central banks, the BoE heavily engaged in QE and maintains a balance sheet of £435 billion ($577 billion) of British government bonds and £10 billion ($13 billion) in UK corporate bonds that it had acquired during the Brexit kerfuffle.

Before it starts shedding assets on its balance sheet, however, the BoE wants to raise the Bank Rate enough to where it can cut it “materially” if needed, “reflecting the Committee’s preference to use Bank Rate as the primary instrument for monetary policy,” as it said. In this, it parallels the Fed. The Fed started its QE unwind in October 2017, after it had already raised its target range for the federal funds rate four times. The BoE’s previous guidance was that the QE unwind would start when the Bank Rate is “around 2%.” Back in the day when this guidance was given, NIRP had broken out all over Europe, and pundits assumed that the BoE would never be able to raise its rate to anywhere near 2%, and so the QE unwind could never happen.

Today the BoE moved down its guidance about the beginning of the QE unwind to a time when the Bank Rate is “around 1.5%.” The Fed’s target range is already between 1.75% and 2.0%. The Fed leads, other central banks follow. And by August 2, the BoE’s Bank Rate may be at 0.75%. From that point forward, the QE unwind may only be three rate hikes away.

Read more …

Many headlines talk about debt relief. But that’s not what this is. It’s just another bunch of loan extensions and a €15 billion new loan. There will be many more years of austerity and creditor oversight. No, the bailout has not been completed.

Eurogroup Deal For Greece Clinched After Marathon Session (K.)

After several hours of negotiations, Greek officials and representatives of the country’s international creditors reached an agreement on securing the sustainability of the country’s debt in the early hours of Friday. Greece is to receive a loan tranche of 15 billion euros (3.3 billion euros of which would be used to pay off part of the country’s debt to the ECB and IMF), European officials said. Greece will also get a 10-year extension for the repayment of its European Financial Stability Facility (EFSF) loans and an additional grace period of 10 years on interest payments. The extension of the repayment period of the EFSF loans and the size of the final bailout tranche had been a sticking points in the talks.

These two issues were the focus of several trilateral meetings between Greek Foreign Minister Euclid Tsakalotos and his French and German counterparts, Bruno Le Maire and Olaf Scholz. At a press conference announcing the details of the deal, European Economic and Financial Affairs Commissioner Pierre Moscovici spoke of a “historical moment for Greece” and said a new chapter was beginning for the country. He expressed “great satisfaction” in seeing Greece emerge from eight years of financial support.

“Tonight’s Eurogroup agreement achieves what we have been calling for, a credible, upfront set of measures, which will meaningfully lighten Greece’s debt burden, allow the country to stand on its own two feet, and reassure all partners and investors,” he said. Eurogroup President Mario Centeno struck a similar note. “This is it,” he said. “After eight long years, the Greek bailout has been completed.”

Read more …

The IMF has caved on debt relief. Even though it knows it must be accorded.

IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)

The IMF welcomed on Friday a deal on debt relief for Greece reached by Athens’ euro zone creditors saying it will improve debt sustainability in the medium term, but maintained reservations on the long term. Euro zone finance ministers earlier on Friday offered Greece a 10-year deferral and maturities extension on a large part of past loans as well as 15 billion euros in new credit to ensure Athens can stand on its own feet after it exits its third bailout in August. “The additional debt relief measures announced today will mitigate Greece medium-term financing risks and improve medium term debt prospects,” the IMF managing director Christine Lagarde told a news conference.

But she added that the fund will not join the expiring 86-billion-euro bailout as the time “has run out”, and maintained “reservations” on the long term sustainability of the Greek debt, which runs until 2060. The fund will begin assessing the sustainability of the Greek debt “as early as next week”, Lagarde said, adding that the fund will remain engaged in Greece and will participate to the monitoring of the Greek economic performance and reforms after the end of the program.

Read more …

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece..”

Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)

Germany has earned around 2.9 billion euros in profit from interest rate since the first bailout for Greece in 2010. This is the official response of the Federal Government to a request submitted by the Green party in Berlin. The profit was transmitted to the central Bundesbank and from there to the federal budget. The revenues came mainly due to purchases of Greek government bonds under the so-called Securities Markets Program (SMP) of the European Central Bank (ECB). Previous agreements between the government in Athens and the eurozone states foresaw that other states will pay out the profits from this program to Greece if Athens would meet all the austerity and reform requirements.

However, according to Berlin’s response, only in 2013 and 2014 such funds have been transferred to the Greek State and the ESM. The money to the euro bailout landed on a seggregated account. As the Federal Government announced, the Bundesbank achieved by 2017 about 3.4 billion euros in interest gains from the SMP purchases. In 2013, approximately 527 million euros were transferred back to Greece and around 387 million to the ESM in 2014. Therefore, the overall profit is 2.5 billion euros. In addition, there are interest profits of 400 million euros from a loan from the state bank KfW.

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece,” said Greens household expert Sven Christian Kindler said and demanded a debt relief for Greece. “It can not be that the federal government with billions of revenues from the Greek interest the German budget recapitalize,” Kindler criticized. “Greece has saved hard and kept its commitments, now the Eurogroup must keep its promise,” he stressed.

Read more …

And here’s why the Greek recovery story is simply falsehood.

Greek GDP Is Low, But Food Prices Are High (K.)

Greeks may be among the poorest citizens in the European Union, but that does not mean low prices for basic products and services in this country. According to figures published on Wednesday by Eurostat, Greece was the 17th most expensive country among the 28 EU member-states last year, with the general price level standing at 84 percent of the EU average. However, in the most basic category – food – price levels in Greece stood above the bloc’s average, having a significant negative impact on living standards. Eurostat figures had shown on Tuesday that the per capita GDP in Greece in 2017 amounted to just 67 percent of the EU average, while real private consumption stood 23 percent below the EU mean rate.

A key role in food prices remaining at such high levels – in spite of the decade-long crisis – has been played by a succession of hikes in the value-added tax: From a 9 percent rate on food imposed in 2009, many food products now bear a VAT rate of 24 percent, making Greece the 13th most expensive country for food across the bloc. High indirect taxes also explain the particularly high prices in tobacco and alcoholic beverages in Greece, which make this country the 12th most expensive in the EU in this category.

Read more …

A hard Brexit will be very unpretty. Airbus talked today about moving 14,000 jobs out of the UK. And they won’t be the last.

EU Is Getting Ready For No-Deal Brexit – Juncker (G.)

The EU needs to be realistic about the dangerous state of the Brexit negotiations and is preparing to deploy its trillion-pound budget to cushion the bloc from the prospect of a no-deal scenario, the European commission president has warned. With the two sides still far apart on the “hardest issues”, just days from a crunch leaders’ summit in Brussels, Jean-Claude Juncker told the Irish parliament on Thursday he was stepping up preparations for a breakdown in talks, and even drafting plans aimed at keeping the peace in Northern Ireland. The problem of avoiding a hard border with the Republic – said by the Irish taoiseach, Leo Varadkar, to be akin to a “riddle wrapped in an enigma” – is threatening to thwart all attempts to make progress on a wider deal.

With Theresa May refusing to countenance what Juncker described as the bloc’s “bespoke and workable solution”, of the Northern Ireland effectively staying in the customs union and single market, it was crucial for the 27 EU member states to prepare for the worst outcome, the commission president said. Juncker told Irish MPs and senators in a joint session of parliament in Dublin: “With pragmatism comes realism. As the clock to Brexit ticks down, we must prepare for every eventuality, including no deal. This is neither a desired nor a likely outcome. But it is not an impossible one. And we are getting ready just in case.

“We will use all the tools at our disposal, which could have a cushioning impact. The new long-term budget for our union from 2021 onwards has an in-built flexibility that could allow us to redirect funds if the situation arose. “We will also earmark €120m (£105m) for a new peace programme which has done so much in breaking down barriers between communities in Northern Ireland and the border counties.”

Read more …

More things coming to an end in Britain.

Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)

The United Kingdom, widely considered to be the birthplace of the modern incarnation of the public-private partnership (PPP), in which private firms are contracted to complete and manage public projects, could be one of the first countries to jettison the model. The collapse in January of 200-year old UK infrastructure group Carillion, whose outsized role in delivering public services earned it the moniker “the company that runs Britain,” has fueled concerns that other big outsourcing groups could soon follow in its doomed footsteps. Last week the CEO of Interserve, another large outsourcing group, revealed that the government has given the firm a red rating as a strategic supplier, meaning it has “significant material concerns” about the company’s finances.

Fears are growing that Carillion was not a one-off episode but rather the swan song of a deeply flawed and dying business model. Those fears were hardly assuaged by the release this week of a damning parliamentary report into the UK government’s practice of outsourcing public projects through so-called Private Finance Initiatives (PFIs). PFI deals were invented in 1992 by the Conservative government and then enthusiastically rolled out by the subsequent Labour government. The schemes usually involved large-scale public buildings such as new schools and hospitals which were previously funded by the UK Treasury. Under PFI they were put out to tender with bids invited from developers who put up the investment to build new schools, hospitals or other schemes and then leased them back.

[..] The Treasury’s incapacity to measure the actual benefits of PFI should be of grave concern to British taxpayers given that the interest rate of private-sector debt — these projects are debt financed — can be as much as 2 to 3.75 percentage points higher than the cost of government borrowing. Even if the government doesn’t enter into any new PFI-type deals, it will pay private companies £199 billion, including interest, between April 2017 until the 2040s for existing deals, in addition to some £110 billion already paid. That’s for 700 projects worth around £60 billion. British taxpayers could clearly “get a much better deal,” the report concludes.

Read more …

John Lounsbury posted this talk by Steve from late 2016 again. And why not? Economics denies the role of energy…

Energy Is The Primary Driver Of The Economy (EI)

Economic theory has failed to incorporate the role of energy in production for two centuries since the Physiocrats, according to Prof. Steve Keen. In this video he derives a production function that includes energy in an essential manner. It implies that economic growth has been driven by the increase in the energy throughput capabilities of machinery. Prof. Keen argues that all economic gain can be traced to the use of energy which we receive at no cost from the sun. Capital and labor participate in the economy only by use of this energy.

Read more …

The Dutch play a strange role in this.

Italy To Pick Up Migrants, Impound German Charity Ship (R.)

Italy appeared to relent on Thursday after at first refusing to accept 226 migrants on board a German charity rescue ship, saying later in the day it would take them in but would impound the vessel. Anti-immigrant interior minister Matteo Salvini initially said the Dutch-flagged ship Lifeline should take the people it plucked from the Mediterranean to the Netherlands and not Italy. But transport minister Danilo Toninelli, who oversees the coastguard, later said it was unsafe for the 32-metre vessel to travel such a great distance with so many people on board. “We will assume the humanitarian generosity and responsibility to save these people and take them onto Italian coastguard ships,” Toninelli said in a video posted on Facebook.

Earlier this month Salvini pledged to no longer let charity ships bring rescued migrants in Italy, leaving the Gibraltar-flagged Aquarius stranded at sea for days with more than 600 migrants until Spain offered them safe haven. The Dutch government denied responsibility for the vessel, something Toninelli said Italy would investigate. The Italian coastguard would escort Lifeline “to an Italian port to conduct the probe” and impound the ship, he said. Also on Thursday, the German charity Sea Eye which operates another Dutch-flagged ship, the Seefuchs, said in a statement it was ending its sea rescue mission after the Dutch government told them that it was no longer responsible for the vessel.

Read more …

Please make sure it’s spent well.

People Donate Millions To Help Separated Families (AP)

In an outpouring of concern prompted by images and audio of children crying for their parents, hundreds of thousands of people worldwide are donating to nonprofit organizations to help families being separated at the U.S.-Mexico border. Among those that have generated the most attention is a fundraiser on Facebook started by a Silicon Valley couple, who say they felt compelled to help after they saw a photograph of a Honduran toddler sobbing as her mother was searched by a U.S. border patrol agent. The fundraiser started by David and Charlotte Willner had collected nearly $14 million by Wednesday afternoon.

The Willners, who have a 2-year-old daughter, set up the “Reunite an immigrant parent with their child” fundraiser on Saturday hoping to collect $1,500 — enough for one detained immigrant parent to post bond — but money began pouring in and within days people had donated $5 million to help immigrant families separated under the Trump administration’s “zero-tolerance” policy that criminally prosecutes all adults caught crossing the border illegally. “What started out as a hope to help one person get reunited with their family has turned into a movement that will help countless people,” the couple said in a statement released by a spokeswoman Wednesday. The couple, who were early employees at Facebook, declined to be interviewed.

“Regardless of political party, so many of us are distraught over children being separated from their parents at the border.” The money collected from more than 300,000 people in the United States and around the world will be given to the Refugee and Immigrant Center for Education and Legal Services, or RAICES, a Texas nonprofit that that offers free and low-cost legal services to immigrants.

Read more …

South Korean President Moon Jae-in doesn’t sit still.

2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)

North and South Korean officials are meeting to arrange the first reunions in three years between families divided by the 1950-53 Korean War. Friday’s meeting at the North’s Diamond Mountain resort comes as the rivals take reconciliation steps amid a diplomatic push to resolve the North Korean nuclear crisis. Seoul’s Unification Ministry said the meeting will discuss ways to carry out an agreement on the reunions made at a summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-in. The two summits between Kim and Moon have opened various channels of peace talks between the Koreas, including military talks for reducing tensions across their tense border and sports talks for fielding combined teams at the upcoming Asian Games in Indonesia.

Read more …

Even if we don’t shoot them, we find other ways to kill them off.

Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)

High levels of tourism can lead to a dramatic reduction in the number of cheetahs able to raise their young to independence, new research has found. A study in Kenya’s Maasai Mara savannah found that in areas with a high density of tourist vehicles, the average number of cubs a mother cheetah raised to independence was just 0.2 cubs per litter – less than a tenth of the 2.3 cubs per litter expected in areas with low tourism. Dr Femke Broekhuis, a researcher at Oxford University and the author of the study, surveyed cheetahs in the reserve between 2013 and 2017 to assess how the frequency of tourist vehicles affected the number of cheetah cubs that survived to adulthood.

“During the study there was no hard evidence of direct mortality caused by tourists,” such as vehicles accidentally running over cubs, Broekhuis said. “It is therefore possible that tourists have an indirect effect on cub survival by changing a cheetah’s behaviour, increasing a cheetah’s stress levels or by minimising food consumption.” Broekhuis said she has seen as many as 30 vehicles around a single cheetah at the same time. “The most vehicles that we recorded at a cheetah sighting was 64 vehicles over a two-hour period,” she said.

Too many tourist vehicles can reduce a cheetah’s hunting success rate, the study suggests, and even if the hunt is successful, the disturbance from tourists could cause a female to abandon her kill, making her less likely to be able to provide for her young. Broekhuis said it was “crucial that strict wildlife viewing guidelines are implemented and adhered to,” and suggested limiting the number of vehicles around a cheetah to five and not allowing them to get any closer than 30 metres.

Read more …

The shape of things to come.

India Is Facing Its Worst-Ever Water Crisis (ZH)

India is facing its worst-ever water crisis, with some 600 million people facing acute water shortage, a government think-tank says. The Niti Aayog report, which draws on data from 24 of India’s 29 states, says the crisis is “only going to get worse” in the years ahead. Around 200,000 Indians die every year because they have no access to clean water, according to the report. And as The BBC reports, many end up relying on private water suppliers or tankers paid for the by the government. Winding queues of people waiting to collect water from tankers or public taps is a common sight in Indian slums. Indian cities and towns regularly run out water in the summer because they lack the infrastructure to deliver piped water to every home.

• 600 million people face high-to-extreme water stress. • 75% of households do not have drinking water on premise. 84% rural households do not have piped water access. • 70% of our water is contaminated; India is currently ranked 120 among 122 countries in the water quality index. India faces more than one problem – all compounding the nation’s crisis: Droughts are becoming more frequent, creating severe problems for India’s rain-dependent farmers (~53% of agriculture in India is rainfed17). When water is available, it is likely to be contaminated (up to 70% of our water supply), resulting in nearly 200,000 deaths each year.

Interstate disagreements are on the rise, with seven major disputes currently raging, pointing to the fact that limited frameworks and institutions are in place for national water governance. And that means massive problems lie ahead… 40% of the Indian population will have no access to drinking water by 2030 with 21 cities running out of groundwater by 2020 – affecting 100 million people which will cut 6% from GDP by 2050. What remains alarming is that the states that are ranked the lowest – such as Uttar Pradesh and Haryana in the north or Bihar and Jharkhand in the east – are also home to nearly half of India’s population as well the bulk of its agricultural produce.

Read more …

Mar 302018
 
 March 30, 2018  Posted by at 7:07 pm Finance Tagged with: , , , , , , , , , , ,  


Jerome Liebling May Day Union Square Park New York City 1948

 

 

Dr. D. peels the American political onion to get down to what it’s all about. I’m impressed. He explains America better than just about anyone. Turns out, there ain’t much left. So yeah, what happened?

 

 

Dr. D: The news cycle runs so frenetically it’s easy to lose track of the bigger tide. Let’s go back a week and look at something the Automatic Earth has been talking about since the beginning.

This weekend at a speech in Mumbai, Hillary Clinton said:

“If you look at the map of the United States, there’s all that red in the middle where Trump won. …I win the coast….I won the places that represent two-thirds of America’s gross domestic product. So I won the places that are optimistic, diverse, dynamic, moving forward. And his whole campaign, ‘Make America Great Again,’ was looking backwards.”

There are many ways to look at this: for one thing, by number, over 90% of the counties are Red. Yet over 50% of the population is concentrated in the cities and Blue counties. Clinton officially won the popular vote. Yet the United States has always had a geographical Electoral College system. A compromise of representation between small, weak states and strong, large states, and the rules of the 2016 campaign were no mystery or surprise. Yet that’s only the middle-sized picture.

The Big Picture is Mrs. Clinton saying she’s representing the important people, the right people – even the working people – and that 2/3rds of those people live exclusively in Blue districts on both coasts. While this is arguably true, it wasn’t always true. NYC or San Francisco have always been important, but from their founding until now, places like Dayton, St. Paul, Pittsburgh, or New Orleans were considered vital, important places, places where their own specialty happened: tires or flour, steel or shipping, lumber or mining.

What Happened? In a way the election was a referendum on “What Happened?” What happened to my community, my country, my area, and all the vital work those long-abandoned areas used to do, what happened to the massive GDP those areas used to contribute, and the answer is simple:

 

An organism contracts from the periphery to the core.

 

There’s a lot in that statement. As it took decades, even a century to happen, you can see which peripheries were sacrificed first and next, who had power, who didn’t, and how long they could maintain it; and that’s interesting, because it was not East or West, white or black, rural or urban as they might have you believe. There are as many hopeless, abandoned people in Baltimore as there are in Billings, Montana, possibly more, and possibly started far sooner. But if it’s not ethnic or geographical, then what is it?

 

An organism contracting from the periphery to the core is a consequence of centralization.

 

The Automatic Earth began with discussing the shrinking of the country, of industrialization, in terms of who would receive the ever-dwindling supplies oil and energy, the infrastructure and attention, but that is not necessarily a function of practicality. It is more often a function of political power, and we largely have a political problem and not a practical one.

The Core has been using their power to attract and concentrate more wealth and more power to themselves and their areas until most of the nation’s wealth and power are concentrated in Clinton’s 2/3rds of GDP, the sub-10% of the counties. All top 10 richest zip codes are now in one region: the Washington D.C. area.

Economic wealth and power is used to expand political power, further extracting the wealth of the Periphery to maintain the lifestyle of the Core. While this may seem a practical strategy, it isn’t. At one time the Periphery was creating maybe 2/3rds of the wealth of the nation, costing nothing, and that was with no more infrastructure than remains today.

So when those places are idled, 2/3rds of the nation’s GDP also vanishes, and while the Core can maintain their lifestyle by cannibalizing the remaining energy and attention, the entire nation they are part of only becomes far poorer. So far from the concentration of power making them stronger , it’s making them weaker , as they have a fraction of the former wealth and ability, cohesion and cooperation, men and materials to draw on.

 

This leads to the problem she highlights, which is social and political fracturing. With a majority of the wealth pulled to the Core, the Periphery withdraws its economic and social consent in a sense of unfairness that is only validated by further extractions, concentrations, and non-cooperations.

This can make it more difficult to run even the Core economy as disagreements develop between Core vs Periphery or entitled vs disenfranchised peoples even within the Core itself, leading to a difficulty maintaining compliance, resource supplies, disagreements on how to allocate wealth, support infrastructure, and so on.

This may seem an engineering issue, but this is also Tainter’s “Collapse of Complex Societies”, where cultures weather many storms, many expansions and contractions, but what causes “Collapse” is the attempt to maintain expensive infrastructure built up during the good times, at the expense of one portion of society. If compromise can be reached, Society survives.

If a compromise cannot be reached and the Core attempts to force its will via social and military force, the price of compliance becomes too high and fails, and with it, the cooperation, the social contract that makes a people or a nation one unit. It fractures, and when it does, those pieces break up and become, as he says, simpler, Less Complex societies. Less specialized, less concentrated, and less centralized, or by our modern pejorative view, “Primitive.”

As our American society has measurably less energy since 1974, we have seen the re-allocation and distribution of that energy ring-fenced into an ever-dwindling core of fewer counties, and fewer participants in those counties, and like other complex societies, we have been socially fracturing since that time as well, as fewer and fewer within the system benefit from it.

There’s much more to unpack in this, but let’s just ask some questions:

• What makes a “Core”? What constitutes the “Periphery”?

• Since the Periphery has and could contribute a majority of overall GDP, what inspires the Core to sacrifice it rather than expand their wealth through it?

• As a metaphor for a bodily process, a biological “contraction” occurs during emergencies such as starvation, freezing, or flight. But would the body really survive if it crippled the legs, lost its fingers, or its hearing to save itself? Contrarily, would the body survive and function if the brain, liver, or heart swelled to 3 times their original size?

• What is the resource load of a brain or stomach that is 3x larger than necessary?

• Since from an engineering perspective all parts of a machine must be in working order for it to work at all, what impractical, non-engineering priorities must be established to cause the core and periphery to become so mismatched?

• How are those impracticalities decided? How are they maintained?

• Is the deciding and maintaining of inequity and non-function a benefit to the Core? To the Periphery? Both? Neither?

• Once the Periphery has been sacrificed to the Core, what must happen for them to be re-joined and freely cooperate again?

• Can this be done? What would have to be sacrificed that wasn’t sacrificed before? By which side? One? Both?

 

Mrs. Clinton’s idle quote has meaning. If her places are “optimistic, diverse, dynamic, moving forward” then logically the other , the 90% of Red America is “pessimistic, oppressive, racist, dull, lazy, and backwards.” “Deplorable,” if you will. Aside from how this doesn’t seem to be a good pitch to win votes among 90% of voting counties, you have to ask, “How did they get this way?” and “What is your plan to gather your countrymen and make them optimistic, productive, and to work again, and thus help all?” Yet oddly, that was her opponent’s slogan.

If she’s not asking the question of how to include and elevate everyone, isn’t she really saying “I’m in favor of further enriching my Core at your expense”? And while historically that is indeed a common response to dwindling energy, Tainter warns it may also be one that can collapse both the economy and the society.

Since large, concentrated societies contract to the Core to protect themselves and their critical assets, those in the core historically won’t offer time or resources to help anyone but themselves: the army, the police, the roads, the tax officials. When that is true, you may want to localize, decentralize and maintain your own Core, with your own people, at home. This re-localizing will re-establish the balance of power in the Periphery where most people live.

 

 

Jan 222018
 
 January 22, 2018  Posted by at 7:27 pm Finance Tagged with: , , , , , , , , ,  


Winslow Homer Mending the nets 1881

 

Yes, it’s 10 years ago today, on January 22 2008, that Nicole Foss and I published our first article on the Automatic Earth (the first few years on Blogger). And, well, obviously, a lot has happened in those 10 years.

For ourselves, we went from living in Ottawa, Canada to doing a lot of touring starting in 2009, to support Nicole’s DVDs and video downloads. We visited Sweden, Slovakia, Czech Republic, Germany, Switzerland, Italy, Spain, Austria, Denmark, US of course, with prolonged stays in France, Britain, New Zealand, Australia, times that I miss a lot here and there, to now with Nicole settled in New Zealand and my time divided between Athens, Greece and the Netherlands.

We met so many people both online and in the flesh in all these countries it’s impossible to remember everyone of them, and every town we found ourselves in. Overall, it was a humbling experience to have so many people share their views and secrets, especially since we never stayed at hotels (or very rarely), we were always invited to stay with our readers. Thank you so much for that.

Since we started publishing 8 months before the fall of Bear Stearns, and we very much predicted the crisis that followed (we had been doing that before as well, since 2005 at the Oil Drum), we were the first warning sign for many people that things were going off the rails.

There are still to this day people expressing their gratitude for that. Others, though, not so much. And that has to do with the fact that governments, media and central banks came together to create the illusion of an economic recovery, something many if not most people still believe in. Just read the headlines and the numbers, on housing markets, stocks, GDP, jobs. Unfortunately, it was an illusion then and it still is now.

 

To get back to 10 years ago: Nicole and I decided to leave the Oil Drum because they didn’t want us to write about finance. Given what happened with Lehman while we were leaving, and as said with Bear Stearns later, it would appear that finance was indeed the hot issue back then, more than peak oil or associated themes.

The main reason we wanted to focus on finance was that we realized it was the most imminent of all the crises mankind faced and still faces. Energy and environmental issues are real and threaten our way of life, but before they hit us, the mother of all financial crises will.

What has changed, and increased, a lot over the past decade is the media. They have moved, more than before, into a kind of la la land where narratives are invented and presented with the express intention of keeping people feeling good about themselves in the face of all the distortion and disasters they face.

The big move in energy is not so much peak oil, but a meme of moving away from oil. ‘Renewable energy’ is all the fad, and it works, because it holds the promise that we can maintain our levels of energy consumption, and our lifestyles in general, pretty much up to some undefined moment in the future. For all you know, a seamless transition.

It’s a nonsense narrative, which originates not just in wishful thinking, but much more than that in widespread ignorance about what energy actually is and does, and what qualities oil and gas bring to the table that no other energy source can.

We must have written a hundred articles about such themes as energy return on energy invested (EROEI), and that the EROEI on renewables doesn’t allow for our present complex societies to continue as they are. Renewables are not useless by any means, but switching to them from oil will mean a huge simplification from our present lives. More than anything, probably, we have to ask if that would be such a bad thing.

But that is a question we avoid at all costs, because it is a threatening one. It implies we may have to do with less, and that’s not what we’re hardwired to do. Like any other species, we always want more. This is so ingrained in our world that our economies depend squarely on a perpetual need to strive for more tomorrow than we have today. Not as individuals, perhaps, but certainly as a group.

More trinkets, more gadgets, more energy. And for a -relatively- long time, more people. Relatively, because population growth is a recent phenomenon. It started at the very moment we began to have sources of ‘free’ or ‘surplus’ energy. Give any species a source of ‘surplus’ energy, and it will use it up as fast as it can, and proliferate to achieve that, until the surplus is gone. We are no different.

 

Of course, as the 2nd Law of Thermodynamics holds, the use of energy produces waste. More energy use produces more waste. One source may be slightly less polluting than another, but it’s thermodynamics that dictates the limits here. No energy source is fully renewable, and clean energy is just an advertizing term. And with an energy return too low to run complex societies on, those are hard limits. The only way out is to use less energy, but our economic models are geared towards the opposite, as are our brains.

Meanwhile, we’re saddling our children with the consequences of our prolific use of energy. Species extinction runs a hundred or a thousand times faster than is ‘natural’, ever more of our arable land is too polluted or wasted to produce food, and the grand mass of plastics in our oceans exceeds that of the living creatures that fed us for a very long time, taking the numbers of these creatures down so fast our grandchildren will have to eat jellyfish.

Ironically (and there’s lots of irony in the story of our tragic species), we produce more food per capita today than ever before, but its distribution is so warped that one group of us throw away more than we consume, while another goes hungry. And to top it off, much of what we eat lacks nutrition, and is often even downright toxic for us; it makes us fat and it makes us sick.

Then again, our entire environment is also fast becoming toxic. We’re a bloated, obese, asthmatic, allergic and cancer-riddled species, and yet we call ourselves a success. It’s all about the narrative.

 

But as Nicole and I said 10 years ago, and still do, it’s finance that will be the first crisis to hit. It will hit so hard it’ll make any other crises, environment and energy, feel like an afterthought. Pension plans across the board will prove to be a Ponzi, housing will collapse, shares will crumble, scores of people will lose all their savings and their jobs, their homes.

This is because, in an ostensible effort to ‘save’ our societies and economies, our -central- bankers and politicians decided to put everything on red, and loaded another $20 trillion into the upper shelf of the financial world, the very shelf that was most rotten to begin with in more than one sense of the word. And they’re not the ones paying the heftiest price for this stupidest bet of all times, you are.

 

All in all, the only possible conclusion we can draw is that in the past 10 years, things have indeed changed. Thing is, they have changed for the worse. Much worse. And the recovery narrative can’t and won’t hold. Question is who realizes this, and what they are planning to do with the knowledge.

Friend of the Automatic Earth Nomi Prins said recently that in her view, the Fed is scared to death of causing a global financial crash. I think they may have recognized the inevitability of that crash quite a while ago, and they’re working to minimize the impact on themselves and their buddies and masters.

A global central bank tightening looks an easy sale now that people have swallowed the recovery myth whole. The crash that will lead to might take long enough to develop for them to deny any responsibility.

And then we’re all on our own. The political ramifications will be gigantic. Because the incompetence and corruptness of incumbent politicians will be exposed, and governments overthrown.

Nothing we couldn’t have, and didn’t, see coming in January 2008. Best advice today, as it was back then: get out of debt.

And thank you so much for 10 years of reactions, responses, comments, your hospitality, and all other forms of support -including financial of course.

 

 

Dec 102017
 
 December 10, 2017  Posted by at 10:22 am Finance Tagged with: , , , , , , , , , ,  


Robert Frank Motorama, Los Angeles 1956

 

Peak Fantasy Time (David Stockman)
Deflation Remains Biggest Threat As Lofty Stock Markets Head Into 2018 (F.)
Global Powers Lobby To Stop Special Brexit Deal For UK (G.)
The US Media Yesterday Suffered its Most Humiliating Debacle in Ages (GG)
Principles of Political Economy: The Opening Lines (Steve Keen)
Half A Salary, Half A Job, Half A Life (K.)
Erdogan, Tsipras Strike Secret Deal On Refugees (K.)
Refugee Arrivals in Greece Offset Decongestion Efforts (K.)
Super Rich Shown To Have Grown Out Of Ancient Farming (G.)
India Gov. Files Suits Against Monsanto et al Over Bollworm Cotton Attack (VoI)

 

 

Politics is the entertainment division of the military industrial complex.
-Frank Zappa

The decline in quality of jobs -and compensation- is as horrible as the jobs reports’ attempts at hiding that decline.

Peak Fantasy Time (David Stockman)

If you want to know why both Wall Street and Washington are so delusional about America’s baleful economic predicament, just consider this morsel from today’s Wall Street Journal on the purportedly awesome November jobs report. “Wages rose just 2.5% from a year earlier in November—near the same lackluster pace maintained since late 2015, despite a much lower unemployment rate. But in a positive sign for Americans’ incomes, the average work week increased by about 6 minutes to 34.5 hours in November…. November marked the 86th straight month employers added to payrolls.” Whoopee! Six whole minutes added to a work week that has been shrinking for decades owing to the relentlessly deteriorating quality mix of the “jobs” counted by the BLS establishment survey.

In fact, even by that dubious measure, the work week is still shorter than it was at the December 2007 pre-crisis peak (33.8) and well below its 2000 peak level. The reason isn’t hard to figure: The US economy is generating fewer and fewer goods producing jobs where the work week averages 40.5 hours and weekly pay equates to $58,400 annually and far more bar, hotel and restaurant jobs, where the work week averages just 26.1 hours and weekly pay equates to only $21,000 annually. In other words, the ballyhoed headline averages are essentially meaningless noise because the BLS counts all jobs equal – that is, a 10-hour per week gig at the minimum wage at McDonald’s weighs the same as a 45 hour per week (with overtime) job at the Caterpillar plant in Peoria that pays $80,000 annually in wages and benefits.

In fact, what has been the weakest expansion in history by far may now be finally running out of gas. During the last several weeks the pace of US treasury payroll tax collections has actually dropped sharply – and it is ultimately Uncle Sam’s collection box which gives the most accurate, concurrent reading on the state of the US economy. Some 20 million employers do not tend to send in withholding receipts for the kind of phantom seasonally maladjusted, imputed and trend-modeled jobs which populate the BLS reports.

Yet we we are not close to having recovered the 4.3 million goods producing jobs lost in the Great Recession; 40% of them are still AWOL – meaning they are not likely to be recovered before the next recession hits. Stated differently, the US economy has been shedding high paying goods producing jobs ever since they peaked at 25 million way back in 1980. Indeed, we are still not even close to the 24.6 million figure which was posted at the turn of the century.

By contrast, the count of leisure and hospitality jobs( bars, hotels and restaurants), or what we have dubbed the “Bread and Circuses Economy” keeps growing steadily, thereby filling up the empty space where good jobs have vacated the BLS headline total. Thus, when goods-producing jobs peaked at 25 million back in 1980, there were only 6.7 million jobs in leisure and hospitality. Today that sector employs 16.0 million part-time, low-pay workers..

Read more …

“.. the Fed has erroneously predicted 2% inflation for 66 months and continues to tell us that the low levels of inflation are “transitory.“

Deflation Remains Biggest Threat As Lofty Stock Markets Head Into 2018 (F.)

In the two weeks running up to the passage of the Senate’s version of the tax bill, the equity markets moved significantly depending on how any particular Republican senator intended on voting. Then, when the Senate finally passed the bill on the next business day, markets made new intra-day record highs, but then reversed course. Given the current sky-high market valuation levels, the tax benefits are already priced in. Economist David Rosenberg examined market reaction to the five major tax bills of the last 70 years. He found that, on average, the S&P 500 rises 14.3% (median 18.9%) in the year leading up to the passage of the tax legislation. In the year following, on average, the index falls 7.5% (median 13.1%). It could be he is on to something.

If it has been historically easy money that has propelled the U.S. and every other major stock market to record heights over the past few years, then it is noteworthy that the last 12 moves from the world’s central banks have been tightening moves. We know that the Fed is certain to tighten next week at its December 12-13 meeting. This, despite the fact that the Fed’s governing board is deeply divided on the outlook for interest rates and inflation. According to their own minutes, some Fed-governing members continue to hold to the academic view that the Phillips curve (i.e., inflation always rises when the unemployment rate is low) is alive and well. Under this view, inflation is just around the corner and the Fed had better be pre-emptive, lest inflation get ahead of them.

The other view is that today’s economy exhibits behaviors that are significantly different from those that dominated the 60+ years of post-WWII America, and that inflation is no longer the threat it used to be. In fact, deflation may be a bigger threat, especially given the high and rising debt levels. Regular readers know that I have espoused the latter viewpoint. I have pointed out several times that the Fed has erroneously predicted 2% inflation for 66 months and continues to tell us that the low levels of inflation are “transitory.” Fed Chair-Elect Powell espoused this viewpoint in his confirmation hearing, so, there is not much hope that they Fed will back off.

Read more …

US, Canada et al don’t want any special treatment for Britain. But that’s not their decision.

Global Powers Lobby To Stop Special Brexit Deal For UK (G.)

Theresa May’s hopes of securing a unique post-Brexit trade deal with the EU were under threat on Saturday night as Brussels said it was coming under international pressure to deny Britain special treatment. After a week that saw May reach a deal with the EU that will allow Brexit talks to move forward on to future trade relations, EU officials insisted a bespoke deal more favourable to the UK than other non-EU nations was out of the question. One EU source close to the talks said: “We have been approached by a number of [non-member] countries expressing concerns and making it clear that it would constitute a major problem for them if suddenly the UK were to get better terms than they get.”

The official said that once the UK is out of the single market and customs union in March 2019, there could be no replication of the terms of the current trading relationship, or anything close to it, and no special treatment. “It is not just an indication of some strange rigid principle. It is because things won’t work,” he said. “First and foremost we need to stick to this balance of rights and obligations, otherwise we will be undermining our own customs union and single market. Second, we cannot upset relations with other third countries,” the official said. “If we were to give the UK a very lopsided deal, then the other partners with whom we have been engaging and who entered into balanced agreements would come back and question those agreements.”

Read more …

Julian Assange on Twitter: “Is the fake news story about @WikiLeaks yesterday the worst since Iraq? It’s a serious question. Three outlets, CNN, NBC and ABC all independently “confirmed” the same false information. Has there previously been a serious triple origin fake news story? i.e not just re-reporting.”

The US Media Yesterday Suffered its Most Humiliating Debacle in Ages (GG)

Friday was one of the most embarrassing days for the U.S. media in quite a long time. The humiliation orgy was kicked off by CNN, with MSNBC and CBS close behind, with countless pundits, commentators and operatives joining the party throughout the day. By the end of the day, it was clear that several of the nation’s largest and most influential news outlets had spread an explosive but completely false news story to millions of people, while refusing to provide any explanation of how it happened. The spectacle began on Friday morning at 11:00 am EST, when the Most Trusted Name in News™ spent 12 straight minutes on air flamboyantly hyping an exclusive bombshell report that seemed to prove that WikiLeaks, last September, had secretly offered the Trump campaign, even Donald Trump himself, special access to the DNC emails before they were published on the internet.

As CNN sees the world, this would prove collusion between the Trump family and WikiLeaks and, more importantly, between Trump and Russia, since the U.S. intelligence community regards WikiLeaks as an “arm of Russian intelligence,” and therefore, so does the U.S. media. This entire revelation was based on an email which CNN strongly implied it had exclusively obtained and had in its possession. The email was sent by someone named “Michael J. Erickson” – someone nobody had heard of previously and whom CNN could not identify – to Donald Trump, Jr., offering a decryption key and access to DNC emails that WikiLeaks had “uploaded.”

Read more …

Steve is busy introducing economics to energy. Another thing the entire field entirely overlooked.

Principles of Political Economy: The Opening Lines (Steve Keen)

Labor without Energy is a Corpse; Capital without Energy is a Statue

Economics went astray from the very first sentence of Adam Smith’s Wealth of Nations in 1776: “The annual labour of every nation”, Smith asserted, “is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always, either in the immediate produce of that labour, or in what is purchased with that produce from other nations.” This paragraph mimicked the structure, and even the cadence (though not the brevity), of the opening sentence of Richard Cantillon’s 1730 treatise Essai sur la Nature du Commerce en Général (which Smith read). However, Smith made one crucial substitution: he asserted that “Labor … is the fund” from which our wealth springs, whereas Cantillon asserted that it was Land:

“Land”, Cantillon began, “is the source or matter from which all wealth is drawn; man’s labor provides the form for its production, and wealth in itself is nothing but the food, conveniences, and pleasures of life.” (21) Both these assertions are strictly false. The true source of the wealth that humanity has generated from production is neither Labor nor Land, but the Energy that humanity’s production systems harness and turn into useful work (now known as “Exergy”). However, Smith’s assertion is irredeemably false, whereas Cantillon’s merely needs generalization to make it consistent with the fundamental laws of the universe known as the Laws of Thermodynamics. These Laws are still poorly known by economists, which in part explains why economic theory has managed to be in conflict with them for so long. Illustrating why this is so, and why it is crucial, will take time, and effort on your part too to understand them (if you do not already).

But the fact that no theory that contradicts them can be taken seriously, was stated eloquently by the physicist Arthur Eddington in his 1928 book for lay readers The Nature of the Physical World: The law that entropy always increases—the second law of thermodynamics—holds, I think, the supreme position among the laws of Nature. If someone points out to you that your pet theory of the universe is in disagreement with Maxwell’s equations—then so much the worse for Maxwell’s equations. If it is found to be contradicted by observations—well, these experimentalists do bungle things sometimes. But if your theory is found to be against the second law of thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation. (37)

Read more …

Life in Greece. Every day gets worse.

Half A Salary, Half A Job, Half A Life (K.)

Two in three Greeks fail to pay their bills on time, mainly because they don’t have the money. Three in 10 private sector workers, meanwhile, work part time and get paid a salary of 407.15 euros a month, on average. The first case puts Greece at the top of the list of EU countries in terms of citizens that don’t keep up with their bills, according to the European Consumer Payment Report 2017, with the main reason being the lack of money. In the rest of Europe, the main causes of delays are simple absentmindedness or forgetfulness. The second case is something entirely different. In one sense, it can be interpreted as a reduction in unemployment, which dropped to 20.5% in September. Basically, unemployment falls as part-time work rises, with 30.6% of employees in the private sector working such jobs.

Is this something to be glad about? Should we welcome it as an improvement in the country’s economy? Flexible forms of labor that bring in a pittance of a salary strengthen the ranks of the nouveau pauvre, but at the same time bring down unemployment – albeit dragging down every index that points to a normal life along with it. This is the new normal. But how can 400 euros a month possibly be considered normal? We are beyond the viral videos of the first months of the crisis, of frenzied officials claiming that children were fainting of hunger at school, of images of people rummaging through trash cans looking for food, of pensioners falling over each other for a bag of free potatoes and other such dramatic scenes, real or contrived, that appeared on screens all over the world, and which the present government is quick to claim no longer exist.

Today, some really “lucky” Greeks are insured and have a daily wage of 51 euros, adding up to 1,193 euros a month. But the majority, the less fortunate – yet still fortunate enough to have a job – need to make do with 400 euros a month. It is a conundrum that requires a good deal of math. This month you’ll pay the water bill but not the electricity, you’ll limit your purchases to the bare essentials and you’ll adapt your diet to your budget. What’s left after that? A constant knot in your stomach that you have to learn to put up with. You won’t faint in the street, but each day will be a struggle. You will die a little bit inside, but this is not a measurable reaction and the indices don’t care. Neither does the government, whose slogan when it was in the opposition was that there are real people behind the data. Now the only number it cares to talk about is the shrinking unemployment rate.[..]

The line that defines normal is constantly being shifted and with it the definition of poverty.

Read more …

Erdogan was in Greece the past week and tried to stir up as much shit as he could. Refugees remain his main weapon.

Erdogan, Tsipras Strike Secret Deal On Refugees (K.)

As pressure due to overcrowding continues to build at reception centers for migrants on the islands of the eastern Aegean, Turkish President Recep Tayyip Erdogan accepted a request by Prime Minister Alexis Tsipras that Turkey take back migrants from the Greek mainland as well as the islands, Kathimerini understands. During a joint press conference with Erdogan on Thursday, Tsipras declared that “new measures have been agreed for cooperation in the context of the European Union-Turkey agreement,” referring to a deal signed between Ankara and Brussels in March 2016 to curb human trafficking across the Aegean. Tsipras’s comments spurred much speculation about what those measures might be. It appears that they would involve triggering the return of migrants to Turkey, a process that has largely halted as new arrivals often lodge applications for asylum, a lengthy process.

Thousands of migrants, particularly those deemed to be the most vulnerable such as children, pregnant women and the elderly, have already been transferred from cramped facilities on the islands to the mainland. But conditions remain overcrowded at the island camps amid a constant stream of new arrivals from neighboring Turkey. What remains unclear is whether officials in Brussels have approved the deal; as it stands, it would basically undermine the basis of last year’s EU-Ankara agreement, according to which migrants should remain on the islands until a decision has been reached on their status (whether they are considered to belong to vulnerable groups meriting priority treatment, to be granted asylum etc). In recent comments, Dutch Ambassador in Athens Caspar Veldkamp expressed concerns about the prospects of mass relocations to the mainland if returns are not being made to Turkey, noting that this could undermine the EU-Turkey deal and encourage human smugglers rather than averting them.

For the leftist-led government, however, moving migrants from cramped facilities to mainland camps would appease those in the party concerned about inhumane conditions on the islands. As winter looms, and hundreds of migrants continue to live in tents around the reception centers, Migration Minister Yiannis Mouzalas has conceded that he could not rule out the risk of people dying from hypothermia. In an interview with Der Spiegel that was published on Friday, Mouzalas said that authorities were making preparations to ensure that island camps are ready to deal with plunging temperatures. Everything should be in place by December 15, he said. “The key though is the number of new arrivals,” he said, adding that if there is no large increase in numbers “then we are well prepared.” Authorities might reserve some rooms at local hotels if necessary, he said.

Read more …

Haven’t heard this one before, and it feels like an ominous sign: “Migration Minister Yiannis Mouzalas told Germany’s Spiegel Online that he cannot guarantee that no one will die in the camps with the onset of winter.”

Refugee Arrivals in Greece Offset Decongestion Efforts (K.)

The effort to improve the living conditions of refugees and migrants stranded at overcrowded reception centers on the eastern Aegean islands of Lesvos, Chios and Samos by transferring some of them to the mainland will fail to yield the desired result as long as flows from Turkey continue. In its latest report, the UNHCR said that 17,764 people were transferred from the islands to the mainland in the period from July 2016 to November 2017. UNHCR sources clarified, however, that the number of those removed from the islands is significantly higher than the official figure. Many of the people who have completed the necessary procedures or are deemed to be vulnerable, and as such are allowed to depart for the mainland, do so at their own cost, the same sources said.

They also reckoned that in 2016 around 40% of transfers were conducted by the UNHCR but the%age rose to 80% in 2017 after a request by the Migration Policy Ministry. At the same time, however, in the period between early April 2016, when Ankara and Brussels reached a deal to limit migrant flows into Europe, until late November, some 48,600 people arrived in Greece. In November, 3,800 people arrived on the Greek islands from Turkey, while 2,128 asylum seekers were transferred to the mainland in the same month. The Migration Policy Ministry on Saturday dismissed rumors on Chios that there are plans for the immediate removal of some 1,000 people from the Vial hotspot. It said that removals will take place gradually.

Meanwhile, Migration Minister Yiannis Mouzalas told Germany’s Spiegel Online that he cannot guarantee that no one will die in the camps with the onset of winter. “What we can do,” he said, “is try the utmost to prevent death.” Moreover, the German newspaper Bild said that an increasing number of refugees in Greece are trying to get to other European Union countries using forged passports.

Read more …

There are multiple pieces coming out lately that prove the obvious: once mankind started gathering surpluses, hierarchies developed, and so did inequality.

Super Rich Shown To Have Grown Out Of Ancient Farming (G.)

To measure relative wealth in a society, the team worked with archaeologists studying 62 different societies in Europe, Asia and North America. Some of these were up to 10,000 years old and included digs in ancient Babylonia, Catalhoyuk (now in Turkey) and Pompeii. Researchers analysed the sizes of houses at these sites and used these as indicators of the variations of wealth that existed there at any one time. “House size gives a very good indication of wealth,” said Smith. This point was backed by Kohler. “We consider house size to be a proxy for wealth.” The figures produced by these analyses provided the team with an indication of a particular society’s wealth. The greater the diversity in house size, the greater the inequality. In turn this disparity was measured using a system based on the Gini coefficient.

“Gini coefficients range from zero for societies in which each person has exactly the same amount of wealth to a society in which a single person owns the resources of an entire society. Such a society would have a Gini coefficient of one,” Kohler said. The team found that ancient farming societies had an inequality with a coefficient of around 0.35. That is a higher level of inequality than the level that is likely to have existed in earlier millennia when humans lived as hunter gatherers and shared many resources. “However, this inequality among these, the first farmers, is an awful lot less than the inequality you find in the US today,” said Kohler. “Here we have a Gini coefficient of around 0.8 today.” In the ancient farms of the New World, inequality stayed more or less the same. However, in Eurasia it started to climb over time until it reached levels of around 0.6 a few thousand years ago. This rise coincides with the introduction of oxen and horses and their exploitation in the ploughing of fields.

Read more …

More. Monsanto. Mayhem.

India Gov. Files Suits Against Monsanto et al Over Bollworm Cotton Attack (VoI)

The Maharashtra government on Friday announced that it would file police complaints against seed companies like Monsanto, which supplied seeds of BT Cotton, the crops from which were destroyed in a large-scale bollworm attack. Maharashtra’s Revenue Minister Chandrakant Patil said on Friday more than 70% of the cotton crop in Vidarbha has been destroyed due to the bollworm attack. He added that companies like Monsanto had provided the BT Cotton seeds with the promise that they were immune to attacks by the pest. The Vasantrao Naik Shetkari Swavalamban Mission, a state government body, has estimated that the output of cotton in Maharashtra would fall to 43.10 lakh quintal as compared to 78.61 quintals in December 2016.

The opposition parties are however demanding that the Maharashtra government pay compensation to cotton farmers on the lines of the ongoing farm loan waiver extended to cultivators. The Nationalist Congress Party is demanding that the government provide a compensation of Rs 25,000 per hectare for farmers whose crop has been destroyed in the bollworm attack. NCP leader Dhananjay Munde said his party would hold protests in the cotton-growing areas of Vidarbha to force the government raise compesation to farmers. With the opposition parties likely to paralyse the state legislature during the Winter Session to be held in Nagpur from Monday, Chief Ministre Devendra Fadnavis’s government on Friday asked revenue officials to carry out panchnama of crops destroyed in the bollwork attack. “We are working on a compensation package for farmers,” Patil told reporters.

Read more …

 

Politics is the entertainment division of the military industrial complex.
-Frank Zappa

 

Jul 122017
 
 July 12, 2017  Posted by at 11:34 am Finance Tagged with: , , , , , ,  


JMW Turner Vignette Study of a Ship in a Storm c.1830

 

Nicole sent me this video, which I know next to nothing about. I don’t know where it was filmed, or when, or why, nada. But, apart from the fact that listening to Nicole is always interesting, and I haven’t heard her talk nearly enough recently, because we live on opposite ends of the world these days, this is interesting because it relates directly to energy issues that have lately been a recurring theme at the Automatic Earth.

That is, once the net energy we gain from our energy sources falls by enough, our complex systems become untenable. This is not an easy-to-grasp thing for many, but it’s nevertheless true. The energy return on energy invested (EROEI) on the vast majority of our present energy sources is already dangerously close to the point where we will have to make our lives, and our societies, simpler.

We can discuss whether that’s such a bad thing, but it doesn’t really matter. We can’t beat thermodynamics. The initial reactions to this will in all likelihood by very dramatic, and in cases violent, since many individuals will try to escape having to adapt, and since individuals, societies, nations will realize that energy provides political -and military- power. Trust is a delicate topic.

There can be no doubt that in the immediate future we will attempt to build even more complex systems and societies, just to solve the problems caused by complexity, only to find out later that these systems are all built around centers that cannot hold. And we can all imagine what this will mean for our economies.

Here’s Nicole:

 

 

Nicole Foss from Community Solutions on Vimeo.

 

 

Jun 262017
 
 June 26, 2017  Posted by at 11:49 am Finance Tagged with: , , , , , , , , , ,  


Paul Klee Ghost of a Genius 1922

 

The Automatic Earth has written many articles on the topic of EROEI (Energy Return on Energy Invested) through the years, there’s a whole chapter on it in the Automatic Earth Primer Guide 2017 that Nicole assembled recently, which contains 17 different articles.

Still, since EROEI is the most important energy issue there is at present, and not the price of oil or some new gas find or a set of windmills or solar panels or thorium, it can’t hurt to repeat it once again, in someone else’s words and from someone else’s angle. This one comes from Brian Davey on his site CredoEconomics, part of his book “Credo”.

It can’t hurt to repeat it because not nearly enough people understand that in the end everything, the survival of our world, our way of life, is all about the ‘quality’ of energy, about what we get in return when we drill and pump and build infrastructure, what remains when we subtract all the energy used to ‘generate’ energy, from (or at) the bottom line.

Anno 2017, our overall ‘net energy’ is nowhere near where it was for the first 100 years or so after we started using oil. And there’s no energy source that comes close to -conventional- oil (and gas) when it comes to what we are left with once our efforts are discounted, in calories or Joules.

The upshot of this is that even if we can ‘gain’ 10 times more than we put in, in energy terms, that won’t save our complex societies. To achieve that, we would need at least a 15:1 ratio, a number straight from our friend Charlie Hall, which is probably still quite optimistic. And we simply don’t have it. Not anymore.

Also, not nearly enough people understand that it has absolutely nothing to do with money. That you can’t go out and buy more or better energy sources. Which is why we use EROEI instead of EROI (Energy Return on Investment), because the latter leaves some sort of financial interpretation open that doesn’t actually exist, it suggests that a financial price of energy plays a role.

First, here’s Nicole from the Automatic Earth Primer Guide 2017. Below that, Brian Davey’s article.

 

 

Nicole Foss: Energy is the master resource – the capacity to do work. Our modern society is the result of the enormous energy subsidy we have enjoyed in the form of fossil fuels, specifically fossil fuels with a very high energy profit ratio (EROEI). Energy surplus drove expansion, intensification, and the development of socioeconomic complexity, but now we stand on the edge of the net energy cliff. The surplus energy, beyond that which has to be reinvested in future energy production, is rapidly diminishing.

We would have to greatly increase gross production to make up for reduced energy profit ratio, but production is flat to falling so this is no longer an option. As both gross production and the energy profit ratio fall, the net energy available for all society’s other purposes will fall even more quickly than gross production declines would suggest. Every society rests on a minimum energy profit ratio. The implication of falling below that minimum for industrial society, as we are now poised to do, is that society will be forced to simplify.

A plethora of energy fantasies is making the rounds at the moment. Whether based on unconventional oil and gas or renewables (that are not actually renewable), these are stories we tell ourselves in order to deny that we are facing any kind of future energy scarcity, or that supply could be in any way a concern. They are an attempt to maintain the fiction that our society can continue in its current form, or even increase in complexity. This is a vain attempt to deny the existence of non-negotiable limits to growth. The touted alternatives are not energy sources for our current society, because low EROEI energy sources cannot sustain a society complex enough to produce them.

 

 

Using Energy to Extract Energy – The Dynamics of Depletion

 

Brian Davey: The “Limits to Growth Study” of 1972 was deeply controversial and criticised by many economists. Over 40 years later, it seems remarkably prophetic and on track in its predictions. The crucial concept of Energy Return on Energy Invested is explained and the flaws in neoclassical reasoning which EROI highlights.

The continued functioning of the energy system is a “hub interdependency” that has become essential to the management of the increasing complexity of our society. The energy input into the UK economy is about 50 to 70 times as great as what the labour force could generate if working full time only with the power of their muscles, fuelled up with food. It is fossil fuels, refined to be used in vehicles and motors or converted into electricity that have created power inputs that makes possible the multiple round- about arrangements in a high complex economy. The other “hub interdependency” is a money and transaction system for exchange which has to continue to function to make vast production and trade networks viable. Without payment systems nothing functions.

Yet, as I will show, both types of hub interdependencies could conceivably fail. The smooth running of the energy system is dependent on ample supplies of cheaply available fossil fuels. However, there has been a rising cost of extracting and refining oil, gas and coal. Quite soon there is likely to be an absolute decline in their availability. To this should be added the climatic consequences of burning more carbon based fuels. To make the situation even worse, if the economy gets into difficulty because of rising energy costs then so too will the financial system – which can then have a knock-on consequence for the money system. The two hub interdependencies could break down together.

“Solutions” put forward by the techno optimists almost always assume growing complexity and new uses for energy with an increased energy cost. But this begs the question- because the problem is the growing cost of energy and its polluting and climate changing consequences.

 

The “Limits to Growth” study of 1972 – and its 40 year after evaluation

It was a view similar to this that underpinned the methodology of a famous study from the early 1970s. A group called the Club of Rome decided to commission a group of system scientists at the Massachusetts Institute of Technology to explore how far economic growth would continue to be possible. Their research used a series of computer model runs based on various scenarios of the future. It was published in 1972 and produced an instant storm. Most economists were up in arms that their shibboleth, economic growth, had been challenged. (Meadows, Meadows, Randers, & BehrensIII, 1972)

This was because its message was that growth could continue for some time by running down “natural capital” (depletion) and degrading “ecological system services” (pollution) but that it could not go on forever. An analogy would be spending more than one earns. This is possible as long as one has savings to run down, or by running up debts payable in the future. However, a day of reckoning inevitably occurs. The MIT scientists ran a number of computer generated scenarios of the future including a “business as usual” projection, called the “standard run” which hit a global crisis in 2030.

It is now over 40 years since the original Limits to Growth study was published so it is legitimate to compare what was predicted in 1972 against what actually happened. This has now been done twice by Graham Turner who works at the Australian Commonwealth Scientific and Industrial Research Organisation (CSIRO). Turner did this with data for the rst 30 years and then for 40 years of data. His conclusion is as follows:

The Limits to Growth standard run scenario produced 40 years ago continues to align well with historical data that has been updated in this paper following a 30-year comparison by the author. The scenario results in collapse of the global economy and environment and subsequently, the population. Although the modelled fall in population occurs after about 2030 – with death rates reversing contemporary trends and rising from 2020 onward – the general onset of collapse first appears at about 2015 when per capita industrial output begins a sharp decline. (Turner, 2012)

So what brings about the collapse? In the Limits to Growth model there are essentially two kinds of limiting restraints. On the one hand, limitations on resource inputs (materials and energy). On the other hand, waste/pollution restraints which degrade the ecological system and human society (particularly climate change).

Turner finds that, so far it, is the former rather than the latter that is the more important. What happens is that, as resources like fossil fuels deplete, they become more expensive to extract. More industrial output has to be set aside for the extraction process and less industrial output is available for other purposes.

With signficant capital subsequently going into resource extraction, there is insufficient available to fully replace degrading capital within the industrial sector itself. Consequently, despite heightened industrial activity attempting to satisfy multiple demands from all sectors and the population, actual industrial output per capita begins to fall precipitously, from about 2015, while pollution from the industrial activity continues to grow. The reduction of inputs produced per capita. Similarly, services (e.g., health and education) are not maintained due to insufficient capital and inputs.

Diminishing per capita supply of services and food cause a rise in the death rate from about 2020 (and somewhat lower rise in the birth rate, due to reduced birth control options). The global population therefore falls, at about half a billion per decade, starting at about 2030. Following the collapse, the output of the World3 model for the standard run (figure 1 to figure 3) shows that average living standards for the aggregate population (material wealth, food and services per capita) resemble those of the early 20th century.(Turner, 2012, p. 121)

 

Energy Return on Energy Invested

A similar analysis has been made by Hall and Klitgaard. They argue that to run a modern society it is necessary that the energy return on energy invested must be at least 15 to 1. To understand why this should be so consider the following diagram from a lecture by Hall. (Hall, 2012)

eroei

The diagram illustrates the idea of the energy return on energy invested. For every 100 Mega Joules of energy tapped in an oil flow from a well, 10 MJ are needed to tap the well, leaving 90 MJ. A narrow measure of energy returned on energy invested at the wellhead in this example would therefore be 100 to 10 or 10 to 1.

However, to get a fuller picture we have to extend this kind of analysis. Of the net energy at the wellhead, 90 MJ, some energy has to be used to refine the oil and produce the by-products, leaving only 63 MJ.

Then, to transport the refined product to its point of use takes another 5 MJ leaving 58MJ. But of course, the infrastructure of roads and transport also requires energy for construction and maintenance before any of the refined oil can be used to power a vehicle to go from A to B. By this final stage there is only 20.5 MJ of the original 100MJ left.

We now have to take into account that depletion means that, at well heads around the world, the energy to produce energy is increasing. It takes energy to prospect for oil and gas and if the wells are smaller and more difficult to tap because, for example, they are out at sea under a huge amount of rock. Then it will take more energy to get the oil out in the first place.

So, instead of requiring 10MJ to produce the 100 MJ, let us imagine that it now takes 20 MJ. At the other end of the chain there would thus, only be 10.5MJ – a dramatic reduction in petroleum available to society.

The concept of Energy Return on Energy Invested is a ratio in physical quantities and it helps us to understand the flaw in neoclassical economic reasoning that draws on the idea of “the invisible hand” and the price mechanism. In simplistic economic thinking, markets should have no problems coping with depletion because a depleting resource will become more expensive. As its price rises, so the argument goes, the search for new sources of energy and substitutes will be incentivised while people and companies will adapt their purchases to rising prices. For example, if it is the price of energy that is rising then this will incentivise greater energy efficiency. Basta! Problem solved…

Except the problem is not solved… there are two flaws in the reasoning. Firstly, if the price of energy rises then so too does the cost of extracting energy – because energy is needed to extract energy. There will be gas and oil wells in favourable locations which are relatively cheap to tap, and the rising energy price will mean that the companies that own these wells will make a lot of money. This is what economists call “rent”. However, there will be some wells that are “marginal” because the underlying geology and location are not so favourable. If energy prices rise at these locations then rising energy prices will also put up the energy costs of production. Indeed, when the energy returned on energy invested falls as low as 1 to 1, the increase in the costs of energy inputs will cancel out any gains in revenues from higher priced energy outputs. As is clear when the EROI is less than one, energy extraction will not be profitable at any price.

Secondly, energy prices cannot in any case rise beyond a certain point without crashing the economy. The market for energy is not like the market for cans of baked beans. Energy is necessary for virtually every activity in the economy, for all production and all services. The price of energy is a big deal – energy prices going up and down have a similar significance to interest rates going up or down. There are “macro-economic” consequences for the level of activity in the economy. Thus, in the words of one analyst, Chris Skrebowski, there is a rise in the price of oil, gas and coal at which:

the cost of incremental supply exceeds the price economies can pay without destroying growth at a given point in time.(Skrebowski, 2011)

This kind of analysis has been further developed by Steven Kopits of the Douglas-Westwood consultancy. In a lecture to the Columbia University Center on Global Energy Policy in February of 2014, he explained how conventional “legacy” oil production peaked in 2005 and has not increased since. All the increase in oil production since that date has been from unconventional sources like the Alberta Tar sands, from shale oil or natural gas liquids that are a by-product of shale gas production. This is despite a massive increase in investment by the oil industry that has not yielded any increase in “conventional oil” production but has merely served to slow what would otherwise have been a faster decline.

More specifically, the total spend on upstream oil and gas exploration and production from 2005 to 2013 was $4 trillion. Of that amount, $3.5 trillion was spent on the “legacy” oil and gas system. This is a sum of money equal to the GDP of Germany. Despite all that investment in conventional oil production, it fell by 1 million barrels a day. By way of comparison, investment of $1.5 trillion between 1998 and 2005 yielded an increase in oil production of 8.6 million barrels a day.

Further to this, unfortunately for the oil industry, it has not been possible for oil prices to rise high enough to cover the increasing capital expenditure and operating costs. This is because high oil prices lead to recessionary conditions and slow or no growth in the economy. Because prices are not rising fast enough and costs are increasing, the costs of the independent oil majors are rising at 2 to 3% a year more than their revenues. Overall profitability is falling and some oil majors have had to borrow and sell assets to pay dividends. The next stage in this crisis has then been that investment projects are being cancelled – which suggests that oil production will soon begin to fall more rapidly.

The situation can be understood by reference to the nursery story of Goldilocks and the Three Bears. Goldilocks tries three kinds of porridge – some that is too hot, some that is too cold and some where the temperature is somewhere in the middle and therefore just right. The working assumption of mainstream economists is that there is an oil price that is not too high to undermine economic growth but also not too low so that the oil companies cannot cover their extraction costs – a price that is just right. The problem is that the Goldilocks situation no longer describes what is happening. Another story provides a better metaphor – that story is “Catch 22”. According to Kopits, the vast majority of the publically quoted oil majors require oil prices of over $100 a barrel to achieve positive cash flow and nearly a half need more than $120 a barrel.

But it is these oil prices that drag down the economies of the OECD economies. For several years, however, there have been some countries that have been able to afford the higher prices. The countries that have coped with the high energy prices best are the so called “emerging non OECD countries” and above all China. China has been bidding away an increasing part of the oil production and continuing to grow while higher energy prices have led to stagnation in the OECD economies. (Kopits, 2014)

Since the oil price is never “just right” it follows that it must oscillate between a price that is too high for macro-economic stability or too low to make it a paying proposition for high cost producers of oil (or gas) to invest in expanding production. In late 2014 we can see this drama at work. The faltering global economy has a lower demand for oil but OPEC, under the leadership of Saudi Arabia, have decided not to reduce oil production in order to keep oil prices from falling. On the contrary they want prices to fall. This is because they want to drive US shale oil and gas producers out of business.

The shale industry is described elsewhere in this book – suffice it here to refer to the claim of many commentators that the shale oil and gas boom in the United States is a bubble. A lot of money borrowed from Wall Street has been invested in the industry in anticipation of high profits but given the speed at which wells deplete it is doubtful whether many of the companies will be able to cover their debts. What has been possible so far has been largely because quantitative easing means capital for this industry has been made available with very low interest rates. There is a range of extraction production costs for different oil and gas wells and fields depending on the differing geology in different places. In some “sweet spots” the yield compared to cost is high but in a large number of cases the costs of production have been high and it is being said that it will be impossible to make money at the price to which oil has fallen ($65 in late 2014). This in turn could mean that companies funding their operations with junk bonds could find it difficult to service their debt. If interest rates rise the difficulty would become greater. Because the shale oil and gas sector has been so crucial to expansion in the USA then a large number of bankruptcies could have wider repercussions throughout the wider US and world economy.

 

Renewable Energy systems to the rescue?

Although it seems obvious that the depletion of fossil fuels can and should lead to the expansion of renewable energy systems like wind and solar power, we should beware of believing that renewable energy systems are a panacea that can rescue consumer society and its continued growth path. A very similar net energy analysis can, and ought to be done for the potential of renewable energy to match that already done for fossil fuels.

eroei-renewables

Before we get over-enthusiastic about the potential for renewable energy, we have to be aware of the need to subtract the energy costs particular to renewable energy systems from the gross energy that renewable energy systems generate. Not only must energy be used to manufacture and install the wind turbines, the solar panels and so on, but for a renewable based economy to be able to function, it must also devote energy to the creation of energy storage. This would allow for the fact that, when the wind and the sun are generating energy, is not necessarily the time when it is wanted.

Furthermore, the places where, for example, solar and wind potential are at this best – offshore for wind or in deserts without dust storms near the equator for solar – are usually a long distance from centres of use. Once again, a great deal of energy, materials and money must be spent getting the energy from where it is generated to where it will be used. For example, the “Energie Wende” (Energy Transformation) in Germany is involving huge effort, financial and energy costs, creating a transmission corridor to carry electricity from North Sea wind turbines down to Bavaria where the demand is greatest. Similarly, plans to develop concentrated solar power in North Africa for use in northern Europe which, if they ever come to anything, will require major investments in energy transmission. A further issue, connected to the requirement for energy storage, is the need for energy carriers which are not based on electricity. As before, conversions to put a current energy flux into a stored form, involve an energy cost.

Just as with fossil fuels, sources of renewable energy are of variable yield depending on local conditions: offshore wind is better than onshore for wind speed and wind reliability; there is more solar energy nearer the equator; some areas have less cloud cover; wave energy on the Atlantic coasts of the UK are much better than on other coastlines like those of the Irish Sea or North Sea. If we make a Ricardian assumption that best net yielding resources are developed first, then subsequent yields will be progressively inferior. In more conventional jargon – just as there are diminishing returns for fossil energy as fossil energy resources deplete, so there will eventually be diminishing returns for renewable energy systems. No doubt new technologies will partly buck this trend but the trend is there nonetheless. It is for reasons such as these that some energy experts are sceptical about the global potential of renewable energy to meet the energy demand of a growing economy. For example, two Australian academics at Monash University argue that world energy demand would grow to 1,000 EJ (EJ = 10 18 J) or more by 2050 if growth continued on the course of recent decades. Their analysis then looks at each renewable energy resource in turn, bearing in mind the energy costs of developing wind, solar, hydropower, biomass etc., taking into account diminishing returns, and bearing in mind too that climate change may limit the potential of renewable energy. (For example, river flow rates may change affecting hydropower). Their conclusion: “We nd that when the energy costs of energy are considered, it is unlikely that renewable energy can provide anywhere near a 1000 EJ by 2050.” (Moriarty & Honnery, 2012)

Now let’s put these insights back into a bigger picture of the future of the economy. In a presentation to the All Party Parliamentary Group on Peak Oil and Gas, Charles Hall showed a number of diagrams to express the consequences of depletion and rising energy costs of energy. I have taken just two of these diagrams here – comparing 1970 with what might be the case in 2030. (Hall C. , 2012) What they show is how the economy produces different sorts of stuff. Some of the production is consumer goods, either staples (essentials) or discretionary (luxury) goods. The rest of production is devoted to goods that are used in production i.e. investment goods in the form of machinery, equipment, buildings, roads, infrastracture and their maintenance. Some of these investment goods must take the form of energy acquisition equipment. As a society runs up against energy depletion and other problems, more and more production must go into energy acquisition, infrastructure and maintenance. Less and less is available for consumption, and particularly for discretionary consumption.

hall

Whether the economy would evolve in this way can be questioned. As we have seen, the increasing needs of the oil and gas sector implies a transfer of resources from elsewhere through rising prices. However, the rest of the economy cannot actually pay this extra without crashing. That is what the above diagrams show – a transfer of resources from discretionary consumption to investment in energy infrastructure. But such a transfer would be crushing for the other sectors and their decline would likely drag down the whole economy.

Over the last few years, central banks have had a policy of quantitative easing to try to keep interest rates low. The economy cannot pay high energy prices AND high interest rates so, in effect, the policy has been to try to bring down interest rates as low as possible to counter the stagnation. However, this has not really created production growth, it has instead created a succession of asset price bubbles. The underlying trend continues to be one of stagnation, decline and crisis and it will get a lot worse when oil production starts to fall more rapidly as a result of investment cut backs. The severity of the recessions may be variable in different countries because competitive strength in this model goes to those countries where energy is used most efficiently and which can afford to pay somewhat higher prices for energy. Such countries are likely to do better but will not escape the general decline if they stay wedded to the conventional growth model. Whatever the variability, this is still a dead end and, at some point, people will see that entirely different ways of thinking about economy and ecology are needed – unless they get drawn into conflicts and wars over energy by psychopathic policy idiots. There is no way out of the Catch 22 within the growth economy model. That’s why degrowth is needed.

Further ideas can be extrapolated from Hall’s way of presenting the end of the road for the growth economy. The only real option as a source for extra resources to be ploughed into changing the energy sector is from what Hall calls “discretionary consumption” aka luxury consumption. It would not be possible to take from “staples” without undermining the ability of ordinary people to survive day to day. Implicit here is a social justice agenda for the post growth – post carbon economy. Transferring resources out of the luxury consumption of the rich is a necessary part of the process of finding the wherewithal for energy conservation work and for developing renewable energy resources. These will be expensive and the resources cannot come from anywhere else than out of the consumption of the rich. It should be remembered too that the problems of depletion do not just apply to fossil energy extraction coal, oil and gas) but apply across all forms of mineral extraction. All minerals are depleted by use and that means the grade or ore declines over time. Projecting the consequences into the future ought to frighten the growth enthusiasts. To take in how industrial production can hit a brick wall of steeply rising costs, consider the following graph which shows the declining quality of ore grades mined in Australia.

mining-australia

As ores deplete there is a deterioration of ore grades. That means that more rock has to be shifted and processed to refine and extract the desired raw material, requiring more energy and leaving more wastes. This is occurring in parallel to the depletion in energy sources which means that more energy has to be used to extract a given quantity of energy and therefore, in turn, to extract from a given quantity of ore. Thus, the energy requirements to extract energy are rising at the very same time as the amount of energy required to extract given quantities of minerals are rising. More energy is needed just at the time that energy is itself becoming more expensive.

Now, on top of that, add to the picture the growing demand for minerals and materials if the economy is to grow.

At least there has been a recognition and acknowledgement in recent years that environmental problems exist. The problem is now somewhat different – the problem is the incredibly naive faith that markets and technology can solve all problems and keep on going. The main criticism of the limits to growth study was the claim that problems would be anticipated in forward markets and would then be made the subject of high tech innovation. In the next chapter, the destructive effects of these innovations are examined in more depth.