#156. Actual fantasy


Everyone knows the quotation, of course, which says that “when it gets serious, you have to lie”.

Actually, when it gets even more serious, we have to face the facts.

I’m indebted to Dutch rock music genius Arjen Lucassen for the observation that the counterpart to “virtual reality” is actual fantasy – and that’s where the world economy seems to be right now.

You may think it’s imminent, or you might believe that it still lies some distance in the future, but I’m pretty sure you know that we’re heading, inescapably, for “GFC II”, the much larger (and very different) sequel to the 2008 global financial crisis (GFC).

SEEDS 20 – the latest iteration of the Surplus Energy Economics Data System – has a new module which calculates the scale of exposure to “value destruction”. This exposure now stands at $320 trillion, compared with $67tn (at 2018 values) on the eve of GFC I at the end of 2007.

How this number is reached, and what it means, can be discussed later. Additionally, potential for value destruction needn’t mean that this is the quantity of value which actually will be destroyed when a crash happens. Rather, it gives us a starting order-of-magnitude.

For now, though, we can simply note that risk exposure seems now to be at least four times what it was back in 2008. Moreover, interest rates, now at or close to zero, cannot be slashed again, as they were in 2008-09. Neither can governments again put their now-stretched balance sheets behind their banking systems, even if global interconnectedness didn’t render such actions by individual countries largely ineffective.

Finally – in this litany of risk – two further points need to be borne in mind. First, global prosperity is weakening, and has been falling in most Western economies for at least a decade, so any new crash will test an already-weakened economic resilience.

Second, and relatedly, any attempt to repeat the rescues of 2008 would be unlikely to be accepted by a general public which now – and, in general, correctly – characterises those rescues as ‘bail-outs for the wealthy, and austerity for everyone else’.

The high price of ignorance

It’s tempting – looking at a world divided between struggling, often angry majorities, and tiny minorities rich beyond the dreams of avarice – to think the surreal state of the world’s financial system reflects some grand scheme, driven by greed. Alternatively, you might feel that far too many countries are run by people who simply aren’t up to the job.

Ultimately, though – and whilst greed, arrogance, incompetence and ambition have all been present in abundance – the factor driving most of what has gone wrong in recent years has been simple ignorance. For the most part, disastrous decisions have been made in good faith, because thinking has been conditioned by the false paradigm which states that ‘economics is the study of money’, and which adds, to compound folly still further, that energy is ‘just another input’.

I don’t want to labour a point familiar to most regular readers, so let’s wrap up recent history very briefly.

From the late 1990s, as “secular stagnation” kicked in (for reasons which very few actually understood, then or now), the siren voices of conventional economics argued that this could be ‘fixed’ by making it easier for people to borrow than it had ever been before. This created, not just debt escalation, but a lethal proliferation and dispersal of risk, which led directly to 2008.

In response, the same wise people, those whose insights caused the crisis in the first place, now counselled yet more bizarre gimmicks, the worst of which was that we should pay people to borrow, whilst simultaneously destroying the ability to earn returns on capital. Nobody seems to have wondered (still less explained) how we were supposed to operate a capitalist economy without returns on capital – and that, by the way, is why what we have now isn’t remotely a capitalist system based on properly-functioning markets.

When GFC II turns up, it’s as predictable as night following day that the zealots of the ‘economics is money’ fraternity will come up with yet more hare-brained follies. We already know what some of these are likely to be. There are certain to be strident calls for yet more money creation (but this time with a label saying that “it’s not QE – honest”). Some will advocate ‘helicopter money’, perhaps calling it ‘peoples’ QE’. There will be calls for negative nominal interest rates, with the necessary concomitant of the banning of cash. Ideas even more barking mad than these are likely to turn up, too.

Ultimately, what’s likely to happen is that the authorities will respond to GFC II by pouring into the system more additional money than the credibility of fiat currencies can withstand.

We know, of course, that any new gimmicks, just like the old ones, won’t ‘fix’ anything, and can be expected to make a bad situation even worse.

So the question facing everyone now – but especially decision-makers in government, business and finance, and those who influence their decisions – is whether we abandon conventional economics before, or after, the next mad turn of the roulette wheel.

Put another way, should the creators of “deregulation”, QE and ZIRP – and the facilitators of sub-prime and “cash-back” mortgages, collateralised debt obligations and the alphabet soup of “financial weapons of mass destruction” – be allowed to introduce yet more insanity into the system?

Before making this decision, there’s one further point that everyone needs to bear in mind. In 2008, financial gimmickry nearly, but not quite, destroyed the banking system. The only reason why this didn’t happen was that fiat money retained its credibility. But, whilst the follies which preceded the GFC imperilled only the credit (banking) system, those which have followed have put the credibility of money itself at risk.

This is perhaps the most powerful reason of all for not letting the practitioners of ‘conventional’ economics have another swing at the wrecking-ball.

I hope that, reflecting on this, you’ll agree with me that we can no longer afford the folly of financial economics.

Moreover, we need to say so, making fundamental points forcefully, and resisting any temptation to wander off into esoteric by-ways.

A scientific alternative?

If there can be no doubt at all that money-based interpretation of the economy has ended in abject failure, there can be very little doubt that a workable alternative is ready and waiting. That alternative is the recognition that the economy is an energy system.

This idea is by no means a new one and, though I’d prefer not to particularize, it’s been pioneered by some truly brilliant people. If those of us who base our interpretations on the energy-economics paradigm can see a long way into the future, it’s because we’re “standing on the shoulders of giants”.

Moreover, much of the work of the pioneers is rooted in solid science, meaning that, for the first time, there is the prospect of a genuine science of economics, firmly located within the laws of thermodynamics. This has to be a more rational option than continuing to rely on economic ‘laws’ which try to impute immutable patterns to the behaviour of money – something which is, after all, no more, than a human construct.

I like to think that my much more modest role in this direction of travel has been to recognize that, if energy economics is going to transition from the side-lines of the debate to its centre, it needs to tackle conventional economics on its own turf.  That means that, whilst as purists we might prefer to set out our findings in calories, BTUs and joules, we have to talk in dollars, euros and yen if we’re to secure a hearing. It also means that we need models of the economy based firmly on energy principles.

If you’re a regular visitor to this site then the basics of what I call surplus energy economics will be familiar. Even so, and with new visitors in mind, a brief summary of its main principles seems apposite.

Core principles

The first principle of surplus energy economics is that everything that constitutes the economy is a function of energy. Literally nothing – goods, services, infrastructure, travel, information – can be supplied without it. Even in the most basic aspects of our lives, everything that we need – including somewhere to live, food and water – is a product of the application of energy. The more complex a society becomes, the more energy it requires, even if this is sometimes masked when energy-intensive activities are outsourced to other countries. The idea that we can somehow “decouple” economic activity from the use of energy has been debunked comprehensively by the European Environmental Bureau as “a haystack without a needle”.

You need only picture a society even temporarily deprived of energy to see the reality of this. Without energy, food cannot be grown, processed or delivered, water fails when the pumps stop working, our homes and places of work become cold and dark, and schools and hospitals cease to function. Without continuity of energy, machinery falls silent, nothing can move from where it is to where it is needed, individuals lose the mobility that we take for granted, and, in a pretty short time, social order fails and chaos reigns.

Ironically, financial systems are amongst the first to collapse when the energy plug is pulled. People cannot even write learned papers telling us that energy is ‘just another input’ when their computer screens have just gone down.

The second principle of surplus energy economics is that, whenever energy is accessed, some of that energy is always consumed in the access process. Stated at its simplest, you cannot drill an oil or gas well, excavate a mine, or manufacture a wind turbine or a solar panel without using energy. Much of this energy goes into the provision of materials, of which just one example is copper. This is now extracted at ratios as low as one tonne of copper from five hundred tonnes of rock. Supplying copper, then, cannot be done with human or animal labour – and, of course, even if this were possible, the need for nutritional energy would keep the circular, ‘in-out’ energy linkage wholly in place.

Taken together, these principles dictate a division of available energy into two streams or components.

The first is the energy consumed in the access process, known here as the Energy Cost of Energy (ECoE).

The second – constituting all available energy other than ECoE – is known as surplus energy. This powers all economic activity, other than the supply of energy itself.

This makes ECoE an extremely important component, because, the higher ECoE is, the less surplus energy remains for those activities which constitute prosperity.

Four main factors drive trends in ECoEs. Taking oil, gas and coal as examples, these energy sources benefited in their early stages from economies of scale and expanding geographic reach. Latterly, though, with these drivers exhausted – and as a consequence of the natural process of using the most attractive sources first, and leaving costlier alternatives for later – ECoEs have been driven upwards relentlessly by depletion.

A fourth factor, technology, accelerates movement along the early, downwards ECoE trajectory, and then acts to mitigate subsequent increases. Mitigation, though, is all that technology can accomplish, because the scope for technological improvement is bounded by the envelope of the physical properties of the energy resource itself.

Lastly on this, because the four factors driving ECoEs – reach, scale, depletion and technology – all act gradually, ECoEs evolve, and need to be measured as trends.

Application – the money complication

With the basic principles established, and the role of ECoE understood, it might seem that, to arrive at a measure of prosperity, all we need do now is to subtract ECoE from economic activity. That would indeed be the case – if we had a reliable data series for output.

But this is something that we simply don’t possess, least of all in reported GDP. Essentially, GDP has been manipulated for the best part of two decades, and, arguably, for even longer than that.

By manipulation, I’m not referring to tinkering at the production boundary, or understating the deflator necessary for making comparisons over time.

The kind of manipulation I have in mind is the simple matter of pillaging the future to inflate perceptions of the present.

Expressed in PPP-converted dollars at constant 2018 values, reported world GDP increased by 36% between 2000 and 2008, and has grown by a further 34% since then. During those same periods, though, world debt increased by, respectively, 50% and 58%. Each $1 of incremental GDP between 2000 and 2008 was accompanied by $2.30 of net new borrowing, a number that has increased to more than $3 in the decade since then. Sustaining annual “growth” of about 3.5% in recent years has required annual borrowing of about 9% of GDP.

In short, GDP and growth have been faked by the simple spending of borrowed money. This exercise in cannibalising the future to sustain the present would look even more extreme were we to include in the equation the creation of huge holes in pension provision.

In this context, we need to answer two questions before we can calculate a useful output metric against which ECoE can be applied.

First, what would happen now, if we stopped piling on yet more debt?

Second, where would GDP be today if we hadn’t embarked on a massive borrowing spree?

You’ll understand, I’m sure – with government, business and finance still hamstrung by the failed economic methodologies of the past – why I won’t go into details here about the SEEDS algorithms which provide answers to these questions.

What I can say, though, is that, in the absence of further net borrowing, growth in world GDP would fall from a reported level of around 3.5%, to about 1.2% now, decreasing to just 0.6% by 2030.

On the second question, setting growth since 2000 of $61tn against borrowing of $167tn over the same period puts in context quite how far reported GDP has been inflated by the spending of borrowed money – and, if this borrowing binge hadn’t happened, GDP now would be 30% below the numbers actually recorded. Instead of “GDP of $135tn PPP, growing at 3.5% annually”, we’d have “GDP of $94tn, growing at barely 1%”.

Prosperity – the ECoE connection

When we set growth in real, “clean” GDP (C-GDP) of 31% since 2000 against a global trend ECoE that has risen from 4.1% to 7.9% over the same period – and stir a 23% increase in population numbers into the pot as well – you’ll readily understand why people have started to become poorer.

This is set out in fig. 1. In the left-hand chart, the gap between reported GDP (in blue) and C-GDP (black) represents the compound rate of divergence in a period when debt of $167tn has been injected into the system, together with large amounts of ultra-cheap liquidity.

If we were now to unwind these injections, GDP would fall to (or below) the black C-GDP line, over whatever period of time the debt reduction was spread. The gap between C-GDP (black) and prosperity (red) shows the impact of rising ECoEs, and illustrates how the worsening ECoE trend is set to turn low (and faltering) growth in C-GDP into a deteriorating prosperity trend.

The middle chart adds debt, to set these trends in context. In the right-hand chart, per capita equivalents illustrate how the average person has been getting poorer, albeit – so far – pretty gradually.

Fig. 1

#1567 Global

Comparing 2000 with 2018 (in constant PPP dollars), a rise of 31% in C-GDP has been offset by an ECoE deduction that has soared from $2.7tn to $7.4tn. Aggregate prosperity has thus increased from $69tn ($71.9tn minus ECoE of $2.7tn) in 2000 to $86tn ($93.5tn minus $7.4tn) last year.

This is a rise of 26%, only slightly greater than the increase (of 23%) in world population numbers between those years. In fact, SEEDS indicates that global prosperity per capita peaked in 2007, at $11,720, and had fallen to $11,570 by last year.

On the cusp of degrowth

This, to be sure, has been a very small decrease, essentially meaning that per capita prosperity has plateaued for slightly more than a decade. Before drawing any comfort at all from this observation, though, the following points need to be noted.

First, the post-2007 plateau contrasts starkly with historic improvements in prosperity. The robust growth of the first two decades after 1945, for instance, coincided with a continuing downwards trend in overall ECoE, as the ECoEs of oil, gas and coal moved towards the lowest points on their respective parabolas.

Second, the deterioration in prosperity, though gradual, has taken place at the same time that debt has escalated. Back in 2007, and expressed at 2018 values, the prosperity of the average person was $11,720, and his or her debt was $27,000. Now, though prosperity is only $140 lower now than it was then, debt has soared to $39,000.

Third, these are aggregated numbers, combining Western economies – where prosperity has been falling over an extended period – with emerging market (EM) countries, where prosperity continues to improve. Once EM economies, too, pass the climacteric into deteriorating prosperity – and that is about to start happening – the global average will fall far more rapidly than the gradual erosion of recent years.

Fourth, as these trends unfold we can expect the rate of deterioration to accelerate, not least because our economic system is predicated on perpetual expansion, and is ill-suited to managing degrowth. In a degrowth phase, in which utilization rates slump and trade volumes fall, increasing numbers of activity-types will cease to be viable (a process that has already commenced). Additionally, of course, we ought to expect the process of degrowth to damage the financial system and this, amongst other adverse effects, will put the “wealth effect” – such as it is – into reverse.

The differences between Western and EM economies is illustrated in fig. 2, which compares the United States with China. On both charts, prosperity per person is shown in blue, and ECoE in red.

In America, prosperity turned down from 2005, when ECoE was 5.6%. In China, on the other hand, SEEDS projects a peaking of prosperity in 2021, by which time ECoE is expected to have reached 8.8%. The reason for this difference is that complex Western economies have far less ECoE-tolerance than less sophisticated EM countries.

As a rule of thumb, prosperity turns downwards in advanced economies at ECoEs of between 3.5% and 5.5%, with the United States far more resilient than weaker Western countries, most notably in Europe. The equivalent band for EM countries seems to lie between 8% and 10%, a threshold that most of these countries are set to cross within the next five or so years.

Where China is concerned, it’s noteworthy that, with ECoE now hitting 8%, there are very evident signs of economic deterioration, including debt dependency, increasing liquidity injections, and falling demand for everything from cars and smartphones to chips and components.

Fig. 2

#1567 US vs China

The energy implications

In conjunction with the SEEDS 20 iteration, the system has adopted a new energy scenario which differs significantly from those set out by institutions such as the U.S. Energy Information Administration and the International Energy Agency.

Essentially, SEEDS broadly agrees with EIA and IEA projections showing increases, between now and 2040, of about 38% for nuclear and 58% for renewables, with the latter defined to include hydroelectricity.

Where SEEDS differs from these institutions is over the outlook for fossil fuels. Using the median expectations of the EIA and the IEA, oil consumption is set to be 11% higher in 2040 than it is now, gas consumption is projected to grow by 32%, and the use of coal is expected to be little changed.

Given the strongly upwards trajectories of the ECoEs of these energy sources, it’s becoming ever harder to see where such increases in supply are supposed to come from. With the US shale liquids sector an established cash-burner, and with most non-OPEC countries now at or beyond their production peaks, it may well be that far too much is being expected of Russia and the Middle East. The oil industry may, in the past, have ‘cried wolf’ over the kind of prices required to finance replacement capacity, but we cannot assume that this is still the case.

The implication for fossil fuels isn’t, necessarily, that worsening scarcity will cause prices to soar but, rather, that it will become increasingly difficult to set prices that are at once both high enough for producers (whose costs are rising) and low enough for consumers (whose prosperity is deteriorating). It’s becoming an increasingly plausible scenario that the supply of oil, gas and coal may cease to be activities suited to for-profit private operators, and that some form of direct subsidy may become inescapable.


It is to be hoped that this discussion has persuaded you of two things – the abject failure of ‘conventional’, money-based economics, and the imperative need to adopt interpretations based on a recognition of the (surely obvious) fact that the economy is an energy system.

Until and unless this happens, we’re going to carry on telling ourselves pretty lies about prosperity, and acting in ways characterised by an increasingly desperate impulse towards denial. Many governments are already taxing their citizens to an extent that, whilst it might seem reasonable in the context of overstated GDP, causes real hardship and discontent when set against the steady deterioration of prosperity.

Meanwhile, risk, as measured financially, keeps rising, and the cumulative gap between assumed GDP and underlying prosperity has reached epic proportions. Expressed in market (rather than PPP) dollars, scope for value destruction has now reached $320tn.

Only part of this is likely to take the form of debt defaults, though these could take on a compounding, domino-like progression. Just as seriously, asset valuations look set to tumble, when we are forced to realise that unleashing tides of cheap debt and cheaper money provides no genuine “fix” to an economy in degrowth, but serves only to compound the illusions on which economic assumptions and decisions are based.


391 thoughts on “#156. Actual fantasy

  1. Proof that any new economic activity can only survive if it fits within the available energy envelope.

    The Guardian has an article about using UK coal shafts to even out electricity from renewables which is claimed is cheap than batteries.

    Lifting weights and slowly releasing them is not a new idea but its claimed pricing may appeal.

    Also in the Guardian Mervyn King warns that the World is sleepwalking into another financial crisis.


    Another economic and financial crisis would be devastating to the legitimacy of a democratic market system,” he said. “By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.”

    It’s a long article but no mention of energy being part of the equation

  2. With regard to tax cuts as a last-ditch ‘stimulus’: given the level of private indebtedness, how can they be of much benefit – surely all will go to paying down debt if anyone has any sense?

    And those who are aware of the precariousness of the situation will surely save.

    Poorer people tend to spend all they have,out of necessity; but they too are generally the most indebted, in the worst ways, eg payday lenders, etc.

    Tax rises on certain goods do seem to stimulate – briefly -as people buy to avoid the rise. No doubt on credit……

  3. I tried to get some Ibuprofen today but you’ll be lucky to get Nurofen at many times the cost.

    There are also shortages of other painkillers and anti-depressants.

    There are a lot of theories around but manufacturers say that production can often fluctuate.

    Is this the future – or rather the now – we face as manufacturers cannot meet global demand due to resource constraints or that cheap non brand name drugs are no longer economical to produce?

    A lot of people could be left in pain

    • I’ve noticed a reduced range of product lines in M&S, streamlining I suppose as they are under pressure, but also repeated gaps on the shelves which never used to happen – meat mostly.

      Most odd of all was the failure to deal with the breakdown of the bakery and the freezer cabinets for over a month – was some key part not available?

      Lots of chill cabinets also went out of operation for prolonged periods, which I’ve never seen before. This is a very busy major store, too.

      A Russian friend did talk about the eventual ‘Sovietization’ of Britain….

    • Actually my local shops chilling cabinets were out of action for some time too. Perhaps it’s becoming economically unviable to repair things.

      I remember stories about the old Soviet Union with empty shelves and long queues for basic foodstuffs. Perhaps we are going that way.

      Ibuprofen has been around since the 60s so why the shortages?

      1. A ruse by companies to force you pay extra for the brand name equivalent.

      2. It’s become genuinely uneconomic to sell at the low prices that poorer people can afford.

      3. Shortages of resources inflating prices leading to point 2 above.

      4. Fear of Brexit has made consumers stockpile.

      Also Naproxen is in short supply along with some anti-depressants.

      My Doctor looked worried so maybe there are other drugs that are be becoming hard to get hold of at a price the NHS can afford.

      With an aging population the role of cheap painkillers is very important – so this could be the start of a crisis especially with Winter approaching.

      Basically the last thing the UK needs now is a disorderly Brexit which could exacerbate the situation.

    • I’d say – and I think businesses might agree – that the last thing Britain needs now is yet more delay and uncertainty.

      As you’ll know, I’m neutral on the “Brexit” decision itself. But I am increasingly disgusted with some of its opponents’ antics. The vote by the public means nothing. Manifesto commitments mean nothing. They oppose “Brexit” with no deal, and then, when Boris does get a deal and the EU agrees with it, they block even a vote on the “with a deal” they said they wanted.

      They seem to forget that the deal on the table is the last one they’re going to get from EU governments which must be sick of this by now. If just one of them vetoes the extension – and there are several who might – then it’s no-deal (because Parliament refused to accept the one the EU had put on the table), and out on 31st October. That would serve the unscrupulous Remain fanatics right.

      What a chance for Madrid – shift the media focus from Catalunya with “we get Gibraltar – or you get no extension”……

    • On ibuprofen specifically, and also paracetamol, I think in the UK these are generally sold in packets of 16. But a new European Directive limits pack sizes to 12 paracetamol and 20 ibuprofen, and also at lowered strength, so it may be that the UK does not have the ‘approved’ packs.

      More generally, I don’t think the EU should grant an extension unless the UK commits to put it to some useful purpose, such as passing the legislation, or holding a general election. Why should EU countries grant yet more time to be frittered away in parliamentary pantomimes?

    • Could be – looking at my packs of paracetamol they are for 16 – but manufacturers did not mention this when asked by the BBC.

      Regarding the EU they should have given us a better deal because it’s lead to deadlock so I can’t see anyway through because no party may get a workable majority.

      As such Parliament will be frozen again.

    • Forgive me for saying so, but I think you’re still being too trusting.

      Some of these people will do ANYTHING to stop “Brexit”. They ignore the public vote, and disregard manifesto commitments. To them, no deal offered by the EU will ever be acceptable. Leaving without a deal is blocked. Then leaving with a deal is blocked as well. It might be that even a general election isn’t acceptable to these people, because Mr Johnson might win it. If they got their second referendum, and lost it, they’d demand a third one.

      The obvious solution now is a general election, with the EU granting an extension conditional on this being held.

      The delay is now causing the EU more harm than any form of “Brexit” might have caused. It’s certainly doing more damage than “Brexit with a deal” would cause. It is extraordinarily frustrating. If I were the EU, I would seriously consider refusing an extension, forcing the UK to choose between this deal or no deal. The Euro Area is going into recession. The ECB is, in all but name, operating QE. Is this a good time to be put into stasis by a bunch of British politicians?

    • Then like some science fiction premise we’ll be forever stuck in a conduit between two Universes – one where we left and the other where we stayed – with arguments raging until the end of time.

      I would love to be able to give up all my responsibilities for 3 years and live somewhere remote with no connection to the outside World although perhaps somebody did that in 2016 and is in utter shock there we’re still dreadlocked.

  4. Thinking about the sick elderly in the winter, the supermarket delivery man amused me by saying they generally didn’t care about gaps in their orders, except for the gin:

    ‘ I don’t care about the rest; have you got the gin?!’

    It’s one very traditional solution……

    Curious gaps and discontinuities are occurring, certainly.

    I hope stable insulin supplies can be maintained, as one of the loveliest people I know would die very quickly without them, and all too young.

    • I hope vital medicines can be maintained too especially for vulnerable people like your friend.

      The M20 is about 8 minutes drive from me – I have no wish to see it transformed into the world’s longest car park

    • An 1850s Royal Commission investigating the excessive use of alcohol was told by one woman that gin “is the quickest way out of Manchester”.

      Before blaming all the shortages either on “Brexit” or incompetence, it’s worth reflecting on general economic deterioration – this, after all, can be expected to undermine supply chains.

  5. To rectify the balance,talking about the evils of drink, it was also observed that in the days when every farm worker in the West Country was given his 3 pints of (strong) cider a day, everyone was ‘so much more friendly and civil’.

    I hope they beat their wives less, too. Maybe the wives were equally fuddled and ‘civil’, making for domestic peace. An over-worked wife drinking only weak tea probably didn’t make for happy homecomings c 1900.

    The custom of leaving big flagons of cider around to drink at will certainly persisted on prosperous farms until WW1, and drinking water was frowned on as queer, even for women. Sounds like Heaven.

    If supply chains start to creak under pressure, it won’t do people any harm – vital medicines aside – to start to plan a bit and stock-up on essentials , rather than living in this incredible system in which all one has to do is put out one’s hand and it’s there.

    Maybe this would also help people to realise just what IS essential?

    Of course, as the decline in prosperity continues and deepens – as we are agreed it must – those at the bottom, growing inexorably in number ( I may well join them, who knows, as a total collapse in business is quite possible for me as in 2008) will be unable to prepare in this way, not having any spare cash to store their cupboards, and so misery and social tensions will only grow.

    Will the next riots in London see the underclass stealing food, rather than trainers, electronic goods and cosmetics as they did in 2011?

    I still find what happened at M&S this summer puzzling, they must have lost many thousands in food sales.

    • As a friend of mine used to say – “work is the curse of the drinking classes”; “reality is an illusion caused by alcohol deficiency”; and “I’m ill – I have an excess of blood in my alcohol stream”.

      I do wonder, though, when I read about someone (circa 1805) making time for “a quick pint of sherry”, whether drinks were weaker in those days?

    • When an economic re-localisation agenda is pursued, inevitably or proactively, the local population would be dependent on the management and security of the crop/herd as well.

      I would like to think the local population would sufficiently secure their food producing assets from non-local ‘rustlers’.

      This also begs the question: If local people are hungry, what moral right does a local farmer have to withhold this food?

    • Regarding withholding food it depends on whether food should be distributed evenly to all the population or favour those who live in a food producing area.

    • A great deal of rural theft is done by gangs, international in organisation, and of course the ‘Travellers’ who come over from Ireland and have their annual pillaging tour April to September – the major landowners have their own scheme for monitoring them.

      The big machines are worth a lot and find ready buyers when exported. The rise in sheep theft is serious, and I suspect that has something to do with foreign gangs, too, not natives going hungry! I wouldn’t be surprised to findt that a lot is going illegally to restaurants, kebab shops, etc, also often owned by gangs. It’s too big a change, and suggests well-organised activity. These people are very violent if you confront them -no sensible person does.

      When a country is in crisis and crops can find a ready market abroad, people in rural ares will see them exported while they go as hungry as anyone else. And the cities will get first claim, to keep them quiet.

      It is vitally important to make a good kitchen garden, however small, NOW, in order to have high-quality, fresh, greens and fruit as supplements to whatever rations are made available.

      Just a little extra nutrition can make a big difference in one’s spirits, mental acuity and general strength.

      Being able to keep one’s teeth would be a major preoccupation: people suffered terribly from loss of teeth in German-occupied Europe in WW2, being more or less half-starved for years. No teeth, boils, skin diseases, not much fun.

      The decline in the nutritional content of crops -well documented – is alarming, and should also be borne in mind.

      The disappearance since WW2 of the well-run, mixed family farm, producing a surplus of eggs, milk, butter and cream, the occasional chicken for sale, etc, so common in the 1940’s, will be seen to have been disastrous when serious problems in food supply hit.

      Rural areas will no longer be the places to ride things out in terms of material needs, unless you have your own kitchen garden. Further away form the riots, though, which will be something.

      We have, basically, wrecked the agricultural foundation of civilisation. All ‘localisation’ is utterly phoney, at least here in the UK.

      If Don Stewart were still here he could I am sure tell us much more of use on the nutritional front.

    • I must have missed a post – why has Don left?

      Even if you can grow stuff in your own garden there would be nothing you could do to stop hungry people taking it all.

      Teeth hygiene is very important as there is new research showing how some very harmful bacteria can lurk in you gums causing all sorts of problems through your body.

      I’ve tried to delve more into the current drug shortages but can’t find specific answers.

      I would say the UK should look to manufacture alternatives as soon as they can.

      Not being able to get hold of a basic drug like Ibuprofen is ridiculous – but if say there’s only enough resources for the US to satisfy demand in its own country then that could be one the new reality.

    • It’s the same in many “developed” economies. Doubled populations in the past 50 years, triples in 75 years, and agribusinesses with monoculture crops and meat production replaced the family farms with some diversification. Brittle systems are more fragile, and they are being increasingly taxed by higher throughput. Water, & sewer systems, and electric grids are in a similar boat.

  6. As a minor but eloquent indicator of the recession in the EU, in our region of Spain exports – mostly to the rest of the EU – including wine and chorizos to the UK, are sharply down by 10% year on year. I am quite sure it will worsen.

    This is a very bad time for the Madrid government to be making such a hash of the Catalan problem, with posturing quite as absurd as the UK Parliament over Brexit; although perhaps it might reduce the Air bnb crisis in over-crowded Barcelona if people are put off by continued rioting?

    • On the latter, in my part of Spain – and, I believe, in Barcelona, too – it’s illegal to let a property for a short period (less than one month) without a tourist licence, and this offence carries a minimum fine of 40.000 euros.

      All it really needs, I think, is for the public to report flouting of this law, and for the police and the courts to enforce it.

      Likewise, in many countries it is illegal to operate a taxi service without several types of official licence covering the vehicle, insurance and driver.

    • True about Airbnb in Spain often being conducted illegally, but the context is all important: ever read those local newspaper reports of someone ‘getting a beating’ to ‘adjust accounts’? That could well happen…..

      And if the person doing the illegal renting actually has political contacts and influence, which might include the local police, it is something no sane person would touch. Justice is far from impartial in Spain, and things get rather nasty quite quickly if you upset someone connected.

      I also think the city authorities (if not of the Left) are often quietly happy to see the large volumes of tourists continue, and they will, of course, have their nice homes far away.

      In much of Southern Europe, attracting increased tourist volumes is more or less the only business plan. Florence is now utter hell in high season, and yet they want more!

    • Financial genius Gordon Brown sold most of Britain’s gold reserves. Not only that, but he pre-announced this intention, causing the price to slump. This low point on the gold price chart is known as “the Brown bottom”. What a wonderful time to have been a buyer!

      When I worked in international equities, a phrase commonly used was “this share price has now risen too far – the French have started buying!” I was never sure if this was logical or simply chauvenism….

    • A Bank of Canada senior market executive told me (2000) that they were not permitted to buy gold, only sell it! I had volunteered to consult to them for $1/year on how to use options for currency intervention and revenue streams. (selling puts on gold, making them a contingent buyer at lower prices) It was a waste of time!

    • Yes, i noticed that one too. There’s a plan B already.

      Bet the UK will confiscate the 245000 ounces the LBMA stores for its paper trading customers.

      Lets call it Johnsons top. His hair is rather confusing but i can see through it.

  7. Re Gordon Brown , I read somewhere that selling the gold was a failed strategy to bring down the price, though not being an economist I have no clue if or how the UK might gain from this. Seeing it was preannounced and done in tranches so each lot was worth less than the last , I do wonder. Maybe he underestimated the pricing power of Asian demand

    • It was done as one of ‘the precious’ as the banks are known was in trouble meeting its gold obligations. So pressure was put on the treasury to sell to provide actual gold in the market and force the price down to help acquire more elsewhere.

      As always the Hoi Poloi were not even considered in all this (I mean it’s not like it’s actually there property)

    • I would like to learn details if possible. Can you provide any links or references to documents, papers, etc?


    • In 2016, the number of ‘owners per ounce’ on the Comex (paper trading) rose above 500.

      Steven, don’t try to figure out why the UK sold its gold holdings. Maybe the trade was cheap oil for 10 years in exchange for the gold. The real reasons won’t be televised.

      Full faith & credit.

      Read some stuff on fofoa blog. Gives me a headache though.

      Point is, the monetary plane goes down like a Boeing 737 when upward pressure in the form of cheap energy dissapears.

    • “A mighty bubble of wealth is blown before our eyes, as empty, as transient, as contradictory to the laws of solid material, as confuted by every circumstance of actual condition, as any other bubble which man or child ever blew before.”

      Edward Chancellor, Devil Take the Hindmost

  8. I also recall reading a account of the Brown gold fiasco which indicated that it was done to help out a TBTF UK bank in severe difficulties.

    Regarding UK plc (bankrupt) there is a good article in The Guardian, (among all the trivial gender and race froth) regarding the mass loss of employment – and more projected in the near future, ie before 2025 – in retail in the UK: 95,000 redundancies in the last year.

    Jobs so vital for the mass of the population, those least able to retrain and adapt, and above all where there is little industry.

    Operating costs up 11% over the last 5 years, and profit margin down 50% over the last 10. Crippling business rate burden, etc.

    Simply appalling, but the usuall idiots are blathering about ‘wonderful opportunities entering the next business cycle’. For whom?! Debt collectors?

    I am beginning to feel that if the UK were a house in a medieval city, it would be one of those with the X for ‘Plague Here’, on the door!

    This is not a robust economy, nor society sadly, able to weather a storm of any magnitude. I fear our host’s prognostications will be all too fully realised.

    • Rather more than a decade ago, a then colleague told me that “the UK is more of a banana republic than any country which actually grows bananas”. That’s a simplification, obviously, but the British economy really is at very great risk.

      Some of its problems are common to other Western economies, to a greater or lesser extent. Prosperity is in relentless decline, with the cracks papered over by the spending of borrowed money. The infusion of cheap credit has pushed up asset prices, enabling some to come up with a meaningless balance sheet suggesting that ‘you’ve never had it so good’. Closer observation soon reveals the cracks in the facade. Look at huge numbers ‘just about managing’, and a host of other financial and non-financial indicators, and it’s there to be seen.

      None of this is unique to the UK – it’s at least as bad, or worse, in much of the Euro Area, though the EA does have, proportionately, twice as much manufacturing as Britain. Wherever you look, especially in the West, you can see overvalued assets, excessive indebtedness and dependency on a credit treadmill.

      Where the UK does differ is its dependency on finance. This activity, much of it simply passing money from hand to hand, adds little value, but constitutes a sizeable proportion of GDP. What goes with it is huge exposure to financial shocks. Even on official figures, financial assets exceed 11x GDP. That level of exposure is far higher than in most other economies – only Ireland and Holland compare – and is a higher multiple than those which have brought down others, such as Cyprus.

    • The UK belongs to the core. That is, business class on the monetary plane.

      That means other core central banks will have to support the £ when the time comes. Imho. We’ll see.

  9. Keiser Report and Dmitry Orlov
    Dmitry has been, or is about to be, interviewed by Max and Stacy. Since he has to cram everything he wants to say into 15 minutes, he makes notes to prime himself. He provided the notes to his subscribers a few days ago. I thought perhaps the interview would appear, but it is still not up. Max and Stacy in the current post talk about the (apparent to them) collapse of the fiat system (highlighting continuing problems in the Repo market). And since Dmitry addressed the same sorts of problems, but from the standpoint of someone now living in Russia, I thought it would be interesting (and permissible) to give you a few quotations:

    “The demonization of Russia stems from the desperate need to get at Russian natural resources without paying for them. Without that it’s pretty much game over for the US and the EU as industrialized societies. ….Russia has already sold its US debt and diversified its foreign reserves. It’s in a unique financial position among all the major nations: it has zero net debt. And, yes, Russia’s gold hoard is growing. This is setting the stage for a gold-backed system of international trade conducted in local currencies.,,,Now, there’s one more thing that’s key about Russia’s position right now, and it must really be scaring the bejesus out of the bankers in New York and London. Russia no longer has to export its main energy products (oil and gas) in order to maintain a trade surplus. It uses its trade surplus to finance social projects, to build infrastructure and so on. It also uses it to lend to developing nations in ways that stimulate Russia’s export industries and creates jobs in Russia….China’s economic performance over the last five decades has far surpassed that of anyone else. At this point it must be conceded that their model is superior to anyone else’s. But what is it? Well, it’s certainly not any sort of communism, as Karl Marx or his followers may have imagined it…Russia is moving ahead with developing a closed nuclear fuel cycle and has perfected the fast neutron reactor which will allow it to stretch out the existing depleted uranium stockpile over many centuries. ”

    From the news over the last few days, we hear that Russia is now moving forward on very large oil projects in the Siberian shelf in the Arctic Ocean, and is courting the Africans currently in Sochi…in partnership with Egypt.

    ON THE OTHER HAND, as Dmitry points out, the Europeans and Americans have to come up with something to trade for the natural resources. Since neither Europe nor North America are currently leaders in manufacturing technology, what do they have to trade (with fiat currency having a value of zero)? And so we have to ask Gail Tverberg’s question about whether the impoverished Europeans and Americans can actually reimburse the Russians for the not-inconsiderable cost of getting the Arctic oil out, and whether the African markets can repay investments (such as China’s new railroad in Kenya). In short, we have to confront Dr. Morgan’s ECoE question.

    Don Stewart

    • 90 billion barrels of oil is not worth extracting from the Arctic in terms of the environmental damage it will cause – but it won’t stop them.

      What is its EROEI ratio?

    • Don
      The Keiser Report with Dmitry Orlov has now been aired: https://www.rt.com/shows/keiser-report/472028-china-to-surpass-us-economy/

      One thing that wasn’t mentioned on this programme that is worth noting is that Russia recently hosted a Russian – African Summit. At this event, Putin announced that Russia had cancelled some $20 billion of debt that dated back to the Khrushchev era. China and now Russia are turning Africa slowly but surely from Western hegemony into their sphere of influence. They also have all the gold. Just another step down on the West’s declining prosperity..

    • So we have the start of debt forgiveness to gain influence.

      This will no doubt be a growing trend as most debt can’t be repaid anyway so it can be used as a ‘ free of charge’ tool

  10. Oliver Kamm who I know contributes to CapX says – in the Times- that we should celebrate future population growth in the UK.

    It’s as though many commentators Do not realise that the World us running out of resources and that over burdened services do no matter

    • ?! It is indeed difficult to comprehend such blindness.

      Most major UK institutions are in semi-failure as it is, setting aside questions of food and energy security, water supply, etc. Let alone ecological aspects.

      When I go into town, the stress from over-crowding is now almost palpable (here, the result of massive housing developments out of town) and the infrastructure creaking.

      Astonishing report in The Guardian regarding the level of violence that people say they would tolerate in order to get their desired Brexit result. Not expect, but tolerate!

      I thought that these levels of polarisation were happily confined to the Iberian Peninsula….

    • I’ll have to try and find the article in the Guardian – sounds frightening.

      Each camp feels that their solution – leave or stay – will take us back into real growth and prosperity and are prepared to fight for their beliefs.

      2020 might not be a pleasent year

    • It’s no coincidence that countries that embrace political correctness ( none factually based truth) are in the worst position. My hunch is PC is a larger drag than ECOE on prosperity. We used to say Africa was poot because of bad governance. Similarly the West ills stem from the same cause …energy costs are (for now) of secondary order importance.

  11. @ewaf88
    ‘what is the EROEI?’
    The article I saw doesn’t say anything about the financials or EROEI. About 6 years ago when Rex Tillerson flew to Russia to celebrate the joint Rosneft/ Exxon-Mobil well in the Arctic, he said ‘the world is headed toward 200 dollar oil, so it will be profitable’. Of course, on the geopolitical front Exxon was forced to stop participating and the West thought it had throttled further movement by the Russians through the strategy of forbidding technology exports to them. My perception is that Russia has developed its own technologies in both the oil and nuclear fields since that time. The Russians have also developed close working ties with the Gulf States, and the recent trip by Putin to the Gulf resulted in several investments by those states in Russian companies. So my assumption is that, along with the thawing Arctic, the plan is technologically feasible and can get some funding.

    Two issues not much discussed in the media:
    *Are Stalinist 5 year plans preferable to unfettered democracy and financial capitalism as a way to move economies?
    *What sort of economy could function well with 200 dollar oil from the Arctic? And how do we get to that economy? (Similar to ‘What sort of economy could function well with intermittent sources of electricity and how do we get to that economy?)

    Orlov speaks (in his notes to himself) approvingly of Stalin’s 5 Year Plans. It is worth remembering that Henry Ford thought they were what the economy needed. Ford built the equivalent of a 5 Year Plan at River Rouge…a gigantic, tightly integrated, top down production system. Dmitry suggests that it was the Chinese use of very large state directed companies which powered their remarkable 5 decade run.

    If I read between the lines on Pence’s recent demands on China, it seems to me to imply that the US leadership is very afraid of the effectiveness of 5 Year Plan style economics. Dmitry suggests that vertical integration is one reason Russia has been effective in terms of weapons systems, while the atomization of supply chains has been a reason the US is, in his perception, falling behind.

    Don Stewart

    • Don it’s Energy return on energy invested although Tim uses the shorter definition.

      Obviously if oil goes up to $200 a barrel then it could be profitable but who is going to buy it?

    • If oil did go to $200/b, the authorities would print the money to pay for it – on top of the printing that CBs are already engaged in. Money versus the physics of energy is a conflict that can have only one outcome.

    • Someone identifying as an ‘analyst in the US military’, in a comment on the J M Greer site, let drop as an aside the observation that they expect the flow of Gulf oil to the US to dry up ‘by about 2023.’

      The main post, about the US fleet and current infantry battlefield doctrine, as contrasted with China and Russia, was certainly well written and seemed informed and professional.

      I’ll see whether he pops up again.

      Quite a few people are converging on 2025-30 as the likely period for a major oil-supply crisis.

  12. Once people believe themselves to be involved in a struggle of transcendental significance, wave flags about and shout ‘Traitor!’ ‘Fascist! (or in the case of Brexit, ‘Little Englander!’), and plenty of time is allowed for tensions to build and positions to harden – the mishandled and dishonest Brexit negotiating process – violence is not far behind waiting for an opening.

    I’m deeply saddened to see this happening here in Britain. And no one is doing anything at all to defuse the situation; although I would place the greatest responsibility on those who seek to over-turn the Referendum result at any cost to the functioning of UK democracy, the reputation of Parliament, and the social damage they are inflicting.

    Their position would seem to be that none of these things matter a bit, so long as they succeed.

    And all a self-indulgent distraction from now very pressing economic dangers which we cannot afford to ignore.

    • Well I’m sure future psychologists and social scientist will look back on this period with extreme interest and may liken it to the divisions at the time of the Roundheads and Cavaliers.

      With decreasing prosperity obviously people need something tangible which they can believe and hold on to for a feeling of security – real or otherwise.


    • The English Civil War was really a spat between two factions of the incumbent elite. The leaders of those Parliamentary soldiers who claimed that it was a ‘war for the common man’ were strung up by Cromwell.

    • That’s enlighting although it is two sides of the elite which are going at each other hammer and tongs over Brexit.

      However. – just like the earlier conflict – those who on the surface -appear to be supporting leaving – clearly want to stay but cannot say so for fear of upsetting their voters.

      So you can argue that the electorate are being strung up as much as the soldiers were.

      Duplicity triumphs

  13. With the Fed now pouring tens of billions into the system on a daily basis, China apparently doing similar, the ECB seemingly paralysed like a rabbit staring into headlights, and the whole ‘unicorn’ nonsense starting to unravel, I doubt if we have enough years of tranquility/stability to operate even a three-year plan. Unrest seems to be spreading around the world, including countries that normally are pretty stable.

    The real problem is that decision-makers still don’t get it. They tried credit adventurism, and it failed. Then they tried monetary adventurism, and that is now in end-game. They still believe in the mantra of perpetual “growth”. Even those who recognise the importance of energy don’t understand its role in the economy – and seem to believe in a seamless transition to renewables.

    What we’re witnessing is incomprehension – the bafflement caused by the failure of prior assumptions. One of these is that ‘everyone keeps getting more prosperous, so nobody minds a tiny minority becoming ever richer’.

    This and similar paradigms are over – but decisions are being made in ignorance of this fact.

    • I can only thank out host again for offering a compelling analysis which helps to pull together so many of the threads in the economic news.

      If these excellent summaries of the situation were to appear on the front page of every newspaper and website as the top story for a month, I am beginning to doubt that even then they would get it.

      We probably need to look not just at the politics of vested interests (the top tier of the wealthy who cannot contemplate the fact that the paradigm which made them rich has had its day and are now very fearful of Redistribution politics) , ideological allegiances, distraction rather than information media, etc, but also brain science……

      Our economic policies, so misinformed, are about as useful as the summaries of the situation issued to their troops before every Big Push in WW1, promising total victory this time if the effort was big enough, when that didn’t change the fact that they were still only throwing men against machine guns and artillery, with the same tactics, and the same result.

      Failed paradigms are terribly dangerous if you persist in them….

    • Regarding unrest Tim many of us are still better off than a few decades ago in real terms so somehow we must get the general populace to accept less ( and less)

      Of course easier said than done.

      By the way I managed to get hold of some Ibuprofen today but it had to be through the dispensary in Sainsbury’s – none were on the shelves perhaps to stop panic buying.

      The price was good £2.50 for 84 400mg tablets which compared very favourably with the brand name version Nurofen which was on display at £6.99 for 24 200mg tablets.

    • I’m surprised that you could buy 84 – the limit here, set by Europe, is 20.

      People in the UK (for example) are certainly better off than they were in, say, 1973, or 1983. But SEEDS says they’re worse off, by c 10%, than they were in 2003. It seems to me that what people notice most is the direction of travel.

    • Yes you’re right concerning the direction of travel.

      I’ve mentioned this before but in 1975 the Government came clean about inflation and distributed leaflets.

      Could they be as honest now about declining prosperity?

      Seems not…..

    • Then that’s a poor reflection of the education their advisors in the Treasury receive.

      Perhaps they adhere to rigid economic theory and will not accept anything else even if it’s right in front of them

    • In this context “ignorance” is to do with vested interests. My experience, over the past 60 years or more, is that we all have vested interests to do with our individual or organisation mindsets. Only now, having been retired for 20 years, do I recognise how my vested interest changed each time I moved from one kind of organisation to another. Sometimes I couldn’t even understand the “language” being used in an organisation I had moved to.
      I don’t believe that the mindsets and associated language being used in this blog can be understood by anyone with a classical/conventional mindset. Those who do may be on the verge of moving on, but it would not be in their interest to reveal their dissatisfaction with their current lot. This was my experience when I decided to move out of top-down bureaucracy 40 years ago. I no longer believed in top-downism, but had yet to fathom out my emerging mindset.
      I find it hard to believe that I could change the mindsets of my many friends who believe in a future of business as usual. Most of whom have grandchildren. Although retired their vested interests are to do with the well-being of their grandchildren.
      Maybe the way to overcome the ignorance of those who cannot see that the current paradigm is over would be to persuade them that their current vested interests are not sustainable.?

    • It seems that the military is more realistic than most elected & appointed officials. See:

      Note the graph of interconnectedness of systems 1/3 way down.


      U.S. Military Could Collapse Within 20 Years Due to Climate Change, Report Commissioned By Pentagon Says

      The report says a combination of global starvation, war, disease, drought, and a fragile power grid could have cascading, devastating effects.


    • Steven
      The major cause that will be the downfall of the US military won’t be climate change per se but bloated expenditure on military projects that are of questionable value. (E.g. the F-35 flying lemon – a plane that costs billions in development, comes in at $90 million per plane each – at least – still has teething problems and has been roundly slated by American test pilots. Or the Gerald Ford class aircraft carrier that currently has hardly any functioning lifts, cannot be armed with defensive missiles and leaks prodigiously).
      Yes there will be blackouts and a return of epidemics and not just in the US either – and this will push any military of any country to breaking point. However, I can also envisage a point in the next decade that either the US engages in a suicidal war against a moderately well armed opposition (it may not necessarily be China or Russia – although the outcome would be a la JM Greer’s Twilights Last Gleaming) and or a financial crash.

    • No argument with your elucidation, Tel. He also didn’t mention antique sewer systems in most US cities. Failures there are epidemic fodder.

    • The really sad fact about this is the appalling nature of really modern sewerage systems. I have been to too many modern build estates and one of the overriding comments from residents is the failure of the sewerage system. These new build estates will become uninhabitable ghost towns in the near future

    • You might find the fact that the sewerage systems in a lot of UK new builds is not up to scratch an eye opener. It is not the only things not up to scratch with these wretched so called “developments” – I could be here all day on that particular topic

    • Or just hope that the changes happen do slowly that people adapt without noticing except perhaps when they can no longer afford a car.

    • It’s almost like our energy/climate problems are an outside-context problem for our elites. They can’t seem to be able to wrap their head arround it. At times I wonder if there is some type of thought calcification process happening here.

      Could a part of the issue be that degrowth would require a reduction of inequalities, something very much at odd with the neoliberal narrative ? In my opinion a part of the problem is that quite a few indicators (like inflation, CPI, employment, looking at mean GDP per capita instead of the median) have been deliberalty biased/picked to be on the rosy side, which makes for a deadly mix once paired with the complete disconection between the upper decile and the rest. You can’t experience the problem first or second hand, nor through trusted indicators (economic ones). Some non kosher indicators are in the red, but surely they are defective readings (ecological ones). What I expect to happen when the kosher indicators go red is either complete decision paralysis, or a big cargo cult economics kumbaya.

      “An Outside Context Problem was the sort of thing most civilisations encountered just once, and which they tended to encounter rather in the same way a sentence encountered a full stop.” Damn I love Ian M. Banks.

  14. “Jeremy Warner, assistant editor of The Daily Telegraph, is one of Britain’s leading business and economics commentators.”

    His article today is entitled “The solution to the Great Stagnation of our times is staring us in the face”.

    It is windpower! No comment is needed!

    • “Jeremy Warner, assistant editor of The Daily Telegraph, is one of Britain’s leading business and economics commentators.”
      This is code for a Neoliberal propagandist who wants to promote the illusion that economic growth forever is not only possible but also essential and to hell with pesky little facts such as the inability of the economic model to function properly as net available energy begins its descent in earnest. The same goes for Oliver Kamm. They are not journalists but stenographers. Their silence on the backlash against their beloved Neoliberal policies in Chile, Ecuador Brazil Iraq etc that are currently happening – not forgetting the Gilets Jaunes – is deafening.
      No wonder tabloid circulation is declining and more people turning to alternative media.

    • If someone borrows money to take a holiday he wouldn’t otherwise have taken, or to buy a car she wouldn’t otherwise have bought, what is that but debt-created growth?

    • Perhaps he’s got a special pair of goggles on that allows him to see things we can’t – or is reporting from an alternative Universe where there’s plenty of cheap energy

    • More wind in a hurricane is a rather disturbing proposal.

      Indeed doc.

      You deserve the Noble prize.

    • UK energy consumption in 2018, in mmtoe:

      Oil: 77
      Gas: 68
      Coal: 8
      Fossil fuels: 152
      Nuclear: 15
      Wind: 13
      Solar: 3
      Hydro: 1
      Other: 8
      Total: 192
      FF: 79%
      Wind: 6.7%

    • And for his next article, “How the Industrial Revolution took a wrong turn in utilising coal and then oil for energy rather than following the Dutch and developing windmills”!!

  15. To come clean about steadily declining prosperity would be to admit that the UK is not so appealing a place to invest in, and, – I suggest this is crucial – would open the door to a political debate about the necessity for, and justice of, the redistribution of wealth (such as it is) – above all higher taxes on the greater fortunes. Quite unthinkable!

    I also suspect that even if the true situation,and the redundancy of old economic models formulated in an era of growing energy surpluses, were to be grasped at a higher governmental and advisory level – in all its implications – this would never be communicated to the general public.

    • If TPTB in a region appreciated the trends and their implications. Letting it be widely known, could worsen the situation.

      If we take the UK as an example. If young people are aware and decide to emigrate to ‘invest’ elsewhere, the shrinking tax base would shrink even faster.

      You could end up with an island of older people with no economy and no ability to support themselves.

      There was a book released recently called ‘Empty Planet’, which concluded that today’s developed nations could begin competing for each others young people, just to keep their economies afloat.

      My partner and I are both professionals with 2 young children, with a good amount of savings, that was originally intended for a mortgage deposit. We are just waiting to see what happens with the UK after Brexit. Each year we struggle to find reasons to continue to ‘invest’ in the UK. If an opportunity presented itself, we could easily be off.

      I am starting to wonder if Brexit is to keep ‘us’ in, not to keep ‘them’ out.

  16. ‘Bunker Mentality’ or…… ‘Downfall’? Wonderful film. Moving counters on a map which correspond to nothing on the ground……

  17. The points raised by Kevin are excellent – if someone like him is frustrated and looking to move it’s eloquent as to the real situation we are in, even at the height of easy money.

    1/There is simply no way the the true economic and financial situation could ever be explained frankly to the mass of people, it would impact too severely on the economy, which is partly built on the general delusion of the hope of growth, th possibility of profitable investment and the security of savings and pensions. .

    So those who catch on – thanks in part to blogs like this outside MSM – will act accordingly so far as they can, and that might well mean emigration looking attractive once more (as in the 1970’s) for the better-qualified.

    Besides, since the two World Wars, government in Britain has relied heavily on propaganda and not on informing the public of the truth: the difference today being that in WW2 the general public more or less had faith in the integrity of their rulers and that the best was being done for them, which I suspect has largely vanished after the very damaging Blair years of ‘spin’, the Iraq war, and the Brexit fiasco. What faith is left now? In nurses, of course, maybe the Armed Forces, but in our ‘leaders’? Hardly! The circle of trust narrows to family, friends, maybe church/mosque, and not much more.

    Those who talk about ‘De-growth’, which is nearer the true situation, are mostly Green sentimentalists, often well-off, who don’t fully appreciate the real implications; as a term though it’s rather more gentle than ‘decline and collapse’!

    2/ A sense of general desperation has occurred before: in the early 19th century, after the Napoleonic Wars boom, things got very difficult in Britain for all classes: working class often starving and living in wretched conditions in towns, too many under-employed middle-class professionals, and even the upper classes with few decent openings for their younger sons – and yet observers noted that ‘there has never before been such an accumulation of capital in this country’. Empire solved the problem in part, but it was seen as a very severe and also perplexing crisis an early instance of ‘jobless growth’. And then, of course, the 1970’s, the lowest of low points in recent history.

    So, emigration once more looks attractive, and also in search not just of prosperity, but of the last deck of the house of cards we have built likely to remain more or less standing. But with the risk of jumping from frying pan into fire….

    Moreover, increased nationalism, regionalism and protectionism may well mean there are fewer escape options. Ironically, already now it is easier to get settle as an unskilled migrant than a skilled one in many places -above all if you can enter illegally and then regularise things.

    3/ In terms of competing for the young, the open borders espoused by Neo-liberals – supported by the internationalist Left – are clearly seen as the solution in that regard (most of Western Europe has fed off cheap Eastern European labour, as well as Spanish and Italian, as we all know) as well as the mass importation of unskilled Asians and Africans, themselves from collapsing and often violent regions.

    This seems to be the preferred ‘solution’, rather than competing in draining the younger members of the advanced economies as the book proposes. The idea of a ‘Universal Right of Migration’ is also being pushed to take advantage of the collapse of the non-Core economies, dressed up as a human rights issue.

    Where this has been pursued to the extreme, as in Britain over the last 20 years, we see a much higher birth rate and baked-in population growth, but NOT increased prosperity and productivity; counter-balanced by the steady destruction and overwhelming of institutions (schools, hospitals) through sheer pressure of population. The over-crowding in Britain now almost makes one want to scream at times.

    That the imports are destined to do only low-skill work will not enamour them of life in Britain, over-crowded and exploited, and this will be expressed in much higher crime, as we now see – above all when the crime gangs pay so well.

    A dismal picture, and probably insoluble?

    • The critical thing now might be how far people, countries, and their leaders, can adapt.

      Most countries are now at the tipping-point, where growth in prosperity has gone (or will soon go) into reverse. We’ve spent the best part of two decades in denial, using practices that put the financial system at risk.

      More recently, we’ve started to see this showing up systemically, and from here on we should expect individual industries to start dying off, as complexity starts to decrease.

      A huge part of our problem is a belief, ingrained over two centuries, in perpetual growth. We’re now at the point where the fact of growth has gone but the myth of growth continues. The latter phase is obviously time-limited.

      This necessarily leads to public discontent.

      Part of the problem is that incumbent regimes don’t understand the processes at work. Specifically, they don’t understand the nexus by which the economy and the environment are connected via energy. Still less do they understand energy ratios, of which ECoE is one.

      Let’s remind ourselves that we’ve been discussing this here for more than five years. In that time, we’ve been mostly right, and the consensus or official line mostly wrong. I’m not thinking of minor expectations here, like the “Brexit” vote, and Mr Trump. But the economy isn’t growing, in any meaningful sense, 11 years on from the GFC. QE, ZIRP etc have not proved to be “temporary” or “emergency” measures. People are responding angrily to a deterioration in prosperity that we have tracked but that officialdom still denies.

      Change has to come, either voluntarily or painfully. Just as examples:

      -The bus replaces the car.
      – Redistribution becomes inevitable.
      – We stop running the economy on cheap liquidity and telling ourselves fairy stories about “growth”.

  18. @Dr. Morgan
    Two observations:
    *Max and Stacy are in NYC to do a show on the collapse which is happening, and Stacy observes that a modest Manhattan hotel room cost them 1000 dollars for one night.
    *I recently exchanged correspondence with an internet doctor. The conversation centered around his recent attack on the ‘organic’ label food…based in the language of toxicology and defining the death-dealing load of toxic chemicals. I pointed out that the real elephant in the room is NOT residual toxins, but the killing of the microbes in the soil and the gut and the mitochondria with what is toxic to THEM. His response was that ‘it is best not to scare people, they react badly to scary news’….so I guess toxins won’t be part of his message any time soon.

    So what we are seeing from the grandest (national propaganda) to the lowest (what an internet doctor says) favors lack of transparency (and we can see what happens to whistleblowers); but everything seems to be fine if you are close to the source of the money (e.g., Manhattan).

    That said, I heartily agree with your assessment that it is time to start looking for industries to kill off or let die. If we are lucky we will get Five Year Plans for Degrowth, if we aren’t lucky we will get financial collapse and the expiration of the most indebted. I will just note that the ‘most indebted’ in the US are the cell-phone providers like AT&T. So, as a horror flick, imagine California with fires burning from whatever electricity we can still burn using frail infrastructure, no CalFire to fight them, and no cell phones to keep us in some semblance of communication.

    Don Stewart

    • Thanks. When industries die, huge amounts of supposed “value” is destroyed. Often, the more over-inflated this supposed “value” is, the quicker and harder it falls.

      Here we need to tease out the leads. One example – with the ‘economy of stuff’ now deteriorating, because falling prosperity is squeezing scope for discretionary purchases (think gadgets, fragrances), and with sales of big-ticket items (like cars) heading south too, what happens to advertising expenditures (which mostly are already on zero-based budgets)?

      What would you have done with stockholdings in livery stables in, say, 1905?

  19. Hello Dr Morgan

    I’ve been following your blog for quite a while but haven’t been tempted to engage previously as I’ve been busy arranging my own personal ‘Brexit’ from France back to the UK.

    I find your reasoning compelling with profound(and refreshing) implications for the political landscape particularly here in the UK as debates over tax and spend v low tax/small state become largely irrelevant/redundant or at least transformed as available resources shrink.

    I’m no economist but regarding political choices (where to tax and where to spend) from my lay perspective I’m intrigued by the thought of where the spending axe will fall first. A lot of discussion around here seems to be somewhat (pardon me if I’m wrong) apocalyptic with talk of food/medicine shortages etc etc. Personally I think there an awful lot of ‘low hanging fruit’ that might be targeted before we get to rationing of essentials.

    I had a discussion one with an emeritus professor in medicine acquaintance of mine bemoaning having had to quit medical research in the NHS due to the increasing influence of ‘capitalism’. I’m not sure he appreciated me pointing out that having a paid career in scientific research was due to ‘capitalism’ making it no longer just the preserve of the rich or those with rich patrons.

    I suppose the point I’m making is that just as surplus energy enables wealth, surplus wealth enables culture, leisure etc etc – i.e. those activities not necessary essential to mere survival that one would place at the top of good old Maslow’s hierarchy of needs.

    There’s a lot of activity (including intellectual) going on that I’d place even outside of that hierarchy that I would argue ‘deserves’ to be the first casualty of economic decline (including most of the issues which seem to obsess the likes of the Guardian – what their columnists would have to talk about in the aftermath is beyond me).

    Unfortunately I fear such fripperies have such an intellectual and cultural grip that local councils for example would rather cut basic services.

    • Cuts will appear as even more bank branches, supermarkets, department stores, bus services, etc, disappearing from even decent, seemingly prosperous, mid-sized towns, and specialist medical departments becoming ever less accessible. God help the current failing regions……

      Happening already: a pilot scheme for moving people in N. London to 2nd-rate service en masse is already in place.

      Things will get worse and worse at a steady rate, changing the whole landscape of amenities and services: the question is, where will they be the least worse?

      I am partly hanging around here in Cambridge as the hospital is turning into a small city on its own, hugely funded.

    • Leaving aside central and local government cuts (which were either necessary of ideological depending on ones viewpoint) clearly corporations will use available technology to reduce costs and maximise profits regardless of how inconvenienced some customers are (and it’s not as if other providers are offering a choice).

      What struck me on moving back to the UK (Northern Ireland as it happens) is, despite all the talk of just about managing and food banks etc, the sheer scale of conspicuous consumption on display (presumably either debt fuelled or enabled by a decade long mortgage holiday). We sold our old car in France and bought our first new car in thirteen years when we got back thinking – well we’ll be a bit flash. Not a bit of it – our new Renault is pretty much outclassed by everyone else’s premium german model – all new or pretty recent regs.

      Then there’s the plethora of restaurants and coffee houses; little artisan tea rooms; ‘artisan’ beers at £2.50 a bottle; craft fairs; hand car washes; nail bars (unfortunate recent connotations); Turkish barbers and ‘hand-pulled’ pizzas in all the supermarkets. Until recently recently even my own sister had her gardener (tending what I’d call a small suburban patch of grass).

      Everything seems to need to be a little extra special at an extra cost. I could be wrong (I doubt it) but I’m sure it wouldn’t take much of a downturn for all of these little luxuries to suddenly become unaffordable and then what happens to the ‘artisans’ and activities dependant on their wages etc. Seems to me there’s much more froth around than just that on top of your pumpkin spiced latté.

    • “Then there’s the plethora of restaurants and coffee houses; little artisan tea rooms; ‘artisan’ beers at £2.50 a bottle; craft fairs; hand car washes; nail bars (unfortunate recent connotations); Turkish barbers and ‘hand-pulled’ pizzas in all the supermarkets. Until recently recently even my own sister had her gardener (tending what I’d call a small suburban patch of grass).

      Everything seems to need to be a little extra special at an extra cost. I could be wrong (I doubt it) but I’m sure it wouldn’t take much of a downturn for all of these little luxuries to suddenly become unaffordable and then what happens to the ‘artisans’ and activities dependant on their wages etc. Seems to me there’s much more froth around than just that on top of your pumpkin spiced latté.”

      They’re unaffordable right now. Many artisanal tea rooms, craft fairs, hand car washes and nail bars in Brighton where I live exist to facilitate claims for Tax Credits. They aren’t in any sense economically viable businesses. The Tax Credits are paid for by government borrowing and so this is a good example of increasing GDP using debt.

    • The little extra special on an overall mediocre thing is what can be called Premium Mediocre. To quote the original quote in Ribbonfarm : “Premium mediocrity is a pattern of consumption that publicly signals upward mobile aspirations, with consciously insincere pretensions to refined taste, while navigating the realities of inexorable downward mobility with sincere anxiety.”

      When I read about it I immediatly got a “haha” moment. It’s a very usefull concept to look at what you are offered. The whole piece is there : https://www.ribbonfarm.com/2017/08/17/the-premium-mediocre-life-of-maya-millennial/

  20. Planning to replace cars with buses, as out host suggests as an adaptation, would be nice: but all one hears about are huge developments dumped on ‘green belt’ land – say 1,000 or more units – and always car-dependent, with no bus services!

    Even on the fringe of towns the bus services can be awful, limited, and useless to those who work unusual hours (often the poorest).

    If there are train services the numbers of extra people simply swamp them, as well as the old town centres that people go to for shopping and entertainment.

    No co-ordinated long-term planning at all….

    • To just compound the stupidly Arriva has been allowed to chop its second bus which serves a hospital saying that it’s no longer profitable enough because a local supermarket has withdrawn its subsidy.

      The council has no funding to step in.

      Now £2bn has already been spent – sorry wasted – on HS2 now just imagine how that could have spent to rescue and improve local bus services

  21. Testing Dr. Morgan’s patience most likely, but an example of Triage thinking

    Dr. Kara Fitzgerald interviews a mother/ daughter team in Oregon who have had amazing, low budget, success in promoting healthy mothers and their children.


    I participated in a meeting where the mainstream genetic determinists didn’t want Randy Jirtle to be allowed to speak.
    “they just blew the minds of many scientists when they demonstrated that.”

    So some things such as energy decline are going to happen whether we want them to or not. But some things are within our control. And sometimes science shows us ways to solve problems which are actually less expensive in terms of money and energy. Can Mississippi go beyond its racist past and embrace something truly optimistic for all of us?

    Don Stewart

    • The greatest advance in reducing maternal deaths shortly after giving birth (by over half!) was very low-budget: simply disinfecting hands properly.

      One medical man thought of it, got data to back his idea up, and campaigned for it – and was stiffly opposed because he made the profession look like fools.

      British physicians were among the last to concede he was right, it seems……

    • This is why hand disinfectant dispensers are so important for hospitals and old people’s homes which I have to visit on a regular basis.

      With Antibiotics losing their clout we will have to rely on older methods of cleanliness in the future.

      By the way you may have seen my post telling Tim that I managed to get hold of some Ibuprofen but had to ask the despensary for some.

      The pharmacist who sold it to me said they’re having all sorts of trouble getting hold of many drugs – not just the ones mentioned on here.

      There was a genuine look of concern on her face.

  22. Is it just me ?
    . . . or is anyone else feeling a strange disturbance in the Force ?
    I know you have said before Dr. Tim, that just because a collapse is inevitable does not mean that it is imminent. Now I do agree with that statement and its logic, but I am reading more and more about central banks ” losing control” and massive amounts of QE no longer having any effect on markets.
    Today I read a sentence in one ZH article which had a particular effect upon me.
    It read;
    ” Our advice: queue the marshmallows and graham crackers. When the Fed’s scorched earth policies burn up the economy and transform your life savings to ash, you will be glad you have them. ”
    Now, I don’t know what grahams crackers are, but is this an American equivalent of taking that last “Hamlet” out of your pack and lighting up ?

    • It is, in my opinion, coordinated. The UN recently called for fiscal stimulus, aka printing for the people.

      Sister, would you please check the heart-longue machine for patient nr. 3. If needed, add some liquidity type A positive.

    • I think we’re watching at least two main narratives here.

      First, deteriorating prosperity. Unlike ‘conventional economics’, and probably most governments, we here understand that people are getting poorer, and why.

      This is a gradual process, though not necessarily a slow one. There is an increasing number of countries where public anger is erupting, primarily over deteriorating prosperity even where other ’causes’ (inequality, taxes, prices) make the headlines. We’re seeing demand decreasing for whole categories of products, and what’s likely to happen next is that individual industries start to die off.

      Then there’s the financial. Absurdities abound, and are increasing. The stimulus process seems to be losing its effectiveness. When something happens here, it’s likely to be pretty rapid. “Tech” looks ever more like ‘Dotcom 2’. Markets are buttressed by debt-funded buybacks. Investors continue to back cash-burners, but with decreasing enthusiasm. Any of these could change quite quickly, resulting in a panic rush for the exits.

    • I notice it especially each time I return to the UK, little by little things are getting perceptibly worse. For people who do not understand the dynamics of what is happening to them, I can understand how their frustration can turn into anger.
      That said, I do not believe we are at a tipping point yet, where that anger will show in streets of the UK.
      With a view to something that you have touch upon in previous articles Dr. Tim, namely the loss of faith in money. We have seen how fragile GBP is, ( I was nervously laughing at your recent “Great British Peso” remark ). The Pound has been not too far from parity with the Euro, or the Dollar for that matter, and it may well revert back to these low levels fairly soon. The exposure of the UK to the, as you put it “Financial absurtidies”, tells me that this country really is on borrowed time.
      As financial conditions worldwide spiral ever deeper into the Rabbit Hole, the “Emperor has no clothes” moment cannot be that far away.
      When that happens the ICS ( the wine-bar, artisan beer, nail salon, economy ) component of GDP will disappear rapidly, leaving a very small core behind.
      I know that it is very subjective, but I really do feel that disturbance in the Force !

    • The analogy of the Force is quite fitting because those dreadful Star Wars films (will they never end) are draining the UK of money which goes straight into the coffers of Walt Disney to be distributed to their directors and shareholders.

      Star Wars along with the Superhero films have successfully brainwashed probably billions of fans.

      I must see the film – I must have the merchandising and I can’t wait for the next release.

  23. CHILE

    Given that a reported one million people – about 5% of the population – have taken to the streets in protests over inequality, it seems worthwhile to take a look at Chile using SEEDS.

    Results are provisional, but it looks as though the economy was doing really well until 2013, but has since been deteriorating very rapidly.

    I’m not sure, as yet, what’s caused this reversal, but growth (both reported and ‘clean’) has slowed markedly, ECoE rises are making this worse, and debt seems now to be rising rapidly.

    Though inequality is the headline issue, my interpretation is that the average person has deteriorating prosperity (exacerbated by taxes), and rising per capita debt. There may well be a case for reforming the balance of taxation.

  24. Can Desperation be Defused by Wise Government Action?
    I don’t know for sure, but my advice to governments would be: stop doing stupid things. I will give two examples. Somebody recently calculated how long a skilled worker in Hong Kong had to work to afford a modest sized dwelling. The number has doubled in the last decade or so. So the housing bubble that the CBs are so proud of having inflated may very well be a contributing factor to the mobs in the streets. In the US, some local governments try to defuse the anger by building a few, fantastically expensive to build, ‘affordable housing’ units. Of course we know that they are fighting an uphill battle because of rising ECoE…but they are making things a lot worse for themselves with monetary adventurism.

    Check the website GrowBabyHealth. Scroll down to the second block of information. You will see the stunning results in terms of healthy babies and healthy mothers compared to the average in the US. And this program is operated on the pittance provided by Medicaid. So it is possible to take the currently available money and produce healthy mothers and healthy babies. Surely a healthy baby is a non-negotiable demand in terms of ‘prosperity’. But it requires walking away from the notion that ‘the market will provide’ and intervening to show people how to behave despite what the market tries to sell them. By the way, of 500 babies now born through GrowBaby, 1 has been autistic and 1 has ADHD. These numbers are vastly better than the US average. GrowBaby takes advantage of the fact that the body is a self-healing system, and can tolerate far-less-than perfect conditions…it’s not necessary to eliminate poverty and produce perfect harmony in the home to produce these results. But it does take targeted attention and a willingness to NOT do the most ‘market acceptable’ things possible.

    Some people have commented that the Brexit debacle shows that Britain has forgotten how to actually govern itself. I suggest that, in the US, we have forgotten how to do Public Health…which is another example of forgetting how to do governance. Some of you may be familiar with ‘governors’ on engines. The neoliberal philosophy is that ‘governors’ are an old fashioned idea which a lot of calculus and other fancy math coupled with some other-worldly assumptions and airy abstractions show are completely un-neccesary and are, in fact, counterproductive. Welcome to the real world.

    Don Stewart

    • Regarding public health Don two things that would save your country’s citizens.

      Close down all fast food outlets and spend several billion on healthly diet and exercise advertising.

      Ban corn syrup in foodstuffs.

    • Yes that certainly needs to be taken into account.

      Now concerning energy I think I did a rough calculation about a year back on how much more energy we are using for transporting people who have been made overweight through poor diet.

      Following this I wonder if it’s possible to calculate the sum World total of energy and resources ( that includes of course hospital treatment for obesity and related diseases plus the cost of painnkiller abuse)

      Put it this way I feel that health services would not be in crisis if we all looked after ourselves much better.

      However I allowed myself my weekly dispensation today and gratefully consumed a small raspberry trifle.

      This will be followed by quite a few beers if England win the World cup on Saturday.

      Sorry for the OT Tim

    • On the whole, I’m rather relieved that the government doesn’t take too close an interest in my physical and mental welfare, as it would undoubtedly make an utter balls up of it, pushed here and there by fashion and monomaniac ‘experts’.

      For one thing, I probably wouldn’t be eating these delicious butter scones with clotted cream, (and in the 18th century many thought tea -Lapsang Souchong in this case – was a slow poison!) nor looking forward to a glass or two of a very nice organic red from Murcia after my evening bike ride – so bad for me, oh so bad…

      I’m all for people being able to poison themselves if they wish: the tragedy is when ordinary people can only buy even basic foodstuffs which are poisoned, as seems to be the case in the US.

      But when have governments ever really sought, with care, the true welfare of their citizens?

    • When people set up a state remedial health system, it is “self-insured” via tax revenues. Those who eat unhealthfully, drink to excess, smoke, use harmful drugs, don’t exercise, etc. are a burden on their peers. That’s one reason why “sin taxes” were established in many countries.

      I eat some sweets, drink around 8 oz of wine with dinner, but also eat a balanced diet and exercise moderately several times/week. Plus walking the dog several times/day adds up to 20 miles/week. I feel good from all this. Soda, candy, chips, etc. are not taxed beyond small % sales taxes here. (Massachusetts) IMHO, that should be at least tripled. Tobacco is highly taxed now.

    • Hi I certainly wouldn’t advocate a diet of carrots and lettuce and I do allow myself one fruit and cream trifle and some chocolate per week

      However the diets of so many Americans is so poor that some form of action should be taken.

      Fresh fruit and vegetables don’t cost that much but it seems the poor are cunningly dissuaded from enjoying them.

      The junkfood companies spend billions on advertising yet the budget for promoting health food is minuscule.

      There are even subsidies to allow people to grow corn specifically for the production if corn syrup.

      So there’s the proof you need that the US Corporates are in collusion with the Government to poison its populace.

  25. The feeling, mentioned above, that things are getting worse in the UK comes I think mostly from the over-crowding, and the overall quality of the newcomers: I find tribal scars, religious dress, etc, faintly depressing and alien, even if the person is nice enough – the long slow slope down to….what? It all signals community disintegration even amid prosperity.

    Otherwise, looking around, things look just fine: restaurants and pubs are full, flash new cars and fashionable clothes, etc. Lots of beggars here, but most are scammers who see this as a good place to have a go.

    But in the smaller towns losing their pubs, banks, supermarkets and chain stores, things would feel very different, I am sure.

    Nottingham seemed very lacklustre to me a few months ago, but is it appreciably any worse to live there than in 2008? Or 2003? I have no idea.

  26. Is Health Purely Personal?
    One of the important points made by the GrowBaby people is the effect not only on this mother and this baby, but also that baby as an adult and the children of that baby. The foundation for this study of epigenetics was laid in the 1980s when scientists began to track the effects of the ‘hunger winter’ in the Netherlands in 1944-5 on those children who were in the womb at that time, and how they developed as adults…and also the effect on their children and grandchildren. While it only takes one generation to break the chain of calamity, the dysfunctional epigenetics can continue statistically for many generations. In fact, the Nutritionist part of the team at GrowBaby has demonstrated that she can change gene expression in 6 hours. The GrowBaby people say that almost all parents are vitally concerned about the health of their developing child. They actually listen to and practice better lifestyle advice.

    So the notion of ‘every man is an island’ is just demonstrably false. It isn’t consistent with the biology…besides the evidence that we are social creatures.

    It may have been Mrs. Thatcher who epitomized the height of the ‘island man’…”there is no such thing as the common interest”. People who thought that usually made an exception for defense, and supported higher military spending financed by taxes. But the goal was to get the government out of the lives of people to the maximum extent possible. Some staunchly conservative people now think that the huge rise in inequality we have experiences is simply a property of the ‘everything bubble’ brought about by insane money policies.

    To me, the question comes down to those 3 children who cannot attend school without keepers…are we as a society ready to just consign them to their doom? Execute them now to avoid the trouble of convicting them of crimes later on? If we aren’t, then subsidizing their education is a costly experiment which you can see if you look at Albert Bates’ graph.

    So I come down on the side of practicality. I don’t look forward to school board meetings any more than anyone else. Nobody ever said democracy was free.

    Don Stewart

    • Quite so, but do we as intelligent adults wish to be subjected to the whims and fashions of nutritionists?

      Hardly! Look at how they chop and change, damning quite innocuous food and drink, and then admitting their mistake a few years or a decade later. In fact often doing great harm -j ust as with fashions in medical prescription.

      Do I wish to be forced by the state to take statins from the age of 50 because they think it might reduce the NHS treatment bill? Should I be denied any treatment if I have refused them?

      So personal liberty versus control by society is an issue. ‘Experts’ can be very foolish indeed. It might be different if they were infallible, but they never will be.

      Nearly everyone now misunderstands what Thatcher meant by ‘there is no such thing as society’.

      It was a counter to the ‘sit on my backside with my hand out’ attitude that developed in Britain from the 1960’s onwards, and also the habit of blaming all one’s personal and economic failings on ‘society and the system.’

      Britain had become very corrupt by then (and I think she would have had just as little time for the rather self-indulgent old Establishment, although some of them seemed to make her go a bit weak at the knees).

      It’s an attitude ultimately derived not from brutal Capitalism, but from the homesteads of the Norse and Saxons and Celts: you get on with your work with your family and sink or swim according to ability and luck. That’s how farming or any business or craft was until the advent of subsidies. Or from the mining communities who publicly humiliated men who refused to pull their weight at work. Admirable approach – but of course it can go too far.

      The most enthusiastic Thatcherite I know comes from a working class home in Wales, the daughter of an illiterate house painter, who through brilliance and effort got to Cambridge to read Physics, a hell of an achievment against all the odds – which is I think the sort of thing that Margaret Thatcher was driving at.

      She didn’t sit at home moaning about being a victim of society living in the ‘oppressed Celtic Fringe’, drinking litres of cheap cider and getting banged up with a baby at 15 (many at her school did just that!).

    • Don, The blame game is the human way when normal biological hierarchy is exacerbated by scarcities, overshoot, etc. Different religion, skin color, eye shape, hair type, life-style, etc. defines “others” vs one’s tribe. You seem to think that cooperation, harmony, rationality…can increase in the face of overshoot. In my view that is utopian idealism. Rose colored glasses are worn by Pinker as they were by the late Hans Rosling.

  27. Houses are still selling fairly quickly here, perhaps a little slower than before (ie not instantly!); and I saw today that all the vacant retail units in the old town centre have at last filled up after over a year empty – fast food chains, nothing independent and truly local. Business as usual then, so far.

    But I do feel we are catching glimpses now of a rather large fin at some distance in the water, and that soon, to ominous music, something nasty is going to pop up from the deep with a worryingly large mouth……

    • Well let’s hope we win the rugby World cup first.

      Tim must be drowning his sorrows as Wales went out to a very dour performance by South Africa.

    • Where the fin is concerned, it’s only ever been a matter of “when”, not “if”.

      This is a global situation, of course, but management of UK (and wider) policy has been particularly clueless for a very long time, certainly back to Gordon, “light touch regulation” and the end of “boom and bust”.

  28. At least one of the economists of the 18th century argued that addiction to sinful things – luxuries, fancy clothes, including wines and spirits – should be both promoted and very heavily taxed, compelling the rich to seek investment opportunities and raising revenue for the state. Its always been perverse!

  29. Good article in the Guardian by Nesrin Malik about the collapse of WeWork and the shady investments that support such ventures.

    Some investors such as Saudi Arabia sometimes do not invest in companies for financial gain but rather political.

    The price of failure / Hubris was to award the CEO – Adam Neumann – a goodbye reward of $1.7bn.

    Good work if you can get it – the article is well worth a read

    • This situation has been widely covered, excellently on Wolf Street. Wolf’s broadcast today talks about “consensual hallucination” in the markets, and I think that’s as good a term as any. I find it remarkable that investors such as Saudi let him walk away from this $1.7bn wealthier. But these are strange times.

      It seems to me that “tech” sector looks ludicrous. Most of these businesses aren’t “tech” anyway, in the way that electronics and life sciences are, for example. Many are cash-burners, others are tied to mature income streams like advertising, and others might face regulatory risk.

      The way this seems to work is that investors rely on other investors coming in later, giving them a profit and keeping the businesses afloat. My hunch is that, when this fails, it will fall very rapidly, and it’s such a big chunk of the market that it will have systemic consequences. It all looks very “Dotcom mk 2” to me.

    • Perhaps a cut and paste job by the Guardian but points taken about future repercussions.

      Perhaps the Saudis need all the political influence they can get especially as they may struggle to get the $100bn they want for a 5% stake in Aramco.

      They are still being very coy about their reserves but they also know if they try and press ahead they will have to open up to inspection

  30. @Xabier and Steven Kurtz
    Did you actually look at the GrowBaby statistics, note that they are quite outside the pale in terms of the Medical Establishment and Political Correctness, and have identified a particularly susceptible population which is vitally concerned about the health of their child and can be taught the epigenetics? They know that only 15 percent of old white guys who survive heart attacks are willing to change their lifestyle…and they don’t prioritize going after that population using scarce resources. This is a very tough-minded form of triage. But they are trying to do the best they can with the resources available. Don’t let preconceptions and ideological stances get in the way.
    Don Stewart

    • Don,
      I just searched for and found the GrowBaby nutritionally focussed website. It’s reasonable advice for those parents having the time and literacy to learn about it, and in a position to buy healthy foods. That is probably closer to 5% of global parents than to 50%. It’s a positive, but a small, narrowly available one.

      FYI, Epigenetics is currently highly contentious in that DNA isn’t altered; RNA is affected. (switching on/off of genetic controllers) I’ve been following this for around a decade. Search for ” ‘Jerry Coyne’ and epigenetics” He is an evolutionary biologist. He claims that a few generations in some species can inherit the RNA changes, but that it is temporary. Also note that nurture and nature are constantly in a dynamic.

      My point was that any positive effects of nurture are challenged with tougher obstacles daily as we get ~220,000 deeper into overshoot. A bath, massage, good meal, good sex can make you feel great…for a day. This blog is, I think, about system dynamics involving millions as a start..

    • TM: “Well, it’s actually about economics and energy…….”

      Economics and energy are, inescapably, in a dynamic system. Or so I thought??

  31. Belaboring the Point
    While healthy infants and mothers are vital to our survival as a society, the other end of the spectrum may provide fodder for contemplation.

    Alzheimer’s and other forms of dementia and mental deterioration definitely threaten to bankrupt us on their current trajectory. Dean and Ayesha Sherzai, both MDs, have developed a highly effective protocol for reversing mental deterioration. They call it NEURO (nutrition, exercise, unwind (reduce stress), relax (sleep), and optimize (challenge your brain). Now it is entirely possible to do scientific measurements on the brain of a 20 year old and detect the damage. BUT, the damage will only become evident to the individual perhaps 50 years later. Is it possible to persuade 20 years olds to take care of their brains to provide a healthy old age?

    Never say never, but for now the Sherzai’s are concentrating on the mature people who are beginning to feel the symptoms. Those feeling the symptoms are motivated in ways that those who are 20 are not usually motivated. This is the difference between a stock and a flow. With due respect, I think at Al Bartlett got it wrong: failure to understand a compound growth curve is NOT the greatest weakness of the human mind…because ALL compound curves turn into S curves or bell curves eventually. The biggest failure is to look at flows and think we are looking at stocks. And so we can’t deal with climate change because we don’t understand that the stock of CO2 in the atmosphere is causing a flow (melting of the ice sheets) which is going to be catastrophic AT CURRENT LEVELS of CO2. Similarly, the 20 year olds are uninterested in looking at the flow of toxic substances into the brain as they drink another six pack with their wings. They either don’t understand the effect on the stock, or else think they will never live that long anyway, or ‘scientists always lie’…or you supply the rationalization.

    In terms of the core discussion on this blog, the same points can be made about debt and fossil fuels.

    In short, we need to do the best we can given the flawed nature of humans (and of course, our own selves, exemplary though we are).

    Don Stewart

  32. Getting back to Prosperity – or the lack of it – it seems the protests in Chile, at least in the capital, were started by a rise in the cost of the Metro system: butterfly wing causing a storm……

    I wonder, historically do we have any instance of a government in an advanced economy actually lowering taxes, not for ideological reasons, or to pay off vested interests and patrons, but simply because the mass of people were being impoverished and needed to have a little of the pressure relieved?

    This is different from ‘helicopter money’ which seems to have become a theme.

    ‘Losing revenue’ and ‘unfunded’ tax cuts seem to be what keeps Treasury officials up at night.

    The primary purpose of government is to maintain itself and its mal-investments, and unsustainable infrastructure/institutions, not the welfare of the citizenry. Rather like a bad landowner screwing his tenants even when the harvests are poor.

    • I wonder how much the US needs to spend to bring its infrastructure up to standard.

      When and if they do decide to act the materials will have to be if the highest quality because they’ll probably have to last a very long time.

      With diminishing energy it feels like our last chance salon to get things fixed.

    • There was an article in The Atlantic yesterday entitled “The Toxic Bubble of Technical Debt Threatening America”. It’s about failure to maintain infrastructure (i.e. to use energy to reduce the entropy in the infrastructure system). The Atlantic calls it “technical debt”, but to me it seems it would be better described as an accumulated energy cost.

  33. Tim Business insider quotes a figure of $5.6trn

    Now the US spends an eyewatering $600bn on the military per year – but I doubt they’d want to reduce it to cover the infrastructure costs.

    Big business with interests would never allow it anyway – so crumble away it is.

    Looking at the costs another way it’s a staggering $17,000 per head of population.

    However looking at the total US debt clock it’s currently standing at 74trn

    Now how do they get out of that? Answers on a postcode

    • Thanks.

      According to the WEF, annual shortfalls in US pension provision were $5.5 trillion as of 2015.

      Taken together, pension shortfalls and deficiencies in maintenance of infrastructure are characteristics of an economy plundering the future to sustain the appearance of ‘normality’ in the present. The same goes for debt escalation, and negative real rates (which discourage investment as well as encouraging borrowing).

      Yet this ‘cannibalization of the future’ is worse in many other economies than it is in America!

  34. ‘last chance salon’
    Alice Friedemann observes that 98 percent of the increase in oil production last year was from US shale…which doesn’t make much diesel…which is required to build infrastructure. So she thinks we are probably past ‘peak diesel’. And since she is a fan of the ‘trucks rule everything’ theory, our ability to build will now steadily decline.
    Don Stewart

    • ‘last chance, denouement’
      Robert Rapier sent out a twitter message a few days ago where he recommended against buying depressed PG&E stock (California electric utility). He says that the problems are intractable.

      It’s hard to imagine any solution to the problem of having too many houses built in flammable territory, with houses using electricity provided by fragile infrastructure which breaks in high winds and starts fires…which doesn’t involve massive use of diesel fuel.

      Robert also has a picture of the floating nuclear plant just completed by the Russians, and there is discussion of all the propaganda being generated against it.

      A lot of sturm und drang and not much reality in public discussions.

      Don Stewart

    • Which is why governments will be up the creek if they try to build society out of the coming extended crisis, which has been their policy of first and last resort since just before WW2: mass public works will increasingly become unviable and maybe even materially impossible.

      Most resources will be needed for maintenance, and even then we shall have to look at infrastructure abandonment, maybe with internal refugee crises….

  35. German election in Thuringia
    Does anyone have any up-close-and-personal observations about what is going on in Germany? What I read is dissatisfaction with the 30 years of re-unification which have not produced prosperity, leading to left wing and right wing political parties prospering, which is scarily reminiscent of the scene presented in the stage play Cabaret set in 1933 Berlin.

    A German film director named Petzold has made some films set against the stagnation in the East, with emigrants to the more prosperous West, who find a dysfunctional corporate system in place which is unstable….lots of legal and financial intrigue.

    Any thoughts?

    Don Stewart

    • One thing for sure is that despite great economic numbers, german working poors have been on the rise. The last reform of the labour law has proven to be really harsh toward the unemployed. The existence of the mini-job contract, instated as a stepping stone toward regain full employment has become a way for companies to get cheap labour without the usual red tape (like paying health insurance, sevrance pay, minimum pay and so on…). Conveniently, those mini-jobs also make employment numbers look good.

      The end result has been the rise of a precariat labour strata, very similar to what already exists in the US with working poors holding several jobs and yet failling to meet ends.

      I have no idea (as in hard data) if this as ties with the rise of the AfD, but my gut feeling is that it is probably the case.

  36. Dave Pollard Links
    Search on howtosavetheworld, for some excerpts and links to Dave’s Links of the Month. For old timers, there is even a link suggested by Nicole Foss. The lead-off article is a summation of Robert Jensen’s critique of Naomi Klein and the Green New Deal. Also a defense of the XR consultant who thinks 6 billion people may die. (Please note that Dave thinks Jensen frequently appears to be totally depressed…maybe a vagus nerve tune up?)
    Don Stewart

  37. Sorry here’s the headline to help you find it

    The U.S. Only Pretends to Have Free Markets
    From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

    6:00 AM ET
    Thomas Philippon
    Professor of Finance at New York University

  38. What Happened?
    From an article in The New Yorker, but written, I believe, by a Brit. Can anyone explain what how it came to pass?
    Don Stewart

    In December, 2015, about one per cent of British people believed that Britain’s membership in the European Union was the most important issue facing the country. This summer, a poll of members of the Conservative Party—whose hundred and sixty thousand voters elected Johnson as the Party’s leader by a huge margin—showed that sixty-one per cent would accept significant damage to the British economy in order to get out of the E.U. Fifty-four per cent were willing to see the Conservative Party destroyed. “It is a complete mystery how something that was not a high-priority issue can become in three years your defining political identity,” the M.P. Rory Stewart told me. During the spring, Stewart, who served as a minister under Johnson in the Foreign Office, stood as a moderate candidate in the Conservative-leadership contest. Three months later, he was among those thrown out of the Party. “It is peculiar. It is fascinating,” Stewart said. “We are all sitting in the center with nothing.”

    • The US blames Russia for the mass protests in Chile:
      “Speaking before a congressional committee hearing on Capitol Hill, State Department diplomat Michael Kozak suggested that “foreign actors” were stoking protests in Chile. Pressed on the statement by reporters following his testimony, Kozak elaborated further. “We have identified on social networks false accounts that emanate from Russia, which are people who pretend to be Chilean, but in reality all the message they are doing is trying to undermine all Chilean institutions and society,” he was quoted by Chilean media.”

      Are the worldwide protests, (and based on the preceding evidence of a sudden, mass change of mind, I would put Brexit into that bucket), evidence that evil people like Putin can with subtlety upset all our ‘democratic institutions’ in the blink of an eye? Or is it more like the California fires…let the brush accumulate and eventually a spark finds it?

      It seems to me that the simplest explanation starts with SEEDS. The decline in prosperity and the increase in debt, almost uniformly across the globe, is the tinder that the sparking wire ignites. The sparking wire can be some social media manipulators in St. Petersburg or at Facebook or Google HQ or Tucker Carlson on Fox News (e.g., the fires in California are because of the ‘woke’ culture) or the declining affordability of apartments in Hong Kong.

      Maybe people rather suddenly realize that the ‘democratic institutions’ aren’t doing the job?
      Don Stewart

    • Firstly, at least a large minority of the political establishment (elected reps and the commentariat) have historically been happy with membership of the EU and its direction of travel while euroscepticism has been largely contained to what John Major referred to as those ‘bastards’ within his own party way back in 1993.

      As for the general public (who I suspect have always tended to me more eurosceptic than their elected ‘representatives’) they probably felt (rightly) that TPTB were unlikely to ever offer them a say in anything EU related and in that context why mention it as an issue? it was only the electoral threat posed by Farage’s UKIP (underpinned of course by a growing strand of eurosceptic public sentiment) to the Conservative party that forced Cameron into allowing a referendum that he fully expected to win.

      I don’t doubt that some may have also voted leave as a general ‘stuff you’ to TPTB perhaps driven by factors highlighted here by Dr Morgan.

    • There is no ‘mystery’ about it at all: ‘Project fear’ started, and the attempt to annul the Referendum completed, the polarisation of British politics.

      Dragged out over several years, senselessly heightening tensions and emotions, this is really no surprise.

  39. Motivations for Brexit were so various.

    Some people had been waiting , like my mother, ever since the entry of Britain in to the EU, to reverse it with their vote! Now she is too frail and unsteady to vote in anything again.

    The local pest-controller voted for Brexit because he wanted to get rid of all the Pakistanis, Poles and Gypsies in Peterborough – where there is considerable racial tension, frequent violence and where the EU gypsies have gone on a crime spree. This part of England has never been friendly to outsiders even English, at any time, and his home town doesn’t feel at all like it anymore….

    My conversation with him was ironic, being half-Spanish! But I can look utterly English. He didn’t rant, just: ‘Something has to be done, doesn’t it?’

    What has been unforgivable has been the patronising attempt to paint all Brexiters as ‘poor, thick whites’, ‘the losers in life ‘ – most notably in The Guardian – and the attempt to sweep the Referendum result aside. As if many quite well-off people didn’t vote for it too!

    The deterioration in politics which it has both promoted and revealed has been appalling, and dangerous.

    My MP has been subjected to abuse, by email and phone and on social media, and threatened in the street over the issue (a Tory Remainer), having to install panic buttons at home and work.

    But this great anger is recent, and comes from the sense of being ignored and betrayed which arises from the determination to quash the Referendum at any cost.

    They don’t want another hypocritically-termed ‘People’s Vote’: they already had it and rightly expect it to be implemented in a straightforward fashion.

    Similarly, in Spain the Establishment has refused to accept the results of the last election, which would have admitted the radical Left ‘Podemos’ party to power with the tame Socialist, and the Spaniards are being forced to vote again in November in the hope that the Podemo, Left and Nationalist vote will have weakened.

    It’s just not democracy. And all on the very verge of a potentially cataclysmic GFC2……

    • There are a number of factors informing the “Brexit” vote which are (a) globally-trending factors, and (b) not understood by the incumbencies.

      This is why outcomes such as the “Brexit” result come as such a shock, especially to incumbencies and the ‘commentariat’.

      The first of these is deteriorating prosperity. Though not visible in official data, this is all too real to the ‘ordinary’ voter.

      The second is disconnection. The average person knows that his/her prosperity is declining. The authorities, genuinely unaware of this, act as though it isn’t happening.

      Accordingly, governments (a) fail to adopt policies appropriate to falling prosperity, and (b) persist with policies which are either counterproductive or irrelevant.

      Put another way, the public have one set of priorities, but the authorities have another.

      Where the public is concerned, this situation results in anger. This informed the “Brexit” vote, the election of Mr Trump, the yellow-waistcoat uprising in France and the success of ‘populism’ in Italy and elsewhere. It is now spreading around the world – though trigger-factors differ, the dynamic is the same. It’s visible in a string of countries.

      The authorities’ responses are conditioned by bafflement, and the fear which this bafflement engenders. It’s why the authorities – not just in EM countries, but in places like Britain and France as well – are becoming increasingly authoritarian.

  40. Blaming ‘Russian interference’ for all unwelcome political events is rather like the Soviet and Chinese habit of calling any dissidents ‘mentally ill’ or ‘reactionary’, and just a step from saying ‘possessed by demons’.

    They’ve used this so often it has lost all force and is embarrassing to any intelligent observer .

    But they persist in this fiction, which tells one much about the lies and irrationality we can expect to meet GFC2 – no doubt that will be ‘Russian’ in origin, too.

    I can see it now: ‘They hate us for our Monetary Adventurism!’

    • As per my previous answer, seeing the hand of Moscow and Beijing in everything is a form of paranoia induced by bafflement over what is really happening – and yes, this bafflement will only increase, GFC II being a good example, unless and until the incumbencies understand what is happening.

  41. Crystallization and Quorum Sensing
    In my REM sleep it occurred to me that there are two processes which are common in Nature which may be relevant to sudden changes in the political landscape.

    Water can be ‘super-cooled’ to below 32 degrees. But then any little disturbance sets off an instantaneous conversion to ice…the water crystallizes.

    Bacteria use Quorum Sensing. Dangerous bacteria can float around for a very long time in low concentrations and do no harm. But then, for one reason or another, the concentration reaches a critical level and the bacteria ‘quorum sense’ and begin to act as a toxic mass. The ability to Quorum Sense has been conserved by evolution and is present in higher creatures also. I’d be surprised if humans don’t react that way.

    So either of those physical processes may be at work in the current episodes of discomfort which are evident around the world. They seem ‘irrational’ to those observers who think that everything is linear.

    Don Stewart

  42. I feel that the masses and media pick up the Russian meme out of ignorance and insecurity (as well as a lack of personal intellectual culture and sophistication, which would expose its falsity in an instant) and in the case of the media saying what their owners and the intelligence agencies want.

    But I feel that it is propagated, in the first place, as a deliberate, naked lie, to achieve certain political ends, revealing great cynicism and depravity in those who formulated it.

    Ruling through blatant but plausible lies is an old game, and decent, honest, people of culture often never quite catch on to it.

    They are not really baffled, they are liars and propagandists and know what they want to achieve – in the case of the US, over-turning the Trump presidency which upsets so many vested interests, above all in the MIC.

    The Soviets and the Chinese Maoists knew full well that dissidents were not ‘mentally ill’, or ‘reactionary enemies of the Revolution’, ‘traitors’, etc – they killed many genuine supporters of Communism and the best people in their societies.

    This doesn’t contradict,of course, the central thesis of this blog that the Establishment does not understand what forces are now shaping – destroying – our economies due to trusting long out-dated economic models. Nearly everyone, in this respect, is lost in ignorance, incomprehension and wishful-thinking

    We are entering very dark times: lies and propaganda will make them even darker still: one thinks more and more of the 1930’s……

    Anyway, lovely day, off to chop firewood: a sane occupation in an ever more insane world.

    Looking forward to the next stimulating post!

  43. Quorum Sensing
    Sensing by definition implies communication. And social media and the media in general enable people who would otherwise not be in communication to communicate. So social media facilitate the gathering of Neo-Nazis, and Extinction Rebellion activists, and Brexiteers, and all other sorts of people that the Establishment would be happy to keep atomized.

    One of the tools available to the Establishment is to use the same media to separate people who might co-operate into warring factions. Race or country of Origen or Sexual practices are triggers to pull to tear people apart. The Mayor of South Bend, who is running for the Democratic nomination, understands this. He argues for unanimity, but the forces of division are very strong in the US. Cambridge Analytica understands all this and is available for hire.

    But unanimity is its own trap. Robert Jensen’s take down of the Green New Deal can be read as the dangers of promising something which one can’t deliver.

    Don Stewart

  44. Here’s a reaction to the stagnation.


    Incoming ECB President Lagarde says big European countries aren’t spending enough: report
    By Barbara Kollmeyer
    Published: Oct 30, 2019 7:47 a.m. ET
    Christine Lagarde, the incoming president of the European Central Bank, has criticized the governments of Germany and the Netherlands for not using big budget surpluses to help stimulate their economies. Lagarde made the comments in an interview with France’s RTL broadcaster, Reuters reported. “Those that have the room for maneuver, those that have a budget surplus, that’s to say Germany, the Netherlands, why not use that budget surplus and invest in infra-structure? … Why not invest in education, why not invest in innovation, to allow for a better re-balancing?” Lagarde said.

    • Holland and Germany are also the two countries most cautious on what lies ahead – the Dutch CB has spoken of the importance of gold in a crash, whilst Germany is repatriating its bullion.

      Coincidence? I doubt it…….

    • The last policy to go down well in Germany, one would have thought?

      Aren’t the Dutch actually up to their eyeballs in consumer debt with a ridiculously inflated property bubble?

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