#132: The revenge of the spider


If you’re a regular visitor to this site, you’ll know that we’ve covered a lot of themes, varying from the plight of individual economies to the madness of economic policy both before and – especially – since the 2008 global financial crisis (“GFC I”). You’ll probably know, too, that the expectation here is for “GFC II”, a far larger sequel to the events of 2008.

You might also know that the coming autumn sees the opening of a window in which this second crisis might take place (though, in their very nature, the timing of such events cannot be predicted). So the aim now, with autumn approaching, is to summarise how things stand.

Let’s start with the economy. Ever since the late 1990s there have been clear signs of deceleration in the pace at which underlying economic output has been growing. The interpretation put forward here is that this deceleration has been caused by an exponential uptrend in ECoE (the energy cost of energy). At least two other material headwinds can be identified – environmental stress, and mistaken economic policy – but a worsening in the energy equation has been the critical factor undercutting the potential for growth.

As modelled by SEEDS, these trends in energy have already put prosperity growth into reverse in the majority of Western economies, where prosperity per person generally peaked between 2000 and 2007. On this basis, the average Italian has become 12.3% poorer since 2001, the average American is 7.7% less prosperous now than he or she was back in 2005, and prosperity in the United Kingdom has fallen by 10.3% since 2003.

Where the West is concerned, the outlook is for more of the same. Mr Trump may or may not be able to “make America great again”, but neither he nor anybody else can ‘make Americans prosperous again’. Much the same, varying only in rapidity of deterioration, applies to virtually all developed economies.

In recent years, the Emerging Market economies (EMs) have become more prosperous, though sometimes at rates nowhere near claimed expansions in GDP per capita. According to SEEDS, this improvement in EM prosperity looks likely to continue, albeit at fading rates. In theory, this leaves global prosperity pretty flat, with progress in the EMs offsetting impoverishment in the West. In practice, though, EMs may not be able to carry on growing their prosperity at all in a world in which their Western trading partners are becoming poorer.

Unfortunately, policymakers have never understood the processes undermining prosperity. Worse still, any concept of coming to terms with deceleration is wholly unacceptable, not least because the financial system is predicated entirely on perpetual growth. Of course, you might think that basing anything on perpetual economic expansion in a finite world is pretty crazy – but whoever said that either politics or finance has to be limited by rationality?

A direct consequence of the collision between resource reality and a commitment to growth in perpetuity has been an attempt to ‘cheat’, using financial adventurism in an ultimately futile attempt to get around the ending of growth.

This has taken two main forms. The first, adopted in the years before GFC I, was “credit adventurism”, making credit cheaper, and easier to obtain, than ever before. Since GFC I, this has been compounded by “monetary adventurism”, which has involved pouring mind-boggling amounts of liquidity into the system.

To a certain extent, the latter was a consequence of the former. By 2008, “credit adventurism” had created debt of a magnitude that was impossible to service under “normal” monetary conditions. Barring “reset” – ruled out because of the short-term pain that it would have caused – the only way to cope with such gargantuan debts was to make them ultra-cheap both to service and to roll-over.

Just as there have been two forms of adventurism, there are two forms of crisis. “Credit adventurism” led naturally to a credit (debt) crisis, which was why banks were in the eye of the storm in 2008. “Monetary adventurism”, on the other hand, leads to a monetary crisis, which is why fiat currencies will be at risk in GFC II.

These forms of adventurism have succeeded in creating an illusion of growth, convincing enough so long as we wear blinkers where underlying fundamentals are concerned. World GDP increased by 35% in the seven years between 2000 and 2007, and by 31% in the decade between 2007 and 2017.

But the escalation in debt alone gives the lie to any claim that this “growth” has been genuine or sustainable. Between 2000 and 2007, growth of $25.5 trillion (at 2017 values) was accompanied by a $52tn increase in debt, meaning that just over $2 was borrowed for each $1 of “growth”. Since 2007, the ratio has worsened markedly, with “growth” of $29.8tn accompanied by $99tn in borrowing, a ratio of $3.30 of new debt for each growth dollar.

Escalating indebtedness has not been the only consequence of financial adventurism, of course. The crushing of returns on invested capital has created huge shortfalls against the amounts that we ought to have put aside for retirement, all but destroying the viability of pension provision for all but a wealthy minority. Monetary adventurism may not – yet, anyway – have created a spike in consumer inflation, but it has led directly to massive bubbles in asset prices.

Critically, the worsening ability of the economy to carry these excesses has been disguised by the phoney “growth” created by the simple spending of borrowed money. Everyone appreciates that an individual does not become more prosperous simply because he or she runs up an ever-bigger overdraft, and spends it. Unfortunately, observers – including policymakers – do seem to believe that economies can prosper by racking up ever bigger debts, and mortgaging the future, and then pushing the proceeds through consumption.

There are even those who believe that the inflated prices of stocks, bonds and property constitute “wealth”, even though the only people to whom such assets can be sold are the same people to whom they already belong.

If we strip away the simple spending of borrowed money, SEEDS calculates that claimed “growth” (of $55tn, or 76%) since 2000 falls to less than $21tn, with the remaining $34tn an illusion conjured out of adventurism. Meanwhile, the deterioration in trend ECoE, from 4.0% back in 2000 to almost 8% now, means that aggregate prosperity increased by just $16.4tn, or 24%, over the period as a whole.

Unfortunately, world population numbers expanded by 22% over the same period, so growth in average prosperity has been just 2.3%, over seventeen years. All and more of that increase has gone to the EMs, leaving the average Western citizen poorer.

What we are left with, then, is deteriorating Western prosperity, faltering underlying output in the world as a whole, unprecedented levels of debt, grotesquely inflated asset markets, and huge hostages to fortune, not least in the destruction of pension provision.

In simple mathematical terms, SEEDS estimates that “reset” in 2008 would have required ‘value destruction’ – a fall in the aggregate prices of assets – of the order of $84tn, equivalent to almost $100tn today. Of course, monetary adventurism was used to avoid reset in GFC I – carrying that value overhang forwards – and we’ve gone on adding to it, at steadily rising rates, ever since. SEEDS puts scope for value destruction today at over $400tn, which should be treated as a (very approximate) order of magnitude of the extent to which asset values have to fall.

This, of course, is ‘first order’ value destruction. If the prices of your shares, bonds and property fall, you still own them, and no money has actually flowed out of your bank account. The real problem is ‘second order’ value destruction, which is what happens when the value of your assets falls to a level lower than the sum you borrowed to acquire them.

Though the scale of the sums involved is almost impossible to calculate, we can conclude that the world will face vast ‘second order’ value destruction when GFC II happens.

We can be equally certain that, rather than accept the necessity of value destruction on a scale roughly four times larger than 2008, the authorities will resort again to adventurism, pouring liquidity into the economy at rates which dwarf anything experienced during and after GFC I. The strong likelihood has to be that adventurism on this scale will undermine the value of fiat currencies, destroying many whilst inflicting hyperinflation on those which survive.

The public, on the other hand, can hardly be expected to like getting ever poorer, especially whilst the distortion of the relationship between incomes and asset values seems to have made a minority wealthier whilst imposing austerity on everyone else. Whether, during GFC II, they will turn increasingly towards insurgent (“populist”) politicians, or opt instead for the collectivist offer of a Left made resurgent by popular adversity, is a second-order question. What we can anticipate, with high levels of confidence, is political and social change at least commensurate with the scale of economic and financial upheaval.

Those with long memories might remember a song for children called “there was an old lady who swallowed a fly”. After the fly, she swallowed a spider (“that wriggled and jiggled and tickled inside her”), the point being that she swallowed the spider in order to catch the fly. Thereafter, ever larger animals were ingested to catch the one swallowed previously – “she swallowed the bird to catch the spider”, and so on – finishing up with swallowing a horse (“she’s dead – of course”).

By this analogy, the system “swallowed a fly” in the years before 2008, then “swallowed a spider” during GFC I in an attempt to deal with it. In real life, swallowing a fly can happen to anyone, and swallowing a spider is at least feasible. Swallowing a bird, however, is not.

In this sense, GFC II is set to be the spider’s revenge.

321 thoughts on “#132: The revenge of the spider

  1. We’re getting into all sorts of fascinating areas here, so some general thoughts might help.

    First, I think the inevitability of GFC II is demonstrable. As an analogy, is the reaction going to be ‘chemical’ (requiring a catalyst), or ‘nuclear’ (triggered by critical mass)? We have a lot of potential catalysts, but such is the critical mass now that GFC II may not need one.

    The likeliest process is a crisis in one or more economies big enough to have global repercussions. Turkey by itself isn’t big enough, but EMs, collectively, are. A common EM problem is the impact of a rising dollar on USD-denominated debt. Mr Trump’s trade policy is part of this process.

    Individually, the big economies at greatest risk – according to SEEDS – are Britain and China. The UK economy is deteriorating rapidly, and “Brexit” complicates things, not so much because “Brexit” itself is necessarily good or bad, but because it is being mishandled by both sides. The UK economy isn’t all that big in global terms, but its distended financial sector is. If markets want to test (“attack”) one of the ‘big four’ traded currencies, GBP is the obvious candidate.

    This said, China constitutes the greatest risk. China has an absolute growth imperative. It’s been resorting increasingly to debt to keep on delivering. An attempt to convert debt to equity almost crashed the market. Recent attempts to rein-in debt growth were still-born, because of the trade conflict with America. This threatens the required continuity of the inflow of dollars. China has a serious looming problem with energy.

    Timing is necessarily conjectural. But it has long looked likely that enough financial and economic ‘fissionable material’ would be in place by the autumn of 2018.

    Given that ‘reset’ is no longer an affordable option – ‘value destruction’ would just be too costly now – flooding the system with liquidity looks the only game in town. That is bound to be inflationary, on a scale which poses a threat to fiat currencies.

    The incumbency probably can see this coming, or, at least, can see enough of it to get very worried. Reform remains just about possible, but that window of opportunity is closing fast.

    I’m sure we will examine some of these “what next?” themes here soon.

    • Hi Tim

      When you say that the “incumbency can see this is coming” this implies a passive role.

      I actually think you are right about flooding the system with liquidity and that ultimately resulting in inflation. Although the distributive consequences cannot be foreseen with any certainty can you think of a better way that would preserve the system and erode the huge debt burden? Debt would disappear and the great unwashed are fooled by the money illusion when inflation takes hold but the system survives.

      What i’m saying is that if I were a policy maker I’d look to engineer this and not just look at it passively.

    • Yes, Bob, but you’d need a plan for ‘what happens aterwards’ as well. I wouldn’t disagree if the incumbency believed that massive liquidity injection, with all of its consequences, was the only option.

      But where they’re wrong is if they think that this process will leave the status quo intact. If you’re about to open the kingston valves in the hull of the system, it is a good idea to have a lifeboat.

    • Just pick an arbitrarily ridiculous debt ratio and SEEDS tells us the fissionable material was there any number of years ago. And it has continued to become less stable, but the half-life remains remarkably high, because no crisis has occurred.

      Easy money, groupthink, moving goalposts et al can and will continue to paper over each other well beyond the existing absurd levels.
      Are there historical counterexamples to this proposition?

      I like the chemical/nuclear analogy.
      GFC II’s trigger and aftermath will only be chemical – much the same as we have seen before.
      “Nuclear” changes in human society cannot happen with, amongst other things, such political diversity.

      For example, could we imagine all the present leaders allowing scientists to take cooperative charge of energy resources to steer us through the coming crisis?
      Kind of like The Admirable Crichton. But that was only a play.

      I cannot see that anything except a shortage of physical energy (in particular, oil energy) will expose reality.
      “China has a serious looming problem with energy” is no small part of that.

      Earliest time: next summer.

    • Martyn – you could of course be right about next summer, and timing is, as I always say, conjectural.

      This said, we’re not necessarily going to get much prior warning – and these things do have a habit of happening in September-October. increasingly, I encounter “ordinary” (non-specialist) people asking me “is there going to be a crash?”

      Finally, I think the two likeliest venues for GFC II – China and the UK – could get into big trouble in a very short time.

    • Tim

      I agree with you but it’s not a case of assuming that such action will not change the status quo it’s a question of which is the least worst option given that you want to retain the status quo, or at least as much as you can.

    • All the materials are certainly in place, much as the great Continental armies which swung into action in 1914 were ready for orders in 1904.

      And, much as they fought to maintain Empires which crumbled as a result of the war (excepting France and Britain, who lived on borrowed time thereafter), so the solution most likely to be adopted in GFC II may well bring down the system we are so long accustomed to.

      I just wish that this August of 2018 in England were a little lovelier, before the financial guns begin to bark……

    • Thanks. That site also has an interesting article on attempts to discredit Jeremy Corbyn.

      Both topics are extremely serious, but what continues to surprise me is that the ‘corporatist-globalist-liberal’ elite actually seems to think it can win by such methods. These are the same groups, of course, who put the chances of Trump and “Brexit” at nil. In other words, they believe what they want to believe, just like Louis XVI.

      They seem not to understand public opinion, economics or history. Their only realistic alternative now is reform, meaning compromising with their opponents, yet this is hardly canvassed at all.

      Personally, and being largely non-political, I would prefer to see reform. Where Mr Corbyn is concerned, and as things stand, the governing Conservatives probably have more chance of winning the national lottery than the next election. I’m quite convinced that support for Mr Trump is growing, not shrinking, and that enough Democrats realise this such that, given a chance to re-run 2016, they wouldn’t choose Mrs Clinton.

      In Britain, there remains (just about) room for compromise, but deep sacrifices would be required by the incumbency to make this happen, which I cannot see happening. Between them, the government and the EU seem determined to create the worst possible “Brexit” outcome. Neither side seems to have any grasp of either economic or political reality.

    • Hi Tim

      Corbyn has blotted his copybook very severely in the row about anti semitism in general and “wreath laying” in particular. He has shown a spectacular degree of misjudgment together with world class performance as a liar and he will not find it easy to get out of this farrago without a huge dent to his credibility. In the past I believe he would have resigned already but these days of course the holds on power have to be pried away with a jack hammer.

      Two weeks ago I would have agreed with you; now I’m not nearly as sure.

    • Nobody could loathe anti-semitism more than I do. But:

      – To what extent is this bigged up by the anti-Corbyn element in the press (I don’t know the answer to that)

      – If so, will it backfire the same way as “project fear”?

      – What alternative is there, to Labour, or for Labour?

      The Conservatives’ only option now, I suspect, is to get rid of Mrs May in time to acclaim Boris at their conference.

    • Tim

      I don’t believe that Corbyn is antisemitic; like I do he distinguishes between antisemitism and anti Israel. I loathe antisemitism and have never been able to understand it but I do have considerable criticism of Israel in how it has treated the Palestinians. Unfortunately, many do not make the hard distinction and the dislike of Israel is the logical extension of their antisemitism. Corbyn’s record is against prejudice so I’m inclined to acquit but he has associated with many who are antisemitic.

      Will it backfire? The trouble is he seems to create trouble every time he opens his mouth so it may not.

      As to who is the alternative that is simple; it will be some other non entity who has no idea what is going on: let’s face it the HOC is full of those and we are spoilt for choice!

    • I think you may be right. But, when considering Mr Corbyn’s chances, it can be hard to cut through the thickets of ‘experts’ and the media. It’s also hard to get one’s head round what a total shambles the current government has become – and governments lose elections far more often than oppositions win them.

      I sometimes think about setting out a theoretical reform agenda for the UK, but, as soon as I start listing some essential components, a sense of futility descends. In any case, I fear that either GFC II, and/or a bungled “Brexit”, could be the knock-out blow.

      It is very depressing.

  2. Picking-up on Tim and Bob J’s points I share their view that in the event of GFII they will liquefy the system.
    Senior officials at the Bank of England have made it abundantly clear that low growth is the ‘new normal’. The preferred policy response is low interest rates along with ‘quantitative easing’ as and when required. As Tim has pointed out QE is a very addictive narcotic.
    Bob J’s assessment is certainly plausible, but I would like to add a rider if I may. I’m pretty sure that policy-makers are attempting to engineer a ‘soft’ default by way of inflation, although they could lose confidence of the markets very easily.
    One important factor here is whether the citizenry at large come to the view that price inflation was sufficiently damaging to their positions so as to give impetus to the idea of converting currency (soft money) into something or anything tangible (hard assets) as an imperative. I think what I’m trying to drive at here is the outside possibility that ordinary people will suffer a loss of confidence in the currency too, and a shift in perception of this sort would cause money velocity to accelerate and that could be the harbinger to hyperinflation. Moreover, technology would facilitate the process through ‘chatter’ on social media, and cash could readily converted into hard asset items using the internet at which point the authorities would probably step-in to curtail access to on-line bank accounts.
    I think history shows that policy-makers can pursue a policy of monetary debasement quite successfully providing debasement is gradual and punctuated by occasional crises of devaluation. The £UK is a case in point with the currency gradually losing purchasing power remorselessly with the occasional devaluation: 1967, 1976, 1992, 2016 etc. People at large are surprisingly accepting of such debasement and all the more so when policy is based on the asset-price route to riches using high house prices to make people feel ‘rich’.

    • Ultimately, though, when you can’t sell your house at the bubble price, the ‘feeling rich’ factor -which is dismayingly prevalent in Britain, I agree – will vanish.

      One of my old customers is trying to jump ship to Germany (partner from Franconia who wants to retire there, and he likes the people and their bibulous culture), prompted by an unsolicited offer from a lady in his rather nice market town – who now can’t attract any offers on her property. Dismay all round.

      Probably due to wide reporting of the housing market decline.

      This will accelerate.

      Houses here normally get offers in 2 weeks or less; I shall be fascinated to see what happens in September-November as more elderly residents die off d go into homes.

      Now, what happens to elderly ‘care’ (asset-stripping) funding when the housing bubble pops in Britain?!

    • My view is that there is neither ‘low growth’ nor a (stable) ‘new normal’, certainly where the UK is concerned.

      First, the UK economy is deteriorating – a SEEDS view, but backed up by a growing amount of evidence, statistical and observational.

      Second, this kind of ongoing deterioration cannot be stable, either financially or politically – it’s likelier to fall below some threshold of sustainability.

      Third, there are a lot of ‘crystalisation risks’ – house prices, the currency, and, of course, a “Brexit” process mishandled by both sides.

    • One of the big risks the UK will have to manage is social cohesion (or rather the lack of) between the asset holding class and the non-asset holding class which is generally split between old and young. Low interest rates clearly favour one group whilst impoverishing another – so far this hasn’t become a mainstream talking point (to my knowledge) but once hope turns to despair for the youth of the nation I’m not sure what central banks can do. Give away free houses? Who builds them? Persimmon? https://uk.trustpilot.com/review/www.persimmonhomes.com

    • @All is Dust

      The thing about the property market is that it should be self correcting – in time.

      Prices are so high that FTBs have been more or less choked off (BOMAD and HtB being excepting) so that, because there is always selling pressure due to death or emigration, demand gets choked off and prices should fall – in time.

      One huge caveat to this is immigration; if this keeps up then prices will keep up and there will be a continuing decline in owner occupiers.

      The other thing is “in time” and I doubt whether this will happen “in time” and that more unpleasant things will intervene.

    • @ Bob J

      Under normal circumstances I’d agree with you but we’re very far from the market being able to determine fair value for any asset class given the hocus pocus of the Central Banks. What was the value destruction that Dr. Morgan estimated? £400 trillion? It simply won’t be allowed to happen until the final days of empire, at which point it ceases to matter.

      Instead, I think we’ll see what I’m going to call ‘treadmill economics’. As soon as your feet stop moving you’re out of the game and onto the streets. I think setting the pace of the treadmill is the only game the Central Banks can play; the ideal pace being to impoverish a slow trickle of people without tipping the political system over.


    • I like the term ‘treadmill economics’, because it neatly describes what is happening.

      If you put together (a) deteriorating average prosperity, and (b) the inequality created by policies which benefit assets at the expense of income, what results is the gradual (but not slow) impoverishment of increasing numbers. Logically, impoverishment grows from the bottom up.

      This can be observed in the rising numbers who are ‘just about hanging on’, with employment getting ever less secure, and wage rates stagnating, whilst the cost of essentials keeps rising. Ironically, even those who think they’re doing well rely on paper or ‘notional’ asset values which, in the aggregate, simply cannot be realised. Much of my $400tn scope for value destruction simply involves asset prices correcting to levels consistent with economic reality. The real damage is then caused by debt left exposed by this process.

  3. As for the neo-liberal corporatist elite:

    Public opinion? Disdain, and seen as infinitely malleable – and can we blame them?

    Economics: pure ignorance.

    History: now, who on earth knows or cares about that, these days?

    As my financier chum said to me (we’d been discussing, of all subjects , the expansion of the Venetian mercantile empire – early into lunch!) ) looking around a packed London restaurant: ‘ They are utterly ignorant; and completely happy!’

    Much that same can be said for their opponents – it’s not a party political thing.

    The real Left, poor fools, are too busy jumping up and down shouting: ‘Marx was right! Marx was right!’

  4. Given the challenges of political will, the vested interests behind the Brexit diversion, and the apparent lack of intelligent, sensible and charismatic leaders for change; do we really have the brief window of time for reform as suggested by Dr Morgan? Interesting paper (amongst many) here from Tim Jackson, champion of reform to manage degrowth and new economic thinking. Have posted here because his latest research was notably commissioned by the MOD as part of their 2018 Strategy & Trends review (and considered by the all-party parliamentary group on Limits to Growth), good to know someone is taking it seriously https://www.cusp.ac.uk/themes/aetw/briefing-paper-no1/

  5. Quite: the Marxist are currently the least-bad horse in the ideological knacker’s yard – just for a time.

  6. Jackie thanks for the link to a sustainable future -excellent paper. My own view is that I hate seeing young people forced into low paid delivery jobs and horrible high pressure work in fast food chains.

    If I was in charge I’d kick Deliveroo – McDonald’s – KFC etc out of the country.The latter two I’d replace with healthy food outlets where staff are treated and paid decently.

    Regarding technology there are new breakthroughs heading our way – Quantum computing is one although it’s too early to say what sort of impact this may have.

    One thing were not going to have is intelligent human like robots walking around anytime soon. A robot doing a backflip is one thing but if it can’t pack shelves – sweep the floor – peel potatoes – be a stand in to listen to a nagging partner and fry a decent burger then it’s not much use. (Mr Flippy the burger fryer got ‘fired’ after one day ironically due to productivity problems – not sure if he/it is back at work yet – perhaps the robot union has stepped in)

    • And look surly and unwashed? ‘Subway’ should be on your list, Donald. Seems never to lack patrons though. 🙂

    • I think Subway is slightly better than the other two. I’ve not actually had a McDonalds or a KFC for over 5 years.(since I worked in the financial sector) With KFC they always dish out the cheap cuts – I think the only way to get a decent bit of breast is to go down on your knees and beg.

      Pity about your lamb – it’s by far my favourite meat – but I love pork too – especially they way they serve it in Dusseldorf.

    • And yet the very high quality lamb from our province, Navarre, can’t find enough buyers, and the shepherds and their flocks may disappear….

  7. Science; Seaweed; Economics
    I know this is a little off-topic for this blog. But the read is so compelling for me in a lot of different ways that I will mention the book:
    Seaweed Chronicles: A World at the Water’s Edge
    It’s written from the standpoint of Maine, but it applies equally well to other shores, particularly Ireland, which was part of Maine a very long time ago.

    The book looks at the extraordinarily complicated ecosystem which is the Gulf of Maine. From big events such as the warming and acidifying water to industrial harvesting of seaweed to the intricate dependence of life on the seaweed to invasive species. It also takes a look at the ability of ordinary people to make a living from the ocean, and the ability of some to globalize small businesses using more or less traditional methods of harvesting, and the intrusion of giant corporations intent only on money now. Not explicitly examined, but readable between the lines is the history of why subsistence homesteads are a vanishing species. It also takes a look at the mirage of ‘scientific studies’. The science of the interaction of hundreds of species, along with the physical changes, costs way too much money and takes way too long…so politicians point to the lack of peer-reviewed studies which conclusively prove that some corporation doing what it does will actually cause grievous damage to approve anything that seems like it will provide jobs in the short term. It may be worth noting that, while Maine people have shown themselves perfectly capable of destroying the resource that has provided their livelihood, at the present time they desperately need protection against Canadian corporations using destructive practices. Free-trade laws, of course, militate against the Maine people being able to do anything on their own behalf.

    Part of the defense against the Canadians is the question of whether the Crown Colony of Massachusetts laws from 1640 classify seaweed as ‘fish’ or ‘not fish’. If this is not evidence that our political and legal system is broken, I don’t know what would convince you.

    In short, this book looks at the historical destruction of the ocean that feeds many of us, the difficulty of understand and proving using science the exact relationships, and the status of current efforts to reverse the destruction. There are some victories. For example, the return of alewives to a river after the destruction of a dam. But the fin-fish (e.g., cod), which had the highest economic value, are simply gone.

    It is also sobering to note all the use of fossil fuels while working the oceans, and to think about the wrenching adjustments which would be required were fossil fuels to vanish.

    Don Stewart

    • I remember a film made in 1973 called Soylent Green (set in 2022) – here the two main protagonists find out that Governments had been lying and that the great oceans had died several years before and no longer produced plankton.

      It also features global warming with the start of a runaway greenhouse effect.

  8. Art Berman on Oil
    Tight oil has increased dramatically in the last 10 years in the US, enabling the reaching of a new high in production. Some will argue that tight oil has not shown that it can produce positive cash flow, but the oil did flow, and at a fairly reasonable price. However, all the tight oil plays in the US are now in decline, except for the Permian Basin, which is still increasing. Art Berman has this to say about the Bakken play in North Dakota:

    ‘Bakken-Three Forks water cut increased 3% & gas-oil ratio increased 8% in 1st 6 months of 2018 suggesting signs of early field depletion. ‘

    Art has also presented data indicating that most wells in the Permian are not profitable at current well-head prices (which are less than WTI prices).

    Which indicates to me that the relief that the US has given the oil markets will probably not last much longer….unless prices go dramatically higher…or investors get even more frantic in search of yield.

    Don Stewart

  9. I was in Germany this week and heard two things on the local radio that triggered me.
    “We should look at possibilities to help Turkey with its economic problems. They are a Nato member after all”

    And they talked about a second “Brexit” referendum?

    German souls massaged for further idiocy? They KNOW that its almost domino d-day and they will defend the status quo with ever rising dispair.

    Very well described by Gail Tverberg using:

    Remove one stick and the structure collapses.

    • Interesting.

      Self-interest as well as generosity could indeed make a case for helping Turkey – but how can this be done given the regime in Ankara?

      On “Brexit”, the problem with a second referendum is that the public have already decided. There may have been a time when British voters were persuadable by their “betters”, but that time has passed.

      There can be no doubt that the process is fraught with risk, but much of this results from inept negotiating and lack of preparation on both sides.

      The UK side has been complacent, both about public opinion and about the economy. The EU side has been arrogant and insular, choosing to ignore (a) the risk of “Brexit” to other EU economies, and (b) public opinion, not just in Britain but also in Europe. The EU stance has been ‘we hold all the high cards’ – and the UK side has failed to call them on this.

    • True. The beatings however will continue until moral improves 😉

      Interventions as far as the eye can see, from Zerohedge:

      Then, out of the blue Chinese A-shares surged just before 2am ET, with the Shanghai Composite spiking into the last hour of local trading and closing up 1.1% at session highs just below 2,700, an action that was closely reminiscent to countless “national team” interventions…

      … and sure enough, Bloomberg reported that it was China’s state-backed funds, or the so-called “national team”, that purchased blue-chip stocks last on Monday to support the A-share market,

      We’ll see what happens. Maybe when EM fx turns out nasty, or southern Europe with Turkey, the UK will hasten Brexit because the GBP won’t be the dirtiest shirt in those cases. Its difficult to understand major geopolitical moves before they happen.

    • Tim

      Have you heard of the National Centre for Social Research? They do what they say and for many years they have been carrying out surveys on British attitudes to the EU. For well over twenty years those surveys have shown consistently more than 50% (52% average between 1992-2015 rising to 65% in the immediate years before the vote)wanting to quit the EU or for it to be radically reformed. The evidence is there.

      Not only the above the EU themselves carried out surveys shortly before the vote and were optimistic (!) about the British economy but very pessimistic about the European economy; they thought it would not improve and that the EU did not have the tools to tackle the issues.

      All the talk about media manipulation and Leaver’s lies is nonsense. What is extraordinary is not that we voted “out” but that no one saw it coming, despite all the evidence.

    • By the way, look at the way they try to make Turkey a ‘family member’…

      A Nato member… after failed Turkey EU membership they try to push another joint venture down our throats. Mentioning Nato member made my ears almost bleed. Ridiculous. Mainstream poisoning is what it is; poison.

      Thank god there’s a few blogs still shining before that too, is ‘banned’, dear doc.

  10. The problem is, ‘the people’ did not vote for Brexit – the result was far too close, and it is quite impossible for Brexiters to say that they are in the majority.

    Brussels knows this, and this explains their stone-walling. Irresponsible, yes; but perfectly foreseeable.

    As I always say – and am rather disliked for it – to Basque nationalists: you need a clear and unshakeable majority to do anything like this, which will make any consequent pain politically and socially bearable.

    In the case of national independence, 90%+; for Brexit, 70% or so in favour would have shown Brussels that the Brits were not going to be pushed around, so better to make it as painless as possible for everyone concerned.

    Brexit failed there and then. A simple majority works well enough in local and national elections, when all can be reversed or conformed in a few years: not so in such grave matters of national policy.

    I am sure the Brits will enjoy reading the 82 ‘advice documents’ for Brexit soon to be issued by their wise and provident government: so stimulating for the winter fireside, evoking that 1940’s feeling of everything being in hand….. Will it be as amusing as the 1970’s advice to hide under a door and a blanket in order to survive nuclear war

    Who knows, that firm, guiding hand may well soon be that of Boris, who finds national politics as easy as a glib editorial in the Spectator, or a clever undergraduate essay at Oxford.

    God, what a shambles!

    Meanwhile, I am stocking up: I’m rather going to enjoy the winter in the woods here cutting up firewood, which should give me in total, about a five-year supply.

    And I’ll get some sling-shot practice in for the bunnies: my mother got bored with those as an evacuee during the war, maybe I will come to share those feelings

    • It is a shambles, on both sides.

      Part of the problem is that Britain has an odd concept of ‘democracy (Dmitri Orlov puts it rather more strongly in his book about collpse). Parties can win an absolute majority with 35% of votes cast, or get no seats at all with 12%. Even Labour’s 1945 landslide was just shy of 50%. The Lords, ludicrously, are nominated, and freedom of speech gets more restricted all the time.

      In this context, 50+% voting for something is meaningful, and deeply symbolic. Yet there isn’t even balance in government, since Mrs May has now purged her cabinet of almost all Brexiteers.

    • Mrs May has purged all Brexiteers from her cabinet….

      Up next; we excluded the £ from FX markets.

      The purity of the exponential function, in all its beauty.

  11. FYI
    Place: NYC Seminar & Conference Center, 71 West 23rd Street, Suite 515, NYC

    Join me (JHK), David Stockman, Chris Martenson & Adam Taggart in New York City for an intimate 6-hour discussion primarily focused on our forecasts for the Economy and the financial markets, with special emphasis on the biggest threats that could trigger a major correction, as well as the key crash indicators we’re all watching most closely. We’ll also explore the many growing Energy, Environmental and Social Disorder risks in today’s world — as well as provide ample time to address your most burning questions.

    Register: https://ppsummitnyc.brownpapertickets.com

    I can’t imagine a less enjoyable way to spend 6 hours than with this bunch of doomers…but it might be therapeutic. I doubt that any ‘inside the Beltway’ people will be in attendance. (A little tongue in cheek)

    Don Stewart

  12. Thanks Dr Tim for another thought-provoking article and absorbing comments section. I just finished re-reading Herman Daly’s ‘Ecological Economics’ and rather like his wry, rhetorical question that as there is an estimated 25,000 man hours of labour in a barrel of oil, and humanity uses in the order 90 million barrels per day, how much of our current lifestyle is due to the magic of the market and how much to the magic of FF?
    So, as we rush headlong into the end-days of FF-powered capitalism, Daly suggests 10 policies for achieving a Steady State Economy.
    1. A system of rationing [Cap/Auction/Trade] for basic, non-renewable, natural resources.
    2. Ecological based tax reform. Tax labour and income less, and tax resource extraction and use more.
    3. Limit the range of inequality in income distribution. Define ‘enough’?
    4. Free up the length of the working day/week/year. More part-time working and job sharing etc.
    5. Re-regulate international commerce, as per Ricardo’s original ‘comparative advantage’ thesis, don’t allow the free movement of financial capital between borders.
    6. Downgrade the WTO, the IMF and World Bank in favour of a multi-lateral payments clearing union. He was chief economist at the World Bank [but only for a while…]
    7. Move away from Fractional Reserve banking to a system of 100% reserve requirements. An end to compounding interest-bearing money would be good too.
    8. Stop treating the scarce as if it were non-scarce [e.g. FF], and the non-scarce as if it were scarce [e.g. knowledge, information].
    9. Stabilise the population. At the nation-state level.
    10. Reform national accounts. Separate GDP into a ‘cost account’ and a ‘benefit account’ and not adding them all together. So, when you use your natural resources, don’t only show the benefit of using them, also show the corresponding reduction in natural capital stock.
    Some interesting points raised, although very little chance that politicians and large businesses would elect to follow this course of action. It may be an option when BAU finally draws to a close and change is forced upon us, depending on the extent of FF depletion. More likely, I fear, is either total thermodynamic collapse, or a [painful] return to agricultural feudalism.


    • Thanks. Some of this, indeed most of it, makes a great deal of sense, but getting any of it adopted looks wildly implausible.

      There’s quite a lot I would add to it, too, including redressing the balance between capital and income, and changing attitudes in more ethical and less materialistic directions. After all, if – as I am convinced – prosperity has ceased growing globally, and is already declining in the West, we are going to need radically different aspirations.

      The task now, for somebody, might be to design a programme which, whilst far from ideal, can be ‘sold’ to decision-makers as ‘less bad’ than what they face otherwise. On the other side of the equation, “populists” tend to be strong on what they (and voters) dislike, but much weaker on what to do instead.

      We’re in an odd situation, ideologically. Communist collectivism failed in the USSR, and the current version of ‘capitalism’ has become discredited since GFC I. So there is a huge vaccuum where ideas ought to be.

      Equally oddly, there seems to be a lack of interest in this.

    • The problem with all this is that, as you say, these programmes will never be adopted; there are far too many vested interests which do not want a change to the status quo.

      As I see it the only way they would be adopted is if some catastrophe occurred (natural disaster), or even war, which meant that BAU was simply not an option and was something that people could rally round (the “Dunkirk” spirit).

      Internal collapse would probably not be suitable as there would most likely be continuing internal conflict.

    • Indeed so.

      I’m pondering the possibility that one government does recognise the reality, or at least the part of it that says that we’re in a zero-sum game, so one country can only prosper at the expense of others.

      If a government did think this, it would pursue tough trade policies; set its sights on taking down globalising corporates; and aim to restrict the flow of capital and labour. (I’m sure you know who I have in mind here). If it does stack up, it could be an interesting discussion.

  13. Something that doesn’t seem to have sunk in regarding ‘Brexit’ is the fundamental conflict between ‘systems’. The quote the seasoned investment commentator, Russell Taylor: –

    “…The EU was a political act, thought up during the war by Monnet and Schuman, to bring together old enemies for future security and strength. As such, the EU is not a negotiating body – but a legal treaty. So the EU is a legal construct, based on Roman law, or the judgements of emperors given over the many centuries of the empire’s existence. These were codified by emperor Justinian in the mid 500s AD, then adopted by the Catholic Church as the basis of ecclesiastical and lay law, and finally updated and forced on all continental European countries by Napoleon.

    But the British mindset is very different. Based on Anglo-Saxon family law, common law practice is rather more flexible than Roman law or the Napoleonic code. The differences are summed up in a phrase once popular among bankers: on the continent, what is not allowed is forbidden, while in London, what is not forbidden is allowed.”

    Hence the impasse?

    • @Mark Meldon

      If you read the preamble to the Treaty of Rome in mentions that the peoples of Europe “desirous of an ever closer union…” would enact the (fundamentally) trade treaty.

      I think this was an organic concept which saw the peoples growing together by trade and would take a considerable time; it was a natural process of contact.

      The EU is much different as it sees a union of states, not peoples, and is a project to be pursued not developed organically.

      I think your point is valid in view of what the EU has become; it would not matter nearly as much if we had stuck to the original conception.

    • All I would add to this is that the EU has never really bought into the ‘Anglo-American economic model’ (aka “neoliberalism”), with its minimalist stance on regulation. We discussed this here a year ago, with the focus on the schism within ‘capitalism’ between this and the regulatorily proactive EU version.

      I suspect that Mr Trump is in the process of repudiating the model, leaving the UK as almost the only major economy still adhering to it.

    • I listened to an interesting lecture/debate with Jonathan Haidt and Nick Clegg entitled “The rise of populism and the backlash against the elite” on YT recently. Clegg argued that for Europeans there is a visceral attachment to the conception of a European union – something to be immensely proud of irrespective of its obvious flaws. However, the UK has always taken a more pragmatic, transactional approach to membership, which seems entirely consistent with Michael Sandel’s description of the Anglosphere as not so much as having a market economy as being a market society.

      Clegg also had something interesting to say about immigration. From his time in office (before the mass displacement of populations in Syria and Libya) he remembers European colleagues being puzzled by the UK attitude to immigration. On the continent, the politicians recognised the concerns of their electorate to immigration from OUTSIDE the EU, whilst the UK population seemed more concerned about immigration from INSIDE the EU, one of the most culturally homogenous areas in the world.


    • Interesting. I’ve never, personally, heard anyone in Britain raise the slightest objection to immigrants from Western European countries. I’ve heard objections to immigration from eastern EU countries (and equally to immigrants from the US). The British seem not particularly racist to me, but they do seem pretty hostile to immigrants who are Muslims.

    • “Clegg also had something interesting to say about immigration. From his time in office (before the mass displacement of populations in Syria and Libya) he remembers European colleagues being puzzled by the UK attitude to immigration. On the continent, the politicians recognised the concerns of their electorate to immigration from OUTSIDE the EU, whilst the UK population seemed more concerned about immigration from INSIDE the EU, one of the most culturally homogenous areas in the world.”

      That’s because Nick Clegg doesn’t understand what happens when you mix Freedom of Movement with a non-contribution based welfare state.

  14. Most interesting, but Clegg is off the mark there for Spain at least (remarkable as he has a Spanish wife -maybe they don’t talk much?).

    In Spain, the EU represents: to the wealthy, an opportunity to make even more money (the prime reason the dictatorship was dropped by those within Francoism) and a stable currency; to those who suffered under the Dictatorship, and are unhappy with the very imperfect nature of the ‘Transition’, it represents a court of appeal beyond the politically corrupt courts of Spain itself; and for Catalan and Basque nationalists – although so rudely rebuffed by Junker – a hope for a European identity rather than a Spanish one.

    All very pragmatic reasons for being ‘European’ in that half-African, partly-Arabised, land.

    Really, he does spout nonsense.

    I suspect that the Germans are the only really idealistic Europeans, in a woolly sort of way – may be quite wrong in that?

    • Clegg talks about the visceral desire for union in the context of WW11 when there was an imperative to avoid war. But what does “union” mean? You can have a union via the mechanism seen in the Treaty of Rome: trade and the union is of peoples, a natural process which will achieve the same thing ie a disinclination for war. This is not what you have with the EU which not only proactively pursues a union of “states” but introduced the Euro to force this with catastrophic results.

      With regard to immigration he is obviously disdainful of the position taken by many that we need to control this, especially from the EU. But if you ask a simple question: should a nation state be concerned about the absolute level of the population and the rate of increase, you would surely answer “yes” as this is a pretty basic issue. Now it may be easier with immigrants from the EU but that doesn’t mean there are no issues. With the EU there is not only lack of concern about intra EU movement (it’s part of the single market) but the same goes for outsiders. What I fail to understand with intra EU movement is that it not only impacts the host country but also the home country. Can the Polish be completely indifferent when so many of their young people go abroad and drain that country of skills?

    • I’ve never rated Clegg, and David Cameron rang rings round him, such that all of the voter backlash against the coalition was visited on the Lib Dems, not the Conservatives.

      The most pro-EU people seem to me to be in Belgium, Holland and Luxembourg.

      We have to be very careful of definitions, though – being ‘European and proud of it’ (as I am) doesn’t have to mean liking the EU.

  15. Returning to Trump: is he merely a narcissistic loose cannon, or merely the front-man for a clique within the US establishment which realises that neo-liberalism is rapidly crumbling, and that a zero-sum game – as our host puts it – is developing globally?

    Are they using him to shake things up, to the advantage of the US, to be ‘last man standing’?

    I believe we can just about discern, dimly, different factions within the military and intelligence communities in the US,and maybe within the business community as well.

    • The general tendency to regard Mr Trump as an idiot may be, not only wide of the mark, but one of his greatest assets. Support for him seems to be growing, not least among demographic groups assumed by the Democrats to be totally ant-Trump.

      Ronald Reagan, amongst others, was considered to be an idiot by his (defeated) opponents.

  16. I highly recommend reading Dmitry Orlov’s essay today: The Suicidal Empire.

    Since it may be behind a paywall, I will summarize. The US is thrashing about ineffectually trying to preserve its status as the global hegemon (including universal use of the dollar). But a sudden collapse of the US would likely bring enormous chaos to the world, with warring states and a huge reduction in standard of living. So the rest of the world needs to work out ways to organize themselves, while bleeding the US (and maybe the EU).

    Ask yourself exactly why the US Congress cannot think of sanctions punitive enough to lay on Russia? And the obvious answer is that almost every Congressman understands, but does not say, that the loss of the dollar as the reserve currency would be catastrophic to the US standard of living, and would likely result in Congressman decorating the limbs of oak trees. When John Kerry was Obama’s Secretary of State, the Republicans were talking about shutting down the government. Kerry said ‘don’t they understand the reserve currency issue?’. My theory is that some little old lady or man who has been in Washington for a long time is assigned to explain the math to every junior elected official. And so, because they all understand the cold mathematics, any country such as Iran, Libya, or Russia which is trying to de-dollarize will be demonized.

    As for Orlov’s statements about the value of an Empire (limits to violence and flourishing trade), Putin said pretty much the same thing several years ago….’we need a global leader, but the global leader needs to be intelligent’.

    Trump, I think, either now dimly understand the monetary situation, or has people close to him and who are clever enough to steer him, who understand it. For example, consider the fires in California and other places in the West. Trump initially understood the problem as ‘California is sending water into the ocean that they should be using for putting out the fires’…and sent out some embarrassing tweets. The person who had put the bug in his ear was a congressman from California who supports some water infrastructure which would supply more irrigation water for the Central Valley….which has nothing to do with fires. Then the California Dept of Tourism sent out an emergency message that all the tourists should come back to California, because the fires are all on National Forest land, and there are few tourist spots in those forests anyway. So it wasn’t about water for fires, and the fires are not on State of California controlled land…so which level of government has been found wanting??? But never let a debacle go to waste. Now the plan is to monetize the forests…sell the timber so that it can’t burn. such an action will likely restore the situation of the Forest Service of 40 or 50 years ago…providing lumber rather than all this ‘land of many uses’ nonsense.

    In my estimation, the demise of an Empire is the most dangerous time for humanity…particularly with the existence of enough nuclear weapons to wipe us all out.

    Don Stewart

  17. Addendum
    Max and Stacy were discussing the ‘end of empire’. Stacy commented that she spent a lot of time living in Europe during the ‘end of empire’, and people who thought they couldn’t live without the empire found themselves a lot better off without the empire. The empire was costing more than it was worth to maintain. Whether the same is true of the US is a good question.

    Don Stewart

    • It seems to me that, when they had an Empire, the British saw it as a duty rather than as a source of profit. Famously, Kipling wrote a poem about it. People may scoff now about this sense of duty, but the less cynical Britain of Empire times believed overwhelmingly in duty as part of Christianity.

  18. Dr. Morgan
    I saw monuments in southern France, erected by the Romans, extolling the Pax Romana. I think there was some sincerity in it, but the sincerity did not stop barbarity, as in the treatment of the leader of the Franks.

    In terms of Orlov’s comments about the delicacy of putting together a new order, it is worthwhile taking a look at Adrian Bejan’s modeling of flows. Flows are naturally hierarchic. That is, there are a few or one central conduits, with considerably fewer large conduits, and considerably fewer than that minor conduits, and a whole lot of seepage. Almost any system that Bejan and his compatriots have studied evolves in that direction…from the vascular systems in the body to highways to college basketball. If the US fails catastrophically, there is no other country ready and willing to assume its place. Some people speak of China, but I think your SEEDS data indicates otherwise. Russia has a stable financial situation, but is far too small and not diversified enough. Britain isn’t fit to ‘rule the waves’ according to your data. So that leaves the prospect that Dmitry identifies of ‘warring states’.

    Don Stewart

    • Indeed so, but I’ve yet to be convinced about catastrophic failure in the US.

      If you look at SEEDS conclusions, however surprising they may seem initially, they tend to make sense if you look at situations objectively.

      Pertinent examples now:

      – The Chinese economy is built on escalating debt, compounded by an energy challenge

      – The British economy is crumbling

    • Orlov well worth reading: amusing – as ever – with some very sound points (quite right about the disintegration of empires being great danger points) and much to be taken with a pinch of salt.

      He is all too obvious a partisan Russian propagandist these days: and quite right too – we all have to sing for our supper in some way and he has chosen Russia as the refuge for his family.

      Interesting omissions, too: he ignores – in that essay – the global ecological catastrophe which is unfolding – unevenly, but remorselessly,and which will surely sweep away all our petty human projects and delusions. Quite as menacing to Russia as anywhere else, although mitigated perhaps by the huge area it coves.

      And quite wrong about others: ‘corruption and decadence’ occur at the start of empires as much as at the end: the early Caliphate plunged right into deep corruption and pleasure-seeking,and I don’t think we can call the British Empire decadent at the end – look how well and bravely they all fought, even the lounge lizards from Eton (oh, but that brings Boris to mind – now, there IS decadence!), and those often very rich fighter pilots from the pre-war flying clubs, what men they were!

      There is always the shadow of the old Soviet mockery of ‘decadent Capitalism’ hanging over Orlov’s writing same old theme. Which, of course, was also the Fascist and Nazi commonplace. He would have been a Commissar in the old days.

      On the theme of Russia, I can recommend reading at least one of the memoirs which are readily available on the Revolution and life in early Bolshevik Russia -very illuminating about human nature and living in times of deep deprivation, uncertainty, violence and stress. Ditto anything on bombed-out Germany immediately post-war – a bit harder to find.

      If things really go wrong, all one will think about, stumbling among the ruins, is where to get the next sack of potatoes, or loaf of bread.

  19. Yes, it’s not an ignoble tale by any means.

    One only has to look at the efforts of British colonial administrators and soldiers in the less glamorous posts to bring order to tribal anarchy and raiding – and they certainly didn’t get rich! In fact, the officers were so badly paid that if they didn’t have some private means, their lives were rather threadbare.

    And yet, these days, it’s fashionable to mock and say the Empire was no better than the Third Reich!

    • It seems to be human nature to rewrite the past to vindicate situations in the present.

      For instance, there exists film footage of the 1937 Coronation Review of the Fleet – the new King inspecting 8 battleships, 2 battlecruisers, 5 carriers, 60 cruisers……compared to that, what is Britain’s world standing now?

    • It is very difficult to compare military solutions today to the past. So I would not use the UK’s lower ‘platform’ quantities as an indicator of a reduction in military capability/power.

      No doubt we have less ‘visible presence’ today which you could argue is a drop in political/geopolitical influencing capability.

      However, we have to take into account that a modern naval platform can track and engage multiple targets simultaneously over the horizon at a lower level of risk than historical platforms. Due to missiles combined with modern targeting technologies and defences systems. Making it more effective in specific tasks than multiple historical platforms.

      Even on patrol a modern frigate extends it’s effective coverage with merlin or naval lynx 2 helicopters. So could be equivalent to multiple historical patrol vessels.

      But we also have to take in to account ‘Relative Capability’ of the UK’s potential adversaries forces. They have modernised too in similar ways.

      Really tricky this sort of comparison.

    • Indeed so, and today’s capital ship is the SSN.

      I was thinking, rather, of the symbolism, and of presence and reach in relation to contemporary rivals. Even as recently as the 1970s, the RN still had about 60 destroyers and frigates, constituting a global presence. We’ve never really found a successor to the Type 12s – effective, balanced, affordable in serious numbers (there were 41 of them, commissioned between 1956 and 1973), and an export success.

    • It’s a pity that the design team who worked on the T12 didn’t work on the disaster that is the Type-45 . It’s turning onto a real Heath Robinson with all its retrofits to keep it going.

    • Agreed – it’s like favouring Austin Morris and ending up with a fleet of Morris Marinas instead of Volkswagen Golfs.

      If you think about the dreadful range of cars our home manufacturers produced in the 1970’s – mostly poor handling – poorly built rust buckets and compare them to those produced by our European friends.

      My first car was a 1982 Mini Metro 1.0L . It looked quite pretty but the drivers side door had a ‘slight’ rust issue. My second was another Metro (financial constraints) 1.1L – the engine seals went and then the gearbox played up (use of cheap plastic ball bearings).

      I finally saw the light and borrowed to buy a Citroen AX in 1988. Comfortable – an economical buzzy petrol engine and its handling was a gas.

      An extract from Wiki

      ‘In 1989, a naturally aspirated diesel AX, using the 1360 cc all aluminium alloy TUD engine, managed a figure of 2.7 litres per 100 kilometres (100 mpg‑imp), totalling over 1,000 miles (1,609 km) from Dover to Barcelona’

      Perhaps it’s the super economical car of the future we’ve all been waiting for.

    • Back in the late 1920s there was a car capable of 100mph (a lot, then, and enough now) that did 100mpg.

      To put things in context, just look at the technology in a Smart – even base-level models from 10 years and more ago were more advanced than most new cars today.

      Less surprising, perhaps, if one remembers that Smart are Mercs. This said, on one occasion I had a Smart Fortwo as a courtesy car (it was great), but on another I had a Merc A-class (the ultimate cure for insomnia).

    • I found Lions, Donkeys and Dinosaurs by Lt Cdr Lewis Page RN (retd) an interesting read. Amongst other things he argues that naval surface warfare is an obsolescent concept.

    • Kevin

      I’m sure you’re right but the flip side is vulnerability; you have to knock out only a few assets to disable your opponent. In terms of national defence I’d rather have 100 vessels than 10 of equivalent capability as the risk is far less.

    • Tim, regarding your point about procurement from overseas. I used to work in a team that tackled the optimisation problem ‘Military Bang For Buck’. When we were ‘allowed’ to explore alternative/foreign procurements there seemed to be savings to be had and hence more total platforms could be acquired. Just as you suggest. For example when we allowed the programs to consider the US Super Hornet as an option for a multi-role fighter the programs told us to buy them rather than F-35 or convert Typhoon to multi-role. We are buying a proven platform and don’t have to absorb all the development costs.

      However once wider UK economic, political factors are considered MoD usually end up procuring from the usual primes (e.g. BAE).

      The defence budget often seems to used as an extension of the welfare budget for specific communities and industries. I don’t have a view on whether this is right or wrong.

      Bob J – It might seem like you want more numbers to deal with attrition, but you don’t have that option today. To be survivable in modern warfare a warship needs a whole host of defense systems, including point missile defense, helicopter patrol, and stand-off ability (i.e. Ability to fire missiles over the horizon and not expose yourself to a threat). Unfortunately, this results in having a more expensive ship and hence a smaller fleet.

      A single modern warship can perform area denial more effectively and at lower risk than a fleet a few decades ago. It really is something.

    • Even Russia has procured warships from overseas, and was, until the Ukraine issue, negotiating with yards in France and Spain. I believe Australia’s new carrier is a Spanish design. No major British type has won export orders for a long time, even from ‘traditional’ customers such as Australia, Canada, NZ or India.

      A modern frigate needs a hangar large enough for a Merlin, or at least for one/two Lynx/Wildcats. She needs a point defence missile system, but these are quite compact nowadays, CIWS is useful, and SSM is highly desirable. Despite helo sonar capacity, she needs hull-mounted sonar and perhaps towed array. For a destroyer, area defence missiles are vital, but SSM is not.

      I cannot really see why either type can’t be accomplished on a hull of, say, 4000 tonnes, especially as we’re not contemplating an AEGIS-type capability. This makes me wonder quite why T45 is so big and so expensive. As for the carriers, we simply don’t have the escorts – we have only 17 operable, and only 1 in 3 can be on task at any given time. As somebody once explained to me, a CV without an escort force is “just a big biscuit-tin full of petrol”.

    • One of the factors that is considered in UK defence procurement is the need to maintain a UK based ‘sovereign’ capability in design, production and through-life.

      Another factor for why industry has UK government over a barrel.

      ‘Let’s not produce something good enough to compete for global market share, but just enough to allow HMG to justify to the scrutineers the extortion sums they are giving us…

      …if we cock-it-up we’ll always get more money out of them for the “mid-life-upgrade” that the platform needs to realise its potential.’

  20. Couple if interesting paragraphs from The Telegraph written by Jeremy Warner about stock prices.

    ‘ At the turn of the century, the value of listed stocks worldwide was about the same as global GDP. Today it is three times as big. Even assuming that the share of corporate profit in GDP continues to grow – and by implication, that labour’s share falls further – this stretches credulity’
    (Ponts to Tim’s over valuation of assets)

    ‘The flash crashes of 2010 and 2015, were, I suspect, only harbingers of worse to come. Nobody can tell you when the next big train wreck might be, but that it is coming is not in doubt’

  21. @Xabier
    Dmitry has used a lot of ink over the years talking about the ecological disaster. In the years when he ran a publishing business he sought out and published authors who wrote about homesteading. One of his favorite authors that he published wrote a book about the necessity to have an integrated animal/crop system producing most of what the family needs and using animal traction, and be ‘total family’ based….that is, a traditional family farm. Dmitry wrote a long essay about how to establish a homestead in Siberia, and survive the first winter (which is a big challenge).

    In terms of the end of the age of oil, I believe he agrees with Putin that the industrial societies should be converting transportation from oil to natural gas as rapidly as possible. Putin describes electric vehicles as ‘using coal inefficiently and with high pollution to move vehicles’. I imagine Dmitry agrees with that assessment.

    In terms of ‘decadence’, I think Dmitry was disappointed that his final book, about the Technosphere, met incomprehension. (I was present in a reading, where he had to confront the incomprehension.) He thinks that American society is living in a techno-illusion. Will everyone be taking selfies as they starve to death? Now that he has had some time living in Russia again, does he have the same assessment of the Russians? I don’t know.

    It is clear that he admires Putin. But he also thinks that Putin is a thin veneer of sanity on a dysfunctional government. Dmitry says that Putin’s plan to reform the Russian governance has just six years to work…if a successor to Putin doesn’t emerge in the next six years, all bets are off.

    I don’t know where he gets his data on Afghanistan…one certainly doesn’t see it in the mainstream media in the US…but that’s not surprising. When the US commander in Afghanistan recently volunteered that peace negotiations with the Taliban were a good idea, he was forced to walk that statement back pretty quickly. Which leads me to believe that Dmitry’s assessment of Afghanistan may be fairly accurate.

    Albert Bates, the Tennessee Permaculturist, was in Estonia recently teaching. After Estonia, he did some touristy things in St. Petersburg. He tweeted a picture of people walking down a street in St. Petersburg and said ‘have a good look at our enemy’ (the Russians are official ‘enemies’ of the United States, again, after a couple of decades hiatus). This set off a storm of comments. People said that, ‘No! These people are not our enemies. It is Vladimir Putin who is our enemy.’ Well…Putin won re-election handily, and got over 90 percent of the vote in Crimea. So a whole lot of Americans have cognitive dissonance.

    Don Stewart

    • Oh, I just thought that some of his generalisations in that essay were defective – I’ve read the earlier stuff, and there is much of value in it.

      As a writer, he is declining into (richly merited) satire and anti-West rhetoric; and for a European, one can see the shadow of the USSR in his writing.

      And he is, too obviously, singing for his supper these days (for which, the world being as it is, I do not reproach him – but it ain’t historical).

      That America is now sunk in decadence, who can doubt? I would say Britain too: many of the working class – from my observations in this village – want SUV’s and holidays in the sun, not Victory gardens. They park their SUV’s on the gardens!

      There was an energy about the British up to 1914 which I don’t see now.

      And – ye gods! – are they FAT! Shared Anglo-US decadence?

      Russians in their early 30’s will most likely not be taken in by Techno-Utopia, as they will remember digging for potato crops when children, like my Russian friends.

      Personally, I haven’t taken Orlov too seriously since he shamelessly begged online for money to repair his boat, because he had neglected to maintain the engine properly……

      It seems both the Russians and the Chinese have worked out that solar is not the way to survive. They might have a word with the EU ‘Project Stardust ‘ people? Model towns based on solar panels……

    • Prosperity can be as addictive and as habitual as many other things. We have become (a) habituated to growth, and (b) accustomed to thinking that rising prosperity will take care of our mistakes.

      Incidentally, have you heard about posters, placed all over Barcelona, urging British tourists to jump off balconies?

    • There was a mention of brish obesity recently on television. They looked a photograph taken on Brighton beach in 1976 – and there were very few fat people compared to today.

      It’s basically how our diet has changed over the last 40 years as well as US corn syrup invading many things.

      Our switch to fast unhealthy foods is costing the NHS billions in diabetes – back problems – knee problems – heat attacks and strokes etc.

      Having watched a program on good carbohydrates I was shocked to see how many healthy foods are the opposite. A baked potato for example contains 19 cubes of sugar – doble that of a can of coke.

      I now have a list of healthy foods that I’m going to concentrate on.

  22. Dr. Morgan
    I found this article provocative:

    The approach is to look at the Fat Tails, the catastrophic possible outcomes…rather than watered down ‘consensus’ views. The thought occurred to me that one could apply the same approach to your SEEDS work. For example: the bubbles all pop and the economy NEVER RECOVERS its ability to turn debt into productive capacity. If one assigns a probability of decline and then recovery in the financial markets of 90 percent, with a ‘pain’ index of 1 point, that give 0.9 pain index. But if the ‘never recover’ probability is 10 percent, with a pain index of 100, then that gives a probable pain index of 90. It is clear that the Fat Tail, while not the most probable, should be the focus of attention.

    Steve St. Angelo did something similar in his recent interview with Jim Kunstler (except that he thinks his predictions are not Fat Tails but are instead ‘most likely’). Steve predicts a 50 percent decline in US oil production over the next few years. (Giving Steve’s prediction some credence is Art Berman’s recent tweet that vehicle miles traveled and gasoline consumption in the US have fallen in recent years, as gasoline prices have increased…showing that there is indeed price elasticity and 200 dollar oil may just be a pipe dream).

    Don Stewart

    • I’ll have to write about oil prices here sometime. Shales have transformed the scene, but not permanently, because underlying economics are crippled by depletion rates, making shales’ free cash flows negative. There is much talk about ‘peak demand’ (rather than supply) – but consumption keeps growing.

      SEEDS, of course, is designed to handle the interface between energy and money – so it’s interesting that so much of the consensus around both is so delusional.

  23. Kevin’s comments are illuminating: I’d that suggest the university budget is also used as a disguised regional welfare and stimulus programme.

    One major business HQ, some government offices and a college or university of some sort and a town just about survives.

  24. Extracts from New Scientist highlights the true scale of maintaining existing infrastructure.

    if we face even more serious funding problems in the future you could find certain sections of less critical roads being shut for good.

    ‘Around Europe many bridges are in a poor state. A report in France from earlier in the year said that a third of the country’s road bridges are in need of repair, with around 7 per cent being more serious with an eventual risk of collapse.

    And in Germany, a report from the Federal Highway Research Institute last year found 12.4 per cent of Germany’s road bridges were in bad condition, with around 12.5 per cent considered good.

    In the US, a report earlier this year found that 54,000 of 613,000 bridges surveyed were structurally deficient. These bridges are crossed 174 million times each day’

    • Infrastructure maintenance has to be a primary, “non-discretionary” call on resources. Part of the SEEDS thesis is the need to make rational choices, prioritising non-discretionaries.

  25. @Donald.

    You make an interesting point; I saw Monbiot’s piece on the Brighton Beach ‘photo from 1976 in the Guardian a few days ago (I was 13 that year, and vividly remember walking up virtually dry river beds in Devon where I grew up).

    We are a fat nation. When I started out as an IFA in 1989/1990, probably 90% of people who applied for life assurance obtained ‘ordinary rates’ of premium. Over the years that has dropped to around 55%-60% in my experience (which isn’t untypical), meaning fully 40% of proposals are ‘rated’ in one way or another. Up until 1996, everyone got the same ‘rate’ when they were buying annuities; that year the ‘Anderton Tables’ were introduced, allowing higher rates to those with health or lifestyle issues. Today, about 40% of annuity applicants qualify.

    My office overlooks a pub forecourt with tables and chairs. There they sit, the unhealthy and morbidly obese, day after day, quaffing their booze and swallowing their chips! You rarely hear anyone speak other than English outside the pub, but having just returned from a holiday in NE France, Germany, Belgium and the Netherlands, we were shocked as to how suddenly their teenagers have got much fatter than they were.

    Not all diabetics are obese; I’m one and I have always been 6’2″ and around 13st. My medical advisers point to family history. With some cheap drugs, a sensible, teetotal, diet, exercise and working hard I feel very well.

    • Hi sorry to hear about you diabetes – there is a diet ‘cure’ that was mentioned on the carbohydrate program by Dr Xand van Tulleken. It might still be on the BBC iPlayer.

      I do remember that Summer of 1976 – I was 18 and staying in a Youth Hostel on the Isle of Wight.

      As I’ve grown older I have a continual battle against my weight and have been up to 17 stone. I do exercise and have cut down on enjoyable food but I get terrible cravings for ice cream and chocolate. Food manufacturers know what they are doing.

      As an aside regarding pictures in digital newspapers – there was a picture of Waterloo (London) station concourse taken in 1996.

      Fashions didn’t seem to have changed much – nor had the station- but there was one interesting difference – no one was looking at mobile phones or tablets. How times have changed.

    • I have heard that undiagnosed thyroid underactivity might be linked to obesity in people who do not have a bad diet. There is a very good book on this by a Dr Peatfield, which I can recommend.

  26. Fat British, Fat Americans, Fat World

    Anyone with a modicum of knowledge could easily make a fool of me on this subject. But it seems to me that the gist of it is that we are well-designed to eat complex carbohydrates. Both the high fat diet and the low fat/ high simple carb diets lead to dysfunctional gut microbe populations.

    It also argues for the primacy of diet as controlling the microbe population…as opposed to the ‘genetic engineering’ approach which tries to match the diet to the the existing microbes. A similar distinction was made by Carl Woese in a speech in Germany in 1980…he called it ‘technological adventurism’…nicely bookending Dr. Morgan’s ‘monetary adventurism’.

    Don Stewart

    • A happy microbe population is all important in keeping a healthy weight – there was an article about in in today’s Telegraph which recommended foods to eat to keep them smiling

    • Where I live we get tourists from all over Europe – the British seem to be far and way the most overweight. I think there may be significant variations regionally.

    • I think its the same as the ‘reinforced concrete’ problem mentioned before on this blog, dear Don.

    • “Once identified by the local police, who is actively working to track them down, they will get the maximum punishment possible”.

      I’m intrigued…..

    • I remember being on a train from Rome trying to get to the South of France (Menton) in 1977 on a hot Italian train- it just kept on stopping everywhere. There was a rather obese American in my compartment who said in a very heavy drawl ‘It’s no use complaining – the Mafia run the trains – signal – track – everything’

      Do you think I should have written a letter of complaint?.

  27. I wonder if anything can be done to help Venezuela – they have huge oil reserves but there’s mas migration

    • Certainly! Install a U.S. puppet as president, give management and control over the oil reserves and any local refinery operations to U.S. multinational OilCos, have the country adopt the US dollar as its currency, like Ecuador did many moons ago to stem its devaluation, and all will suddenly be well for the Venezuelans who remain.

  28. The government seems very confident as to what adds ‘value’: housebuilding!

    Reading up on the Bedford-Oxford-Cambridge Corridor, where the construction of one million nasty little housing units is being advocated (water resources, anyone?), one finds confident assertions as to the Gross Value Added to be derived from such a splurge of concrete and shoddy partitions. Gosh, it just goes up and up! Instant wealth!

    Oxfordshire is being told to double its housing total – and how lovely they will no doubt be to look at and live in.

    Given the difficulties with maintenance which will arise, and ‘concrete cancer’, might it not be better put as Gross Liabilities Added?

    • Well there’s a good chance that the massive correction in the value of assets may happen before they even build the first one meaning that everything will have to be repriced. I hope they haven’t already bought the land.

      And they all lived in little boxes – little boxes made out of ticky tacky

    • ‘Ticky-tacky boxes’: my barber’s son is a plasterer, and when asked why a quote he gave to his father for a job at his home was so high, he explained ‘ But that’s for a proper job, dad, proper quality; not the crap I do on the sites’. Caveat emptor 🙂

    • The friend told me that her son is dismayed by current building standards. He does bespoke work (and believe me it looks great) but his work is expensive. I hoping he’ll be able to do my bathroom.

  29. British Tourists
    This is a naive question from an American who does not pretend to understand British tourists.

    It seems disrespectful for British tourists to be naked in a fountain honoring the Italian war dead. During the World Cup, in what was once Stalingrad, some British tourists were in a pub singing Nazi songs and giving Nazi salutes, etc. In Italy, the officials seem intent on prosecuting. In Russia, the natives just ignored the British.

    Apparently, the Spanish are disgruntled with the British tourists.

    I have read statistics showing that, in 1947, the British people were very aware of the role of the Russians defeating the Nazis in the East. Today, the average British person is only dimly aware that there was a war with an Eastern Front. Probably few British understand that, at Stalingrad, Italian and Ukrainian people fought for the Nazis. Consequently, they have little appreciation for the appearance of neo-Nazi paraphernalia in modern Ukraine. Probably only one in a hundred British people could describe the desperate gambit by Marshal Zhukov which destroyed the Nazi army at Stalingrad.

    The United States is the site of a great deal of warfare between the ancestors of today’s Americans. While Theodore Roosevelt could write a book The Winning of the West, which described the defeat of the Native Americans as entirely positive, if you were to visit a battlefield today the National Park Service would give you a much more balanced and nuanced view of the proceedings. The same with a Civil War battlefield. I recently visited the Petersburg, Virginia battlefield. It was the final defeat of Robert E. Lee, which effectively ended the Civil War. The current tour guides make it clear that a lot of former slaves were fighting for the Union. But the battlefield is studded with monuments erected in the early 20th century commemorating ‘our brave soldiers’ who fought for the Confederacy…with no mention of the former slaves who died fighting for their freedom. The tour at Colonial Williamsburg makes it very clear about the class distinctions and the lack of ‘democracy’. It seems to me that the US is finally coming to terms with the divisions of the past.

    I don’t know what it is with the British. Are they just ignorant? Is it just a few bad actors? Maybe they still long for an aristocracy? Perhaps someone can give me some perspective.

    Don Stewart

    • @Don Stewart

      Yes the British are ignorant but maybe not more so than many other nations. What is extraordinary in a way is that in the age of the internet, vastly improved communications and cheap travel this still remains the case; you would have predicted less ignorance.

      Despite cheaper travel most folk stay in Europe and even then prefer not to interact with the locals.

      A few years ago i visited Jerash in Jordan and was wandering around the extensive site whence appeared a group of young Germans. They were all fixated on their phones, tablets and each other and were almost running around, not taking anything in at all; they had no interest in the wonders of the place. Some of the girls were dressed “inappropriately” which shows a disrespect. Like the men in the Rome fountain they have no appreciation of other cultures which is rather depressing.

    • The lack of respect shown by those two in the fountain was disheartening but the emergency reinstatement of an ancient Roman law which will allow their punishment to be beheading is not acceptable here in the 21st century.

      No doubt the EU bureaucrats will just sit there and do nothing – not wanting to upset or question a member state.

    • A few years ago I was in a cafe in Tunisia listening to the cafe proprietor explaining, over and over and with great patience, why he could not serve beers to a group of young Germans.

      Nowadays I sometimes listen to British immigrants – sorry, “expats” – denouncing bull-fighting.

    • I believe that a majority of young people questioned can’t even name correctly the main states involved in WW1 and 2….

      In Spain, memorials recently erected to those civilians executed by Franco are routinely broken and vandalised, with Francoist and Nazi symbols and slogans painted on them. Memorials to entirely innocent men, women and children.

      When a member of ETA was released the other day, after 31 years in prison, he was greeted warmly by the radical Basque nationalist Left (a major party in the region): his supermarket bomb had, in effect, burned alive some 20 or so women and children…..

      As Marcus Aurelius wrote: ‘Reflect that this day, and every day, you will meet the ignorant, the stupid, the evil, the shameless….’

      The Emperor also wrote: ‘Some days, I just want to stay in bed’.

  30. Suggested Reading

    Barrett contends that the brain’s primary function is not thinking, but anticipating the needs of the body and meeting those needs before they arrive. This is how allostasis is maintained efficiently.

    My comment. This theory is in line with some other recent research showing that memory is not about recalling accurately events from the past…it is about identifying things which happened in the past which may be useful in our current situation. In other words, the brain is concerned about now and the immediate future.

    We have to have peculiar learning to be concerned about abstract things like climate change and the end of the credit bubble…and even then some of us go about our business as if it will never happen to us. I can drink the Kool-Aid and still be concerned about my grandchildren going to college.

    There are deep issues here. Darwin settled on natural selection as the motive force behind evolution. Natural selection worked because living things generate a lot more offspring than can ever survive in the real world. In a sense, humans, particularly over the last few hundred years, have been living in a delusional world where ‘every child (or even potential child) is precious’.

    So what is the rational thing to do if one concludes that Malthus is finally going to catch up with humans?

    Don Stewart

    • My take on this is that the conscious mind makes judgements, which the subconscious mind then adopts as ‘factual’, thus determining how we react to things.

    • I’ve been reading the Diary of Victor Klemperer, which is very illuminating as to how human beings adapt to very desperate circumstances -in this case, Soviet-occupied Dresden after the defeat of Hitler.

      Everyone manoeuvring for survival. Very little rationality involved: just the basic instinct of self-preservation, and the construction of new hierarchies – with the top people (Soviets and their puppets) having the best access to energy products.

      Klemperer ,an academic, was good with the cards handed to him, and became rich and privileged in East Germany, and to my surprise able to take extensive foreign holidays in the West. And a pretty, clever, wife some 45 years his junior – the old primate rules.

      Primo Levi is also good on the hierarchies among the inmates of the death camps,and the camp economy. Again self-ordering hierarchies, with ‘friendships’ based on utility. When the camp was liberated but starving, he had to face the harsh truth that not everyone can be saved, and that many must be shut out to save a more viable group. harrowing to read, but again instructive.

      This is why, on a grander scale, rational plans for global reform are to be taken with a pinch of salt.

      The French Revolution crowned the Goddess Reason in public festivals, but having produced anarchy and Terror, she was soon cast aside for the new Alexander, Napoleon.

  31. Addendum
    Lisa Feldman Barrett reviews some recent books about the mind:

    When science writers can’t get it really right, how can a climate scientist or a student of credit bubbles and resource depletion be expected to magically persuade John Doe to do the right thing?

    Don Stewart

  32. This suggests that the Venezuelans can’t run an oil business because they’ve been corrupted by largesse and collectivism. I thought the problem is that their enormous oil ‘reserves’ are effectively locked in by the energy cost of their recovery.
    Given the risk to the US from the collapse of their Shale Ponzi, it’s easy to see how the Oil Co.s would appear to need other ventures. Iran is a much more obvious solution waiting (or brewing) as a problem, though Bolton has ruled out a US puppet show. More likely is a colourful revolution sustained by the crew who gave us fb and stuxnet.

    • I’ve seen two comments om EROEI – one saying it’s around 9.8 the other 0 -1 describing their oil as an energy sink.

      I guess it needs a full economic assessment based on the latest technology.

    • Pending such an assessment, EROEI, which varies significantly between different basins anyway, a workable estimate for shale liquids would be around 5, I believe.

    • Talking to Iranian exiles, they say that the theocratic government cannot be broken – far too strongly entrenched. And utterly ruthless.

      The recent unrest was, they have told me, greatly exaggerated by the Western media; which does not surprise one.

    • From memory, the late great Alan Coren wrote of Italy:

      “It has a first-rate system of communications, known as the Mafia
      It has a highly sophisticated financial system, known as the Mafia
      And it has a strong and stable system of government, known as the Mafia”

    • I remember being on a train from Rome trying to get to the South of France (Menton) in 1977 on a hot Italian train- it just kept on stopping everywhere. There was a rather obese American in my compartment who said in a very heavy drawl ‘It’s no use complaining – the Mafia run the trains – signal – track – everything’

      Do you think I should have written a letter of complaint?.

    • I don’t know enough about processes in the US, but I cannot see how Mr Trump could be impeached. Moreover, his popularity seems to be rising, not falling. The BBC, I’m convinced, has a visceral loathing of him, and has long since ceased, sadly, to be a source that I trust.

      As luck would have it, the next article here will be about Mr Trump. Essentially, I’ll be asking whether his is the first government to understand the downwards trend in global prosperity.

    • Yes it will be interesting to find out – I mean there’s now more than enough information around on the Web – including this site – highlighting the energy problems we face so you’d of thought at least one of his team would have raised a question.

    • Donald – sadly I don’t think the problem of energy as it is so clearly and cogently articulated in this great blog will be considered in the thinking of people around Mr Trump. The perspective and motivations seem very different to me, Mr Trump might well have the deterioration of global prosperity on his radar but I suspect he and his advisers look at it from a maintaining (and growing if possible) the US share of the wealth & resource pie. Look at his appointees as (to me) just one good indicator of his lack of concern about the planet, finite resources, and who else loses.

    • I think you’re right. I remember years ago – perhaps the 1970’s – my Grandad telling me that America was the most selfish country on Earth as they always put their interests first.

      Nothing much has changed and Trump’s attacks on the environment by deregulation appall me.

      Because many Americans are worried about the future I’m sure they’ll buy into his American dream and re-elect him. His ‘Build that wall’ chant and its enthusiastic reaction by his supporters around him reminded me both of the film version of 1984 and certain rallies in Germany in the 1930’s

      Looking at America as a whole I know they attack and demonise other countries – but you only have to examine their own behaviour and especially they way their own wealth is distributed to know that it’s a pretty sick country with glaring inequalities.

    • Indeed so. My interpretation, likely to be set out in the next article, is that Mr Trump grasps the point, long made here, that we’re in a situation where global prosperity has ceased growing. Once one accepts this interpretation, it becomes a zero-sum game, in which one country can prosper only at the expense of others. It means the end of seeking mutual benefit in trade policies, for example.

      I’m not suggesting that he necessarily understands the processes of financial adventurism or of energy cost trends. But he may well have arrived at the zero-sum game conclusion by other means, or even simply intuitively.

  33. Aramco listing –


    I’m not sure why it was called off (perhaps only temporarily) – perhaps the audit on their reserves isn’t trusted as extra barrels of oil seem to be appearing despite increases in demand.

    Quote: In April sources told Reuters that an audit of its oil reserves as part of the preparation for its IPO had found it had reserves of at least 270 billion barrels – higher than the 260.8billion it had reported in 2016 review.

    Quote : ‘The collapse also rips away a £1 billion fees bonanza for lawyers, bankers and advisers’

    Poor lambs – it’s going to be a cold winter – but it seems something is going on –

  34. Trump

    Is anyone with a position of power in Washington able to put these two phenomena together? Both from Art Berman tweets in last month or so:

    U.S. led world crude + condensate output in July at 10.8 mmb/d. Russia. & Saudi Arabia close behind at 10.7 & 10.5 mmb/d respectively.

    56% annual base decline rate for Pioneer’s Permian oil production.
    Production base decline is determined by holding the number of producing wells constant for the final year of the time series.

    Don Stewart

    • Well just remember that Rudy Giuliani proclaimed ‘Truth isn’t truth’

      (He’s since backtracked claiming that his statement was not meant as a pontification on moral theology)

    • Yes, it does echo what I’ve been saying about China based on SEEDS. The system shows China as very high-risk, based on dependency on borrowing, and a challenging energy outlook.

    • Not sure I agree. First up China is monetary sovereign, so It doesn’t have to borrow for whatever it can spend in Renminbi. If it borrows US dollars, and it has $1.3 sitting in the US fed to call upon, and an export oriented economy bringing in more Dollars every day. The risk is small today.
      China ‘s aim is for survival of the Communist party so they will spend whatever it takes to keep money flowing to the citizens. They would be probably the last country to get destroyed by debt. Government spending does not create debt. It pays for it. Their end will only come when their resources dry right up or when their exports fail to sell.

    • Revealing (frightening?) article. I’ve been following two dudes as they motorcycle around this huge country. They’ve also come across empty cities that are literally falling apart..

      ‘Xi Jinping Thought’ – unlikely to become a (metaphorical) bestseller as his country teters.

    • I follow those guys on YouTube its fascinating getting to see the ‘real’ China. What I found interesting is you don’t actually own property in China, it reverts to the State after 70 years and then gets re-sold.

    • As Arthur Daley might say ‘A nice little earner’

      I’m actually a little surprised the two haven’t been challenged by the Authorities.

  35. Understanding, intuitively, the zero-sum nature of things when resources grow scarce must be a kind of default setting, derived from ancient experience: one tribe’s gain was invariably another tribe’s loss, once populations had grown sufficiently.

    Mutually beneficial trade, a sense that ‘all boats will rise together’ – and that it is morally correct that they should do so – is a rather later development in the human experience.

    One might say that it is a luxury, and part of the Age of Luxuries which is now departing, to be replaced by another less comfortable one…..

  36. Oil and Gas Depletion
    Please note that I am not promoting this…just informing anyone who might be interested:

    Peak Prosperity ENERGY PREDICAMENT Webinar Is This Coming Sunday: featuring @aeberman12, alice friedman energyskeptic.com & bob burr @bobburrbowling Moderated by @chrismartenson REGISTER: events.genndi.com/regis…

    The cost is 30 US dollars. From an Art Berman tweet yesterday.

    I would guess that Alice will reiterate her thesis that the future of civilization depends on trucks, and that the supply of diesel fuel is not at all assured. Art Berman will likely talk about the furious rate of drilling in the US which is not actually getting us anywhere, as illustrated in my post above (but it does generate a lot of GDP!!!). I have heard of Bob Burr but can’t remember what he said.

    Don Stewart

    • I would guess that Alice will reiterate her thesis that the future of civilization depends on trucks, and that the supply of diesel fuel is not at all assured.

      They’re test trucks with overhead transmission – but I’m by no means saying it can be scaled up- but we could try – better than just laying down and dying.

      The transmission lines could be on all the major routes with the truck having batteries for the final miles to the delivery points.

  37. Alice Friedemann series. Americans have always been crazy, but it’s getting worse lately. Some history:

    In 1894, Nate Salsbury, Buffalo Bill’s producer, created a mock plantation in Brooklyn called Black America and recruited 500 “Southern Colored People, actual field hands from the cotton belt” to occupy the 150 rustic slave cabins. The New York Times advertised it as “Fun for the Darkies” and “Fun-Loving Darky Old Slavery Days”. For two months they pretended to be enslaved, picking cotton bolls from a recently planted acre and processing them in a real cotton gin. Tens of thousands of white people watched “the labors that the Negroes of slavery days engaged in, and the happy, careless life that they lived in their cabins after work,” a New York Times reporter wrote. Black America was a hit, and it toured the Northeast before returning to Madison Square Garden in New York.

    Is Reality TV and obsession with the Royals a step up from 1894 or a slide even further into the abyss?….Don Stewart

    • Worse, I think, because people in 1894 knew they were watching a show – I’m sure they didn’t think it was ‘real’. I’m not so sure we can say that about ‘reality’ TV.

  38. Donald: as a true Highland friend said to me once: ‘You don’t lay down and die: you fight,a and make the b…..s suffer,too!’

    But how does one die nobly in a collapsing, shoddy, consumerist economy?

    I believe by attempting to pass at least something worthwhile to the (possible) next generation.

    This is why I am planting apple trees (not dwarf ones, which are too delicate to endure), yew, blackthorn and hawthorn – the latter can make 450 years if lucky. Something for the bids as well as humans, too.

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