#128: GFC II

THE ANATOMY OF THE NEXT CRASH

Surprising though it might seem, barely two weeks have elapsed since those of us who anticipate GFC II – the sequel to the 2008 global financial crisis (GFC I) – were in a very, very small minority.

Consensus opinion, backed to the hilt by conventional economics, said that no such event was going to happen. Rather, we had entered the sunny uplands of “synchronised growth”, and debt had ceased to be anything much to worry about.

Of course, events, in Italy and elsewhere, haven’t yet proved us right, or the consensus wrong. We remain in a minority, though one that seems to be becoming larger. But events should embolden us, and on two fronts, not one.

First, recent developments strengthen the case for GFC II, not because of their seriousness alone, but because – as will be explained here – they conform to a logical pattern that points towards a coming crisis.

Second, we’re being reminded of quite how far conventional economics is out of touch with reality. This, of course, will be proved decisively if – or when – GFC II does happen.

This, when you consider its implications, is really quite remarkable. Government, business and finance all place heavy reliance on a school of thought which decrees that the workings of the economy are entirely financial – so, if events prove this approach to have been wrong, the ramifications will be enormous.

Those of us who understand that, far from being a matter of money, the economy is an energy system, have a lot of work in front of us.

This seems like a good point at which to publish the promised brief summary of why GFC II is likely.

ECoE starts to bite

Here is one big difference which makes the two contesting views of the economy incompatible. For anyone who believes in money-based interpretation, there are few (if any) logical barriers to perpetual growth in prosperity.

From an energy perspective, however, there is every reason to doubt the feasibility of indefinite expansion on a finite planet.

To be quite clear about this, what is contended here is not that we will “run out of” either petroleum or of energy more broadly. Rather, the argument is that we are running out of cheap energy.

“Cheap”, in this context, does not refer to sums of money invested in the supply of energy. Rather, it refers to the quantity of energy consumed whenever energy is accessed.

The definition used here is the energy cost of energy, or ECoE. Throughout much of our industrial history, the trend in ECoE has been downwards. This trend, beneficial for growing prosperity, was driven by geographical reach, economies of scale and technology.

In recent times, however, both reach and scale have plateaued, and technology has become a mitigator of ECoE increase rather than an accelerator of ECoE decrease. The driver now is depletion.

According to SEEDS, the global trend ECoE was 1.7% in 1980, and 2.6% in 1990. The difference between the two numbers was modest, and neither was a material (or, to most observers, even a noticeable) head-wind to growth.

Because the operative trend is exponential, however, ECoE was close to 4% by 2000, and had now become large enough to start driving a wedge between economic expectation and economic outcome.

The dynamic of sequential crises, part one – GFC I

By about 2000, then, underlying growth in prosperity was weakening, something not helped by the form of globalisation being promoted. Fading growth wasn’t something that conventional economics could explain, let alone accept.

What was apparent, however, was that the ability of Westerners to go on increasing their consumption was flagging, not least because of the outsourcing of skilled, well-paid jobs to the emerging market economies (EMs).

The solution to this seemed simple – give consumers easier and cheaper access to credit.

Two expedients combined to further this aim. The first was to drive down the real (ex-inflation) cost of borrowing. The second was to increase the availability of debt through “deregulation” of the financial sector. Both accorded with the prevailing ideology of laissez-faire economics, with its emphasis on diminishing the role (including the regulatory role) of the state.

Obviously enough, this strategy drove global debt upwards. Expressed in PPP dollars at constant 2017 values, world debt increased by 43%, from $121 trillion in 2000 to $174tn in 2007. Nobody in any position of influence seemed unduly concerned about this, because GDP had increased by a seemingly-impressive 53% over the same period.

Hardly anyone seemed to notice that each $1 of this growth had been accompanied by $2.08 of net new debt. Accordingly, the clear inference – that a big chunk of this “growth” was nothing more substantial than the simple spending of borrowed money – passed largely unnoticed.

The second, less obvious consequence of deregulation was the diffusion of risk, and the separation of risk from return. Various innovative practices enabled the creation of high-return, high-risk instruments which could be sliced in such a way that high risk was divested and high return retained. Surprisingly few observers noticed quite how dangerous this practice was likely to prove.

Risk-aversion revisited

The first – and, with hindsight, unmistakeable – portent of GFC I happened during the “credit crunch” of 2007. Banks, suddenly aware of elevated risk, couldn’t know which counterparties were safe, and which were not.

This was an instance of risk-aversion. What resulted was an interruption in the continuity of credit supply. This took down the small number of banks which had been reckless enough to finance their lending using short-term credit from wholesale markets. These aside, the system seemingly recovered from risk-aversion, though astute observers must by now have realised that the “credit crunch” might well be a precursor to something more systemic.

This 2007 chapter is highly relevant now, because we have entered a new phase of risk-aversion. Even before recent events in Italy, some of us had discerned the rise of risk-aversion, most obviously in the travails of a string of EM currencies. The probability is that this isn’t simply a function of a strengthening dollar, but reflects the withdrawal of capital from countries now seen as risky.

This time – and with a significance that will become obvious shortly – it is the creditworthiness of countries and their currencies which are being questioned, not just that of banks

This is why, here, we had started discussing GFC II, and commenting on its imminence, well before anything kicked off in the Euro Area (EA).

These events have not, then, changed our expectations. Rather, they have conformed to a pattern in which an outbreak of risk-aversion precedes a full-blown crisis.

The dynamic of sequential crises, part two – GFC II

So far, the dynamic of GFC II is conforming to the pattern of GFC I, with an episode of risk-aversion happening first. If the pattern continues, we will get through this chapter and breathe a collective sigh of relief – just in time for GFC II to catch us unawares.

This time, though, the fundamental dynamic is different, which means that the shape of GFC II will be different as well.

The explanation for this lies in how we responded to GFC I.

Put simply, during GFC I the authorities woke up to the obvious fact that the world had too much debt. Whenever debt becomes excessive – for a household, a business or a whole economy – the primary problem isn’t whether the debt can be repaid. At the macroeconomic level, at least, repayment can usually be deferred.

The big and immediate problem is servicing the debt – and this, by 2008, had become something that the world’s borrowers simply couldn’t afford to do. The logical solution seemed to be to slash interest rates.

This involved two processes, not one. The first, which was to take policy rates down to somewhere near zero, would never have been enough on its own. This was why massive QE programmes were launched, buying bond prices upwards in order to force yields sharply lower.

Defenders of QE argued that this didn’t amount to “printing” or otherwise creating new money, that it wasn’t monetisation of debt, and that it wouldn’t spark a sharp rise in inflation.

None of these assurances was, or is, cast-iron. QE isn’t the creation of money so long as it is reversed in good time. QE may not in principle be debt monetisation, but it certainly has become that in Japan, where QE money has been used by the BoJ to buy up nearly half of all JGBs in issue. It would be no huge surprise if the ECB, too, adopted monetisation as the least-bad way out of the looming debt crisis. And QE need not spark inflation, if by that term is meant rises in retail prices – but QE most assuredly has created huge inflation in the prices of assets.

A new adventurism

Be that as it may, what we have seen since GFC I has been “monetary adventurism”, which is distinct from the “credit adventurism” practised before 2008. The credit variety hasn’t gone away – indeed, it has worsened, with each dollar of “growth” since 2008 coming at a cost of $3.39 in new debt, compared with a ratio of 2.08:1 before GFC I – but monetary adventurism has leveraged its consequences.

The numbers are that, between 2008 and 2017, GDP increased by $28.8tn, but debt expanded by $98tn. Nor is this all. The destruction of returns on capital has created what the WEF has called “a global pension timebomb”, blowing a hole estimated by SEEDS at close to $100tn in worldwide pension provision adequacy. QE has poured something of the order of $28tn into the system. In the background, meanwhile, ECoE has continued to tighten its grip, rising from 5.3% in 2007 to 8.0% now.

To cut to the chase, most of the recorded “growth” in world GDP since 2008 has been cosmetic, amounting to nothing more substantial than the simple spending of borrowed money. As we have seen, this is corroborated by the concentration of “growth” towards the lower end of the value-added spectrum.

Bring the increase in ECoE into the equation as well and what we are looking at is a 10% ($7.6tn) increase in world prosperity trying to support a 54% ($98tn) expansion in total debt. Moreover, the 10% increase in aggregate prosperity has barely matched the rate of growth in population numbers. People have not been getting more prosperous, then, but they have been getting ever further into debt.

What on earth could go wrong with that?

Not like GFC I – the nature of GFC II risk

Thus far, with an episode of risk-aversion in the EM economies compounded by debt worries in Europe, events are following the pattern of GFC I.

But there are at least three reasons why we should not assume that GFC II will continue to look a lot like GFC I.

First, prosperity per person has been declining across almost all of the Western economies. The worst affected countries include France (a fall of 5.4% since 2007), Australia (-6.0%), the United States (-6.3%), Britain (-7.9%) and – of course – Italy, where prosperity has declined by 8.4%.

It is no coincidence at all that major political reverses for the establishment have happened in four of these five countries. Deterioration in prosperity seems certain to have informed the “Brexit” vote, the election of Mr Trump, the defeat of all established parties in the first round of presidential voting in France, and the triumph of Lega and M5S in Italy.

The relevance of this going forward, though, is something termed here “acquiescence risk”. This broadly means that populations undergoing hardship are likely to oppose any kind of rescue plan, especially if it is assumed by voters to involve rescues for an elite, and “austerity” for everyone else.

The second big difference between conditions now and those prevailing in 2008 is that recklessness has no longer been confined almost entirely to the developed economies of the West. This broader compass is hinted at by risk-aversion in the EMs. On the SEEDS risk matrix, China is now rated as riskier than any economy other than Ireland.

Third, and most important of all, a phase of “credit adventurism” which put banks at risk in 2008 has become a wave of “monetary adventurism” which puts fiat currencies themselves at risk.

What we should anticipate, then, is that GFC II will be truly global, not exempting EMs, and that, this time, currencies, and therefore national economies, will share a wave of risk previously (in 2008) borne largely by banks alone.

Precedent can help us anticipate why GFC II will happen – but will prove a poor guide to its shape and extent.

= = = = =

Since brevity was promised here, it is to be hoped that the foregoing provides a succinct summary of why GFC II is likely.

There seem certain to be plenty of opportunities for going into this in greater detail.

 

= = = = =

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480 thoughts on “#128: GFC II

  1. I am going to test the patience of both readers and Dr. Morgan by attempting to summarize some thoughts from The Physics of Life by Adrian Bejan. These thoughts all pertain to our current predicament.

    Bejan makes a distinction between Growth and Evolution, two terms he says are ‘routinely conflated and confused in scientific discourse’. Growth is the spread of a seed as it develops. Evolution is the creation of a new seed…a new way of being in the world. Growth follows an S curve: slow, then fast, then slow, followed by stasis. The S curve which characterizes growth can be derived from first principles of physics.

    In terms of Peak Oil, the Hubbert curve describes the S which describes the utilization of what we can label ‘conventional oil’. There are other sources of liquid fuels, which have their own S curves. When Jean Laherrere draws these curves, he draws each one distinctively. For example, he does not try to fit shale oil under the conventional S curve…he draws independent curves and then sums them. The curve for any particular seed (technology) can be moved laterally by incremental improvements to the technology (as Art Berman thinks that the technology for extracting shale oil has moved only a little), but the small incremental movements do not obscure the S curve for the given seed technology. The same could be said, for example, about desktop computers or telephony.

    In the rapid growth phase, both scientists and the lay public commonly speak of ‘exponential growth’. This label is always misleading. There is no such thing as perpetual exponential growth on a finite planet.

    Now, since I can’t draw it here, I want you to imagine an S curve for conventional oil, and a graph of the global GDP which that oil has facilitated into existence. As late as the 1990s, it sure looked to a lot of people like an exponential. But now, evidence such as that presented by Dr. Morgan indicates that many of us are on the downslope of Hubbert’s curve. But since the public and corporate and political perception is one of ‘exponential growth forever’, we grab the nearest tool to try to at least pretend that things are still as they were. The nearest tool is debt. And so, for a while Wile E. Coyote treads air.

    Now I want to shift gears and talk a little about ‘what is flowing?’. With GDP, it is the notion that more economic activity is by definition ‘good’. A proposal such as the ’10 minute walkable community’ is by definition ‘bad’ because it reduces GDP. So the widespread adoption of designing communities so that they are diversified and walkable requires a change in the mental constructs of ‘what is flowing’. I have made the point that our current built environment has been deeply marked by the automobile and airplane and truck. Since there are feedback loops from the built environment to our mental constructs, changing ‘what is flowing’ will not be child’s play. And probably we don’t have the resources to demolish what we have and construct some new vision of Heaven.

    But I want to take a specific look at what is a very large part of the US economy: food and healthcare. If you haven’t looked at Viome, please take some time and look at some of the YouTube appearances of Naveen Jain, the billionaire founder and backer. (A google search for Viome may lead you to pages of bullshit about Vimeo, search on Jain instead). Viome began with enormous promises (chronic disease becomes entirely optional; the medical system will collapse) which didn’t immediately come true. My wife and I were early adopters. We now have the first real results. Let me describe them to you.

    Gut microbes make butyrate, a substance which is used by many genes in the body to do all sorts of health promoting things. If you don’t have butyrate, you are not healthy. The Viome technology looks at both the existence of particular microbes which CAN make butyrate, but also, and perhaps more importantly, whether they are actually generating the RNA which is necessary for gene activation. The measurements are sorted into 9 boxes: high, medium, and low for both existence and activity. Thus, at one extreme, you may have few of the right kinds of microbes and they may be inactive. At the other, you have plenty of the right kind of microbes and they are busily making butyrate.

    If you are in the (1,1) box Viome will advise you to take a certain Probiotic and to eat more resistant starch (which feeds the microbes). If you are in the (3,3) box, Viome will advise you to just keep eating a healthy diet. But it gets interesting in the middle boxes. For example, one can have a relatively poor set of microbes, but a high rate of butyrate production. What this means is that some bad bacteria, which can also make butyrate, are doing so…but also making bad products such as ammonia. The ammonia will lead to inflammation which is associated with virtually all chronic disease. And Viome will generate recommendations for you which deal with your condition.

    So the first step down the path that Jain promises looks pretty good to me. What is the potential? I certainly agree that one can envision the collapse of the medical industry built on treating chronic disease, the end of taxpayer subsidies for the treatment of chronic disease, the severe crimping of industries such as supplement manufacturers, a huge cutback in the industry of ‘diet doctors’, probably big restructuring of the agricultural industry and downsizing of supermarkets as people shun processed foods.

    Now, today, when people walk down the middle aisles of a supermarket, they are searching for something very specific to flow: clever combinations of fat, salt, and sugar. If the above paragraph is to actually occur, then what needs to flow is the concept of ‘science based health promoting food’. Which will turn out to look a lot more like what our ancestors ate.

    So a question for you:
    Can scientific measurements plus feedback change what flows?
    If the answer is ‘Yes’, then we are into one of Bejan’s evolutionary changes. That is, the structure of a very large proportion of our economy changes because ‘what is flowing’ has changed.

    Working against change is the desire of all living things to ‘go with the flow’. The flow is currently the combined volume of the Mississippi, the Amazon, and the Nile. Viome is equivalent to the creek that runs in the back of your property.

    One can extend the same sort of thinking to Dr. Morgan’s ideas about the futility of EVs and the necessity for better designed urban areas and the 10 Minute Walkable Neighborhood. All that is left as an exercise for the student.

    Are you optimistic, or pessimistic?

    Don Stewart

  2. Hello Dr. Tim – I recently has a question about Charles Hall’s EROI approach which I think is relevant to your prosperity calculations as well. Namely: How do sunk capital costs effect prosperity?

    As an economy grows, capital allows for faster growth – a positive feedback loop or economy of scale. More railroads made coal easier, more roads and cars made oil more viable, etc. However as a civilization grows the maintenance cost of capital increases as a share of energy use, leaving less marginal energy available for the construction of new capital. This is relative to the rate of increase of resource extraction and is a function of diminishing resource quality.

    So prosperity decline seems to contain TWO functions: Energy cost increase, plus increasing capital requirements. Instead of (E-ECoE)/N = P, we would have (E-ECoE-SUNK CAPITAL ENERGY MAINTENANCE)/N=P.

    Much of the peak oil thinking focuses on “E”, while current discussion focuses on “ECOE”. Much of the problem with civilization lies with the second component of the denominator – the ongoing sunk metabolic energy demands of capital and institutions. We can’t seem to do anything without sacrificing something else.

    So a marginal barrel of oil in 1960 may have 100 units of energy. Perhaps only 1 of those units of energy was required for proximate (“at the well head”) extraction. However – lets say 80 of those units of energy went to existing capital and institutions (repaving roads, kindergarten teachers…) leaving 19 units of energy available to the economy for growth. Over time, I assert that the problem isn’t whether the marginal barrel of oil costs even FIVE TIMES as much energy (5 of 100 units) but the fact that legacy sunk capital requires 90 units of energy (as an example) leaving only 5 units of energy available to invest in growing the economy – new capital and institutional expansion.

    The problem is that BOTH of the units of the denominator are growing. One unit is subject to diminishing marginal returns, the other is subject to exponential expansion. This to me is the heart of the matter. Even if infinite quantities of energy were available collapse is still inevitable because at some size of the economy the legacy share of energy demand by capital and institutions represented by the MARGINAL unit of energy will leave no SURPLUS energy available for the creation of new capital and the expansion of existing institutions.

    Capital maintenance isn’t exactly “essential” like food and shelter. It’s neither discretionary. You can put it off for a long time before it starts to undercut functional stability.

    If you built an infinite road to nowhere your costs of expanding the road would include each incremental meter. The longer the road got, the more expensive each incremental meter would cost since at first you traveled one mile from start to finish, but soon would travel many hundreds of miles. This is EROI, or perhaps related to ECOE. However, if you are also repairing the road as you work things become much worse as some of your time and energy need to be spent filling potholes and patching cracks. As limits are reached, the road builder may abandon some repairs to allow still further growth. If there are any limits to energy then at some point all available energy would be put into road maintenance – or the maintenance of the road would be abandoned to allow growth.

    Long story short I think prosperity is worse off than we might estimate without capital considerations.

    • Japan and I think China built some roads to nowhere and there is also an airport in Spain and housing which will never be used.

      Here in the UK we’re about to spend billions of on HS2 which we might not be able to maintain.

      The state of the roads in the Uk is appalling with not much money to fix them.

    • The way I look at this is to divide energy supply into three parts. One, of course, is ECoE. The second is non-discretionaries or essentials, into which category I would put maintenance of infrastructure. The third is discretionaries.

      This equation is leveraged against discretionaries. That’s why, in situations where prosperity is in steep decline (as in the UK, for example), we’re seeing retail, pubs and restaurants under pressure. You would also expect to see neglect of maimntenance spending.

      An added complication here is utilisation rates. Infrastructure is geared to near-full utilisation. If utilisation rates fall, the share of maintenance cost falling on each remaining user rises. This can exacerbate the downwards trend in utilisation, and become a vicious circle.

      SEEDS is showing a pronounced decline in prosperity in almost all Western economies. There may be a case for things being even worse than SEEDS indicates.

      But, to the best of my knowledge – and whilst there are many interpretations which recognise weakening prosperity – SEEDS is the only model which captures this. Conventional economic models invariably claim ‘growth’ in output, and assume rising prosperity on this basis.

    • @Dr. Tim – Thanks for the reply. You helped me connect a few dots between apparent growth (GDP) in the face of declining prosperity. I am convinced it is structurally irreversible. I think the tendency to neglect maintenance might be a small element of things being worse than SEEDS would indicate since the concept of “essentials” has some fuzzy boundaries.

      It is particularly important because much of the cost of extraction of energy has to do with capital requirements rather than labor. Roads, heavy equipment, mining and materials, etc. To say the energy cost of energy is increasing and the price is increasing is to say that the return on capital is decreasing, to some extent, and that what we cannot afford is the capital intensity of growth – in that we need to maintain our current capital with energy and resources just to stay in place, and don’t have enough surplus to add any more without abandoning that which we have.

      Those who say “we have plenty of oil if the price can get higher” haven’t thought through the limitations. If the government subsidizes oil prices to $300 a barrel we would use so much steel, concrete, sand and trucking that other sectors would collapse for lack of resources – which would look like price spikes.

    • Thank you, and I’m glad I’ve helped.

      If you look at, say, a bridge, and consider all the steel, other materials and work embedded in it, it has a clear (and large) energy cost. That bridge ages over time, meaning that we have to (a) invest in maintaining it, and/or (b) invest in replacing it when necessary. By ‘invest’, of course, I mean ‘put energy into’.

      So infrastructure is ’embedded energy’, and this decays, requiring replenishment, over time. That’s one of the demands – and a significant one – on our surplus (ex-ECoE) availability of energy.

  3. I’m struggling to reconcile increasing EROEI with news coming from the oil industry that technological advancement is driving down decline rates on established wells from around 7% to 3%. In some areas extraction costs have fallen to around $10 per barrel.
    As far as Surplus Energy economics goes I’m a believer but I’m sceptical over the accuracy of EROEI measurements. Who is measuring the amount of energy used by the pumps the Saudis use to inject water into their wells ? . Are the reports accurate ?.

    In the coal industry we have seen a shift away from deep mine to open cast coal. This must be hugely beneficial in terms of EROEI?.My gut feeling is that any change in EROEI is marginal and will remain of secondary order significance for the foreseeable future. Exponential population increase and alternative energy supplies that might not live up to the hype seems to be the main issue. ?

    • There’s no doubt that ECoEs are rising, I’m afraid. Reported costs are often only operating expenses, not capital costs. Decline rates on some wells can be reduced by investment, but that cost needs to be taken into account. Annual decline rates on shales are enormous. The amount of oil discovered annually has plunged to an all-time low. Technology is limited to the physical envelope of the resource being accessed, something very widely overlooked. Saudi water injection is huge, itself evidence of the ageing of much of the Saudi resource base.

      There is a specific issue with coal, which the is energy content per tonne extracted. This has been falling relentlessly, and open cast coal is likely to be at the low end of the range.

    • Someone posted a visual of how much anthracite vs lignite coal reserves remain… the anthracite number was in the single digits…

      So we are left with burning the low quality brown coal that produces far less heat… meaning we have to dig up, transport and burn more of it … to compensate…

      This is another huge headwind….

    • If open-cast mines are now being opened, (Germany?) it’s poor quality stuff – and undoubtedly a measure of desperation.

    • EROEI
      As I understand it, the observed EROEI can increase when the industry collapses. The reason is that capital expenditures count as a cost. If the industry stops spending capital dollars, the observed EROEI will increase. That happened in the Canadian tar sands a few years ago.

      Of course, it also means the industry is going out of business. I guess the moral of the story is that we need to be really careful with measurements, and understand the implications.

      Don Stewart

    • Don

      That’s a correct observation, and it reminds me of a certain US oil major which once decided to develop projects with an IRR above a specified level – the result was a shrinking portfolio of assets.

      This will not affect SEEDS, however, because ECoE is measured on a multi-year trend basis for each fuel type. Output mix does change overall measured ECoE – if more of a low ECoE fuel is used, say, and less of a higher ECoE alternative – but trends themselves are not influenced the effect you describe. (This was one of the numerous – believe me, very numerous! – issues tackled in creating SEEDS).

      Open cast coal is usually ‘younger’, and of lower quality, than deep-mined coal.

  4. Regarding Exponential Pop growth and Limits to Growth here is the other side of that particular Bet

    https://en.wikipedia.org/wiki/Julian_Simon

    Just to make the point I consider Erlich and Simon to be two extreme polarities although I believe the Needle points to a Cornucopian or free will side of the balance without privileged distortions effecting fair “SocialMarket” outcomes.

    • This guy has been screaming Apocalypse for over fifty years..His book the Population Bomb even came with letters in the back you could send to Congressman..That book is like the New World Order for Liberals..

    • Hi Mastermind, your starter for 10, watch the video. It’s quite the job on de-bunking Ehrlich.

  5. Tim, what assumptions are SEEDS prosperity projections based upon? The model projects increasing prosperity per capita for China and India. I find that difficult to reconcile with an increasing ECOE.

    • I can perhaps help you best by taking China as an example – because there are certainly issues which could depress prosperity in China below current SEEDS projections.

      For 2018, GDP is likely to grow by c6.6%. But a very large chunk of reported “growth” is fuelled by ever-expanding debt, with each RMB 1 of incremental GDP now costing well over RMB 4 in net new borrowing. According to SEEDS, growth without this borrowing impetus is about 2.8%.

      Against this, ECoE for 2018 is put at 8.5%, which is worrying, because it’s nearly at the point where it strangles growth altogether. Prosperity is now growing at about 2.5% annually, or 2.0% per capita, once adjusted for the rate of change in population numbers. That’s nowhere near the 6% rate of growth in reported GDP per capita, because the latter (a) ignores ECoE and (b) is very largely fuelled by massive borrowing.

      Looking at ECoE, China’s 8.5% for 2018 compares with 8.0% globally. By 2025, the global number is projected at 9.6%, and China’s at 9.7% – pretty similar, but very adverse for growth by then.

      According to SEEDS, ECoE (and energy supply) is one of three main problems for China. The others are:

      – The massive build-up in debt, which looks increasingly unsustainable, but without which headline growth would stumble.

      – The trade effects of customers getting poorer.

      So yes, trend growth in prosperity per capita could well be lower than the 2% modelled by SEEDS. The clear risks are to the downside.

      Please note, though, that SEEDS’ 2.0% is already drastically below the 6% swallowed open-mouthed by the ‘consensus’ world of conventional economics. Forecasting can never be precise, but I’d suggest that SEEDS is giving us a radically different (and much better) line on Chinese prosperity than you can get from any conventional source.

      In other words, which is likelier to be right – the consensus at 6%, or SEEDS at 2%?

      I’m biased, of course, but……

    • Great Presentation of the Extent of contamination of the legislative process, The Judiciary Sadly is also succumbing to the contagion.
      Lobbying in the EU
      http://www.wetube.io/video/the-eu-corporate-lobby-tour-the-power-of-lobbies/

      As long as politics is the shadow cast on society by big business, the attenuation of the shadow will not change the substance.

      Quoted in John Dewey and American Democracy by Robert Westbrook (Ithaca: Cornell University Press, 1991), p. 440; cited in Understanding Power (2002) by Noam Chomsky, ch. 9, footnote 16; originally from “The Need for a New Party” (1931) by John Dewey, Later Works 6, p. 163. (Via Westbrook.)

    • The video is interesting and well explains the lawful corruption the state is engaged in. It links to a cartoon presentation about banking but this is half full of errors and should not be believed.

    • Good / shocking video Tim – but obviously no amount of lobbying money can make oil cheaper to extract – only help in hiding the real costs / truth.

      Perhaps when the next bill comes in – if the taxpayer won’t meet then they can always claim diplomatic immunity like Boris Becker

  6. ‘The weakness (In world GDP growth) is also indicative of the longer-run
    trend towards slower energy growth driven
    by gains in energy efficiency’.

    ‘This is the third consecutive year in which energy
    consumption has grown by 1% or less, with
    energy intensity – the average amount of energy
    needed to produce a unit of GDP – falling at
    historically unprecedented rates’.

    BP Statistical review of world Energy 2017

    Perhaps BP are ignoring the fact that growth (in GDP) is being driven mostly by the spending of borrowed money rather than an increase in the manufacture of useful goods and services ?. I think falling energy needed to produce a unit of GDP is being driven by monetary manipulation ?

  7. ..I guess the implications are :-

    – Even BP with all their resources don’t understand the limitations of using GDP as a yardstick to measure economic activity?.
    – Reported gains in energy efficiency are being exaggerated because they assume that GDP goes hand in hand with energy usage?

    • This is what SEEDS is designed to address, and what is false about energy intensity is, equally, false about climate change progress.

      In fairness, BP are not alone in simply accepting GDP as a measure of economic activity, without enquiring further into where “growth” comes from, and how meaningful it is – the same is true of government, business and finance.

      Those who accept GDP as a measure of prosperity then profess complete surprise at events like “Brexit” and Donald Trump.

      Looking on the bright side, though, it’s nice to know something of which decision-makers remain in ignorance.

  8. So here is a mystery for SEEDS to answer, Tim. Why did Mario Draghi choose to exit QE at this juncture when economic growth is weak and inflation is relatively contained? What are the real motivations for this step?

    • Flip answer: Draghi doesn’t have SEEDS…..

      Seriously, though, I’m slightly surprised by this, and more than a bit suspicious – I had supposed that QE might play a role in some sort of compromise over Italian debt. Might he bring it back in a form which has greater “flexibility”, using it to buy (meaning support/take over) the EA’s “cheapest” debt?

      When the crash comes – globally, I mean – I’m sure we’ll move into outright monetisation of debt, something which – remarkably – Japan has been getting away with for some years now.

  9. I think it’s time for an article here entitled “What is SEEDS?”

    This seems important because we’re getting ever more evidence that ‘conventional’ economics’ interpretive abilities are breaking down.

    • Why SEEDS could also be “Why energy prices matter” to answer those skeptics who say that “energy is just like any commodity – money spent on energy just goes back into the economy like any purchase.”

  10. Dr Tim this has just landed in my in box, interested, do you have time or anyone else???? Some how I don’t think they can handle the truth!!!
    https://blog.ons.gov.uk/2018/06/15/calling-all-economic-experts-do-you-have-what-it-takes-to-become-an-ons-fellow/?utm_source=govdelivery&utm_medium=email?
    I have emailed Daniel Groves a couple of times with links to your website. He showed interest in energy use per capita but not sure how far he got.
    Thank you for everything you do and the commentators I have learned so much over the years.

    • Thanks. I agree that my methods and conclusions would not be accepted.

      To illustrate this point, I have just added (at the foot of this article, because it’s not possible within a comment) a pair of charts intended for the next article here.

      The charts are designed to illustrate how measuring prosperity, as SEEDS does, rather than simply accepting reported GDP per capita, makes both “Brexit” and the election of Mr Trump nothing like the “shocks” that conventional interpretation would have had us believe.

      In this context, I cannot imagine anyone in authority in the UK (or, for that matter, in the US either) accepting this interpretation…..

    • Ok Master Mind, your general knowledge round.
      So what do you do for an encore? When the Oil Runs Out, When the Gas runs out Then and only then when the Coal Runs out , When the Tides cease, Gravity fails and The Sun no longer shines then we have a problem.
      I prefer James Burkes view of the Future, I think he has it about right and the screed in your Link is so much eschatological bunkum.
      There are problems sure but there are solutions, Seeds gives us good information to the time now being right to do More with Less.

      http://letthemconfectsweeterlies.blogspot.com/2018/06/abundance-or-scarcity-more-with-less-or.html

    • for those who are curious about the current world political issues, This interview with Pepe Escobar is very explanatory.
      At one point he says”It’s all about energy”

  11. I heard Burke on the same theme on the radio at Christmas – I thought it might be very dead-pan satire.

    Once entertaining and stimulating, but as the Duke of Wellngton said to Lord Castlereagh before he went off to cut his throat:

    ‘I regret to have to inform you, Sir, that I have reason to believe you have lost your reason.’

  12. This will be about Natural Gas, but a short preamble may set the stage:
    http://cluborlov.blogspot.com/2018/06/keeping-up-with-putin.html

    It’s behind a paywall (as little as a dollar a month). So I will quote from memory. Each year Putin puts on a 4 hour TV performance for the citizens of Russia where he answers questions about everything from potholes in streets to the state of the world. This year, citizens submitted well over 2 million questions. These were edited to a manageable number, combined, clarified, etc. What was different this year was that rather than Putin alone being on the hot seat, the Russians used communications technology to involve all sorts of government officials. When Dmitry Orlov’s question was asked (having been combined with other, similar questions), the government official charged with responding and doing something about the problems, was brought into live video conference and asked to commit to doing the right thing.

    Besides this novel experiment in bringing government officials into direct responsibility to the citizens, there was an interesting question about electric vehicles which Putin answered himself. The question was:
    ‘Why isn’t Russia building electric vehicles?’
    Putin’s answer was that electric vehicles are a very inefficient way to turn coal into rolling wheels. He said that Russia will move as rapidly as possible to shift from petroleum powered transport to natural gas powered transport.

    Shell has bet big on natural gas also. And I believe Total has agreement in principal to partner with Russian companies to exploit new gas fields. Of course, the US is trying to stop the Russian/ European initiatives with sanctions.

    Leaving aside the murky political fighting, my question is:
    ‘What would be the impact on ECOE of a switch to NG?’

    I know that we had NG powered automobiles when I was a teenager…65 years ago. So it’s not exactly a new technology. But there had to be a reason that gasoline and diesel never yielded to NG…and my guess is that it was the superior energy density of gasoline and especially diesel. But now that more people are admitting that fracked oil cannot actually produce diesel economically, the search is on for alternatives. I understand the corn lobby supports biodiesel. But we also know that the US grain production is highly dependent on the Ogallala aquifer which stretches from South Dakota to Texas, and is rapidly depleting. And the water in the aquifer lies, each year, farther below the surface, which increases the energy cost of raising the water to the surface to use for irrigation.

    If the ECOE is, say, 8 percent today, what would it likely be in 10 or 20 years with a large scale conversion from gasoline and diesel to NG? Dr. Morgan says that his model takes into account the mix of energy sources. Not asking for the revelation of proprietary information, is there anything Dr. Morgan or anyone else can say to enlighten me (us)?

    Don Stewart

    • Thanks Don, and you raise a number of interesting questions here, which I’ll do my best to answer as succinctly as possible.

      Incidentally, you’ll note that this website is not behind a paywall, and, also, is ad-free. This is a personal choice, and, in my case, I think of it as a pro-bono duty to let the public have as much access (and input) to this debate as possible. Where the line is drawn here is that I don’t disclose methods or data which could help a commercial organisation build a SEEDS-type system. Likewise, anyone who wants comprehensive output cannot expect to get it for free. Just thought I’d explain this policy.

      Now, first of all, the reason why oil has predominated in vehicle engines is the superior power-to-weight ratio. In the Second World War, Britain powered vehicles using gas (made from coal), but this was done only because oil had to be imported at great risk. Obviously, superior power-to-weight is something we pay for, making oil a premium fuel. The ECoE of gas is lower than oil, a gap which might prompt a rethink, but the gap would have to be very big before we’d trade the convenience of petroleum for the lower cost of gas.

      You know, I’m sure, my views on EV, and how I see EV as an exercise in denial over the fundamental issue – which is changing our patterns of work, habitation and travel in response to the rise in ECoEs.

      Acquifers raise an interesting point. Thus far, the problems experienced in parts of the US are dwarfed by what’s been happening in Cape Town, though this is the shape of things to come, in the US and elsewhere. If you’ve not done so, I suggest reading up on the water situation in Cape Town, where extreme measures have been necessary (so you can forget baths, let alone swimming pools or watering the garden).

      The obvious solution would be for Cape Town, located right on the coast, to resort to desalination. Ultimately, California could do the same (and must do something, because the water situation in CA looks set to become perilous, and sooner rather than later).

      But the problem, as with so much else, is ECoE. Put very simply, to desalinate water you have to boil it, capturing and cooling the pure vapour, and leaving the salt as a residue. That needs a lot of energy. In principle, then, the water problem is an energy problem, which in turn means it’s an ECoE problem.

    • Just a point on Desalination, to de salinate or purify water you have to evaporate it this does not require boiling.
      See Waterstillar for details.
      My Neighbour invented Waterstillar and has a large scale offshore patent which delivers huge volumes using Solar power to induce evaporation.
      https://www.waterstillar.com/products

    • but, if there is an affordable solution, wouldn’t they have grabbed it with both hands? There are quite a few solutions Tim, there is a huge water lobby and in Mexico where Water Stillar has a subsidiary in the Bottled Water market is very Strongly contested.
      https://twitter.com/RogerGLewis/status/1008283920633298945 this is a link to a satirical spoof on Opec which I did when I was Marketing Director for WaterStillar.

      On EVś and alternative technologies Hybrids anyone? or Wankel engines. The list is endless where early adoption of viable technologies are frustrated by Established monopoly Lobbying.

    • Hi good video –

      https://www.theguardian.com/uk/2004/mar/19/foodanddrink

      ‘The recall is the latest headache for Coca-Cola’s marketing men and women, who sought to convince consumers that Dasani was “as pure as bottled water gets” – despite the fact that it was essentially tap water, sourced from the mains supply to Coca-Cola’s factory in Sidcup, Kent.’

      https://www.independent.co.uk/life-style/why-bottled-water-is-one-of-the-biggest-scams-of-the-century-a8050841.html

      I think that bottled water will slowly disappear from shops anyway as production and transportations costs make it too expensive for many consumers.

      Perhaps like anything that becomes scarce it will then become highly desirable and you might then getting moped gangs targeting water bottles.

      One thing though – my mum’s tap water is awful and you can’t make a decent cup of tea or coffee out of it (it tastes of disinfectant) so she is forced to but bottled water.

  13. A feasible government response to GFC2 will be to introduce a new central bank issued digital currency, the ‘e-£’, and set a depreciating exchange rate against old £ notes.

    Old £ held in bank accounts will be converted at 1:1, as will old £ notes within a set period, say 12-months; however, after said period, the e-£:old note rate will decrease, say 1:0.9.

    The effect will be obvious: all holders of currency will pay in their notes within the first 12 months to get the better exchange rate. Once all cash is voluntarily removed from the system, negative interest rates can then be introduced.

    The ‘war on cash’ has already started, but banning it will be problematic. This approach will be far more effective and less costly in terms of resources.

    Personally I suspect this is what is being planned, because aside from the effectiveness, the biggest beneficiaries will be 1) Government: all financial transactions can be tracked and hence tax dodging and other criminal activity becomes impossible; and 2) banks: will have an influx of liquidity when all the old £ notes are paid in, bank runs will be a thing of the past, and banks can really start screwing account holders because there is no alternative to keeping money in a bank account.

    It will be sold to the technology-obsessed public as ‘futuristic and modern’, maybe that its ‘blockchain’ or ‘crypto’ (it looks like there is intentional confusion in the MSM between these terms and digital currency), as well as being able to stop crime and terror attacks.

    http://www.themonetaryreset.com/2016/04/e-dollar-concept-is-being-pursued-by.html

    • I also think it is possible, and there are some signs that the NSA and other government organizations are behind the blockchain technology (they are associated with some of the original white papers). So it may seem like a conspiracy theory, but there is enough real evidence and it does make perfect sense. And the people using it now who think they are “avoiding using the system” seem to be test driving the system’s next technology.

    • In all but name the currency systems of the Washington Consensus and rest of the world come under the Bank of International Settlements Central Banking system. 97% of all circulating Money ( not Cash) is Digital. This currency is created electronically ( Digitally) by Centralised Bank Ledgers. The Only Difference with a Blockchain system is that it can potentially be distributed on a Network, that is all BlockChain is, a distributed network ledger system.
      In the UK the Banking act of 1844 barred coining or printing of Cash by private banks reserving, therefore, seniorage benefits to Government.
      http://positivemoney.org/how-money-works/how-did-we-end-up-here/

      The System in the US and The system for the EURO are all slightly different but all Clearing Banks in the UK and Europe create digital money out of thin air The Basle Rations (Capital Ratios) are honoured more in the breach than the observance but even where there is observance collateral is a very broad brush when it comes to what Central Banks will accept acting as Lender of last resort.)

      The NSA has a Patent on the SHA 256 algorithm which is the security encrypting algo’ used by Bitcoin
      https://en.bitcoin.it/wiki/SHA-256 , The ethereum Dagger Hashimoto algorithm is open source. https://github.com/ethereum/wiki/wiki/Dagger-Hashimoto

      Why Be Memory-Hard?
      http://www.hashcash.org/papers/dagger.html
      The main reason why memory hardness is important is to make the proof of work function resistant to specialized hardware. With Bitcoin, whose mining algorithm requires only a simple SHA256 computation, companies have already existed for over a year that creates specialized “application-specific integrated circuits” (ASICs) designed and configured in silicon for the sole purpose of computing billions of SHA256 hashes in an attempt to “mine” a valid Bitcoin block. These chips have no legitimate applications outside of Bitcoin mining and password cracking, and the presence of these chips, which are thousands of times more efficient per dollar and kilowatt-hour at computing hashes than generic CPUs, makes it impossible for ordinary users with generic CPU and GPU hardware to compete.

      That last bit might seem overly technical but it is very important. Money Circulates and its velocity is important regarding how much activity a notional fixed sum of money can participate in. Velocity will go up and down with confidence levels but can lead to large swings in economic activity which are undesirable. Currency issuance is a way to iron out these swings in confidence, in a decentralised issuance system swings in sentiment will even out on average and the control mechanism will necessarily have less extreme undershoots and overshoots. A fixed money supply is not though a good idea, the Gold Standard was a big fat failure in most respects.

      A Joke.
      a physicist, an engineer, and a statistician out hunting. The physicist calculates the trajectory using ballistic equations but assumes no air resistance, so his shot falls 5 meters short. The engineer adds a fudge factor for air resistance, and his shot lands 5 meters long. The statistician yells “We got ‘em!”

      With the existing Crypto / Blockchain Infrastructure and Hierarchy there is a problem of concentration of Economic Power, This group are known as Whales.
      The exchange of Crypto Currencies for FIAT and their price level are maqnipåulated by Fairly small volumes as the distribution is one with a very fat tail that fat tail wags the Market Dog. Mining or distribution through say a universal currency dividend would ensure that first-mover advantage for newly issued currency is not concentrated to a privileged in-group, this happens with FIAT and it is also happening with increased centralisation of Crypto Mining power on all networks, SHA 146, Dagger Hashimoto, Skrypt etc.

      Blockchain Transactions are quite traceable and piercing the anonymity veil not so hard, the trip wire is any conversion back to FIAT. There are though DASH and Monero both of which preserve anonymity much better even within the blockchain space, Governments make a big mistake if they think getting rid of Cash will stop people finding an analogue ( Cigarettes ) ( Pokemon Cards ) Red M and M’s
      anything will do, Silver Dollars, You get the idea.
      https://www.cryptocompare.com/coins/xmr/overview/USD

      https://www.cryptocompare.com/coins/dash/overview/USD
      Web 3 is properly distributed network computing uncensorable and a space where Tyranny will find itself in some trouble save for the Tyranny of the Geek. The Tyranny of the Geek is quite scary. Google Richard Stallman to see why Open Source is the antidote to Geek Tyranny

      https://coinmarketcap.com/

      At this stage here in Sweden Cash is almost finished with I have a project Forres/Lagom which will fill the huge gap extinguishing cash will leave Crytpo Complimentary currencies are rather more healthy than Cigarettes although that said who smokes currency but then that’s the same problem with using any store of value that becomes a speculative object.

    • Tim,

      As I understand it, there is currently a limit to negative rates – negative 0.3% if I recall – below which the cost of vaulting cash becomes attractive for large organisations such as pension funds and insurance companies.

      By removing cash and therefore this lower bound, CBs can take rates to -3% or even -10%, which will set the stage for another enormous credit bubble, thereby allowing TPTB to kick the can further along the road.

      What are your thoughts on this?

    • Hello Jonny, Re your new currency, It’s unnecessary to do such a thing. Only 3% of the currency in circulation is paper/ metal. But the main reason is that the central banks of monetary sovereign nations can issue new currency at will. They just have to conjure up a debt needing payment. Even if all central banks coalesced into one super bank it wouldn’t work. We see already what a mess is the Euro trying to be currency for diverse Eurozone countries. We’ll never run out of money until the whole system breaks down. As to restricting cash, if legal currency is refused then people will choose something else, like cowrie shells or stone discs.

    • I am aware most money is digital and that fewer and fewer people use cash. But the fact that cash is only 3% of the money supply is irrelevant; the point is the option is (currently) there for account holders to withdraw cash and hold it outside the banking system, thereby preventing the introduction of negative rates. Large withdrawals could lead to bank runs and instability, with refusal of withdrawals would lead to the same outcome. Confidence in the system must be maintained to prevent it collapsing. By removing the option to go to cash, the system cannot be crashed in the same way and we are completely at the whim of banks.
      https://www.imf.org/en/Publications/Policy-Papers/Issues/2017/08/03/pp080317-negative-interest-rate-policies-initial-experiences-and-assessments

      I think whether or not the gold standard was a failure depends on your perspective. It limited currency issuance and therefore curtailed ‘growth’ – which in a world of finite resources is not bad thing – and provided stability. No doubt private and central banks would argue it was terrible due to these constraints.

      Roger: very interesting info on bitcoin and crypto. I shall delve into it more.

      John: I have not had a chance to look over your MMT intro yet, but from your comment it seems in your view that confidence cannot be lost in a currency regardless of how much is issued. I fail to see how this can be the case, as numerous real world examples have occurred.

      The Euro is a mess because a currency union cannot work without fiscal unity.

    • Jonny, that’s not quite what I said. money is only produced while so ever resources are there. No one is saying it’s carte blanche. but the main thing is that tax isn’t a source of government revenue.
      Resources will go further in support of an economy, but all bets are off if the grid goes down permanently.

    • To me there are two red lines in the financial system: the implementation of “bail in ” which hits ordinary depositors and negative rates of interest.

      As far as negative rates are concerned I agree that there is a latent desire to eliminate cash and this would be a prerequisite of introducing negative rates. But both of these steps are very serious politically and I think would meet with a lot of resistance. I’ve no doubt that there are some who want this but are not so dumb as to be ignorant of the implications.

    • There definitely won’t be a bail-in. Apart from the public repercussions, it is completely unnecessary. The central bank can underwrite the equivalent funds if it comes down to such an intervention.

    • It won’t make any difference there, but a bail in will definitely set off a public back lash. Which do you prefer?Huge inflation is a wholly political decision.

    • Bob

      I agree entirely. Implementing bail-ins, banning cash or introducing negative interest rates would be perceived by many as violating an unwritten but powerful ‘contract’ between the state and the public.

    • @JohnDoyle

      The problem re bail ins John is that that is the current resolution policy of the EU and it looks like we’ll be staying in the EU!

      Bail ins sound OK but I think that if one reached down to depositors then we’d have revolution. bail outs hit the taxpayer but can be done “under the table” which is the traditional British way of doing things. Having said this I actually think that if a resolution looks like it will hit depositors then I think they will funk it and do a bail out, against the rules or not.

    • Thanks, Bob. Touching savings accounts is illegal for banks, but I don’t know how widely that extends. So a bail in should be illegal, unless the Treaty of Lisbon or equivalent sanctions it. My argument is that a bail in is never necessary, but that doesn’t prevent idiots from sowing distress.

    • @JohnDoyle

      I think you’re wrong there John; in fact savings accounts would be bailed in before ordinary depositors.

      Two things: one is that we still have deposit protection although whether that would last the course of a large bank insolvency remains to be seen; if the rules were changed there would be ructions but would it be affordable?

      There may also be a retrospective clause in the procedure (I’m not sure). This says that liabilities incurred before 1 January 2016 are not subject to the bail in procedure. However, if a bail in was the resolution procedure what would be the status of liabilities outside – that is non insured liabilities incurred before 1 January 2016 ? More muddle!

  14. Natural Gas Powered Vehicles
    https://en.wikipedia.org/wiki/Natural_gas_vehicle

    Some countries, such as Pakistan, are predominately natural gas powered vehicles. I guess I knew this, but had forgotten it. So it is entirely possible to switch a country’s fleet to natural gas. It may be more costly, but then having fuel may be better than having a declining source of fuel. Art Berman pointed out a few days ago that Canada has a very large reserve of frackable natural gas. I believe the fields the Russians and Total are considering are in the Arctic, but do not require fracking.

    If Putin thinks that global supplies of petroleum are about to decline, and/or that he would like to reduce emissions, then natural gas may be a good choice. The vehicles also cost more, which may be compatible with a switch to the kinds of community design Dr. Morgan would like to see.

    Don Stewart

    • I think Putin’s strategy is to use NG domestically and basically export as much petroleum as possible with that substitution, since petroleum is far more valuable on the market and since Russia’s NG reserves would keep them supplied for quite a while yet.

    • And by selling the more profitable petroleum he can effectively subsidize the costs of changing over to a NG infrastructure and vehicles to a large degree, while giving Russia a longer term energy security than basically any other country on Earth.

    • I see BAU as a whole … none of the parts (economies of countries) can exist … unless the whole stays intact…

      When the financial system goes down .. JIT goes down … and the spare parts to operate the gas and oil wells will not be available… also the grid will go to pieces very quickly (a single part busts and that’s it… and the grid is composed of many thousands of parts… + you need to factor in the vehicles including helicopters that are required to repair this massive system)

      They might be able to cobble the local system together for a few weeks using whatever stockpiles they may have … but that is a best case scenario…

      A quick check of total employees of a large hydro outfit – Quebec Hydro – indicates nearly 20,000 staff…I would imagine thousands of these people are engaged in day to day repairs of the network…. I would imagine that on a daily basis they would constantly be replacing parts and making repairs…. https://www.statista.com/statistics/472007/total-number-of-employees-at-hydro-quebec/

    • “They might be able to cobble the local system together for a few weeks using whatever stockpiles they may have … but that is a best case scenario…”

      That isn’t the case for developed nations anyway. I have performed risk analysis on critical national infrastructure as part of government resilience assessments. These system can operate for years at slowly degrading performance. The continual maintenance you see maintains them in a ‘high state of operation’. There are ‘lower states that can be eeked out for years, sufficient for alternative/new payments systems to emerge. Utility companies and goverment regulators work on this together in case of war, pandemics, disrupting supply of components. A GFC is a similar situation which is why that isn’t planned for specifically. It is covered by other plans.

      There are a few concerns that have been raised about the resilience of utilities in developed nations in specific scenarios, but not financial crisis or supply disruption. These full reports require an FOI request to access though.

      I believe similar things are done with large logistics companies identified as critical infrastructure. But I haven’t been part of that work.

      I suspect a gradual deterioration in the ability to maintain utilities over many decades. But it isn’t going to fall apart in a matter of weeks.

    • What is ‘Just In Time – JIT’
      The just in time (JIT) inventory system is a management strategy that aligns raw material orders from suppliers directly with production schedules. Companies employ this inventory strategy to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires that producers are able to accurately forecast demand.

      The just in time inventory supply system is a shift away from other “just-in-case (JIC)” strategies, in which producers hold large inventories to have enough product to absorb maximum market demand.

      What does global supply chain mean?
      In commerce, global supply-chain management (GSCM) is defined as the distribution of goods and services throughout a trans-national companies’ global network to maximize profit and minimize waste.

      This new study by David Korowicz explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. He uses a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.

      http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/

    • Thank you, Kevin.

      I’d welcome your thoughts on something related to this that I’m working on for the next article. What happens if energy supplies are cut off? The coming article asks this as a matter of logic – that the economy is utterly energy-dependent – but it’s not a wholly implausible possibility.

      For instance, if the electricity grid went down, which would stop everything from payment systems and ATMs to refrigeration units, hospital and government power and light to petrol pumps, how long could we hold out then?

      Or, if a country found itself unable to import oil, gas or coal, again, what happens? This could happen – absent the IMF bailout, nobody would now accept Argentine pesos in payment for anything. This event would, I think, be compounded by panic buying

    • We will get a test case soon … Venezuela….

      Yemen is also worth watching … the main port is meant to be blockaded… potentially resulting it the starvation of millions…. well… unfortunately there won’t be much to watch there because we are the one’s starving the millions and the MSM will be instructed to impose a media black out

    • I do not know the current numbers – I don’t spend time compiling and updating them anymore.

      Q: “What happens if energy supplies are cut off?”
      Q: “Or, if a country found itself unable to import oil, gas or coal, again, what happens?

      I have answered these questions together – since they can be viewed as the same thing.

      If external supplies are cut off with no foreseeable end in sight, the UK uses its reserves over a few months to allow a gradual transition to a ‘home sourced’ situation. We maintain the ability to extract gas, oil, and even coal. at home – but importantly the ability to refine them in to the energy products we require.

      Q. “For instance, if the electricity grid went down, which would stop everything from payment systems and ATMs to refrigeration units, hospital and government power and light to petrol pumps, how long could we hold out then?”

      Essential services that rely on electricity supply can’t really “go down” nationally in the UK. They have back-up systems and there are processes in place to ensure their continued maintenance is prioritised over other non-essentials.

      As mentioned above, the ability to refined energy products can always ensure that essential services are kept up and running. Even if this requires running on generators for years.

      Reduction in demand and prioritisation mean that failure of essential services basically can’t happen, because components from non-essentials are used to maintain the essentials (i.e. generators, vehicles, communications).

      I have emphasized the importance of being able to refine energy products in our own country. This is critical to maintain the ability to ‘keep going’.

      My study focus was on essential services. This is a prioritised rationing situation and will no doubt severely damage the economy and our prosperity going forward – but we could run on this subsistence situation, in theory, for decades.

      The worst to expect is something akin to wartime rationing for extended periods.

    • Sorry. Very UK focused answer. I don’t imagine it would be the same elsewhere.

      Basically, we can power our basic needs, but not BAU and the growth and financial ROIs that come with it.

      Increasing ECoE will bite over time, but that will happen regardless of a crisis. A crisis maybe just gives us a taste of Life After Growth 😜

    • I’ve never taken part in contingency planning, but my own view is that loss of electricity supply would inflict huge damage, and very quickly.

      Let’s take hospitals as an example. Generators are – one hopes! – adequate as back-up for a hospital itself, but what about outside suppliers, employees and other inputs?

      Even a second-day scenario looks fraught. During the first day, generators kick-in, and have reasonable stocks of fuel, whilst the staff then on duty can stay over, albeit in over-stretched accommodation. On day two, though, a relief surgeon, say, needs to get to work. Having no power, he needs to get dressed in the dark, can’t see to shave, and has to go without breakfast – seems trivial, I know – and hope his car isn’t behind a garage door operated electrically.

      Food supply looks critical. Shops require power for refrigeration, light and heat, the tills, inventory systems; suppliers need power to their warehouses and their own refrigeration; distributors need power for their diesel or petrol pumps; and all of them need payment systems working seamlessly. Meanwhile, water supply relies on pumping systems powered by electricity.

      In theory, one can park a ship powered by gas turbines in the Pool of London and hook it up to keep Whitehall running.

      But I don’t see what water companies, supermarkets and their suppliers can do in this situation. During a power cut that last just a few hours, my village shop couldn’t trade (no light, no payments system), and it wouldn’t take much longer for food in fridges and freezers to go off.

    • The current population of the United Kingdom is 66,558,434 as of Monday, June 18, 2018, based on the latest United Nations estimates.
      The United Kingdom population is equivalent to 0.87% of the total world population.
      The U.K. ranks number 21 in the list of countries (and dependencies) by population.
      The population density in the United Kingdom is 275 per Km2 (713 people per mi2).
      The total land area is 241,930 Km2 (93,410 sq. miles)
      81.2 % of the population is urban (54,072,374 people in 2018)
      The median age in the United Kingdom is 40.3 years.

      I don’t think that in a crisis we could become hunter gatherers again.

    • Donald
      There is an important element usually missing in Doomsday scenarios: Darwinian selection.

      Remember the old joke about the two guys running from the lion. Guy 1 says to Guy 2: ‘I don’t think we can outrun him’. Guy 2 responds: ‘I don’t have to outrun him, I just have to outrun you.’

      I suspect we are about to go through Darwinian selection of the ‘running from the lion’ kind due to any number of causes. The most nightmarish involve the disappearance of the daily necessities and the rapid starvation or death from violence of a huge number of people. In which case, those few people in the UK who have maintained a simple lifestyle far from civilization will likely be the survivors.

      But there are far less draconian scenarios to think about. Jaron Lanier has just published Ten Arguments for Deleting Your Social Media Accounts RIGHT NOW. Just to take a random example of Lanier’s arguments: Social Media is Destroying Your Capacity for Empathy. Now I would only disagree to the extent that SOME people may actually become MORE empathic. One can find apps which encourage all sorts of pro-social behavior, and calm minds, and getting your ten thousand steps every day, and eating healthy, whole food and not eating junk food. The fact that most people are going in the opposite direction sets up the dynamics for a Darwinian selection event. Particularly since the Social Safety Net is likely to be shredded as a result of the bad effects of Social Media, as described in Lanier’s book. Consequently, and in the absence of total social and economic breakdown, more people are likely to die young. We can already see, in the US, increasing rates of suicide and chronic disease in the young. Life span and health span in the US are declining. But some people will leverage technology in favorable ways and live long, healthy lives.

      Don Stewart

    • The end of civilization comes when the power goes off – permanently.

      The power went out in New York — for a single night — here is what happened

      Now imagine what happens if the power went out across the entire country .. and did not come back on – ever

      Scary stuff

    • It All Depends
      My soon to be wife and I were part of the 1965 New York City blackout:

      ‘On Nov. 9, 1965, at 5:27 p.m., a blackout occurred as several Northeastern states and parts of Canada were hit by a series of power failures lasting as long as 13 hours. The blackout covered 80,000 miles and affected more than 30 million people.

      In contrast to the wave of looting and other incidents that took place during the 1977 New York City blackout, only five reports of looting were made in New York City after the 1965 blackout. It was said to be the lowest amount of crime on any night in the city’s history since records were first kept.’

      We both worked in the Wall Street area of Manhattan. We were invited to her parents house for dinner, across the Hudson in Jersey City. So we walked down to the old Hudson Terminal (which was replaced by the World Trade Center, which was eventually destroyed on 9/11) and caught the Port Authority train to Jersey City. We were in the tunnel under the river when the lights went out and the train lost power. Not an uncommon occurrence. But the power always came back in a few minutes. The emergency lights came on, but the train did not move. After quite a long time, the rumor began to circulate that ‘there is a problem at Niagara Falls’. Everybody just laughed at the rumor. Then, about 6:30, a bunch of Port Authority employees showed up and told us that the power was out in Manhattan, and we were going to have to walk the tracks back to Hudson Terminal. They set up a ladder so we could climb down out of the cars onto the tracks, and they had flashlights and lanterns to light the way.

      As we came up above ground in Hudson Terminal, a Port Authority employee handed us our refund tokens.

      We could see that almost all of the big buildings were dark. A few had emergency generators. We began to walk downtown toward the Battery, where we could catch the Jersey Central Railroad ferry to Jersey City. The bars were hopping. Everybody was celebrating with alcohol. Many children were conceived, apparently because people couldn’t watch television.

      My wife and I caught the ferry to Jersey City about 7:30. We arrived at her parents house about 8:30, after catching the bus in Jersey City. They were annoyed that we were so late. Why didn’t we call? We told them the lights were out in Manhattan. They didn’t believe us. We took them outside to the street and looked over toward where Manhattan should be lighting up the night. It was almost all dark. So they turned on their television and got the story. It turned out that a low-paid employee of the New Jersey grid management system saw some fluctuations he didn’t understand and disconnected New Jersey from the Northeastern grid. That saved New Jersey and points south.

      12 years later everything had changed. Context is everything.

      Don Stewart

    • So you believe that if the power were to go off permanently people would join hands and … and … ???

    • Context! Context! Context!
      If people are in an Amish community, they will keep doing what they have always done, with a few course corrections. If people are in a Prepper community, they will say ‘at last, we get to practice for real!’. If they are clueless, they may kill themselves. If they are Wall Street traders, and there is an open bar, they will likely drink a lot. If they are a couple who fall asleep in front of the TV, they may remember how much fun f…cking used to be. If they are desperate, they may loot.

      If you conjure up a scene where electricity very suddenly goes off, and does not come back on at all, then many are going to die. And it won’t take very long to greatly reduce the population. The survivors will learn to get up with the sun and go to sleep when it gets dark…as nature intended.

      An advantage in 1965 was that most systems were still mechanical rather than electronic. The Jersey Central ferry did not need electricity to take us across the Hudson. Another advantage was that the city was not suffering from the heat that plagued it in 1977. People think better when their brains are cool.

      Don Stewart

    • So all those tens of thousands of people… near these prepper communities… are going to lie down and die….

      They won’t think —- hmmm — I am running out of food — there’s those Amish weirdos down the road… let me load up the pick up with some guns and ammo — drop by my cousins Zeke and Arnold and Clement… then head over there and get me some chickens and pumpkins….

      Do these communities live in bubbles where the hungry can see them … but are unable to enter?

      Oh and btw — these Amish communities are NOT sustainable … I have spoken to the Amish in St Jacobs Ontario — they use water pumps — they use chemical fertilizers…they use tractors…. they are completely plugged into BAU… and they will grow next to nothing when Walmart closes and the electricity goes down…

      Have a look at the map of nuclear installations in North America — there are massive numbers of spent fuel ponds… do you think the Amish bubble will keep radiation out?

    • Thomas Malthus
      I have learned, in dealing with your many aliases, that you have a story and are sticking to it. That’s fine with me. I don’t care what you think, and am not willing to invest very much in trying to change your mind.
      Don Stewart

    • In the case of the UK, 39% of energy is imported, and it’s likely that inventories equate to 60 days’ consumption. But food imports are critical, and inventories are likely to be far lower.

      I suspect that very few developed economies could keep going for more than a month or so without essential imports. Britain managed in WW2, but the situation then was very different – and even then, Atlantic convoys and “dig for victory” were critical.

      One problem is that back-up capacity sits idle under normal circumstances, costing money as it does so.

    • So, probably worth making some assumptions clear. Any risk analysis, and contingency planning I have been involved in to mitigate risks, assumes that:

      1. The situation is temporary (at most months, see pandemic flu scenario).

      2. The situation is is confined to a geographic boundary (the flu scenario is the exception)

      These assumptions allow the following in developing contingency plans.

      1. The possibility of recovering to an ‘acceptable states.

      2. The possibility of external assistance.

      It is also important to note that governments only prepare contingency plans for crises.

      I haven’t seen any country prepare a contingency for a GFC. First it needs to be defined.

      Let’s consider that a possible outcome of a GFC is the temporary inability to ship goods and provide services at the normal BAU level.

      Then I can’t see how this differs from the pandemic flu scenarios which result in similar outcomes for multiple flu phases over a number of months.

      Contingencies have been developed for this to maintain essential services and mitigate economic damage. You can read the action plans on many government websites.

      I would have no doubt also be employed in the GFC triggered supply and service shortage.

      The immediate challenges seem comparable, unless I am missing something critical.

      The timeline in the flu triggered situation is determined by vaccine synthesis process, in a GFC I imagine it is the time taken to ‘vaccinate’ the relevant finance systems.

      So, if we’re confident we can deal with pandemic flu, then we can be confident we can deal with a financial pandemic?

    • You surely are aware that when collapse arrives it will be caused by the end of cheap to produce energy?

      i.e. there will be no energy available beyond some stockpiles which will be reserved for the military — and run out at some point…..

      Collapse is not suddenly going to make expensive difficult to produce energy — cheap and easy to produce

      This is not a temporary situation. This is permanent.

      You need to get your mind around that. You need to recognize that when BAU goes — the global financial system goes — the global energy production system goes — the JIT supply chain goes — the power goes off – permanently.

      And you will be left cowering in the dark. Then the violence, disease, starvation and radiation …. will be unleashed.

      This is … and I am not trying to shock anyone — The End of Days we are facing

      This is not a wonderful adventure — as many seem to think.

      This is armageddon., the holocaust, apocalypse now, www1 and 2, the plague.. and more … all rolled into one…

      And it won’t get any better… because we have burned up all the energy. It is gone….

      The most one can hope for is … a quick painless death for yourself… your kids… your grandkids…

      Nobody gets out of this one alive

    • My belief is that what’s critical is how we respond. The challenges are immense, but it’s not a sudden loss of energy that we face – rather, it’s a two-part process where:

      1. Rising ECoEs squeeze out the capability for growth; and

      2. We lose the ability to counter “the ECoE effect” by accessing ever larger amounts of energy at the gross (pre-ECoE) level

      As soon as it becomes apparent that growth has ceased, the financial system will crash.

      Beyond that, it’s a case of making do without some of the luxuries we’ve become accustomed to. By ‘luxuries’, I don’t just mean gadgets, but some of the practices that growth has made possible.

      One of these is the assumption of perrpetual growth

      Another is the credit-based financial system based on that assumption

      A third is the current distribution of wealth and earnings

      Finally, we need to look at the mis-match between a post-growth economy and a still-growing population.

    • Tim – might I suggest you are greatly underestimating what we are facing.

      We agree that the financial system will implode.

      That surely means that energy production will end. The global supply chain will end.

      Korowicz is the go to guy on this — I recommend reading from page 56 if you don’t have time to read all….

      V. Financial System-Supply-chain Cross Contagion
      Turning and turning in the widening gyre
      The falcon cannot hear the falconer;
      Things fall apart; the centre cannot hold;
      Mere anarchy is loosed upon the world
      W. B. Yeats The Second Coming

      So basically – as happened in GFC 1 the global economy came to a near halt for a few days .. we were inches from the other side of the Rubicon … then the CBs dragged us back….

      There are many implications but I will address the food supply only as I have heavily researched this … I have also discussed this with a commercial organic grower who has done research for the NZ government in this area:

      Soil that is farmed using petro-chemical inputs — will support no crop once the additives are stopped – without years of intensive rejuvenation involving organic inputs

      Effect of Pesticides on soil fertility (beneficial soil microorganisms)

      Heavy treatment of soil with pesticides can cause populations of beneficial soil microorganisms to decline. According to the soil scientist Dr. Elaine Ingham, “If we lose both bacteria and fungi, then the soil degrades. Overuse of chemical fertilizers and pesticides have effects on the soil organisms that are similar to human overuse of antibiotics.

      Indiscriminate use of chemicals might work for a few years, but after awhile, there aren’t enough beneficial soil organisms to hold onto the nutrients” (Savonen, 1997). For example, plants depend on a variety of soil microorganisms to transform atmospheric nitrogen into nitrates, which plants can use. Common landscape herbicides disrupt this process: triclopyr inhibits soil bacteria that transform ammonia into nitrite (Pell et al., 1998); glyphosate reduces the growth and activity of free-living nitrogen-fixing bacteria in soil (Santos and Flores, 1995) and 2,4-D reduces nitrogen fixation by the bacteria that live on the roots of bean plants (Arias and Fabra, 1993; Fabra et al., 1997), reduces the growth and activity of nitrogen-fixing blue-green algae (Singh and Singh, 1989; Tözüm-Çalgan and Sivaci-Güner, 1993), and inhibits the transformation of ammonia into nitrates by soil bacteria (Frankenberger et al., 1991, Martens and Bremner, 1993).

      Mycorrhizal fungi grow with the roots of many plants and aid in nutrient uptake. These fungi can also be damaged by herbicides in the soil. One study found that oryzalin and trifluralin both inhibited the growth of certain species of mycorrhizal fungi (Kelley and South, 1978). Roundup has been shown to be toxic to mycorrhizal fungi in laboratory studies, and some damaging effects were seen at concentrations lower than those found in soil following typical applications (Chakravarty and Sidhu, 1987; Estok et al., 1989). Triclopyr was also found to be toxic to several species of mycorrhizal fungi (Chakravarty and Sidhu, 1987) and oxadiazon reduced the number of mycorrhizal fungal spores (Moorman, 1989).

      https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2984095/

      Organic inputs will be hard to come by considering nothing can be grown – and most if not all animals are killed and eaten.

      Less than 1% of all farmland globally is farmed organically.

      Get ready to starve. No matter where you are:

      https://www.weforum.org/agenda/2015/08/which-countries-have-the-most-organic-agricultural-land/ (note – most organic land in Australia is rubbish and supports sheep only)

      When BAU goes — there will be next to no food production — even permaculture operators will mostly not be able to grow much if anything — most of them are using water pumps to irrigate… then you have ongoing problems with fencing and netting …, rabbits, rats … you name it — this all requires upgrading …. otherwise the crop goes…

      Then you have hungry people killing and eating your manure producing animals – already happening in Venezuela….

      And they’ll be over the fences ripping up the gardens…

      So safe to say — there will soon be nothing to eat post BAU.

      It is a bit much to suggest that the biggest issue we will face is the loss of luxuries… food is not a luxury….

      And how to you keep high tech spent fuel ponds from burning and releasing epic amounts of radiation — when there is no electricity supply?

    • My reference to “luxuries”, as I said, didn’t mean loss of “iFads”. It meant loss of the ability to support a credit-based financial system, and loss of ability to sustain current levels of inequality – to things I regard as “social/political luxuries”

    • Indeed, creative destruction is critical, something that the architects of ZIRP either ignore or don’t understand.

      This has been made worse by the refusal – most obviously in America – to break up corporates with excessive market shares, notably in the “tech” sector.

  15. Thomas Malthus,
    Whilst I think the logic is sound behind increasing ECoE and declining living standards in western countries, it seems you theorise GFC2 will lead to an abrupt end of the modern age.
    Perhaps you could clarify your reasoning?

    • The central banks are doing everything possible to fend off a recession — because they have used all their tools that they would normally use to stimulate and take us out of a recession …

      But at some CBs push on a string …. and growth stops.

      They will be powerless to do anything…. we get GFC2 …. and impotence…

      The financial system implodes… the power goes off …. the violence kicks off… then the starvation … then disease… and finally the 4000 spent fuel ponds that are scattered around the world burn and release massive amounts of radiation … which is carried around the planet by the wind and ocean currents… poisoning everything in the food chain… an already sick and dying global population gets hit with this toxic mix….

      And we go silently into the night….

      The Second Coming
      BY WILLIAM BUTLER YEATS

      Turning and turning in the widening gyre
      The falcon cannot hear the falconer;
      Things fall apart; the centre cannot hold;
      Mere anarchy is loosed upon the world,
      The blood-dimmed tide is loosed, and everywhere
      The ceremony of innocence is drowned;
      The best lack all conviction, while the worst
      Are full of passionate intensity.

      Surely some revelation is at hand;
      Surely the Second Coming is at hand.
      The Second Coming! Hardly are those words out
      When a vast image out of Spiritus Mundi
      Troubles my sight: somewhere in sands of the desert
      A shape with lion body and the head of a man,
      A gaze blank and pitiless as the sun,
      Is moving its slow thighs, while all about it
      Reel shadows of the indignant desert birds.
      The darkness drops again; but now I know
      That twenty centuries of stony sleep
      Were vexed to nightmare by a rocking cradle,
      And what rough beast, its hour come round at last,
      Slouches towards Bethlehem to be born?

      Something like that….

    • Jonny, everything is way over the top. For example; when finance is cut back by, lets say, 15%, the free shit stops. No more healthcare for immigrants, no .gov support for the elderly. In that case we will experience civil disorder, from fights at souplines to burning mosques. Stability and trust dissapears, people stop buying stuff. More people without jobs. The system is way over the top, when we cut back geopolitical troubles will kick in hard, it already does as we speak! We party on enormous piles of debt and fake promises for many years now. When we cut off just one finger, the patient just explodes in our faces.

    • Our most recent history shows that the slightest slowdown of our current economy by just a few percentage points brings an immediate chaos of unemployment and global destabilisation. Yet somehow that won’t apply to a permanent ‘downsizing’; that seems to follow a different set of social rules, as if we can do it and still retain a civilised existence. And of course without downsizing wages too much. We will still expect to eat, buy ‘stuff’ and carry on in employment and even retain our wheels, with the strange certainty that as long as we have wheels, we will have prosperity by involving ourselves in the exchanges of trade that will not differ much to what we have now.

      http://www.endofmore.com/?p=1464

    • houtskool, yes I can see GFC can cause societal unrest, and don’t refute this. But disruptions does not mean an end of modernity at this stage.

      Thomas, you seem to mix up two separate issues: GFC2 with the end of growth and collapse of industrial society.

      I suppose it depends on ones’ view of what causes the GFC2. My view is this event will shake the financial system and will be used to introduce new measures and modify the system, giving more power to the governments and banks, and the system will continue.

      I agree your doomsday scenarios sound plausible if the powers goes off permanently, which it very well could at some point, but fail to see this happening from the upcoming GFC.

      I guess we will see who is right in the not so distant future so there is little point in debating this more.

      The spent fuel rods is almost unbelievable – I will look into it.

    • Here is the cause

      HIGH PRICED OIL DESTROYS GROWTH
      According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

      OIL PRODUCERS NEED $100+ OIL
      Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

    • To save you some time here is my research on spend fuel ponds

      The Fukushima nuclear catastrophe could have been far worse, it turns out, and experts say neither the nuclear industry nor its regulators are doing enough to prevent a calamitous nuclear fuel fire in America https://www.publicintegrity.org/2016/05/20/19712/scientists-say-nuclear-fuel-pools-around-country-pose-safety-and-health-risks

      Japan’s chief cabinet secretary called it “the devil’s scenario.” Two weeks after the 11 March 2011 earthquake and tsunami devastated the Fukushima Daiichi Nuclear Power Plant, causing three nuclear reactors to melt down and release radioactive plumes, officials were bracing for even worse. They feared that spent fuel stored in the reactor halls would catch fire and send radioactive smoke across a much wider swath of eastern Japan, including Tokyo.

      http://www.sciencemag.org/news/2016/05/burning-reactor-fuel-could-have-worsened-fukushima-disaster

      Assuming a 50-100% Cs137 release during a spent fuel fire, [8] the consequence of the Cs-137 exceed those of the Chernobyl accident 8-17 times (2MCi release from Chernobyl). Based on the wedge model, the contaminated land areas can be estimated. [9] For example, for a scenario of a 50% Cs-137 release from a 400 t SNF pool, about 95,000 km² (as far as 1,350 km) would be contaminated above 15 Ci/km² (as compared to 10,000 km² contaminated area above 15 Ci/km² at Chernobyl).

      A typical 1 GWe PWR core contains about 80 t fuels. Each year about one third of the core fuel is discharged into the pool. A pool with 15 year storage capacity will hold about 400 t spent fuel. To estimate the Cs-137 inventory in the pool, for example, we assume the Cs137 inventory at shutdown is about 0.1 MCi/tU with a burn-up of 50,000 MWt-day/tU, thus the pool with 400 t of ten year old SNF would hold about 33 MCi Cs-137. [7]
      http://belfercenter.hks.harvard.edu/publication/364/radiological_terrorism.html

      Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area. http://www.reuters.com/article/2013/08/14/us-japan-fukushima-insight-idUSBRE97D00M20130814

      The problem is if the spent fuel gets too close, they will produce a fission reaction and explode with a force much larger than any fission bomb given the total amount of fuel on the site. All the fuel in all the reactors and all the storage pools at this site (1760 tons of Uranium per slide #4) would be consumed in such a mega-explosion. In comparison, Fat Man and Little Boy weapons dropped on Hiroshima and Nagasaki contained less than a hundred pounds each of fissile material – See more at: http://www.dcbureau.org/20110314781/natural-resources-news-service/fission-criticality-in-cooling-ponds-threaten-explosion-at-fukushima.html

      Once the fuel is uncovered, it could become hot enough to cause the metal cladding encasing the uranium fuel to rupture and catch fire, which in turn could further heat up the fuel until it suffers damage. Such an event could release large amounts of radioactive substances, such as cesium-137, into the environment. This would start in more recently discharged spent fuel, which is hotter than fuel that has been in the pool for a longer time. A typical spent fuel pool in the United States holds several hundred tons of fuel, so if a fire were to propagate from the hotter to the colder fuel a radioactive release could be very large.
      http://www.ucsusa.org/nuclear_power/making-nuclear-power-safer/handling-nuclear-waste/safer-storage-of-spent-fuel.html#.VUp3n5Om2J8

      According to Dr. Kevin Crowley of the Nuclear and Radiation Studies Board, “successful terrorist attacks on spent fuel pools, though difficult, are possible. If an attack leads to a propagating zirconium cladding fire, it could result in the release of large amounts of radioactive material.”[12] The Nuclear Regulatory Commission after the September 11, 2001 attacks required American nuclear plants “to protect with high assurance” against specific threats involving certain numbers and capabilities of assailants. Plants were also required to “enhance the number of security officers” and to improve “access controls to the facilities”.

      The committee judges that successful terrorist attacks on spent fuel pools, though difficult, are possible. If an attack leads to a propagating zirconium cladding fire, it could result in the release of large amounts of radioactive material.

      The committee concluded that attacks by knowledgeable terrorists with access to appropriate technical means are possible. The committee identified several terrorist attack scenarios that it believed could partially or completely drain a spent fuel pool and lead to zirconium cladding fires. Details are provided in the committee’s classified report. I cannot discuss the details here.

      http://www.cfr.org/weapons-of-mass-destruction/nuclear-spent-fuel-pools-secure/p8967
      If any of the spent fuel rods in the pools do indeed catch fire, nuclear experts say, the high heat would loft the radiation in clouds that would spread the radioactivity.

      “It’s worse than a meltdown,” said David A. Lochbaum, a nuclear engineer at the Union of Concerned Scientists who worked as an instructor on the kinds of General Electric reactors used in Japan. “The reactor is inside thick walls, and the spent fuel of Reactors 1 and 3 is out in the open.”

      If you don’t cool the spent fuel, the temperature will rise and there may be a swift chain reaction that leads to spontaneous combustion–an explosion and fire of the spent fuel assemblies. Such a scenario would emit radioactive particles into the atmosphere.

      Pick your poison. Fresh fuel is hotter and more radioactive, but is only one fuel assembly. A pool of spent fuel will have dozens of assemblies. One report from Sankei News said that there are over 700 fuel assemblies stored in one pool at Fukushima. If they all caught fire, radioactive particles—including those lasting for as long as a decade—would be released into the air and eventually contaminate the land or, worse, be inhaled by people. “To me, the spent fuel is scarier. All those spent fuel assemblies are still extremely radioactive,” Dalnoki-Veress says.

      It has been known for more than two decades that, in case of a loss of water in the pool, convective air cooling would be relatively ineffective in such a “dense-packed” pool. Spent fuel recently discharged from a reactor could heat up relatively rapidly to temperatures at which the zircaloy fuel cladding could catch fire and the fuel’s volatile fission product, including 30-year half-life Cs, would be released. The fire could well spread to older spent fuel. The long-term land-contamination consequences of such an event could be significantly worse than those from Chernobyl.

      http://science.time.com/2011/03/15/a-new-threat-in-japan-radioactive-spent-fuel/
      Today there are 103 active nuclear power reactors in the U.S. They generate 2,000 metric tons of spent nuclear waste per year and to date have accumulated 71,862 tons of spent fuel, according to industry data.[vi] Of that total, 54,696 tons are stored in cooling pools and only 17,166 tons in the relatively safer dry cask storage. http://www.psr.org/environment-and-health/environmental-health-policy-institute/responses/the-growing-problem-of-spent-nuclear-fuel.html

    • Further to my lengthy post that is held for moderation … let’s focus on this:

      Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area.

      http://www.reuters.com/article/2013/08/14/us-japan-fukushima-insight-idUSBRE97D00M20130814

      There are 4000 spent fuel ponds. Multiple that by 14,000

      And you get 56,000,000 Hiroshimas worth of radiation released when the ponds lose electricity and spare parts… boil … then burn…..

      How anyone can possibly argue that this is a survivable situation is beyond me

    • So is the issue an earthquake at Fukushima or related to a loss of power to fuel rod ponds in general?

      Some links would be good..

    • I’ve dropped the mother load along with links …. it’s waiting for the moderator to release…

      Keep in mind Fukushima was a reactor incident — spent fuel ponds are a totally different ball game…

      That is dealt with in the research I posted

  16. Kevin’s comments are most interesting: GFC I in its acute phase – the sudden seizing up of the global financial system – simply didn’t last long enough for the effectiveness and competence of such strategic emergency planning to be assessed: banks were saved and opened their doors the next day, etc.

    No doubt it would entail allocating a hierarchy of priorities to infrastructure and food deliveries in the various regions of the UK, suggesting that it would be very wise to live in a hub of strategic national importance, and not in, say, Cornwall, which even now is impoverished and neglected.

    I understand that supermarkets took weeks to start re-supplying in Cornwall after the awful cold snap as they run at a loss there for most of the year anyway. The whole county could, if not starve, then certainly freeze and no one would really notice. This would be true for many regions.

    Of course, living in a national super-hub would bring its own perils, such as being displaced by essential workers, bureaucrats and the military needing housing, and one might the become a refugee in one’s own country, pushed out into the zones being down-graded to preserve the core system – rather like townspeople in a medieval siege driven out into the snow so that the soldiers could be fed with what food stocks remain.

    • !!!!!!!!!! Dr Tim Please tell me Seeds says there is not enough Surplus Energy for this to progress much further. https://www.weforum.org/agenda/2018/06/commerce-cusp-radical-change-organization-ready
      The growing use of wearables and under-the-skin technologies that quantify everything from our steps to our biometrics and heart rates, such as Oura or electrogastrography wearables, further indicate our hyper-personalized future.

      Data will tell stories of nuanced behaviour, such as time spent with work or family, daily rituals, people who come in and out of homes, decisions about dinner, the food we finally eat, and more. Such increased contextual awareness enhances capabilities to read and react to emotion, and therefore to manipulate individuals.

    • In any era of technological change, there is a lot of hype, and usually little thought is given to where the energy for futuristic concepts is supposed to come from. There always seem to be Orwellian aspects, too.

      Much of what currently passes for “tech” is just data handling, with nothing all that clever about it. The authorities in some countries have been lamentably slow over issues such as market share and the handling of private information. Much of it relies almost entirely on advertising, a big industry in terms of revenue, but still a finite pool of funding. Moreover, advertisers seem to be moving into zero-based planning, looking to cut costs (rather than increase volumes) to enhance profitability. I’m encouraged by the EU’s determination to implement regulatory reforms in this sector.

      So I don’t think we need worry over-much. Some of these industries have huge energy and cooling requirements. Ultimately, a lot of it is down to us. I would never use ‘wearables’, and don’t have a smartphone (which to me is just an inferior laptop!). Don’t use apps unless necessary, and send most cookies to the dustbin ASAP. Use ad-blocking, private browsing and VPN. When asked for information, either withold it – or lie. Be selective about which companies you do business with – and from which countries.

    • Dr Tim you may find this study interesting on The Energy Matters website. I really do not think our systems are as robust as we might hope, should there be a major disruption. Living in a rural area our electricity and water go down periodically, so we are perhaps more aware than most of our networks limitations.
      http://euanmearns.com/the-beast-from-the-east-coal-gas-and-the-uk/#more-22196
      I am aware that large Supermarket chains have generators on standby and are required to step in should the grid need backing up, presumably this would be the same should they need to implement their use.
      http://www.yorpower.com/news-standby-generator-payments.htm
      A number of farms here in the North West are also installing gas peaking stations.
      https://www.clarke-energy.com/natural-gas/peaking-station-peak-lopping-plants/
      With regard to food we import over 50% of what we consume and also import a large amount of animal feed too, to say we are vulnerable is an understatement, perhaps we all ought to consider being a lot more self reliant and prepared but developing the skills required won’t come over night.

      Click to access POST-PN-0556.pdf


      Alice Friedemann’s book ‘When Trucks Stop Running’ is an interesting read.
      https://www.peakprosperity.com/podcast/100873/alice-friedemann-when-trucks-stop-running
      If we are phasing out coal by 2025 and oil supplies by many reports are also set to dwindle, is there enough gas coming on line and do we have the storage facilities.

  17. Earlier someone (John?) asked why would powerful interests falsify climate change.

    There is an argument that it is to create something the masses can believe in that justifies the continual erosion of living standards and the introduction of a new societal model.

    What form would this new model take? Technocratic, neo-feudalistic societies in which humans are only permitted to live in designated areas:
    1) Densely populated ‘smart’ cities, in which: no one works; private property ownership does not exist as everything is shared; everyone receives a basic income; everyone and everything is strictly monitored and controlled.
    2) those that do not wish to be part of this futuristic, ‘sustainable’ way of life live in 19th century-style villages outside the city.
    All territory and natural resources outside these permitted areas are out of bounds, and are owned and administered by intergovernmental organisations.

    Sound insane? The crazy part is it is that it is already being discussed at Davos WEF:

    On a related subject, for those with the time and the inclination, I highly recommend these fascinating historical accounts by Canadian alt-media reporter James Corbett:

    How Big Oil conquered the world
    https://www.corbettreport.com/episode-310-rise-of-the-oiligarchs/

    Why Big Oil conquered the world
    https://www.corbettreport.com/episode-321-why-big-oil-conquered-the-world/

    What is Sustainable Development?
    https://www.corbettreport.com/episode-322-what-is-sustainable-development/

    • Taking the UK as an example, these metrics tell you whether there’s growth or not:

      1. Average income, adjusted for inflation

      2. Average income, adjusted for cost of essentials

      3. Average debt per person

      (and don’t be deflected by “property wealth”, which cannot be monetised).

    • Very interesting and honest video – something I wouldn’t have expected out of anyone connected with the American financial industry.

      Paul knows something bad is on the way unless things change.

    • I know a fair number of people in the finance industry … they are all aware that something catastrophic is imminent…

      What they do not understand is the why of it all…

      They – like me until about 6 years ago — believe we are in this position because of the incompetence/venality/stupidity of the central bankers.

      Of course if you think about it – as I did – the CBs are none of the above — why would they take actions that are obviously going to burn down their castles…. when they already have all the power and all the wealth (they own the money machine… what more is there?)…

      If you suggest that they look deeper — for a more realistic explanation — such as — the scenario of The Perfect Storm i.e. we are out of cheap to produce oil … they will scoff…. because acknowledging that means they acknowledge that civilization is about to end…

      It is to acknowledge that all those years of study … that went into obtaining those magnificent degrees… are about to be flushed down the toilet….

      One other thing they understand .. is that the end of cheap oil = their death … their children’s death…

      They are clever enough to get that …. and they prefer not to look behind the curtain … much more palatable to believe in the CBs incompetence… clean the slate and start over again and we’ll get it right next time…

      Oh — and they have all read The Big Short…. so they are all scheming away hoping to be featured in Michael Lewis’ next book/movie (and make a few billion in the process).

    • Nobody I know is doing that.

      As one mate put it ‘so you diligently set up your doomsday farm – stock it with everything you need – get the gardens going – then when doomsday comes your neighbours and everyone else is over the fence wrecking your dream within a few hours’

      These people may be unable to understand the energy angle…

      But they sure as hell understand the futility of doomsday prepping.

      And they have not even been alerted to the 4000 spent fuel ponds worth of radiation ….

      Funny how people — when I do explain that this is an extinction event in itself.. just stare in disbelief… and pretend it ain’t so.

      Well it is. And if violence, disease or starvation don’t get you after the power goes off — radiation sickness will

  18. The complicity of Western governments in the ocean of suffering being wrought in Yemen exposes them as agents of Saudi brutality.
    After three years of relentless conflict, it has been estimated that out of a population of 27.4 million, 22.2 million people in Yemen are in need of humanitarian assistance, 17 million are food insecure, 14.8 million lack basic healthcare, 4.5 million children are suffering malnourishment, while 2.9 million people are internally displaced. As for dead and injured, the toll stands at almost 10,000 and 50,000 respectively.

    As a result of the conflict, the country is also facing the “largest documented cholera epidemic of modern times.” And this epidemic can only have been intensified by the Saudi bombing of a cholera treatment center in the west of the country, causing the French NGO Médecins Sans Frontières to halt their work at the facility.

    Yet despite this mammoth scale in human suffering, the Saudi-led Sunni coalition’s war not only continues, it has intensified with the unleashing of a massive air, land and sea offensive against the Houthi-controlled Red Sea port city of Hodeidah, one of the last remaining points of entry of food, medicines, and other essential humanitarian aid into the beleaguered country.

    https://www.rt.com/op-ed/429962-saudi-arabia-yemen-west/

    I couldn’t find this on CNN…. or BBC….

  19. Some Unlikely Energy Projects?

    This Water one has applications in tandem with Waterstillars offshore patent.

  20. Here’s that trade off link referenced in my last post – this is one of the best research papers addressing this situation — it belongs on a shelf with Perfect Storm … in fact it addresses what happens when the Perfect Storm hits and the aftermath (p.56 onwards)

    Click to access Trade_Off_Korowicz.pdf

  21. There is a confusing conflation of scenarios here, there seems to be two distinct things:

    1. A long term, probably irreversible, unwinding of the energy complexity spiral due to increasing ECoE. Tim’s primary thesis. (Referred to as The Long Descent, or The Long Emergency by other authors)

    2. Specific crises in supply of resources, and/or provision of services, that are temporary and geographically bound.

    No doubt the ‘great unwinding’ would be punctuated by many crisis and depending on policy responses may increase the likelihood and impact of crises.

    I don’t see how a single crisis could result in the catastrophe that is described here sometimes.

    As for planning there are two things to consider:

    1. Planning for life after growth, something that is not temporary.

    2. Planning for specific crisis situations.

    There is a reason it is called a Financial Crisis (GFC) and not TEOTWAKI. There are options when it occurs, even if confidence in existing financial instruments is destroyed. I am saying it will be easy, and it may usher in a new paradigm, but it is not the end.

    • I think we agree on the long-term picture – survivable, but only if we adapt to it effectively.

      On nearer-term events, I think I’m more pessimistic – loss of, say, the grid for as little as a week could bring most things grinding to a halt, because I don’t see how we cope without payment systems, distribution and refrigeration, to name just three.

    • Tim,

      Sorry I meant to say “I am NOT saying this will be easy,…” above. My error suggested the opposite.

      A bit more on contingency planning (UK HMG processes):

      When government prepares contingencies for potential crises it goes through the following prioritisation process, because it can’t plan for everything.

      1. A ‘planning horizon’ timeframe of interest is determined (e.g. 5 or 10 years)
      2. An event is proposed for consideration.
      3. The impact of the event is assessed.
      4. The likelihood of the event occurring within the planning horizon is assessed.

      Now if we take your scenario “loss of, say, the grid for as little as a week”. Specify it a bit better – “Inability to power all electrical equipment connected to mains on the island of Great Britain for a period of one week”

      1. Planning horizon set at 5 years.
      2. Lets say the event is proposed, and not immediately dismissed – there is some merit in considering it further.
      3. The impact is as you have described, and others have described above – is determined to be severe to the economy. But I think the social order consequences have been exaggerated by other commenters.
      4. But, when it comes to assessing the likelihood – I am confident this would be considered extremely unlikely to occur within the next 5 years.

      This is why no effort is put in to planning for this ‘nationwide blackout’.

      If revisited in 5 years they would review previous conclusions and see if any new information would warrant a reassessment. If not, then it wouldn’t get past step 2.

      What you do see planning for is local and regional loss of power, due to specific events such as flooding, and storms. This is because the impact and likelihood is considered enough to warrant a contingency plan to be developed.

      Now, the relevant ‘experts’ are involved in this processes, it is re-run around every 5 years. Maybe these experts don’t understand the linkages between the financial and physical systems well enough and are missing something critical. I accept that that could be the case.

      If the planning horizon is changed then you come to different conclusions. But the timeframe under consideration to be made explicit to allow assessments to be performed and decisions of allocation of resources to contingency plans to be made.

      I don’t think Surplus Energy Economics and SEEDs has anything to add to contingency planning. I think is far more useful for long-term planning – policy development for corporates and nations. But we have discussed that before.

    • Thanks.

      I think I should explain that, for my next article, I’m making the case for energy being the basis of economic output, and suggesting that anyone doubting this should try to imagine even a short period without power. So this is hypothetical and illustrative.

      There are, I believe, military capabilities for shutting down a country’s grid, but, if that ever happened, we’d be in WW3, making all normal planning irrelevant anyway.

    • WW3? Well I don’t want to sound selfish but I hope I can get my annual walking holiday in Switzerland enjoyed first.

    • Thanks. I don’t even think about WW3, as I don’t think it’s likely, and there would be nothing any of us could do about it even if it was.

    • There is no planning being done because those in the know … understand … that when the power goes off… it goes off forever.

      And that there is no point in planning.

      I suspect there would be some sort of plan to take care of the elites — they will seal themselves into their bunkers — the military will function for a time — until the strategic oil reserves are burned up…

      To get one’s mind around this think…. we are going back to pre-industrial society …. but with a number of major differences:

      1. We have burned up all the accessible fossil fuels — so unlike during the Dark Ages — we are not going to discover coal and oil and gas and have industrial revolution 2.0… basically we are never going to burn any more fossil fuels

      2. We can burn trees – but that won’t last long — check your history — there were massive deforestation problems globally pre coal — 7.8 billion people will burn everything that can be burned… so Easter Island here we come

      3. Virtually all soil that support a crop has been farmed using petro chemicals – the soil will support no crop without years of massive organic inputs – what do people eat while they wait?

      4. Finally there are 4000 spent fuel ponds — they are far more dangerous than a reactor meltdown because they continue thousands of x the amount of fuel … when one of the ponds at Fukushima cracked there was a plan in place to evacuate all of Tokyo …. 300km away…. 4000 ponds burn — massive amounts of radiation swirl across the planet — for decades…

      The PTB are aware of all of this — that is why they are doing whatever it takes — to delay the end of BAU.

      They know full well that when BAU ends — this is an extinction event.

      Nothing can be done to prevent that — therefore there is no long term plan.

  22. The great weaknesses – probably fatal – of our global, industrialized civilization: the dependence on ever-greater levels of credit/debt creation, (and on the capacity to service both by states and citizens) and the total dependence upon complex machines which are themselves the product of a global, over-extended (from a resilience point of view), supply chain.

    The two are inextricably linked. Even simple products are no longer manufactured as they would have been pre-1945, nationally. No growth = failure of all financial structures and mechanism = collapse; self-evidently.

    What would be the model for a no-growth, or imperceptible-growth, economy and society for say, the UK? It would take us back to that existing in 1066, with corresponding population levels. Even then, international trade existed, above all for raw wool, making England the richest kingdom in Europe, and so worth the trouble William the Conqueror took to seize it (and the hire of mercenaries to do so).

    We cannot have modernity, vast populations, and ‘no-growth’, and therefore it cannot in any way be planned for. Unfortunately, the soil fertility and natural and human resources available in 1066 no longer exist and cannot be conjured up even over decades. The peasant/hunter is born, not trained. The soil is degraded and infertile, and as for woodland, heath, water…….. Population level would have to far, far lower than that obtaining then.

    Ideas of ‘doing more with less’ trough technical inventiveness are puerile fantasies in this context: complexity does not solve the problems of complexity in such a crisis situation, of such profound extent and magnitude.

    Historically, when complex societies can longer sustain themselves – see Tainter and not a few others – survivors have fallen back on agriculture and pastoralism, which, and this is of supreme importance, were modes of life which had continued largely undisturbed by the growth of the metropolitan areas, ad often environmental degradation was limited, above all when complex irrigation schemes had not been developed and over-grazing taken place. Nomads just carried on doing their thing…….

    Previous empires climbed the ladder of growth, but left the lower rungs largely intact, and mankind could climb down and start again, or stay at that basic level (see Greece, which was no more than a collection of primitive -but well-adapted – villages and very small towns, when the Ottomans conquered it).

    In contrast, modern industrial civilization, inflated grotesquely on oil and gas, has effectively kicked away all the lower rungs – creating vast populations, which cannot exist outside the urban environment, minutely divided as to labour and specializations, and destroying the ecological base of future production.

    As an foot-note, this destruction of natural capital also means that the quantity of rations which ensured survival in 1939-1945 i the UK would have utterly inadequate nutritional content today, and more would be required – I believe the less has been quantified as 20-50% of nutrition due to soil degradation. The result would be slow starvation, consequent epidemics – and loss of mental capacity

    • It’s very difficult to disagree with any of this, certainly if you believe, as I do, that surplus energy supply determines the scale of the economy and the numbers it can support. One way of looking at this is surplus energy (total energy less ECoE) per person. This equation looks daunting, with population the critical number.

      I’m pretty sure Britain – your example – could cope with population numbers at Medieval levels, but that’s a drastically smaller number than today. The assumption that the UK population can rise to 80 million have always seemed, to me, pretty crazy.

      But in almost all economic debate, population seems a taboo area, with James Lovelock the shining exception. His numbers for the population that the world can support in the future are frighteningly small.

      It’s interesting to look at the (Western) Roman Empire. Experts in this field identify net energy as the cause of decline and, from memory, population declined by about 95% from its peak.

    • Extreme carrying capacity estimates go far outside the broad, fourfold range bracketed by the estimates just cited. They have been defined by true believers in the antipodal camps of catastrophist and cornucopian futures. A generation ago Ehrlich (1968) wrote that “the battle to feed all humanity is over” and that “hundreds of millions of people are going to starve to death” during the 1970s.2 Ehrlich’s global population maximum would have to be well below the 1970 total of about 3.7 billion people. In contrast, Simon (1981) maintained that food has no long-run, physi-cal limit. These extremes leave us either with the prospect of eliminating about half of humanity in order to return the worldwide count to a sup-portable level or with visions of crop harvests surpassing the mass of the planet itself.3 As Sauvy (1990[1949]: 774) noted crisply, “Lack of precision in data and in method of analysis allows shortcuts toward reaching an ob-jective predetermined by prejudice, shaped largely either by faith in progress or by conservative skepticism.” Unfortunately, less extreme estimates have been hardly more impressive. Because the question of the ultimate support capacity cannot have a single correct answer, assessing the value of past estimates must be done by looking at their assumptions. Too many of them are overly simplistic, and even the more elaborate ones are usually difficult to defend. In general, the capacity predictions assume too much-as well as too little. Most notably, they almost completely ignore the demand side of the question.
      This content downloaded on Thu, 7 Mar 2013 19:26:32 PM All use subject to JSTOR Terms and ConditionsVACLAV SMIL 257

      http://letthemconfectsweeterlies.blogspot.com/2017/08/feeding-world-malthus-wasnt-such.html

    • Hi Tim

      Please excuse me for making what is not a facetious comment but if we were faced with this level of catastrophe and dislocation then many, if not most, people would simply not survive and so the population would reduce very substantially of its own accord.

      However, the survivors would have a hard time and many more would die within a few years.

      Also “falling back on pastoralism and agriculture” sounds obvious but would be difficult in practice; we are just not equipped mentally for this.

      I suspect that within a century you would have a very small population indeed.

    • Reverting to the 1800’s is not possible ….

      Let’s post this again — clearly many people in the audience are unable to grasp this reality…. they look out car window at the enormous green fields of food and think … what is Thomas on about…

      But those fields are Potemkin Villages… they are fake… they would be barren wasteland if the Urea truck did not arrive next season to sprinkle chemical nitrogen on the crops…..

      FYI:

      Soil that is farmed using petro-chemical inputs — will support no crop once the additives are stopped – without years of intensive rejuvenation involving organic inputs

      Effect of Pesticides on soil fertility (beneficial soil microorganisms)

      Heavy treatment of soil with pesticides can cause populations of beneficial soil microorganisms to decline. According to the soil scientist Dr. Elaine Ingham, “If we lose both bacteria and fungi, then the soil degrades. Overuse of chemical fertilizers and pesticides have effects on the soil organisms that are similar to human overuse of antibiotics.

      Indiscriminate use of chemicals might work for a few years, but after awhile, there aren’t enough beneficial soil organisms to hold onto the nutrients” (Savonen, 1997). For example, plants depend on a variety of soil microorganisms to transform atmospheric nitrogen into nitrates, which plants can use. Common landscape herbicides disrupt this process: triclopyr inhibits soil bacteria that transform ammonia into nitrite (Pell et al., 1998); glyphosate reduces the growth and activity of free-living nitrogen-fixing bacteria in soil (Santos and Flores, 1995) and 2,4-D reduces nitrogen fixation by the bacteria that live on the roots of bean plants (Arias and Fabra, 1993; Fabra et al., 1997), reduces the growth and activity of nitrogen-fixing blue-green algae (Singh and Singh, 1989; Tözüm-Çalgan and Sivaci-Güner, 1993), and inhibits the transformation of ammonia into nitrates by soil bacteria (Frankenberger et al., 1991, Martens and Bremner, 1993).

      Mycorrhizal fungi grow with the roots of many plants and aid in nutrient uptake. These fungi can also be damaged by herbicides in the soil. One study found that oryzalin and trifluralin both inhibited the growth of certain species of mycorrhizal fungi (Kelley and South, 1978). Roundup has been shown to be toxic to mycorrhizal fungi in laboratory studies, and some damaging effects were seen at concentrations lower than those found in soil following typical applications (Chakravarty and Sidhu, 1987; Estok et al., 1989). Triclopyr was also found to be toxic to several species of mycorrhizal fungi (Chakravarty and Sidhu, 1987) and oxadiazon reduced the number of mycorrhizal fungal spores (Moorman, 1989).

      https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2984095/

      Organic inputs will be hard to come by considering nothing can be grown – and most if not all animals are killed and eaten.

      Less than 1% of all farmland globally is farmed organically.

      Get ready to starve. No matter where you are:

      https://www.weforum.org/agenda/2015/08/which-countries-have-the-most-organic-agricultural-land/ (note – most organic land in Australia is rubbish and supports sheep only)

    • Xabier…

      I regret to inform FIFA that they will need to find another cup to present the winner of the football tournament underway in Russia….

      Because I am awarding you the World Cup for this post

  23. http://www.nakedenergy.co.uk/product/how-it-works/ combined vacuum tubes and solar voltaics’ an awesome Project. I was just musing on whether this had been done yet and sure enough, here it is.
    Lots of doom and gloom is very easy to embrace, yet the more I look at the Tech sector not just in digital signals and controls capability but also microgrid networking and permaculture portfolio solution as opposed to high efficiency monoculture solutions the more clear it becomes that the starting assumptions employed for diagnosing the current problems are not and should not be the same starting assumptions used to break into the Future Paradigm.
    Money is simply done wrong at the moment I found this short article quite instructive I read it this morning.
    http://neweconomicperspectives.org/2018/06/the-five-stages-of-money-and-why-were-stuck-at-stage-4.html
    The Five Stages of Money (and why we’re stuck at stage 4)

    Stage 3 money so efficiently and effectively made possible—they can also be issued and used as direct government payments for non-profitable goods and services. This can happen because (a) it “costs” the government nothing to produce the promissory notes, and (b) they provide real income to the citizens providing the non-profit generating services. In other words, Stage 5 money can uniquely and directly be used to pay citizens, on a large scale, to undertake, design, build, and provide non-profit goods and services which, until now, could not be undertaken or accomplished without stressing the monetary system itself (i.e. by “printing money”).

  24. Dmitry Orlov; Collapse of Empire

    As we have previously discussed, Dmitry Orlov’s blog posts are behind a Patreon pay wall (minimum one dollar per month). His current post does talk about the fracking bubble, but does NOT address the larger question of rising ECOE. It is more geopolitical, and specifically expands on his previous work comparing the collapse of the USSR with what he sees as the collapse of the US (along with close ally the UK). I’ll give you the bottom line. You can check out the post if you want the details….Don Stewart

    This analysis may read like a historical survey detached from practical, everyday considerations. But I believe that it has practical merit. If the citizens of the USSR were informed, prior to the events of 1990, of what was about to happen to them, they would have behaved quite differently, and quite a lot of personal tragedy might have been avoided. A very useful distinction can be made between collapse avoidance (which is futile; all empires collapse) and worst-case scenario avoidance, which will become, as collapse picks up speed, your most important concern. Your approach may involve fleeing to safer ground, or preparing to survive it where you are. You may choose your own collapse markers and make your own predictions about their timing instead of relying on mine. But, having witnessed one collapse, and now witnessing another, the one approach I would definitely not recommend is doing nothing and hoping for the best.

    • Thanks, and his book is a must-read.

      Of course, the USSR was self-sufficient in energy and, I’m pretty sure, in food as well. It didn’t have a credit-based financial system, or massive debts. So the position was – relatively – nowhere near as bad as it would be for the US, let alone the UK.

      My purely personal view is that the US is likely to survive what is coming, albeit in greatly impoverished form, but the UK will be in much bigger trouble. Indeed, the UK economy already seems to be experiencing very severe problems.

      A few years ago I was contacted by a Hollywood script writer looking for a collapse scenario for the US – and I wonder why he chose to ask me?…..

    • Does anyone care to address the food issue post BAU? As in there will be very little food produced – even in America — because the chemicals required to grow food in dead soil will not be available.

      300 million people… and a few organic preppers worth of food….

      How does that end?

      Oh and then how do you keep spend fuel ponds managed — without spare parts and electricity?

      Do we just pretend this away?

    • Today’s post isn’t behind a paywall. Only his Thursday posts are. Tuesday posts are on his blog.

  25. More on the US and Geopolitical Risk
    Dr. Morgan may have some number, but as I remember I read somewhere that the value of the dollar is about 50 percent inflated due to being the reserve currency. IF Orlov is correct that the US empire is deflating, then the dollar will no longer be the reserve currency, and its value will fall rather dramatically.

    What impact would such an event have on the rest of the world?
    *Those who have dollar denominated debts will suddenly find their debt cut in half
    *The US appetite for imported oil will shrink rather drastically. And the domestic shale bubble will likely burst. The net result is that the ECOE for the rest of the world may decline. Almost certainly the currency cost of oil would decline…except in the US.
    *The enormous pyramid of financial assets built on top of the US dollar would collapse into rubble. Chinese and Korean and Japanese factories and Russian and Middle Eastern raw materials would still be worth something.

    Don Stewart

    • Don – a solution to energy problems is right in front of the US – stop building gas guzzlers. This would benefit the whole World. Also stop building huge uneconomical cars for emerging markets like China and India.

      In some places there is no quality of life in both India and China due to massive levels of pollution. Why would you want to buy a huge car if all you can do is sit in an endless traffic jam breathing in smog.

      If non essential journeys were banned along with the manufacture of low economy cars we might just have a brighter future.

      It will never happen – the prestige of sitting in say a Rolls Royce instead of a rickshaw will see to that.

    • The mathematical answer is that the market overvalues the dollar at a premium of between 75% and 80% to underlying value measured against all other currencies.

      This cuts both ways, of course. A lot of this premium is because markets discount other currencies for various reasons, mainly EM currencies. On fundamentals, even the RMB is worth more than twice its dollar rate in the FX markets, and you’ll know that the rouble is even more heavily discounted to underlying value. The RMB and the RR are also discounted to EUR and GBP.

      Undoubtedly there’s a USD premium, but I believe that’s based at least as much on the ‘petro-prop’ – the pricing of oil and other commodities – as on reserve status.

    • Donald

      Unfortunately, the US tax system has long favoured SUVs (classed as “light trucks”) over ordinary cars. The love-affair between Americans and big cars has proved remarkably enduring, and the US doesn’t have excise duties on fuel anywhere near European or Japanese levels.

    • Well eventually all these SUV’s will only be good for driveway ornaments or somewhere to live.

    • ” but I believe that’s based at least as much on the ‘petro-prop’ – the pricing of oil and other commodities – as on reserve status.”

      Aren’t these two situations completely co-entangled? Without the petro prop it’s hard to see how the dollar would have the leverage to maintain privileged status as the reserve currency.

  26. Dr. Morgan
    I am not a Russian expert. However, i am pretty sure that one of the things Putin did when he succeeded Yeltsin was to reinvigorate Russian agriculture. Russia is now a significant exporter of some commodity crops.

    As for other things, such as manufacturing. The USSR system was integrated, in that cars might be manufactured in an eastern European country but shipped all over the Soviet empire. Therefore, when the empire collapsed, supply chains were at severe risk. Since, as Orlov describes, the cooperation quickly degenerated into hatreds, things went wrong. Putin has said that one of the mistakes that the ‘new Russia’ made was to believe the West that trade with them would actually be free. When he came to realize what the real agenda was (strangulation), he shifted gears much more to the direction of self-sufficiency. For example, the ties between Ukraine and Russia remained good up until the American sponsored coup. Consequently, rail cars were made in Ukraine for use on Russian railroads, and hard coal from ethnic Russian eastern Ukraine was burned in power plants in Kiev. The ‘nationalists’ blocked the coal shipments for a while, until cooler heads figured out that they couldn’t operate the power plants without the coal. So the disentanglement was messy.

    Don Stewart

    • Russian agriculture was a disaster under the USSR, with food imports necessary despite Russia’s former status as “Europe’s bread-basket”. Every year the USSR blamed this on “the worst weather for fifty years”.

      There is a genuine split in Ukraine between those of Russian and non-Russian descent, though, beyond that, let’s not get into Ukrainean politics here!

    • “There is a genuine split in Ukraine between those of Russian and non-Russian descent, though, beyond that, let’s not get into Ukrainean politics here!”

      These types of ethnic splits are going to be a massive fissure that cracks open as societies decline. Tensions tend to be fraught enough when there is a growing pie to divide amongst the groups, but once the pie is clearly shrinking things turn far more extreme. I believe there is a similar divide amongst ethno-religious groups in the Yemen war along with the Saudi influence.

  27. Companion to Dr. Morgan; Dmitry Orlov; Don Stewart

    (I modestly put myself into exalted company. The purpose is to show where some of my biases come from.)

    Erik Lindberg writes a very long, but thoughtful and informative article on the bankruptcy of liberalism in our time. One of his conclusions is that unfettered capitalism is disastrous, but that progressives or liberals are almost uniformly unwilling to espouse anything other than the perpetual growth that capitalism promotes. As an aside, I would add that the fossil fuel industry has decided to stop denying climate change, and instead start promoting ‘climate adaptation’ strategies such as seeding the atmosphere with aerosols (which provides new, profit promoting opportunities). The banner will read:
    Good jobs, growth, and a green environment
    In other words, its like the words of Burt Lancaster playing a Sicilian nobleman in Visconti’s movie The Leopard:
    ‘Things have to change so that nothing will change.’

    https://www.resilience.org/stories/2018-06-19/conservativism-now-market-economies-and-the-liberal-anti-culture/

    ‘As Alasdair MacIntyre explains it, in premodern, non-liberal societies the human good is always an inherently communal or common good, while the modern liberal state is charged with “providing the arena in which each individual seeks his or her own private good” (172). The main unit of society is the self, a self freed from limits.’

    I have recently been listening to some experts advise middle-aged women who have raised their children, put on a few pounds, and perhaps divorced their husband about what comes next. In other words, ‘it can now be all about you again.’ Lindberg would recognize the symptoms.

    Dr. Morgan clearly foresees the end of the expansion which started 250 years ago. Dmitry Orlov preaches a sort of retro-family values vision which infuriates American liberals. Don Stewart, never a very original thinker, is influenced by the notions propounded by Orlov and Wendell Berry and others that individualism is not the way to thrive in a world which is getting harder.

    Hard choices…which I predict all and sundry will NEVER actually answer, but may stumble around in the dark until they settle on something…or else die in the general upheaval.

    Don Stewart

    • “progressives or liberals are almost uniformly unwilling to espouse anything other than the perpetual growth that capitalism promotes”

      Greer’s book The End of Progress explains this phenomenon quite well: progressivism is ultimately a civic religion of Progress that worships a trinity of Technological Progress, Moral Progress, and Economic Progress (growth).

    • I am pro-growth… because I am old enough to know what a recession looks like… and an unchecked recession would cause total collapse of BAU… and that would be a bad thing

    • The reality is that if you can step outside of ideology, it becomes clear that individualism is a luxury that past societies could simply not afford. And soon we will not be able to afford it either.

    • On Remediating “dead soil ” Can you define what you mean by “Dead” soil is that not Oxymoronic?
      It is Organic Matter within Soil Structures which is alive.

      Perhaps this other presentation from Ted X Dubbo will help you out here.

      Secondly go back to the First Vidoe and note, Plants are Solidified Carbon, most of their Carbon Content is taken from the atmosphere, not the Soil and the Organic matter within Soil structures.

      In Modern Aquaponics and also Horticultural systems Irrigation is found to be much more economical in Higher CO2 atmospheres, you may well know all of this stuff or maybe not? I have an extensive library of Links to article and books etc should you require.

    • Leave the nonsense koombaya TED talks for a moment and read something from an actual scientist:

      Effect of Pesticides on soil fertility (beneficial soil microorganisms)

      Heavy treatment of soil with pesticides can cause populations of beneficial soil microorganisms to decline. According to the soil scientist Dr. Elaine Ingham, “If we lose both bacteria and fungi, then the soil degrades. Overuse of chemical fertilizers and pesticides have effects on the soil organisms that are similar to human overuse of antibiotics.

      Indiscriminate use of chemicals might work for a few years, but after awhile, there aren’t enough beneficial soil organisms to hold onto the nutrients” (Savonen, 1997). For example, plants depend on a variety of soil microorganisms to transform atmospheric nitrogen into nitrates, which plants can use.

      Common landscape herbicides disrupt this process: triclopyr inhibits soil bacteria that transform ammonia into nitrite (Pell et al., 1998); glyphosate reduces the growth and activity of free-living nitrogen-fixing bacteria in soil (Santos and Flores, 1995) and 2,4-D reduces nitrogen fixation by the bacteria that live on the roots of bean plants (Arias and Fabra, 1993; Fabra et al., 1997), reduces the growth and activity of nitrogen-fixing blue-green algae (Singh and Singh, 1989; Tözüm-Çalgan and Sivaci-Güner, 1993), and inhibits the transformation of ammonia into nitrates by soil bacteria (Frankenberger et al., 1991, Martens and Bremner, 1993).

      Mycorrhizal fungi grow with the roots of many plants and aid in nutrient uptake. These fungi can also be damaged by herbicides in the soil. One study found that oryzalin and trifluralin both inhibited the growth of certain species of mycorrhizal fungi (Kelley and South, 1978).

      Roundup has been shown to be toxic to mycorrhizal fungi in laboratory studies, and some damaging effects were seen at concentrations lower than those found in soil following typical applications (Chakravarty and Sidhu, 1987; Estok et al., 1989).

      Triclopyr was also found to be toxic to several species of mycorrhizal fungi (Chakravarty and Sidhu, 1987) and oxadiazon reduced the number of mycorrhizal fungal spores (Moorman, 1989).

      https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2984095/

    • Again … this is NOT related to CARBON!

      The micro organisms that are required in the soil for plants to grow are KILLED by chemicals such as those contained in Round Up.

      Trying to get those micro organisms to return to the soil so that it can support plant life TAKES intensive inputs of compost …. over MANY YEARS.

      As I have posted 99%+ of all agricultural land is FARMED USING these chemical INPUTS.

      Therefore when the chemicals are not available 99% of all ag land will support NO CROP.

      And guess what — the manure required to make good compost to repair the soils will not be available… because the hungry hordes will kill and eat all the animals

      Already happening in Venezuela

      This is not a difficult concept to understand.

      Let me adapt a quote from the great Sinclair Lewis:

      It is difficult to get a man to understand something, when his life and that of his family depends on his not understanding it.

    • To reiterate:

      Indiscriminate use of chemicals might work for a few years, but after awhile, there aren’t enough beneficial soil organisms to hold onto the nutrients” (Savonen, 1997). For example, plants depend on a variety of soil microorganisms to transform atmospheric nitrogen into nitrates, which plants can use.

  28. Tim I don’t think WW3 will ever happen either. If any nut in Russia or the US ever contemplated it they should watch the terrifying BBC drama from 1984 ‘Threads’

    • Donald
      The thing that keeps WWIII as a possibility is the great disparity between NATO and Russia or China. Putin has said that a conventional war with NATO would be suicidal for Russia, because NATO greatly outnumbers them. Which leaves Russia only the threat of nuclear attack. (I perceive the Chinese army as basically a way to keep a lot of people employed.)

      The US thinks it understands very well just how far they can push Russia, without incurring a nuclear response. The US does not give up just because some course of action is stupid. See Afghanistan and Syria and Yemen and Iran. The US wants the resources, and wants servants who will deliver them.

      So there are three possibilities for escalation to WWIII:
      *An accidental escalation as a result of some regional pushing and shoving. The probability of this is enhanced by Trump’s position that ‘if they have something we need, we will just take it’.
      *US misconstrual of Russia’s new strategic weapons. From what I understand, they make aircraft carriers and anti-missile defenses obsolete. Yet an enormous amount of momentum in terms of military spending in the US rides on those very systems. I don’t think the Congress or the Administration will abandon them, just because they are obsolete and vulnerable to attack. Should the Russians sink a carrier with thousands of lives lost, the response in the US would not be rational.
      *Putin will be around for another 6 years. While I see him as a stabilizing influence, who knows what might succeed him? Dmitry Orlov has the same concerns. Will some hot-headed relative of Trump take over Russia and decide to ‘make Russia great again’? In the meantime, official Washington desperately needs some ‘enemy’ to blame for their own fecklessness. There is no better candidate than Russia and Putin.

      Don Stewart

    • Don – Well I guess we can never be 100% safe because no one can predict the future with 100% certainty (except for things you are actually going to do yourself like pick up a cup

      Just quoting from your post –

      ‘The probability of this is enhanced by Trump’s position that ‘if they have something we need, we will just take it’.

      This is very much like one of the closing lines from the 1975 film – 3 days of the Condor

      Higgins (played by Cliff Robertson) to Turner (Played by Robert Redford)

      Higgins: Not now – then! Ask ’em when they’re running out. Ask ’em when there’s no heat in their homes and they’re cold. Ask ’em when their engines stop. Ask ’em when people who have never known hunger start going hungry. You wanna know something? They won’t want us to ask ’em. They’ll just want us to get it for ’em!

      Nothing changes ………

    • Preventing nuclear war
      Fisher was known for a unique idea towards nuclear deterrence. In a March 1981 paper, while discussing the importance on reaching a “wise decision”, especially in terms of nuclear arms, he suggested implanting the nuclear launch codes in a volunteer. If the President of the United States wanted to activate nuclear weapons, he would be required to kill the volunteer to retrieve the codes.

      My suggestion was quite simple: Put that needed code number in a little capsule, and then implant that capsule right next to the heart of a volunteer. The volunteer would carry with him a big, heavy butcher knife as he accompanied the President. If ever the President wanted to fire nuclear weapons, the only way he could do so would be for him first, with his own hands, to kill one human being. The President says, “George, I’m sorry but tens of millions must die.” He has to look at someone and realize what death is—what an innocent death is. Blood on the White House carpet. It’s reality brought home.

      When I suggested this to friends in the Pentagon they said, “My God, that’s terrible. Having to kill someone would distort the President’s judgment. He might never push the button.“

      — Roger Fisher, Bulletin of the Atomic Scientists, March 1981[10]
      https://en.wikipedia.org/wiki/Roger_Fisher_(academic)

      I always thought Roger Fisher’s suggestion would work a treat.

  29. There is in fact a case study for what happens when a modern economy’s petroleum supplies are cut: 1990s Cuba.

    After the USSR collapsed, Cuba’s oil imports halved. The country went through extreme hardship but people worked together and they pulled through.

    They managed to transition from industrial farms using oil derived fertilizers and pesticides, to small-scale organic farming in a very short space of time. The limited room in urban areas spawned creative solutions for growing food.

    Check out the documentary The Power of Community. It’s very inspiring.

    I will concede that western societies now likely have a very different mind set to 90s Cuba – individualistic with a sense of entitlement.

    • Cuba did not collapse — they still had electricity and some oil… the country did not fall into darkness….

      They would also have continued to trade.

    • ‘halved’

      When BAU ends — oil production goes to zero. Big difference

    • From the Wikipedia article:

      “The dissolution of the Soviet Union hit the Cuban economy severely. The country lost approximately 80% of its imports, 80% of its exports and its Gross Domestic Product dropped by 34%. Food and medicine imports stopped or severely slowed. The largest immediate impact was the loss of nearly all of the petroleum imports from the USSR;[2] Cuba’s oil imports dropped to 10% of pre-1990 amounts.[3] Before this, Cuba had been re-exporting any Soviet petroleum it did not consume to other nations for profit, meaning that petroleum had been Cuba’s second largest export product before 1990. Once the restored Russian Federation emerged from the former Soviet Union, its administration immediately made clear that it had no intention of delivering petroleum that had been guaranteed the island by the USSR; this resulted in a decrease in Cuban consumption by 20% of its previous level within two years.[2][4] The effect was felt immediately. Entirely dependent on fossil fuels to operate, the major underpinnings of Cuban society—its transport, industrial and agricultural systems—were paralyzed. There were extensive losses of productivity in both Cuban agriculture—which was dominated by modern industrial tractors, combines, and harvesters, all of which required petroleum to run—and in Cuban industrial capacity.”

    • This is a poor comparison.

      Russia and Cuba never went dark … they were still plugged into BAU…. and the world surrounding them remained fully functional.

      Imagine the entire planet – without electricity or petrol….imagine empty grocery stores… imagine no police force… imagine no medical care…

      That is what is coming. Everywhere.

    • Perhaps a poor comparison to the End of Times that you envisage, but not how I see things.

      For one it demonstrates that soil treated for decades with petrochemicals can be turned around quickly to organic farming, in contrary to earlier remarks posted here.

      Makes one wonder how much else of the doom porn is incorrect or will not come to pass.

    • I’ve had two people evaluate properties that I was purchasing … one was a trainer from here http://www.ofibc.org/ … the other as I have mentioned is a commercial organic grower who consults to the NZ government

      Both of these people are university trained scientists — they are not hobby organic farmers… they know the chemistry behind this stuff.

      The BC person said to me: NEVER buy land that has been farmed using petro chemicals – it takes years to fix it.

      The NZ guy — who assisted with setting up our farm mentioned — as we had a splash of whiskey at the end of a Friday’s work that all those farms we could see as we looked down across the valley (vegetables various orchards…) that the soil on these farms is a sponge… nothing more — all the biota are dead due to petro chemicals… it’s only purpose is to hold up the plants and to absorb more petro chemicals…. without the petro chemicals nothing will grow — without years of repairs.

      I have another mate who owns a large farm in Australia — we were discussing the above — and he said that they had a paddock that they wanted to convert to organic vegetables… it had been farmed with chemicals…. he said year after year they sowed in organic compost… and nothing grew…. they gave up after 4 years….

      I am not making this sh it up…. I have posted a link to the science…

      If you want to stick your fingers in your ears and pretend you are not hearing me that is your choice..

      But come the end of the oil age — the petro chemicals are going to stop…

      And there ain’t going to be any food.

      That is absolutely guaranteed.

      And those little organic hobby farmers that do not irrigate with pumps … well they are going to be overrun by friends, family, neighbours and hordes….

      Why don’t you ring up these guys and ask them for yourself:

      https://www.certifiedorganic.bc.ca/

      Or don’t — remain in your delusional state — that might be a good thing because if I were to break through your bubble with these facts…. that would cause deep despair.

      This is an extinction event.

    • I am not an engineer or even a technician, yet my line of work is optimising certain processes in oil refineries, petrochemical plants, gas plants, etc. I often deal with university educated ‘engineers’, who are unable to see what to me seem glaringly obvious, simple solutions to supposedly complicated performance problems they are having.

      The economics profession is also full of university educated types, who profess to know a lot but in reality know little of substance.

      University educated types can be very convincing, yet the fact is what happened in Cuba totally contradicts what your acquaintances say.

      I am prepared to accept trouble lies ahead, but disagree with you we are soon to face an apocalypse. From my perspective it is you that is delusional.

      May I suggest you take a break from posting here to go stand on a busy street corner with a megaphone and billboard.

    • You seem to think you are the smartest person in the room…. smarter than all those university engineers… (smirk…)

      Explain to me how this does not end in catastrophe:

      HIGH PRICED OIL DESTROYS GROWTH
      According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

      OIL PRODUCERS NEED $100+ OIL
      Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

    • You seem to think you are the smartest person in the room…. smarter than all those university engineers… (smirk…)

      Explain to me how this does not end in catastrophe:

      HIGH PRICED OIL DESTROYS GROWTH
      According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

    • OIL PRODUCERS NEED $100+ OIL
      Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

    • One more bit of info for you to work on (if you aren’t too busy schooling those university educated engineers…)

      And btw — someone who fixes pumps and screws on bolts — is not actually an engineer… I am sure if you were smart enough you would have done the university course and qualified as a mechanical engineer… and earned the big dollars that go with it…

      One of my best mates is one of those ‘university engineers’… he was a partner in a global firm that had a big footprint in the oil and gas industry….

      I think he retired at 45 and does a bit of consulting just to keep his mind active… I am sure he’d have a quiet laugh at the comments disparaging the profession….

      Again – I await your explanation of how this does not end in catastrophe…

      When you are done with that you can then explain to me how 1+1 does not = 2.

    • I had a quick scan … it puts me off when the first thing I see is a reference to man-made climate change… which is bull sh it….

      As I have pointed out — the climate has always been changing and always will — often dramatically over very short time frames…. in Iraq for instance… over decades villages went from verdant farms to arid deserts… and back again …

      Instead of allowing the MSM to tell you what to think… they repeating it like a parrot — I suggest people read history and make up their own minds

      e.g. https://www.goodreads.com/book/show/389074.Ancient_Iraq

      https://www.goodreads.com/book/show/34427005-the-fate-of-rome

      Both are replete with examples of dramatic climate swings over VERY short time frames…. long before we burned the first bucket of coal…

      Anyway I digress… can you provide me with readers digest version of this video — I don’t have a lot of time to live and it is a crisp sunny day and I prefer to spend the 20 minutes on the ski hill….

      My brief scan seems to indicate that he believes we can pull carbon out of thin air and improve soil?

      Well sorry to tell you but as I have pointed out — you cannot easily fix soil that has been decimated by petro chemical farming. Adding compost or manure is a thousand times more rejuvinating than simply adding carbon (the organisms in the soil are DEAD — it is not a carbon issue)….

      If you want the real story — rather than listening to a green groopie with yet another high tech solution to a high tech problem…

      Contact the scientists here and ASK THEM http://www.ofibc.org/contact-us/

      Or save your skype dime — I have already done that — I met with one of the scientists… I paid her to visit the land I was buying … I paid her for a soil analysis … and she told me point blank — IF the soil analysis shows petro chemical usage…. do NOT buy this land…. it will take years to repair the soil….

      Feel free to continue disagreeing…. from a position of ignorance

    • My point is just because someone went to university does not mean they are correct about things – as in your friends’ remarks being disproved by events in Cuba.

      I have no more time for you Thomas. Good day.

    • I get that a lot Jonny.

      When someone is unable to refute the facts and logic I post … they crawl back under a rock… put their fingers in their ears … and repeat nanananana… over and over….

      Have a good one 🙂

      Anyone care to address the dead soil and spent fuel pond issue? Or is the preference just to pretend these problems do not exist?

    • Malthus for Objective Thinkers Uncertainty increases with Knowledge this is because Certainty is bounded within ever narrower limits for Scientific Facts to be Falsifiable and accepted as proveable within those limits. In Mathematics Gödel’s incompleteness and Tarski’s Undefinability, should assist us in recognising the Boundaries of even our collective knowledge and ultimate appeals to Authority in all axiomatic systems.

      Convergent and Divergent and Wicked problems also need to be distinguished when one comes to questions of Political Economy, political economy is not science it is Politics.

      A Question in which part of your thesis do you see the greatest weakness?

    • On the contrary Thomas, I never said I am not willing to listen, I just do not want to continue with tiresome back-and-forth comments.

      Once again, I do not see oil decline as related to GFC2, and so as I said before is not something that will affect us immediately.

      I have already commented the soil issue, but fuel ponds seems a tricky one. Can they not shift them to dry cask storage? Very shortsighted to not store them this way in the first place.

    • You are wrong on the soil issue. Why don’t you ring up BC Organics or some other institution and ask them?

      Obviously you cannot transfer spent fuel to casks otherwise there would be no need for spent fuel ponds.

      You have to wait 5 years or so — and even then it is not happening due to costs.

      Arguably we could shutter every nuclear plant now — wait 5 years — and cask all the fuel.

      Unfortunately that is not feasible because nuclear is a massive contributor to global electricity … shuttering the plants would cause black outs and massive cost spikes for power.

      No way out.

    • Thomas, I am highlighting the historical fact that Cuba successfully transitioned from petrochemical-based to organic-based agriculture in short time, whereas you are offering the opinion that this is not possible.

  30. There is of course the possibility that the system can be maintained long enough for nuclear fusion technology to develop successfully.

    • Not really. But even if there was, electricity is only about 15% or maybe 20% of worldwide energy usage. Good luck coming up with things like electric blast furnaces ,even if you ignore the impossibility of replacing liquid fuel transportation with electrics at the required scale.

    • Another Gawhar would be helpful about now… but that ain’t gonna happen

    • The science is moving in the right direction actually, its just a question of whether it can be brought online in time.

      If fusion is established our societal systems would adjust to a higher usage of electricity, which would not be easy but not catastrophic.

      It’s a shame to read such pessimism and negativity. Frankly I don’t know how some commentators here are able to muster the will to go on living holding the views they espouse.

      Things may turn out the way some are predicting, but may not. No one really knows.

  31. I’ve always found it difficult to navigate between the extremes – the Scylla of utter disaster and the Charybdis of benighted complacency. Personally, I don’t think the world is going to come to an end, but I do think our economic system has entered the final throes of unsustainability. Moreover, an optimistic slant on this could be that growth (and our obsession with it) might have ended just in time to save the environment.

    Some people, including many of those in power, are going to find it very hard to adapt, whereas others might actually enjoy a world in which greed has become pointless, and extreme inequality has ceased to be sustainable.

    The growth obsession has irritated me since long before I started on the work I do now. I see enormous benefits in lifting the world’s poor to a better standard of living, but I don’t see why we in the West want yet more gadgets and status-symbols.

    Measuring anyone’s value (including our own) by what they own has always seemed stunted to me. As children, we might want a better bicycle than the boy next door – but to carry that thinking into adulthood seems, to me, retarded.

    Human beings have always been both competitive and co-operative. The current economic model has put the emphasis too much on the former, and we need more of the latter. The “Anglo-American economic model”, a.k.a. “the Washington consensus”, is already a dead system walking. The real challenge now is to craft something better, based on superior values.

    • In complete agreement Tim. The issue is how to do that when TPTB will resist change to keep themselves in the privileged position they are in.

    • Yes, they will.

      In UK terms, a fascinating chapter occurred between 1956 and 1963. It began with the sheer idiocy of Suez, followed by the panic flight from Empire. There was challenging cultural change (Look Back in Anger was published in 1958), the start of large-scale immigration in 1957, the spy scandals and the Profumo affair, all in a seven-year period.

      To top it off, ludicrous and vicious sentences (later rescinded) were handed down to the Great Train Robbers, whose real offence (in the opinion of Bruce Reynolds) was making monkeys of the establishment – at a time when, as I see it, that establishment was already being battered by events.

  32. ‘making monkeys of the establishment’
    Go to this website and take a look.
    https://drgominak.com

    What this well-credentialed doctor seems to have figured out is how moving inside into the air conditioning and working in warehouses has made us all sick. It has to do (shock!!!) with sunshine and the microbiome. Even a poorly educated person should by now have a glimmer that Life with a capital L has a lot to do with commensal (co-operative, symbiotic) relationships. It turns out that the microbes in our guts make the B vitamins that our body needs in order to do the repairs to the cellular damage that life inflicts on us every day. The repairs are done while we are asleep. But the microbes can’t make Vitamin D…because, duh!, they don’t get any sunshine in there. So the symbiotic relationship is between the sun shining on human skin as we go about our work in the sunshine and make vitamin D which feeds the gut microbes who make the B vitamins which are essential for cell repair for everything from skin damage to brain function. ‘Civilization’ has destroyed this symbiotic relationship in an increasingly world-wide pattern.

    The good news is that a skillful doctor can lead a person to use the products of that same ‘civilization’ to restore the ancient relationships. But it isn’t quick, it isn’t self-evident, and it requires some dedication.

    How did the Establishment get it all so wrong??? Well, we begin with the absolute conviction that ‘civilization’ is a quantum leap ahead for humans. The notion that the ‘quantum leap’ has real costs never entered our fluffy little heads. The notion that taking B vitamins is a good idea only when our bodies are depleted is way to complicated a notion for most ‘controlled experiments’.

    IF anyone survives the coming debt debacle, and if we haven’t completely destroyed the natural world, then life after the Crash may be better than we anticipate simply because we will no longer be able to do ourselves as much damage. To beat the old Dead Horse, we need to think in Systems.

    Don Stewart

  33. This Thread needs some Coleridge.
    So Here it is.
    Work without Hope
    BY SAMUEL TAYLOR COLERIDGE
    Lines Composed 21st February 1825
    All Nature seems at work. Slugs leave their lair—
    The bees are stirring—birds are on the wing—
    And Winter slumbering in the open air,
    Wears on his smiling face a dream of Spring!
    And I the while, the sole unbusy thing,
    Nor honey make, nor pair, nor build, nor sing.

    Yet well I ken the banks where amaranths blow,
    Have traced the fount whence streams of nectar flow.
    Bloom, O ye amaranths! bloom for whom ye may,
    For me ye bloom not! Glide, rich streams, away!
    With lips unbrightened, wreathless brow, I stroll:
    And would you learn the spells that drowse my soul?
    Work without Hope draws nectar in a sieve,
    And Hope without an object cannot live.

  34. The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself.”But the problem is, you see, we haven’t been taught to feel that way. The myths underlying our culture and underlying our common sense have not taught us to feel identical with the universe, but only parts of it, only in it, only confronting it–aliens. And we are, I think, quite urgently in need of coming to feel that we ARE the eternal universe, each one of us. Otherwise, we’re going to go out of our heads.”
    Friedrich Nietzsche
    Watts.
    It vibrates in every thing
    and every not-thing,
    right off the tip of your nose.
    Can you be still and see it in the mountain?
    the pine tree?
    yourself?
    Don’t imagine that you’ll discover it
    by accumulating more knowledge.
    Knowledge creates doubt, and doubt
    makes you ravenous for more knowledge.
    You can’t get full eating this way.
    The wise person dines on something more subtle:
    He eats the understanding that the named was born
    from the unnamed,
    that all being flows from non- being,
    that the describable world emanates
    from an indescribable source.
    He finds this subtle truth inside his own self,
    and becomes completely content.
    So who can be still
    and watch the chess game of the world?
    The foolish are always making impulsive moves,
    but the wise know that victory and defeat
    are decided by something more subtle.
    They see that something perfect exists
    before any move is made.
    This subtle perfection deteriorates
    when artificial actions are taken, so be content
    not to disturb the peace.
    Remain quiet.
    Discover the harmony in your own being.
    Embrace it.
    If you can do this, you will gain everything,
    and the world will become healthy again.
    If you can’t, you will be lost in the shadows forever.”
    – Lao Tzu
    http://www.psychedelic-library.org/alchemy.htm

  35. Idiocracy, Carbon, It’s What Plants Crave! Why Catastrophists should get off the Brawndo.
    “But come the end of the oil age — the petro chemicals are going to stop…
    And there ain’t going to be any food.
    That is absolutely guaranteed.”
    Thomas Mathus, Resident Castatrophy Pornographer of the Surplus energy Blog.
    Thomas Malthus
    on June 20, 2018 at 9:49 am said: The Above as Quoted.
    http://letthemconfectsweeterlies.blogspot.com/2018/06/idiocracy-carbon-its-what-plants-crave.html

    • When is Finite World going to get another article up so I can escape from this rotting province of DelusiSTAN….

    • Malthus, The Laws of Thermo Dynamics are very important the First Law is Instructive.
      “In physics, the law of conservation of energy states that the total energy of an isolated system remains constant, it is said to be conserved over time.[1] This law means that energy can neither be created nor destroyed; rather, it can only be transformed from one form to another. For instance, chemical energy is converted to kinetic energy when a stick of dynamite explodes. If one adds up all the forms of energy that were released in the explosion, such as the kinetic energy of the pieces, as well as heat and sound, one will get the exact decrease of chemical energy in the combustion of the dynamite. Classically, conservation of energy was distinct from conservation of mass; however, special relativity showed that mass could be converted to energy and vice versa by E = mc2, and science now takes the view that mass–energy is conserved.”

      Nature works in Cycles and the Carbon Cycle is one such very important Natural Cycle, Understanding the parts we understand of these cycles can help to bring about the changes in our Farming and Industrial Practices to work in Cycles ourselves rather than employing Linear deterministic Thinking.

      One Can have many nuanced and Polarised discussions with respect to Boundary Conditions and the Starting States of our Systems modelling but these employments of the Scientific Method lead to better systems.

      If it ain’t broke do not fix it, If it is neither Broken or doing the intended job, what then? Design another one.

      SEEDS is a diagnostic Tool providing Heuristic Data for out systems of Political Economy. The Heuristics seem to point to the need for a slower burn of existing resources whilst other Technologies are improved and deployed.
      All of this is perfectly doable as described in Dr Mc Kays Excellent Book in Web Site Form here.

      https://www.withouthotair.com/

      No Doubt for those who prefer to engage in Intellectual Masturbation over Disaster Scenario Porn Dr McKays Insights and those of Technologists and scientists who Love The World and everything within and Upon it and who think these problems we face are worth Solving and can be solved will continue to Find the Solutions and learn more.
      Those who have given Up can indulge their FIddling in the congregations of cross eyed Porn Addicts which exist in yet another Abundance in Cyber Space.

  36. I’m staying out of this “end of the world, or not?” debate. It’s fascinating, but incapable of definitive answers, I suspect.

    All I can do is apply SEEDS to the economy and finance, and draw some broader inferences, such as politics. At a time like this – rushed off my feet – that’s more than enough for me!

    • Tim – don’t you think that by being ‘rushed of my feet’ that you’re not using the World’s dwindling energy supplies wisely? Take things a bit slower – save energy and relax 🙂

    • Thanks, an interesting point of view. In a thesis wrapped up in a novel, Anthony Price links up the Anglo-American position with events in Hungary in a way that is quite persuasive.

      I’m afraid I’m pretty sceptical about revisionist interpretations of history. To be sure, Neville Chamberlain deserves rehabilitation – he bought Britain vital time by appearing to fall for Hitler’s nonsense, but obviously couldn’t say so.

      But, for me, the Western front remains ‘Lions led by donkeys’, and, over Suez, Eden remains an idiot, not least because he waited until public opinion had turned against action before making his mind up. It also had very adverse effects on Britain’s relationship with France – as someone said, “the entente cordiale was buried somewhere between Mers el kebir and Suez” (Mers el kebir – Oran – being where Somerville, tragically but justifiably in my view, sank the French fleet to stop it falling into German hands).

      There are strange echoes of these issues now. For instance, should “Brexit” Britain stay closer to Europe or the US, at a time when capitalist philosophy is fracturing? Should the UK try to remain a global player, replacing Trident at a time when conventional defence is dangerously stretched?

    • Thanks Tim – painting rosier alternatives is always possible in hindsight. We’ll never know what might have happened unless we could travel back in time and change the timeline.

      Incidentally the very first time I heard ‘entente cordiale’ mentioned was by Peter Cook playing an upper class twit in the 1969 film ‘Monte Carlo or Bust’

      The question of the UK’s relationships needs is very complex. Perhaps someone will look back in 50 years time and say of the Conservative Government – ‘What a bunch of fools’ . But again hindsight is a wonderful thing.

      I’m currently listening to Gail Tverberg on YouTube – The coming energy depression.

    • Edmunde Burke Said This.

      “It is very rare indeed for men to be wrong in their feelings concerning public misconduct; as rare to be right in their speculation upon the cause of it. I have constantly observed that the generality of people are fifty years, at least, behindhand in their politics. There are but very few who are capable of comparing and digesting what passes before their eyes at different times and occasions, so as to form the whole into a distinct system. But in books everything is settled for them, without the exertion of any considerable diligence or sagacity. For which reason men are wise with but little reflection, and good with little self-denial, in the business of all times except their own. We are very uncorrupt and tolerably enlightened judges of the transactions of past ages; where no passions deceive, and where the whole train of circumstances, from the trifling cause to the tragical event, is set in an orderly series before us. Few are the partisans of departed tyranny; and to be a Whig on the business of a hundred years ago is very consistent with every advantage of present servility. This retrospective wisdom and historical patriotism are things of wonderful convenience, and serve admirably to reconcile the old quarrel between speculation and practice”.
      From These Present Discontents.

  37. @Thomas Malthus
    on June 20, 2018 at 9:43 pm said:
    “I had a quick scan … it puts me off when the first thing I see is a reference to man-made climate change… which is bull sh it….”

    My dear chap, positions of ignorance are stones which are perhaps left un-slug in glasshouses.
    We clearly have different positions regarding probabilities of future outcomes this is unsurprising as the future is Unknown to all of us(even great sages like you and I. 😉 ))
    Regarding Climate Change I am what is generally known as a Denier, I hold the position that the AGW hypothesis is Falsified not least by Henry’s Law but as a Believer in the electric Universe Hypothesis I also see the Drivers of Climate change Qua Climate Change Vis AGW hypothesis CO2 Climate Change as A much deeper process than just Earth geophysical phenomena.

    Here is an Outline for a Book I have been writing for my Children regarding Climatology.
    https://drive.google.com/file/d/0B6ZHfkDjveZzYXU3UHhLem1HQms/view

    http://www.rocketscientistsjournal.com/

    Regarding Tony Lovell’s presentation and the Three others from that same Independent Ted Conference, I think that what the Publisher Henry Morley said about his Publishing of Popes Essay on Man, is quite appropriate.

    ”The reader of Pope( Lovell or anyone else you do not agree with ), as of every author, is advised to begin by letting him say what he has to say, in his own manner to an open mind that seeks only to receive the impressions which the writer wishes to convey. First let the mind and spirit of the writer come into free, full contact with the mind and spirit of the reader, whose attitude at the first reading should be simply receptive. Such reading is the condition precedent to all true judgment of a writer’s work. All criticism that is not so grounded spreads as fog over a poet’s page. Read, reader, for yourself, without once pausing to remember what you have been told to think´´.
    Henry Morley.

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