#134: An extremity of risk


Last year, GDP per capita in the Republic of Ireland was €62,560, far higher than in Germany (€39,450) or the Netherlands (€42,820), let alone France (€35,310).

If you find this rather hard to take seriously, you’re right. And, whilst you’re in disbelief mode, you should forget any idea that Ireland has made a spectacular recovery since the 2008 global financial crisis (GFC I), or that the country is less at risk now than it was back then. Likewise, you might note that Ireland is at even greater risk from a mishandled “Brexit” than is Britain herself (though you’d never guess this from watching the course of the negotiations).

Let’s clear the decks by getting the official numbers out of the way first. In 2017, Ireland reported GDP of €296 billion, up 50% since 2007 (€197bn at 2017 values). The per capita equivalent for last year was €62,560, a real-terms improvement of 41% over a decade.

At the end of last year, debt totalled €938bn (or a hefty 317% of GDP) – lower than in 2016 (€1,021bn) but still €449bn (92%) higher than it was in 2007, on the eve of the 2008 global financial crisis (GFC I). Financial assets (a key measure of the size of a country’s banking system) totalled 1751% of GDP at the end of 2016, but might be down to about 1500% – or €4.4tn – now. The latter compares with €3.44tn in 2008, the most recent year for which data is available.

Even on a reported basis, there are some negatives here. Quantitatively, both debt and financial assets are a lot bigger now than they were when GFC I struck. Neither a debt ratio of 317% of GDP, nor banking exposure anywhere near 1500%, is remotely comfortable. The saving grace, of course, is GDP, and the robust pace at which it seems to be growing.

Put simply, we can be moderately relaxed about Ireland if – but only if – we accept recorded GDP as an accurate reflection of economic output and prosperity, which are the criteria which really determine the ability of an economy to carry any given level of debt or banking exposure.

Exposing the reality

Unfortunately, official GDP isn’t a meaningful reflection of either. According to SEEDS, GDP (of €296bn) seriously overstates real economic output (€193bn), and is dramatically higher than prosperity (just €173bn).

Obviously, such a drastic overstatement of output means that reported rates of growth are correspondingly meaningless. More seriously, it disguises exposure ratios that are drastically worse than official numbers which, even in themselves, are risky enough. For instance, debt may be ‘only’ 317% of GDP, but equates to about 544% of prosperity. More seriously still, financial assets rise from an estimated 1493% of GDP to 2560% of prosperity, a number which, as well as being truly scary – and unmatched by any other significant economy – means that Ireland has bloated banking exposure from which seemingly there can be no escape.

Put bluntly, Ireland is one setback away from disaster – just as both Britain and her European partners are in the process of crystallising “Brexit” risk……

Seeing through the numbers

How, then, can GDP so drastically misrepresent Ireland’s economic output, her prosperity and her resilience in the event of a shock?

There are three main explanations for the divergence between Irish GDP and the country’s prosperity, as the latter is calculated by SEEDS.

First, the basis on which Ireland calculates GDP was changed in 2015, creating single-year growth of more than 25%, and helping to push reported GDP per capita to levels which are, frankly, ludicrous.

Second, and in keeping with the widespread practice of “credit adventurism”, Ireland has pushed huge amounts of debt into the system, boosting recorded activity in ways which are wholly a function of an unsustainable expansion in credit.

Third – and particularly seriously where Ireland is concerned – reported GDP takes no account of the trend energy cost of energy (ECoE), a trend whose exponential rate of increase has already put Western prosperity growth into reverse.

Leprechauns and lenders

Back in 2015, Ireland adopted a new method for incorporating into GDP the activities of the multinational corporations which form such a big component of the Irish economy. Reflecting this, real GDP (expressed at 2017 values) increased by 25.5%, or €53bn, in a single year, from €208bn in 2014 to €261bn in 2015.

Dubbed “leprechaun economics” by Paul Krugman, this methodological change remains controversial. It is seldom noted that, reflecting this change, the €53bn increase in GDP was accompanied by a much bigger (€204bn) rise in debt, with PNFC (private non-financial corporate) indebtedness actually increasing by €242bn in a year in which both government and households were deleveraging.

A side-effect of “leprechaun economics” was a small decrease in the ratio of debt-to-GDP, which happened because reported GDP grew by slightly more (25.4%) than the increase in debt (24.2%). When debt expands by this much – and when almost €4 of debt is added for each €1 of claimed “growth” – it is clear, beyond a doubt, that any apparent fall in this widely-watched ratio has to amount to a mathematical quirk.

“Leprechaun economics” aside, the reported increase of 50% in GDP between 2007 and 2017 equated to incremental activity of €99bn, a number dwarfed by the €449bn (92%) escalation in debt over the same period.

Borrowing just over €4.50 for each €1 of “growth” is not a particularly outlandish number by the standards of Western economies (though it remains a lot higher than a global average of 3.3:1). Even so, it is clear that, in addition to helpful statistical restatement, Ireland has boosted GDP through a process of spending very large amounts of borrowed money.

This process of credit-created “growth” did not start in 2007, of course. In the seven years preceding GFC I, growth (at 2017 values) of €62bn (46%) in Irish GDP was accompanied by an expansion in debt of €267bn (120%), meaning that Ireland was already habituated to borrowing well over €4 for each incremental euro of “growth”.

According to SEEDS, GDP in 2007 (of €197bn) already materially overstated ‘clean’ (credit-adjusted) output of €181bn. By 2017, the gap had widened to the point where reported GDP (of €296bn) overstated clean output (€193bn) by more than 50%.

And this is even before we take the all-important matter of energy trends into account.

The energy dimension

As regular readers will know, the central working premise of surplus energy economics is that, ultimately, the economy is an energy system, not a financial one – money and credit are simply claims on the output of the energy-driven economy.

Rather than the absolute quantity of energy available, the really critical issue is how much of any energy accessed is consumed in the access process. Put simply, the higher this cost is, the less energy that remains for all purposes other than the supply of energy itself.

Globally, ECoE – the energy cost of energy – is on an exponentially rising trend, having climbed from 4% in 2000 to 5.4% in 2007 (just before GFC I) and 7.7% last year. Across developed economies as a group, ECoE has already risen to levels high enough to put previous growth in prosperity into reverse.

This, ultimately, is why these economies have adopted credit and monetary adventurism in an ultimately futile attempt to maintain a semblance of ‘growth as usual’.

Ireland is more affected than most by the relentless escalation in ECoEs, mainly because of the paucity of indigenous energy resources. Last year, consumption of energy totalled 16.8 million tonnes of oil equivalent, but production was just 3.6 mmtoe, forcing Ireland to rely on imports for almost 80% of her primary energy needs. All of Ireland’s petroleum and gas requirements are imported, making the country particularly exposed both to rising world ECoEs and to energy supply risk.

According to SEEDS, Ireland’s ECoE as long ago as 2000 (4.8%) was already higher than the global average (4.0%). By 2007, this differential had widened, to 6.7% versus a global 5.4%. Today, Ireland’s trend ECoE is put at 11.2%, far higher than a world average of 8.0%.

In other words, the gap keeps getting worse.

Levels of ECoE above 10% make growth in prosperity almost impossible, and Ireland’s high ECoEs are already having a swingeing impact on prosperity. Deducting 2017 ECoE (of 10.7%) from clean GDP of €193bn leaves aggregate prosperity at just €173bn. This number is barely (2%) higher than it was in 2007, but population numbers increased by 6.4% between those years.

This means that prosperity per person last year was €36,510, nowhere remotely near reported GDP per capita of €62,560. Irish prosperity actually peaked in 2005, at €38,780, and it is a sobering thought that debt per capita is 134% (€114,000) higher now (at €198,440 per person) than it was back then (€84,830).

The extremity of risk

What we have seen is that the Irish economy is an extreme, amplified version of adverse trends observable across most of the developed economies. For over a decade, high and rising energy costs have been driving prosperity downwards – indeed, Ireland is fortunate that the post-peak fall in prosperity has been just 5.9%, rather than the 10.8% decline experienced by Britain, or the 12.3% fall suffered by Italy. At the same time, debt has soared.

Quite aside from the “leprechaun” recalibration of GDP, this relentless weakening in prosperity has been masked from reported numbers by the infusion of huge amounts of credit-funded activity into the Irish economy. Since prosperity hit its peak in 2005, aggregate debt has expanded from €356bn to €938bn, and only in the last two years has there been evidence of meaningful efforts at deleveraging. How far these efforts can continue – with prosperity deteriorating at rates of between 0.6% and 0.8% annually – has to be conjectural.

It is only when prosperity (rather than increasingly meaningless GDP) is used as the denominator that the full magnitude of Ireland’s financial risk becomes apparent. Debt of €938bn might be ‘only’ 317% of GDP, but it is 544% of prosperity. More disturbingly still, banking exposure, as measured by financial assets, now stands at an estimated (and truly frightening) 2560% of prosperity.

With a per-capita share of debt of more than €198,000 – and with prosperity continuing to erode – the very last thing that Irish citizens need now is a “Brexit” process mishandled by British vacillation and European posturing.



221 thoughts on “#134: An extremity of risk

    • @Donald

      IMV no one knows.

      I was at university when in 1970 a White Paper was issued quantifying the implication of joining the EEC. It could evaluate some factors but the huge hole related to the dynamic issues; that is how we would adapt within the EEC after joining and the fact is that no one knew.

      Today we seem much more certain of these things and I apologise for the sarcasm. There will be a period of disruption which may last for years and this will cost. But the next forty years? This is anyone’s guess; we simply do not know.

      To reiterate a point we also do not evaluate the risk of staying in the EU; to assume ceteris paribus with the EU but mayhem in our own case really will not do. The EZ is a disaster waiting to happen and the ructions over immigration have only just begun. I actually think that the EU is going to change massively in the next five or ten years and, ironically, we might well find it far more congenial.

    • Well we’ve mistimed our actual leaving so the points raised in the article are relevant.

      We don’t know what the future will hold but I still feel -in terms of al the disruption – that it would have been better to stay in the EU where all our markets are relatively local.

    • @Donald

      We will still trade with the EU; after all we have a huge deficit in trade so the EU have every reason for maintaining trading. Why would we not be able to continue as before?

    • Yes of course we can still trade with them but what about tariffs – customs and all the extra paperwork?

    • @Donald

      We trade with many countries without problems.

      In 2006 54% of our trade was with the EU; in 2015 it was 44%. Trade with the EU has been declining for some time.

    • Hi yes but we need some sort of trade and custom agreement with the EU otherwise we could get hammered with new tariffs and long delays at ports

    • @Donald

      If there’s a will there’s a way. We have a large deficit with the EU and an already sophisticated infrastructure to handle trade.

      As to tariffs it really isn’t in our interests to increase tariffs and most likely we wouldn’t; one of our undoubted aims would be to extent tariff free frictionless trade as a matter of principle.

    • Well we can only wait – they may well impose punitive tariffs on our goods and make transits through customs difficult so as to punish us for leaving. Politicians are that immature,

    • Tarifs in the USA are on average of 3%, hardly worth worrying over.

      The UK has a sizeable trade surplus with the EU, so it them that stands to lose out more (financially) than the UK by causing customs disruption at its borders. Whether it will choose to do this out of spite is another matter.

  1. Without wishing to appear to troll your board, here are a few things that may help in replacing liquid fuel inputs into mining. I have used Kris De Decker’s links here.

    There are three stages to the transport of raw ore:

    (1) Removing it from the ground, either in underground or open cast mines. The former, especially in the UK (coal mines) has tended to make use of compressed air to operate cutting and shovelling tools and conveyor belts and rail based systems to transport the tailings to the surface. The same technologies could be used to some degree in open cast mines, the reason we don’t is that we don’t need to. Diesel driven machines and trucks are less cumbersome and there is no shortage of fuel supply at present.

    (2) Transporting ore across site (a few miles). Aerial ropeways have been used to do this in the past.
    Rail based solutions are another possibility.

    (3) Long distance transport. There are many options here. Before the age of the internal combustion engine, electrically powered trolley trucks and trolley canals were developed with varying success.

    • Thanks for post. I’ve always been a fan of trolleybuses. I wonder – if the need required – how much the infrastructure to put overhead wires on one designated lane of each of our motorways would cost. Surely not as much as HS2.

      Transport lorries could then revert to batteries for the remainder of their journey off the motorway.

      Years ago my Dad was always going on about oil as a finite resource (he had a science degree but ended up in the Patent office) and how important it was that we secured our electric future. He was a big fan of nuclear power.

    • This is interesting.

      I have wondered how we go about electrifying the extractive industries. Particularly because they are often in remote areas.

      No doubt this is technically feasible. But I wonder if the additional costs would challenge the economic feasibility, particularly in a situation of decreasing quality of energy resources.

      Electric power solutions at extraction sites.
      – Transmission with associated losses.
      – Build local power generation (okay if you are extracting fuel sources maybe)
      – Transport power generation to site (e.g. micro nuclear reactor like in current submarines and aircraft carriers)

      Each of these adds to the energy cost of extraction though, and might also need to be subsidised through fossil fuel powered transport at the outset of a new extractive enterprise, particularly when rail or canals have not yet been laid.

      In the past we could afford to leave equipment and hence the minerals they were made out of on remote sites when resources were depleted. But can we afford to do that in a future of lower grade mineral resources? What is the additional cost of recovering, refurbishing and redeploying electrically powered extractive equipment containing valuable copper and moving it to the next site.

      I can imagine a future situation where we know where a resource is, we know how to get it out, but it just isn’t worth doing. How frustrating would that be?

  2. @kevinoneill
    There is a mining museum neat Atlanta, GA which has vehicles used in mining from the metal pans and water used in primitive gold mining (the 49ers in California) to the gigantic vehicles used today. Much of the reason for the gigantic vehicles has to do with the overburden, as well as the reduction in ore content in the resource itself. For example, a basic coal mine a hundred years ago might involve using a pick and shovel to follow an exposed seam of coal. Nowadays, it typically involves ‘mountain top removal’, to get at coal with less thermal content.

    In Wyoming, the coal seams which were closest to the surface were harvested first. Which leaves us with coal seams which are deeply buried with an enormous amount of overburden to be removed.

    Whether electricity could be used to solve the extraction problem I rather doubt. Whether electricity could be used to both remove the overburdens and also replace the overburden once the coal is harvested is even more doubtful. Which puts us on a truly one way journey.

    Don Stewart

    • Maybe then it is more a case of us needing fossil fuels to allow us to continue the extraction because of the overburden. It wasn’t a choice(?).

      The converging issues of decreasing mineral yield, increasing ECoE, and diminishing ROI in investments in new technologies do seem to suggest that mining for resources cannot go on.

      Just stating the obvious – sorry.

  3. The Mining Transport Problem

    Spend 5 minutes here and you will understand the magnitude of the problem.
    Don Stewart

    • Perhaps electrical trucks powered by Graphene supercapacitors that may only have a short range but charge in seconds for jobs like this

    • Thanks, well worth seeing.

      However, this truck is moving overburden earth, not solid rock – the coal itself is simply lifted up from beneath it. It needs to shift 20-30 tonnes for each tonne of coal.

      With copper, we’re talking 500 tonnes per tonne – and rock, not earth. The ore is contained within the rock, not beneath it. Then, whereas coal is simply moved and burned, copper has to be smelted.

      Finally, I believe that coal extracted from shallow open-cast mines tends to be pretty poor in quality, meaning low energy content and high levels of harmful impurities.

    • Conventionel ore is gone. Ore grades are in decline, we need to move a lot more tons of rock for one ounce of copper, silver etc. Same as with oil. Energy cost per ounce of copper….. Etc etc.

  4. Don Stewart & drkevinoneill,

    I suspect that you are correct. Attempting to replace diesel trucks with electrically powered transport would be cumbersome at best. On a kWh basis, electric power would likely be cheaper than diesel. The power to weight ratio of AC motors is generally superior to compression ignition engines and rivals gas turbines.

    But there is a noticeable common feature of all successful electric transport systems. Without exception, they are grid connected. Electric trains, trams and underground systems have been with us for as long as the IC engine and they all draw power directly from the grid via conductive transfer. As soon as batteries become involved in any electric vehicle scheme, cost goes through the roof; power to weight, range and EROI deteriorate dramatically. An electric solution will look quite different to the truck shown in your video.

    If we are lucky enough to be mining close to a grid connection, then grid connected vehicles and machinery can be powered directly from the grid. More likely, if we are mining in a truly remote place, it will be necessary to set up wind power plants and solar panels locally and run machinery and transport directly from their output. That means production rates will be high on days with plenty of wind or solar power and will reduced (maybe to zero) when these generators have insufficient output. This may imply lower labour productivity.

    • There are different kinds of energy. What we need is a low cost energy mix. We cannot move tons of rock on solar power, except maybe 30% of what we do now with diesel power. Running the show on ‘renewables’ is impossible. Energy density is way too low for mining.

  5. @TonyH
    Railroad locomotives have electric motors, but they are powered by diesel engines on board the locomotive which provide the primary energy. Which illustrates the advantages of electricity, but also its limitations in terms of mobility.

    People are starting to build vehicles which use LNG. A number of ships are on order which will use LNG, replacing bunker fuel. Many cities have busses which use LNG, mostly to control pollution. It is possible that we will go through a phase of LNG powered heavy equipment if we run out of diesel. The problem with gas is that if we try to duplicate all the diesel, we will exhaust the gas more rapidly. And LNG does not currently solve the CO2 emissions problem….counting the methane, gas is roughly equivalent to oil in terms of emissions.

    Don Stewart

  6. Don, in the states, electric railways never took off, aside from localities like NYC and street cars in San Francisco. Historically, there were a lot more, but they were phased out following the arrival of diesel buses and mass motoring. For Europe, with its greater population density and comparatively weak domestic oil resources, it was a different story.

    In the UK, the entire southern network, including London, is powered by third rail electrification. Here is a website discussing the system.


    One of the disadvantages of third rail is low voltage (750v) which limits the amount of power that can be drawn from the track to about 3MW. An advantage is that overhead wires are not needed and the system is generally more compact. Third rail controlled by magnetic switches is being used for tram systems now, especially in France. The Swedish are experimenting with a rail in road electrification system that will power electric road vehicles. Similar options could be used for mining transport equipment. Maybe a series of plastic conduit strips, bolted together, with positive and negative conductors running side by side. The vehicle would run along the conduit, picking up power from tracking contacts along its chassis. It would leave the conduit a few hundred feet from the mine face and the short remaining distance would be powered by battery, flywheel or compressed air.

    Alternatively, catenaries carrying overhead wires could be used. Likely, these would be wooden poles that could be moved about as mining shifted locations.
    Power levels can be an order of magnitude greater with overhead wires and there are obvious safety benefits. Your truck would require a pickup arm on its back end. A two wire system would allow it to earth back through the catenary. A hybrid system could use a single overhead wire as a monopole, with the return side being through an earthing strip running along the ground.

    Again, these options are not as technically easy as diesel powered trucks. But they could be made to work.

    • Electric railways, mains-powered, have long been a proven and successful technology. But they are almost the only major use of electric power in transport applications. Their viability comes from fixed routes, and no need to store power.

      This is why approximately 97% of all transport – road, rail, sea and air – remains powered by oil.

    • Don – thanks for link – a pretty sobering analysis. The costs of a nationwide system would be (without maintainence (I can hardly believe this) $3.23m for each and everyone in the US.

      My thoughts are that the building of low economy SUV’s in the States for private use is beyond daft. Fuel should specifically be being saved for transport while R&D continues to find a viable alternative.

      If science can’t provide an answer then it could be back to the horse and cart or we start relying on more locally produced food and goods where possible plus cut our overall ‘wants’ down and concentrate on actual needs.

      Much smaller and lighter delivery electrical delivery vans could then take over.

      In the UK perhaps HS2 should not be built as a high speed passenger line – but rather as a low speed (say 70mph) freight line. This could transport goods to hubs throughout the UK for collection by trucks which would then have to travel much shorter distances.

      In the past train freight was far bigger than trucks.

    • My final post on this topic (I promise).

      I have skimmed through the Energy Sceptic article. A few comments. I am going to use the United Kingdom as an example, mainly because I know it well. The situation for the US may be different.

      First point: Mass electrification of transport will substantially increase the loads on the electric grid. Also, because transportation volumes vary significantly throughout the day, it may prove somewhat difficult to meet these demands using a non-dispatchable electricity generation, if the bulk of load supplies grid connected vehicles. A few order of magnitude estimates.

      Energy use in the United Kingdom stood at 2,249 TWh in 2014. Of this, some 335TWh is electricity Obviously, generating electricity requires a larger input of fuel, much of which is lost as waste heat.


      Transport energy consumption stands at 56,470ktoe between 2016-2017. About 80% of that is road transport (41,480 ktoe). 1TOE is 11,630kWh higher heating value. So total UK road transport energy consumption would be 482.4TWh of chemical energy. Let’s say ICE engines are about 30% efficient on average and electric motors, with transmission losses, are about 80% efficient. To theoretically power all UK road transport with electricity assuming no changes in mode, speed or weight, would therefore require some 181TWh of additional electric generation per year. That would be a 54% increase in the UK’s electricity production.


      The primary cost of oil for road transport at $80/barrel costs the UK some $23bn (£17.8bn) per year. Note: 1barrel of oil = 6GJ. However, at £0.1/kWh, some 181TWh of electricity would cost the UK some £18.1bn per year – about the same. So aside from balance of payment and security of supply benefits, the UK would accrue questionable value from mass electrification of transport.

      Point 2: The cost of electrification. According to the CIA factbook, the UK has some 394,428km of roads including 3,519km of expressways (motorways). The cost electrifying the UK’s roads using some form of overhead wire or ground level electrification scheme is difficult to determine. Past estimates from the cost of trolley bus electrification are not strictly reliable because they lack the economy of scale that would result from rolling out this technology on a large scale. This study of electrification of UK railways puts the cost of 25kV overhead line electrification at between £550K-650K per single track km.

      Click to access RSSB_Electrification2007.pdf

      Assuming the upper limit could apply to some form of road electrification; if all of the UK’s expressways were electrified (say, 1 lane in each direction); the capital cost would be £4.6bn, not inclusive of any development costs. If all roads were electrified, the total cost would be roughly two orders of magnitude greater. The first would appear to be achievable; the second probably is not.

      Expressway electrification is interesting, because it would allow pure electric vehicles to dramatically reduce their required battery capacity. At present, the Tesla Model 3 boasts a 310 mile range. This means that the battery dominates the weight and cost of the vehicle. Even this is logistically difficult for many consumers, because a trip with greater total journey length must locate a suitable charging station and a wait of several hours is needed for full recharge. There is essentially no way for a pure BEV to ever compete with a combustion powered model in terms of range and operational convenience.

      If on the other hand, cars could recharge on the move on electrified expressways, then a battery range of 50miles would be less problematic. An investment in electrification of main roads could therefore make a transition to pure electric vehicles far more achievable. Battery electric trucks have been developed, but typically range is limited to ~100km. Expressway electrification can therefore bridge the gap.


    • Tim – I was being tad sarcastic about him – he’s basically got a cheek lecturing others when he was so much to blame for the Uk’s predicament. Look how he tried to weasel out of the regulatory mistakes he made in the BBC article.

    • GB did one huge service to the UK; he kept us out of the Euro.

      Can you imagine the strife and ructions this would have caused subsequently; it would be Brexit on stilts!

    • Yes so his end of term mark now is 1/10. I’ve just ordered the book (Gordon is a Moron) recommended by Tim – should be a good holiday read.

    • Yes, fair enough. He also did something about third world debt, and was probably the architect of the minimum wage.

      However, if the “cunning plan” now is a bad “Brexit” outcome prompting a decision to re-join the EU, then adopting the EUR is compulsory for new members.

    • Tim if we’re not careful we’re going to have ‘Brexit’ the movie in a few years time along the same lines as the jaw dropping film ‘Enron – The Smartest Guys in the Room’.

      Conspiracy – sex – threats – bluffs – double bluffs – back stabbings. Hollywood would love it.

      Perhaps Tilda Swinton could play Theresa May – Daniel Day-Lewis as Jacob Rees-Mogg – Brian Cox as Gordon Brown – Hugh Laurie as Philip Hammond – Kenneth Branagh as Boris ‘The bus’ Johnson (the sadly deceased Richard Griffiths would have been my first choice) Jim Broadbent as Michel Barnier – Jude Law as Dominic Rab and finally Tom Cruise as Nigel Farage (Hollywood would insist on an American actor to earn money on the US market. Cruise would be the hero figure that prised the UK away from the corrupt and evil EU into the hands of the honest and friendly US thereby saving the World. )

    • Yes Billy would have been an excellent choice. Perhaps Patricia is a bit old at 89 – but then again Theresa has aged about 30 years since she took office.

    • Yes Warren Clarke – he left as far to early. A very good performance in ‘A Clockwork Orange’. I think the UK is now worse than Kubrick’s visualisation.

    • Tim

      As you’ve said before it’s more likely to be cock up than conspiracy and engineering a bad Brexit ultimately leading to a rejoin and adoption of the Euro is, to me, Alice in Wonderland territory. Joining the Euro would be an act of mind boggling stupidity with a guaranteed bad ending.

    • Bob

      I agree, especially given the remarkably low calibre of the current cabinet. If they could re-appoint the very bright Andrew Mitchell, they could probably double the cabinet’s aggregate IQ.

  7. Take your mind off Ireland and Brexit and the next global war and consider something serious:
    View at Medium.com

    Very much in line with SEEDS data, I suspect. Although I won’t attempt to do direct comparisons. China’s petroleum EROEI, as they measure it delivered to the pump, has suffered a precipitous decline.

    Don Stewart

    • Thanks Don. He’s right to identify China, which is probably the single worst risk right now. We covered this here on 2nd July.

      Without criticising the article in any way – but allowing myself a tiny amount of bragging! – I think we do this better here.

      – SEEDS relates debt to prosperity, which is the real determinant of how any given level of debt or other financial burden can be carried.

      – SEEDS calibrates prosperity per person, which clues us in to public support for policy (this metric predicted “Brexit”, Trump and Italy)

      – SEEDS relates GDP “growth” to the simple spending of borrowed money, exposing the ponzi component of reported numbers – and one of the scariest China stats, which I’ve not seen mentioned elsewhere, is that the country adds debt at rates of 32% of GDP annually.

      – SEEDS ties ECoE into the analysis.

      …..just sayin’!

    • I’m very very sorry to tell you this Tim – but because you’ve been so accurate I’ve decided the best place for you during the coming apocalypse is above ground and not in my survival bunker.

      I have 5 years worth of Alt beer – salted beef – powdered soup – cat food and a small hydroponic garden.

      Take care – and good luck!

      Seriously though many indicators are pointing to a crash yet so many share analysts still seem to think that the only way is up.

      The UK simply cannot take on the uncertainties of Brexit and another financial crash at the same time,

    • Well the Chinese -like the rest of us – will just have to accept less. How can they possibly afford this new Silk road? Surely it’s going to collapse under its own debt like many of the shoddy housing estates they’ve built.

      Regarding the latter – what a terrible waste of energy and materials and all for mainly speculation.

  8. @Donald
    So the Chinese officialdom, realizing that something is wrong, invited Albert Bates to China for what is essentially a ‘sustainable rural community’ session. Albert knows a lot about, for example, recycling the phosphorus in your hair shampoo into your garden, and getting the absolute most out of the wood you burn (e.g.,biochar and the carbon cascade). He visits (or else they have a discussion about) a recent eco village which was built, but which has practically no full-time inhabitants. It seems that most of the houses are bought by urban speculators…maybe the same crowd who, in the US, are looking for bolt-holes. And, if I remember correctly, many of the new houses in the village of the centenarians that Dr. Day from Salt Lake City visited and wrote about, are not bought by people intending to live the simple life of the centenarians, but are speculations by the urban.

    I look at the young Chinese who have come to dominate certain educational sectors at Duke and wonder what it is that they think. Frankly, I don’t see a care in the world.

    So it seems to me, never having visited China, that the population is feeling on top of the world. It is the government officials who are alarmed. And they probably don’t know what to do about it. Imagine inviting Albert Bates to come and give you advice!!!

    Don Stewart

    • it’s funny about china because they’ve recently relaxed family size rules just at the time you would have thought they would have to restrict population growth.

      The invitation of Albert Bates sounds creepy

    • @Donald

      I believe China is facing a population crunch. The one child policy, in place for many years is now coming home to roost. In a few years the working population of China starts shrinking dramatically. China, as many have said is likely to get old before it gets rich. It’s a major issue.

    • With the supply of cheap energy coming to end they’re probably thinking of human labour to till the land etc – it could get that bad.

      Yes certainly a new slant on their decision

  9. @Donald
    The opening speaker, a Communist Party official, talked about the seminal influence of the Limits to Growth study. Gail Tverberg, who visited China at their invitation about 2 years ago, commented that, at that time, they were very focused on keeping everyone employed. But they had few illusions that their oil was going to last forever. If one puts together the pieces, there is plenty of work for everyone, but it doesn’t pay very well, and there is not much room for gambling. I have always had the prejudice that ordinary Chinese love to gamble. One of the astonishing things that has happened in the US in my lifetime is the movement of gambling into the mainstream.

    So, my guess is that the perceptions of the officials are not in sync with the perceptions of the ordinary citizens.
    Don Stewart

    • Yes I would agree that perceptions are different. When I visit China in 1996 Canton was a heavily polluted dump – but looking at it now – it’s been transformed.

      I remember a few years back at how happy certain citizens were about not having to live in poverty anymore and of all the new and exciting technology. So they clearly think it’s all going to keep on getting better for them.

      One major problem they have is the number of old inefficient diesel trucks lumbering around – goodness knows what the cost of upgrading the fleet would be.

      Generally I think a mainly electrical future is the way forward with all of us accepting less. In the 1950’s not many people had cars so buses and coaches ruled. It will become like that again.

  10. Regarding China’s alleged demographic time bomb
    The birth rate per woman in China dropped to just slightly below the level in the US in 1992 and has stayed there. China, along with many other countries ,such as Hungary and Cuba, have tried encouraging women to have more children. Such efforts have not nudged the birth rate appreciably.

    If China has a demographic problem, then so do the US and Europe and lots of other countries.

    One advantage China has, and which may be a factor in their invitation to Albert Bates, is that they remember the times when food was grown locally. 20 years ago Shanghai was fed mostly from within a 20 mile radius. People can remember that. People in the countryside remember when almost everything they ate came from local farms. IF there is no choice but to move in that direction again, I would put my money on the Chinese as opposed to the British…who seem to have long forgotten what it is all about…deluding themselves that the City of London is a primary producer of prosperity.

    The more important time bomb is chronic disease. If obesity is a marker of chronic disease, then the Chinese students at Duke are mostly healthy specimens. But the statistics from China indicate that chronic disease is now increasing rapidly. From the perspective of old people feeding themselves, rather than relying on social security of one form or another, sustainability is dependent on the absence of chronic disease and also the nearby availability of plots of arable land. I recommend John Day’s book on the centenarians of Chinese villages.

    for the you tube faction.

    Don Stewart

    • Just seen CapX state which states that 25% of China’s population will be over 65 by 2030. That’s a huge problem.

  11. Donald Trump Tweet –

    3000 people did not die in the two hurricanes that hit Puerto Rico. When I left the Island, AFTER the storm had hit, they had anywhere from 6 to 18 deaths. As time went by it did not go up by much. Then, a long time later, they started to report really large numbers, like 3000…

    ….This was done by the Democrats in order to make me look as bad as possible when I was successfully raising Billions of Dollars to help rebuild Puerto Rico. If a person died for any reason, like old age, just add them onto the list. Bad politics. I love Puerto Rico!

    I think he’s gone mad.

  12. @Donald
    You have not taken to heart what Dr. John Day is saying, based on his first hand experiences over a period of years. Instead, you sound like the attitude my medical doctor ascribed to Medicare in the US:
    ‘we need for people to die before they turn 65’.

    The longevity studies in China, the Blue Zones, and elsewhere indicate that you do not know what you are talking about.

    Don Stewart

    • Hi I meant in terms of being able to support themselves as the State might not be able – or willing to – especially if they were limited to one child. You yourself quoted that chronic disease is increasing so what happens if they get ill?

  13. @Donald
    In a world where increasing ECOE and the obvious bankruptcy of the ‘just mint more debt’ idea are dominant. The idea that the government can take care of chronically sick people for 30 years until they die is also on the endangered species list. To make up hypotheticals which assume that governments will continue to give extraordinarily expensive care to chronically sick people is a waste of time (IMHO).

    Which leads us to Other Solutions. Which is what the Chinese government seems to be exploring. (If they weren’t interested, why invite Albert Bates???) It’s worth remembering that there are still active scientists who participated in The China Study, a joint project of Oxford, Cornell, and a Chinese university whose name I can’t remember. The question they probed was ‘why don’t Chinese people get cancer?’ They also discovered whole provinces in China where nobody had died of coronary artery disease in a decade. Diabetes was virtually unknown. In short, chronic disease of the Western type was very rare.

    So what has happened to them? And they can look around at the proliferation of companies such as McDonalds and get some ideas. Dr. John Day was visiting a medical facility in Beijing when he heard about the Longevity Village. Since he himself was already chronically ill in middle age, he was curious. He went there. He went back again. He researched. In the meantime, Longevity Village became a tourist destination within China.

    Watch Day’s lecture and you will learn what he found out. It’s not at all that these people had an easy life. The centenarians had all spent time being oppressed and starved by various armies. They had experienced social and economic revolutions. But there were patterns to their lives that were life-affirming which prevented chronic disease. Day became a convert. He changed the way he lives, and his chronic diseases vanished.

    Let’s just assume that the Chinese government is smart enough to figure out that doing what they are doing is going to be disastrous. Then they have to do something different. They realize that Limits to Growth was on to some deep truths. If they are smart, they will also figure out that The China Study was telling them something that they have ignored to their peril. They will figure out that Dr. Day and others have put together programs which combine the best of modern and traditional ways.

    And if they are smart and lucky, then people will live to ripe old ages while feeding themselves and perhaps never visiting a hospital in their lives.

    So the problem is political…not an energy problem or a medical problem. The people in Longevity Village walked across a rickety bridge to get to the outside world for 90 years or more. Many of them had never seen a hospital. As Dr. Day describes in his book, urban Chinese come to Longevity Village thinking that they can just ‘bottle some of the water’ and resume their urban lives and live to be a hundred with no disease. That, of course, is utterly wrong. It is the way people have lived in Longevity Village that is the key. Formulating a political program which moves in the direction needed is a challenge of the first order. I do not know whether it is possible, or whether the Chinese officials will decide to just double down on what they are doing now.

    But I think it is important to identify the REAL problems…not ‘fake’ problems such as the ‘percent over 65’ or the ‘One Child Policy’.

    Don Stewart

  14. @Donald
    See this video:

    See particularly the slide at 13:26, which I will summarize as ‘contrary to the popular opinion that we suffer genetic deterioration once we pass our reproductive years, the evidence is actually that we suffer genetic deterioration when we lose hormetic stress resilience.’

    Hormetic stress is either regular mild stress or infrequent acute stress…but not chronic stress. Living either as a couch potato or as a perpetually oppressed person are both deadly. Modern life specializes in both creating couch potatoes and also oppressing the already downtrodden. And so we have the epidemic of chronic disease.

    The people in Longevity Village lived a life of both daily physical work and daily exposure to mild environmental toxins. Dr. Day worked in the fields with people over 100 years old and they drank untreated water out of a river. Occasionally, they were subjected to severe trials by crop failures or invasion by hostile armies. But they also had the social supports identified by Dr. Day. What the people of Longevity Village had by birthright, Ari Whitten will try to recreate in a modern setting using abundant energy resources. But it is important to realize that the people in Longevity Village could do it all with very little in the way of energy resources. Valter Longo (the Fasting Mimicking Diet) recreates the periodic starvation and its hormetic regenerative function with a modern formulation of dried foods and capsules and carefully counted calories and protein. But the people of Longevity Village got it right enough just by being subjected to the whims of nature. Longo visits his ancestral homeland in southern Italy and finds that the centenarians do meaningful work beyond the age of 100…such as walking several miles to and tending an olive grove.

    Dr. Day, however, recommends that people in Salt Lake City get out of the frequent air pollution in winter by driving up to the ski areas which are above the inversion layer which traps the pollution in Salt Lake. So there are some toxins we can deal with easily and some we can’t.

    Again, if the Chinese government perceives a systemic threat and the need for revolutionary action, the recognition of the role of hormesis in banishing chronic disease should be high on their list of priorities.

    Don Stewart

    • @Donald Stewart

      It may be that, in addition to environmental factors there is a genetic element to Longevity Village (I haven’t been through the video in detail so please excuse me if this is discussed). An isolated community with little contact with the outside world may develop slightly different genetic patterns. Clearly if this is the case this aspect could not be reproduced and it would be a case of additional environmental factors.

      In a free society how long would it take to reduce chronic disease by taking the measures discussed? A long time.

    • I can second all this, I have read the ‘Longevity Plan’ by Dr John Day and have the CD in my car as motivation. I am living the book as best I can. Although I was not over weight 128Ibs, I have lost 14lbs and blood pressure down from 150/100 to normal. My Doc was suggesting drugs. People I know start with one drug and before long are taking 8 a day, I did not want that and did not want to be dependent on a failing NHS. I am also growing more food via the no till method, possible even in the wet NW UK. AND despite working full time.
      I now have a very good understanding how a functioning soil ecosystem works and puts minerals in food, which keeps disease at bay in humans and in plants. This is a very basic description of what goes on but the books ‘Mycorrhizal Planet’ Richard Phillips and Paul Stamets ‘Mycelium Running’ are good starting points, videos also on line. Often people are obese but starving and sick because their food is mineral poor and according to Dr Elaine Ingham we need all minerals not just the ones in a supplement pill.
      If what Dr Tim has kindly shared with us comes to pass and I have no doubt it won’t, along with our ‘Crude Awakening’ the next 10 years are not going to be very pleasant, so we all have to make the effort to look after our selves and others because back up services will and are disappearing and that could well include complex supply lines. So there is no time like the present to ‘no till’ for Britain and improve practical skills.
      Dr Tim I would love to send you a nice meal out every now and again but I am not keen on Paypal. Can we Bacs or send you a cheque some how???

    • Thank you, HDUK. I’m not keen on Paypal either.

      On the donation thing, I’m wholly new to how this works, as I didn’t feel I could let people help financially with a project (the site, and SEEDS) that might not work. Only now am I convinced that these are adding value.

      The question now is where to do with this now that I’m pretty confident that it works.

      As mentioned in my new post, I’m travelling next week so will have some space to think about where to go next with this.

      Meanwhile, if anyone has ideas on this, do let me know, especially if you have knowledge about donations and things I’ve heard about like ‘Patreon’ and ‘crowd funding’.

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  16. Donald
    Human genes almost certainly do not play a significant part in Longevity Village and Sardinia and southern Italy and Loma Linda California and the Greek islands and Okinawa and other Blue Zones. It is very clear that distinctive patterns of living are the key to these islands of longevity.

    In a truly free society, the adjustment to these patterns of living would be short and sweet. Those who didn’t adapt would die. (Given the dire condition of most of the ‘developed’ world as laid out in Dr. Morgan’s new post).

    Don Stewart

    • Donald
      More precisely, I should say it is not the ‘genetic complement of human genes’ that is important. What IS important is the pattern of expression of the human genes and also the complement of genes in the gut microbiome and their patterns of expression. These latter three are controlled by environment, including what you eat and what you think and the toxins you encounter. As we know from Ari’s talk, some toxin exposure is essential to the functioning of gene expression, and doctors may commonly say that the mother ‘infects’ her child with an initial set of microbes. The ‘complement of human genes’ is fixed, but the remaining three are malleable to different degrees and can change very quickly in response to environmental change.

      Think about Ari’s example of athletic training, where the number of mitochondria can be doubled or tripled. We all obviously have the genes to make mitochondria. But it is the nature of the couch potato or the despised worker to express those genes differently than either a fit ordinary citizen or an elite athlete undergoing scientific training.

      Don Stewart

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