#158. An air of unreality


Now that a general election has become the latest twist in the saga of “Brexit” – Britain’s ‘on-off-maybe’ withdrawal from the European Union – it seems appropriate to review the situation and outlook for the United Kingdom from a Surplus Energy Economics perspective.

The aim here is to set out an appraisal of the British economy, concentrating on performance and prospects.

No attempt is made, though, to suggest future policy directions, since the likelihood of a wholesale awakening to the realities of de-growth seems remote.

Before we start, I hope I can take it that the ‘energy, not money’ interpretation of economics is familiar to readers (though, given the accelerating pace of change in the world economy, it might be desirable to publish an updated introduction to this in the near future).

The understanding that the economy is an energy system, and not a financial one, can provide insights denied to those wedded to the ‘conventional’ interpretation which states that the economy can be understood, and managed, in monetary terms alone. It is becoming clearer, almost by the day, that this simply is not true.

Long-standing visitors won’t need reminding, either, that, beyond believing that everyone should respect the democratic decision, I’m avowedly neutral on whether British voters made the ‘right’ or the ‘wrong’ choice in the 2016 “Brexit” referendum.

There can be no doubt, though, that “Brexit” has been a huge distraction – indeed, it’s “the excuse that keeps on giving” – and has induced something very close to complete paralysis of the decision-making process.

Policy paralysis is particularly unfortunate in the economic sphere, where “Brexit” has prevented debate over a deteriorating economy and a rising level of financial risk. Even on the basis of official data, Britain’s financial assets ratio – a measure of exposure to the financial system – stands at more than 1300% of GDP. This compares with 480% in the United States, and is a dangerous place to be as a GFC II sequel to the 2008 global financial crisis (GFC) becomes ever more probable.

The place to start is with the economic situation as interpreted by SEEDS (the Surplus Energy Economics Data System) which, for Britain as for any other economy, lays bare the realities behind the published statistics.

Growth, output and debt – coming clean

If you were to believe official figures, British economic output increased by 11% between 2008 and 2018, adding £212bn (at 2018 values) to recorded GDP. This in itself is far from impressive and, since population numbers increased by 7% over that decade, left GDP per capita just 3.6% ahead.

Even these uninspiring figures flatter to deceive. Over a decade in which GDP has increased by £212bn, debt has risen by £890bn, meaning that each £1 of recorded “growth” has been accompanied by £4.18 in net new borrowing.

This, to be sure, is an improvement over the 2000-08 period, which witnessed a reckless, credit-driven bubble in which debt increased by £5.63 for each £1 of “growth”. But the UK economy remains excessively dependent on continuing increases in debt.

The numbers are summarised in fig. 1, which shows how far annual growth has been exceeded by net borrowing, particularly in the period of policy insanity which preceded 2008.

Fig. 1

#158 UK 01

As a result of a continuing addiction to cheap and easy credit, most (83%) of the recorded growth in British GDP since 2008 has been a function of the simple spending of borrowed money.

SEEDS calculations show that, if net new borrowing ceased as of now, trend growth would fall to between 0.1% and 0.4%, well adrift of the 0.6% rate at which population numbers are increasing.

If the United Kingdom hadn’t joined in the pan-Western (and, latterly, pan-global) debt binge in the first place, output last year would have been £1.63 trillion, 22% below the recorded £2.08tn.

Where underlying realities are concerned, SEEDS indicates that, rather than ‘output of £2.08tn, growing at 1.4% annually’, Britain has underlying, ‘clean’ GDP (C-GDP) of £1.63tn, growing by between 0.1% and (at best) 0.4% – and this is even before we turn to the critically-important energy situation. Comparisons between recorded GDP and the credit-adjusted equivalent are set out in fig. 2.

Fig. 2

#158 UK 02

Like so many others, the British economy shows all the hallmarks of “activity” created artificially by the injection of credit – high value-adding activities (like manufacturing) have stagnated at best, displaced by “growth” coming mostly from minimally value-adding sectors which are characterised by low wages and worsening insecurity of employment.

Replacing, say, £1bn of hard-priced manufacturing output with £1bn of residually-priced manicures and fast food deliveries isn’t progressive, least of all if this change has been financed with rising debt, most obviously in the household sector.

The mistaken idea, held as tenaciously in London as it is in the Élysée, that lowering wages somehow makes an economy ‘more competitive’, ignores one rather obvious fact – if low labour costs were an economic positive, Ghana would be more prosperous than Germany, and Swaziland richer than Switzerland.

The energy dimension

Because all economic activity is a function of energy, the cost of energy supply is a vital determinant of prosperity. This cost is calibrated here as ECoE – the Energy Cost of Energy – which measures, within any given quantity of energy accessed and put to use, how much of that energy is consumed in the access process.

For reference, SEEDS indicates that, for complex developed economies, prior growth in prosperity goes into reverse at ECoEs between 3.5% and 5.5%. In Britain, prosperity has been shrinking since trend ECoE hit 4.2% back in 2003. The subsequent rise in trend ECoE – to 9.5% last year – has tightened the screw relentlessly.

This goes a long way towards explaining why the average British person is 10.8% (£2,673) worse off than he or she was back in 2003 (as well as being nearly £27,000, or 49%, deeper in debt).

These calculations also do a lot to explain both popular discontent and the “productivity puzzle” which so baffles the authorities.

At 9.5%, Britain’s trend ECoE is significantly worse than the global average (7.9%) (fig. 3). This competitive disadvantage is of comparatively recent origin since, back in 2003, Britain’s ECoE (of 4.2%) was rather lower than the global average (4.6%). Whereas world trend ECoE has risen by 3.3 percentage points (+71%) since then, the British equivalent has more than doubled (+127%), increasing by 5.3 percentage points.

Fig. 3

#158 UK 03

Part of this relative slippage is due to a shrinkage in domestic energy supply – output of primary energy has declined by 56%, to 119 million tonnes of oil-equivalent last year from 272 mmtoe in 1999. Most of this decrease results from declines in output from the mature oil and gas production operations in the North Sea, though output from coal and nuclear has fallen as well. Against a 162 mmtoe decrease in fossil fuels production, supply from renewables has grown by just 23 mmtoe.

Over the same period, energy consumption, too, has fallen, by 15% or 33 mmtoe. Though often claimed as a sign of improved energy efficiency, this decline is indicative, rather, both of deteriorating prosperity and of the offshoring of energy-intensive (but important) industrial activities.

Perhaps because of complacency induced by the past largesse of North Sea oil and gas, British energy policy has seldom seemed particularly astute. Right back in the 1980s, ‘quick-buck’ thinking permitted both the export of gas and its use in the generation of cheap electricity, both of which were short-term expedients which made excessive demands on a resource which was never huge. Latterly, the authorities dithered for more than a decade over the future of nuclear before making the wrong technology choice for the wrong reasons. The current commitment to renewables, though commendable in principle, does not seem to be well-thought-out, and is likely to impose excessive costs on industry and households alike.

Whatever the local causes, ECoE is projected to rise from 10.0% this year to 12.0% by 2025 and 13.8% by 2030. These numbers indicate irreversible de-growth in the economy, and are markedly worse than those faced by significant competitors – by 2025, when British ECoE is projected to hit 12%, that of the United States is likely to be 10.8%, with France at 8.9%, resource-deficient Japan at 12.5%, and the world average at 9.6%.


When adverse trends in ECoE are set against essentially stagnant output as measured by C-GDP, the aggregate prosperity of the United Kingdom is actually slightly lower now (at £1.47tn) than it was back in 2003 (£1.48tn).

Over that same period, though, the population has increased by 11.4%, from 59.6 million to 66.4 million. Taken together, these figures explain why the average person is 10.8% worse off now (£22,191) than he or she was fifteen years ago (at 2018 values, £24,832).

Rises in taxes have exacerbated this deterioration, with a £2,673 fall in prosperity compounded by a £2,240 (24%) increase in taxation per person. Accordingly, discretionary (‘left in your pocket’) prosperity is £4,913 (32%) lower now (£10,432) than it was in 2003 (£15,345). This isn’t as bad as what has happened in France (-40% over the same period), but the French experience is extreme, and Britain is not far behind in the league-table of impaired prosperity.

Where pre-tax prosperity is concerned, British citizens have suffered more than most over an extended period (see fig. 4). The outlook is for further erosion of prosperity, making the average person 15% worse off by 2024 than he or she was in 2003.

This continuing deterioration in prosperity poses a huge policy problem for decision-makers and opinion-influencers, few (if any) of whom even understand what is really happening to the economy.

Fig. 4

#158 UK 04

Risk and response

If you were to put the foregoing points either to decision-makers or to practitioners of ‘conventional’ economics, the probable reactions would be denial and disbelief.

Additionally, you’d probably be told that the national balance sheet shows net assets at an all-time high of £10.4tn, which sounds impressive – until you realise that 83% of this (£8.6tn) consists of land and buildings, whose nominal values have been inflated by ultra-low interest rates, and which cannot be monetised because the only people to whom they could ever be sold are the same people to whom they already belong.

In fact, corroboration of the cautionary conclusions of the SEEDS analysis of the United Kingdom is particularly easy to find. In recent years, the British economy has been characterised by real and worsening hardship, evident in homelessness, the millions ‘just about managing’, highly elevated levels of household debt, rising recourse to food banks and a dearth of well-paid job opportunities and affordable accommodation for the young. High-profile corporate failures in the retailing and leisure sectors attest to the severe downwards pressure on consumers’ discretionary prosperity.

When calibration is switched from credit-inflated GDP to underlying prosperity, the true extent of financial risk becomes apparent. The debt ratio rises from 263% of GDP to 370% of prosperity, and even this excludes off-balance-sheet “quasi-debts” such as unfunded public sector pension commitments. Worse still, financial exposure – measured as the ratio of financial assets to income – rises from an already-dangerous 1300% of GDP to a frightening 1870% on a prosperity basis.

The sharp fall in prosperity has created significant acquiescence risk, meaning that public support for economic and financial policy initiatives can no longer be taken for granted. The decrease in discretionary prosperity over the past ten years hasn’t been as severe in Britain as in France (-29.3%), but, at -20.9% the United Kingdom ranks third out of the 30 countries modelled by SEEDS, just behind second-ranked Denmark (-23.4%), just ahead of the Netherlands (-20.7%) and Australia (-20.6%), and a long way ahead of Canada (-16.6%), Japan (-14.1%), Italy (-13.6%) and the United States (-12.9%).

This does not mean that Britain faces the imminent arrival of an equivalent of the French gilets jaunes movement, but it does help to explain both the result of the “Brexit” vote and the steadily worsening public disenchantment with the elites. It also means that any attempt to repeat the 2008 banking rescues would be likely to meet with huge popular opposition.

These considerations are set to recast the political agenda entirely, with economic and welfare issues coming to the fore, and non-economic subjects falling ever further down the public’s order of priorities. In the coming years it’s likely that popular demands for redistribution will increase to the point where any party not adopting this agenda will find scant electoral support.

Meanwhile, and despite growing. political pressure for the imposition of much higher taxes on the wealthiest, it should be assumed that the tax base will start to shrink. Tax may account for ‘only’ 37.6% of British GDP, but it already takes a 53% bite out of the prosperity of the average person, up from 44% back in 2008. Any promises based on “tax and spend” are losing credibility, which might be one reason why both major parties are now promoting policies predicated, not on higher taxation, but on sizeable increases in government debt.

The reality, though, is likely to be a growing need for the prioritising of public services, emphasising those services deemed to be essential whilst withdrawing from activities of lesser importance.

The big question from here is whether the elites recognise deteriorating prosperity and act on its implications, or try to ‘tough it out’ and wait for an economic ‘recovery’ that isn’t going to happen.

There are ways of managing a society in economic de-growth, but the first imperatives – a recognition that this is what’s happening, and a preparedness for debate on the issue – still seem as far away as ever.



383 thoughts on “#158. An air of unreality

  1. David Graeber reviews the new Robert Skidelsky for the NYRB:


    Although Graeber and MMTers make a good point that there is no mechanism stopping us from clearing certain debts (e.g. pensions) they seem to me to be too relaxed on the possibilities of inflation. If the money supply increases with no related increase in productivity surely that is damaging to the currency?

    • If we believe – as I do – that the economy is an energy system, with money functioning as a secondary ‘claim’ on economic output, then there’s no monetary “fix” for the fundamental problem. Monetary theories are irrelevant and, when adopted by decision-makers, become dangerously irrelevant.

      The current assumption is that the central banks have unlimited ability to mount a “rescue” of the markets using monetary policy. This is likely to prove the most ludicrously mistaken assumption of the age.

    • So true Tim, and I share your reservations. Central banks cannot rescue the current building crisis for the reasons you so elequently describe. It is my concern to educate our younger generations to the risk that their futures are likely to be far more frugal than that to which they have been accustomed – and it will be a shock.

      I hope that I can prepare at least some of them, if they are listening, by publishing my book early next year and visiting sixth forms and universities to promote my and your proposals. I am only awaiting the results of the general election and hopefully a defiinite way forward for Brexit.

      In the meantime, if anyone would like to review my pdf final draft manuscript they can email a request to: peter@underco.co.uk

    • Eventually excessive printing of money is likely to cause currency depreciation. Key, in my view, is the extent of similar actions by other major economic powers.

    • I think of money as the lubricant that allows the energy-driven engine of the economy to run more efficiently, but the lubricant only increases the engine’s efficiency up to a point. The engine has begun to burn fuel less efficiently (with a lower Energy Return On Energy Invested) and central bankers, seeing the engine’s falling performance but not understanding how it works, have added more lubricant in the hope that this will increase its performance. Instead the engine has developed problems of over-lubrication (bubbles) and is being damaged by this (malinvestment).

  2. Latest from Gail Tverberg takes a warts and all look at Renewable Energy and efforts to decarbonise society. Due to the fact that Western society is still dependent on an infrastructure that is entirely dependent on hydrocarbons it is obvious where her essay is heading to: https://ourfiniteworld.com/2019/11/14/do-the-worlds-energy-policies-make-sense/
    The population conundrum may well play out differently though. Whilst the Former Soviet block and the West + Japan figures are fairly steady (at the moment the population of pretty much all of the old Soviet block is now in decline, along with Japan; most of Western Europe’s indigenous population is fairly static with most countries projected to show declines in the next decade) – the others block is the wildcard. The fact that some places in both South Africa and India were pretty much out of water is an ominous sign of things to come.

    • Agreed. Additionally, electricity consumption is reported to be 13% below the year-ago level, which chimes with concerns over the Indian economy flagged by SEEDS. The outlook for the South African economy, too, is worrying.

    • It’s important to remember that while high-population-growth countries have numerous problems, including failing water supplies, they contribute very little to carbon emissions. The only populations that need to decline quickly are those in wealthy countries, which emit the vast majority of emissions. But while population stagnation in developed countries is better than growth, rapid population decline will never happen voluntarily.

      The real wildcard is in the rich world, which really only has one viable choice: give up the vast majority of their per capita consumption and become as poor as South Africa or India as rapidly as possible. Considering that even a mild diminution of prosperity is causing consternation and political turmoil now, there is a vanishingly small chance that the wildcard will ever be played.

    • Humans will not voluntarily give up energy slaves. It’s not “in the genes.” I’ve posted a link re The Maximum Power Principle before. Voluntary Simplicity and suicides are the only exceptions I know of in humans, and I know of none in other species. To try to avoid moderation, I’ve changed some symbols to words:

      Meanwhile, several other weak links likely fail before the planet roasts us into extinction.

    • I’ve shared this with Gail, as well as Nate Hagens, Bill Rees, and others I know who focus on energy.

      WithBill Gates’ huge $s behind it, there will probably be some development. The embodied energy (cradle to grave) needs to be worked out, along with the actual longevity of the infrastructure. It says 1500C possible to split H20. If it enables more throughput growth, some other weak link will eventually break, while biosphere deterioration continues to increase.



    • @Steven Kurtz

      I agree with you about the importance of the maximum power principle, but it is also important to keep in mind that it applies to species as a whole rather than individual members of a species. Some individuals, like male honeybees, don’t do a whole lot of energy gathering, but they are a small minority of the population. Similarly, monks and other practitioners of voluntary simplicity are always going to be a small minority of the human population.

      I wish I had your confidence that one of the other weak links in modern civilization will fail before the climate crosses important tipping points. We are getting closer and closer to the point of no return, but I am somewhat optimistic that you are correct. That’s why I’m an agrarian prepper. I’m keeping my fingers crossed that industrial civilization will collapse in time. It will be horrific, but better than the horrors that will occur if climate change does the collapsing later on.

    • The analogy of the male honeybees is an interesting one – they either die painfully after copulating with the queen bee – their abdomen gets ripped out – or they doss around during the warmer months. When the autumn arrives – the hive kick them out and leave them to die. Life can be brutal in the beehive. What is possibly a more apt analogy is that of a queen bee that doesn’t fulfil all of her duties – colonies can turn against the queen and create a new one. Similar with the current Corporate States and the promises they promote – jam tomorrow, everyone! With reports now suggesting downward mobility is here to stay, that the life expectancy of Millenials is declining , there should be no surprise that social strife is bubbling up beneath the surface and is beginning to erupt.
      Jonathan Cook has written a very thought provoking article highlighting the all of the fake narratives and the really dirty side of Corporatism that we simply don’t hear about in the MSM. https://www.jonathan-cook.net/blog/2019-11-20/capitalism-suicide/

  3. Having in personal affairs wasted much time and effort to advise those who simply don’t wish to face reality, change, or who simply retreat into fantasy, I sympathise.

    This is only amplified on the scale of the state, which is always institution-bound and inclined to disbelieve that its continuity might be challenged by economic change (one thinks of my siblings in Spain dreaming of the fabled secure, life-long, well-paid state job with pension).

    Attitudes everywhere are questionable and unrealistic. I see the Dutch aren’t happy about quite modest higher pension contributions: ‘I want cake and I won’t pay for it’. Similar pension protests in Spain. How Germany reacts to recession will be fascinating to observe (and what about Target 2?)

    All one can do is try to get the best possible grasp on what is occurring globally, using the few sources that seem reliable, disregard the propaganda, , assess the likely national impact in the short to medium term, and modify one’s own plans and dispositions accordingly – if there is any room to do so.

    Few people have any such room, and as things worsen will naturally expect solutions from on high., and politicians will be all too pleased to pretend to be their redeemers. Their promises will be found to be hollow.

    I can’t see how the return of mass unemployment can possibly be avoided -as it was in 2008, outside the European South – given the scale of the global downturn and the fundamental cause.

    So the politics of Redistribution seem set to be the major feature of the coming years,as the institutions of the 20th century economic and social model increasingly fail due to lack of sufficient funding, and more people struggle with no hope – not just Millennials, but the redundant middle-aged, and the support-hungry elderly (as many of us know, it’s hard and very expensive to keep each frail elderly person going!).

    The coming crisis must surely hit the professional middle-class very hard this time, not only through unemployment, but in savings and expectations, as well as driving the less skilled and low-paid even further down.

    • Looking at Labour’s plan to ‘transform Britain’, while I would agree with some fairly sane measures (more secure tenancies; an end to punitive delays in receiving welfare when unemployed, responsible for much of the explosion in food-bank use), it is worth observing that many of their taxation policies would serve only to erode further the prosperity of the merely modest middle-class, and lead to a reckless indulgence in ‘cheap’ (for how long?) public debt, disguised as ‘investment’.

      I can see little sense in any of this, and no awareness of the true, precarious, position of the UK economy.

      Significant elements in the party also wish, for some reason, to open borders wide, endorsing a ‘right to migrate’, when it is one of the most evident facts of life here that the country is simply bursting at the seams.

      Quite senseless.

    • I don’t have a problem with redistribution per se, given both recent history and future outlook. But how it’s done is critical.

      Historically, monetary policy since 2008 has tilted the relationship between asset prices and incomes in favour of those (generally older) who already owned assets and against those (generally younger) who had yet to acquire assets. This makes the case for some rebalancing.

      Looking ahead, as average prosperity continues to deteriorate, those nearer the bottom, and indeed those in the middle, are going to feel the pinch more and more, a process which corrodes tolerance of inequality.

      But the important thing is to lead these trends, not follow them. At this point, reasoned, fairly equitable redistribution is still possible. Leave it until public demands reach a crescendo and things could become disorderly.

      This aside, all UK political leaders are still talking about “growth”. Voters are increasingly likely to ask, either “what growth?” or “growth for whom?“.

  4. Even the Soviet system promised an abundance of worldly goods – eventually!

    We are most unlikely to become Trappists, or Sufi dervishes with a loin cloth, rosary and begging bowl; even the, they need a surplus to live from their begging…..

  5. Bizarre World
    Is the Prince Andrew ‘withdrawal from society’ and ‘soliciting sex from a minor is not pedophilia’ defense supposed to distract everyone from Brexit? Is insulting China supposed to further any noble cause? Is redirecting NATO to fight China supposed to stop Belt and Road? If Italy signs on to Belt and Road, will Germany send troops to occupy them, as they did during WWII? Did Putin make a good joke about US Shale Oil? But seriously, will the Siberian shelf ever play out positively in Dr. Morgan’s calculus?

    Is the world insane?

    Don Stewart

    • Yes!

      ‘From the crooked branch of mankind, nothing straight can be made’.

      Best to go and find those delightful puppies and toddlers. I’m looking forward to seeing my lovely little Welsh niece shortly who spreads happiness all around her. Carpe Diem….

    • Don, what is truly concerning is that, while our media force feeds us the impeachment reality TV show 24/7, the Fed, without any real explanation of what is going on and only the most perfunctory inquiry by Congress, pumped $3Trillion into the repo market in the last two months (cumulative, the sum of tens of billions provided on a revolving basis, some on a 14 day term basis with talk of creating new, longer terms) because of unexplained “liquidity” issues. As far as I know, only WallStreetonParadeDOTcom has been hammering on this and reporting the facts on an almost daily basis, and discussing the illegality of some of what the Fed is doing. It sure has the air of a stealth bailout. What the heck is going on? Perhaps knowing that an admitted bailout won’t work, politically, this is the “new normal”?

    • There’s a series of issues here. The impeachment process seems part of a wholly partizan effort to ‘get Trump at any cost’. The ‘liberal’ elites, who showed little real animus against GWB and the wars in Afghanistan and Iraq, loathe Trump with a venom that I, at least, find hard to understand.

      The broader issue (not remotely unique to the US) is a combination of deteriorating prosperity and worsening inequality. These trends are what got Mr Trump elected in 2016. Most of the Dem heirarchy, Bernie Sanders excepted, don’t seem to see this, or the implication, which is redistribution.

      What the political ‘Left’ needs, it seems to me, is a policy based on redistribution, and with a particular focus on the young, disadvantaged both by globalization and by the inflated cost of housing, within a generally heightened concentration on economic issues.

    • Dem Hierarchy and Redistribution
      Note the recent warnings from Bill Clinton and Nancy Pelosi to their fellow Democrats about getting too far to the left. In other words, stay on the ‘positive’ side that everything will be peachy if we can just get rid of Trump the Deplorable.

      I was listening to a guy who works on the IPCC talking at The Land Institute, which was founded years ago by Wes Jackson in Salina, Kansas. Wes sees industrial agriculture as wrecking the world, and settled on developing perennial plants (e.g. rice and wheat) as a way to save the world. Then climate change came along and Wes doubled down on his program because perennials have very high potential to sequester carbon.

      The IPCC speaker gave his interpretation of what happened in Copenhagen and in Paris. Copenhagen fell apart because some optimists were promising what no one thought could be delivered. Paris seemed to arrive at an agreement because of one small but critical development: carbon sequestion through land use….e.g., Wes Jackson’s project and many other variants of carbon farming around the world. The French went public and there was a brief flurry of news and then it went largely silent. The Drawdown project picked up on it and maybe some billionaires are interested.

      So if the current trajectory of emissions (which are a straight line going up) are NOT problematic because we know how to bring atmospheric carbon down IN THE FUTURE, then Business as Usual is still OK. He pointed to the shift by Shell: we can produce all the oil reserves we have, plus all the natural gas we want to produce, and then, in a few decades, get into the carbon recapture and sequestration business with both feet. In other words, Shell as an investment is not at risk and world political leaders can promise the public that we can have our cake and eat it too.

      Such a position requires that corporations stop denying that climate change is a problem, but simply say that ‘we know how to bring the atmospheric emissions back down into the soil or sequestered underground’. Think about it: how many political leaders do you hear talking about the linkage between CO2 in the oceans and the CO2 in the atmosphere? Does anyone actually know whether all the CO2 in the oceans will come back into the atmosphere IF we start taking more CO2 out of the atmosphere? Will homeostatic forces tend to balance the two? Someone who is more knowledgable than I may be able to answer those questions…but I can’t. What is pretty clear is that the Shells of the world latched onto the notion that we could emit a lot in the short term, while relying on the same emitters to take it back in the future (with no mention of the fact that what they are promising to take back is only 10 percent of what they will emit).

      The election of Trump upsets the calculus: “it’s all a hoax perpetrated by China”. And so Rex Tillerson (Exxon-Mobil) apparently tried to engineer a palace coup against Trump (according to Nikki Haley).

      But the best thing for the Corporations is if Trump can prevail with his claim that ‘nothing is wrong except the lies perpetrated by the Liberals’. But they were willing to concede part of the Science in Paris. Meanwhile, the crucial conversation about the efficacy of future drawdowns from the atmosphere alone remains missing in action. (Anyone familiar with Thermodynamics would doubt that we can both emit and recapture and sequester effectively.)

      I think that Clinton and Pelosi are thinking along similar lines in terms of redistribution. E.g., “we can continue on with business as usual, with a few tweaks, and always defer any structural change to the future…when technology will save us all.” Countries farther along the Pain Curve (e.g., Britain) are more likely to go into Cake Now mode or else outright Repression (e.g., Bolivia, Chile, Ecuador).
      Don Stewart

    • On the financial and economic issues, the system is starting to crack, which helps explain (amongst other things) Fed intervention.

      Here’s something to ponder. In the West, we’ve been pouring credit into the system to create a semblance of “growth”. There’s been no real growth, though, in value adding activities like manufacturing and construction. Instead, people have increasingly been “taking in each others’ washing”. Meanwhile, inflated asset prices create increased “activity” (think real estate agency commissions on inflated house prices, for instance).

      All along, the watchword has been that we shouldn’t worry about, say, manufacturing, it’s still going on, and growing, but in the emerging economies.

      Now though, that’s started to unravel. Activity in China is slumping, as you can see with sharp falls in sales of, for example, chips and components. In India, production (meaning manufacturing + construction + agriculture + extractive industries) is down 4.3% y/o/y, and electricity consumption is down by 13%.

      This means we’re heading for the “discovery” that the World economy isn’t growing, but shrinking, as some of us have known all along.

      Once the “growth” story bites the dust, so do (a) asset prices justified by “buying future growth”, and (b) the myth that we can ever repay our debts.

      All it needs then is the discovery that, contrary to widespread, complacent assumptions, the Fed (etc) can always “pull off a rescue”.

    • I’m not worried Tim because now it’s Autumn (with aknowlegments to the Hitchhikers guide to the Galaxy) there’s plenty of new money laying around.

  6. “The debt is growing faster than the economy. It’s as simple as that. That is by definition unsustainable. And it is growing faster in the United States by a significant margin.”

    – Jerome Powell, Chair of the Federal Reserve – Nov. 2019
    Don Stewart

  7. Another aspect of the Labour ‘transformation’ plan: the 100,000 new homes – council and social housing – per year.

    Apart from the fact that most sane people don’t want that kind of housing as first choice, due to the problem of potentially unsocial neighbours, where are all the skilled workers meant to come from?

    Notoriously, there is a shortage of such,and they are very well paid: plumbers, electricians, at least, can mostly write their own cheques these days.

    • Haven’t we seen this movie before? The current house building mania is purely to support house prices through the idiotic Help To Get Hopelessly in Debt Scheme that only helps house builders and banks. This has echoes of the building frenzy in Ireland and Spain in the mid 00’s which, ultimately ended up with a monumental house price crash around the time of the last GFC. Spain still has over 1.3 million empty units and Ireland has been demolishing new build houses in an attempt to raise house prices.
      In the UK a lot of social housing that currently exists is in a serious state of dilapidation and are in urgent need of repair – quite a lot should be condemned as unfit for human habitation.
      As for the workforce on new build estates – if Brexit ever did occur and draconian laws came into effect regarding immigration then most of these sites will become ghost sites overnight

    • Given the shocking number of homeless, building council houses seems an extremely sensible idea. Any such programme is likely to have a high British domestic content. It’s essential, of course, that homes are built to high standards, as was certainly the case with the post-1945 council house programmes.

      Housing policy reflects conflicted attitudes, with property all too often seen as an investment rather than as somewhere to live. Governments see high house prices as good news, though this is irrational from an economic perspective. Somewhere to live is essential, just as much as, say, food or electricity. But nobody would celebrate high food or power prices, but the cost of housing (typified by rents) is driven upwards by high prices. Moreover, inflated house prices tie up large amounts of capital which could otherwise be put to more productive uses.

      Schemes such as Help To Buy have been blatant efforts to support high house prices, to the obvious detriment of the young.

    • ……and Tim, is the main driver for house prices impossibly low interest rates? – I checked the other day and offers of 2.2% apr for 5 year fixed abound. When the crunch comes, even if we see a most increase to 4,5%, mortgage payments will double.

      This is what happend to me in the 1991 recession and many were caught out being unable to fund the excess (my £100k mort. required £1,800/mth payment for quite some time as I remember).

    • Yes, exactly.

      If you can afford interest payments of, say, £10,000 per year, at a rate of 5% you can service a mortgage of £200,000. If rates fall to 2.5%, you can now service a loan of £400,000. But so can every other buyer – so prices soar.

      The position at this new, lower rate is that your monthly payments are the same as they would have been, and the house is the same one you might previously have bought for a lower price. All that has changed is the price – and the amount of debt you’re saddled with.

    • Pick-Up Trucks and Vans
      One of the effects of the very low interest rates that I have noticed is that all the guys driving around doing service work are driving shiny new trucks…bought at a very low interest rate. The rather battered old trucks that one used to see have largely disappeared from the streets. For example, a long-established tow truck service used to have really battered old trucks…now they are all new and shiny. The effects of that are probably complicated:
      *the new trucks probably get better fuel mileage
      *the embodied cost of energy rises as perfectly good old trucks are junked and replaced with expensive new trucks
      *the ability of young people to get into the service industry as a gig economy faciliiated by the internet is much higher than its used to be. A very high percentage of the new trucks carry some sort of label signifying their membership in a national or international group of service workers using a common internet platform to get work and perform at certain standard levels.
      *the form factors of the trucks have evolved in ways that probably promote more efficiency for the workers

      So…a mixed bag. Probably more exposure to financial crises (e.g., the explosion of dog walking businesses may not fare well in a GFCII). And the number of huge dogs seems to have increased significantly…which are not cheap to feed. But definitely more people with gig work.

      Don Stewart

    • Part 4 is all about energy – this is what Nate wrote in the first segment:
      Ecological economics acknowledges that real economies are completely dependent on energy. However, orthodox economic theory remains blind to this reality. As a result, so do our institutions and our citizenry. The disconnect has massive implications for our future. This is so critical it deserves reiteration.

      This element, along with productive land, are two components that are never mentioned in mainstream economic circles, Which is why any “solution” to any threat to “Western Civilization” that comes from the economics field will fail to achieve its stated aim.

      Also love the E O Wilson quote: “The real problem of humanity is the following: we have paleolithic emotions; medieval institutions; and god-like technology.”

  8. This clip says it all:
    “The alarm bells are ringing loud and clear. Unless governments take decisive action to help boost investment, adapt their economies to the challenges of our time and build an open, fair and rules-based trading system, we are heading for a long-term future of low growth and declining living standards, “OECD Secretary-General Angel Gurría recently said.”

    OECD don’t get it. They are blaming the trade war for the global slowdown but of course, here, we all know why growth is slowing and will accelerate in the coming years. Until they start listening to Dr Tim they will never figure out a solution and consequently we will all become poorer as the years pass by or a crash happens triggered by any number of bad economic trends.

  9. Labour’s ‘Transformation’ policy still fails to impress. Just looking again at construction:

    Isn’t homelessness due in very large part to massive immigration over the last decade or so?

    One, essential, nurse for the NHS from India, or Nigeria, brings a husband and 2-4 children (Guardian article) with commensurate pressure on public services and housing. Just ride a bus in London and you will see this – the big families of newly-settled women.

    Will the new homes be built to very high standards? Most doubtful – look at all the construction scandals of recent years. Decaying housing estates built in the past are also testament to the enduring British fondness for poor quality construction ad the incompetence of Council planning building standards departments.

    Where will they go? Greenfield sites? Is that really desirable?

    And the question as to where the skilled workers will come from remains unanswered and, I suspect, unanswerable. Unskilled men today are mostly the dregs of the workforce, with poor social and work habits and abilities, probably not suitable to train up – that’s exactly why they are unskilled……

    Above all, it seems impossible if restrictions are placed on the hard-working tradesmen from Eastern Europe – I’ve employed them myself, and was impressed, having to make them take proper breaks and sit down for them,etc. I’ve never met working Brits with that work-ethic.

    They compare very well to the average very slow British builder, who always seems to be working as inefficiently as possible (this was observed of agricultural workers in the past – but builders are a damn sight better paid now!)

    And, undermining it all, the delusion that cheap money will last forever, and that the UK can continue to add to the national debt mis-characterised as ‘investment’. Borrowed money poured into hasty construction projects that will probably be falling apart in 20 years or so……

    • It’s noteworthy that almost all parties are competing to make grandiose spending promises to the voters. This in turn reflects a false interpretation of the economic realities – surprising in itself, given that conventional “growth” has slumped to 1.2%, even before the global recession which most observers now concede is coming.

      The reality of deteriorating prosperity, as we understand it here, has surely become so visible that it ought to have at least been recognised, if not properly understood or explained, long before now.

      The conventional view of migration is that the increase in numbers working increases GDP by more than enough to offset the increase in numbers. This ignores the fact that human physical labour is a tiny part (well under 1%) of the energy used in the economy. There can be genuine humanitarian reasons for admitting immigrants, but there is no economic logic favouring overall increases in the population.

      This, in some ways, is the crux of the issue. If population numbers hadn’t increased – and if house prices had been kept under control – the UK wouldn’t have a housing crisis on the scale that it now is. Building council houses is a rational response – but it doesn’t address the fundamentals.

    • So true Tim. The problem with politicians generally, in common with many loose thinkers, is that they see only the effects of their policies and fail to go to the root causes. The Labour party is promising to build 150k council houses each year for 5 years, a worthy objective, but fail to recognise the availability of land, land prices (supply & demand) and the many objections that will be registered during the planning stages as Nimbys raise their voices, and of course the many wishing to protect the environment among several other local objections.

      These sound bites achieve little. The housing crisis needs to be addressed in the certain context of SEEDS and recognition of the no-growth economy going forward – but we know they are not listening don’t we?

  10. My Error
    I said that ‘Bill Clinton’ was warning against a shift to the left…it was actually Barack Obama.

    Supposedly, in early 2008, when Obama was given a choice between saving the lenders or saving the debtors, he said “but saving the debtors would work against my Funder Base”. My guess is that Obama and the Democratic National Committee see their job as appealing to a large base of Funders while also pacifying the mob.

    Trump can loudly proclaim that ‘the United States will never a Socialist country’, while also loudly advocating for negative interest rates and more Federal Reserve intervention in the Repo market which are strongly biased to benefit a certain clientele. Whether egalitarian socialist or Funder Base Financial Capitalism, politics seems to always be about deciding who gets the big piece of the pie.

    Don Stewart

    • I think we live in a world of competing socialisms: the traditional welfare state kind and the new variant, “Federal Reserve Socialism.” Forward, comrades!

    • Indeed so, Ken, and something we discussed here quite a long time back – ‘right’ vs ‘left’ is becoming less meaningful than ‘corporatist/collectivist’ vs ‘libertarian’ (with ‘libertarian’ vs “liberal” a big distinction as well).

    • Interesting stuff. If they’re missing the role of energy in the economy, though, they’re missing a critical component.

      The inter-connected issues around energy, ECoE and the environment are utterly crucial. It seems to me that investors who “get” this have a huge potential advantage over those who don’t.

      My advice now is to keep an eye on production in the EMEs – by ‘production’, I mean manufacturing, construction, ag and the extractive industries, and keep a watch on electricity and broader energy use (lead indicators for production) too.

      Production is “the real stuff” – as opposed to pizza deliveries, hand-washing of cars and moving money around, which have been boosted by monetary policy.

      A great deal of production has been offshored to EMEs. There are clear signs that production growth in some EMEs is reversing, most obviously in China and, now, India.

      If EME production goes down, we’re in de-growth – simples.

  11. Two articles in The Guardian caught my eye: in one, on the hopeless old market town of Peterborough, trashed during the late 20th century and submerged recently under low-grade immigration, featured one of Corbyn’s ‘left-behinds’, a homeless father who declared that he’d absolutely love a house to change his life – for him and his four (!) children.

    Personal responsibility, anyone? Free condoms better than increased public borrowing to house people like him? Poor, poor kids, though:what chance do they have with a fool like that for a father …. His face bore all the typcal marks of prolonged substance abuse.

    And the other was on the reactions of German savers, and politicians, to the novel negative interest rates on accounts with less than 100k euros. The earth trembles!

    Amusing that the ‘pro-business’ party says that Germans have to learn to ditch savings for more adventurous investing. Others, mindful of voters’ ire, call for tax-breaks to compensate for the attrition of savings.

    Coming to us all rather sooner than we might think?

    As Don has observed, all insane.

  12. I am a firm and shameless NIMBY: I found a nice place, have endeavoured to make my little bit of it even nicer – and productive too – and do not wish to see it covered in concrete and tarmac merely to house either drug-addicted and semi-criminal ‘left-behinds’ (we have enough of those who were settled in the neighbouring village) or pseudo-‘luxury’ housing development.

    In other words, I would like any successors here to have a decent environment to enjoy, too.

    • Though I’d describe myself as a conservationist rather than a NIMBY, I share your feelings on this. I used to know Cambridge well, from my student days, but have long found it unrecognizable, with appalling traffic congestion. Latterly, as a councillor in a village, I discovered how little – almost no – say locals have over planning decisions.

      There are complex issues here. One American said to me that “Californians want no exploration, no production, no refineries and no pipelines – but have a God-given right to drive 200 miles a day”.

      People do need somewhere to live, and that does require building homes, but there’s a lot more to it than that. A home doesn’t just mean a roof over your head, but a degree of security, and freedom from exploitation. The UK, I think, needs to look at population issues, about attitudes to the ownership of multiple homes in this context, protection of tenants and controls on short-term letting. It certainly doesn’t need to experience the horrors that homelessness has brought to some American cities.

      What’s required is strategic thinking over population numbers, migration, numbers of cars on the road, allocation of use of homes within these parameters – all of it difficult within the short-term (and seemingly shortening) electoral cycle.

      Around the world, of course, degrowth is going to such issues into a wholly new context. NIMBYs – and conservationists – might find some consolation in what degrowth means for ‘development’.

    • Tim according to Google there are around one billion cars on Earth.

      Now regarding degrowth and energy usage what if this number was reduced by 50% so no 2 – 4 car families and car pool / share schemes.

      I wonder if this would suffice on saving the planet. Of course it would have to be done over 20 – 30 years so that economies could adjust – bit better this than having it forced on us.

    • Re: halving numbers of cars
      “I wonder if this would suffice on saving the planet.”

      There are so many weak links in the physical system, that the effect would be minimal.


    • First of all, I’d be all in favour of reducing the number of cars – I think it’s something that both degrowth and the environmental challenge will impose on us anyway, and it’s better to plan ahead for it rather than just letting it happen. It’s interesting to note, BTW, that car-making is one of a number of industries which are already contracting.

      This said, every $, £ etc not spent on something (in this instance, cars) is spent on something else – and, since that “something else” is necessarily supplied using energy, the linkages are complex.

      It always amuses me that car ads invariably show eitherr the open road or cities with neither traffic nor police, yet the realities are sitting in traffic jams and wondering where you’ll find a parking space.

  13. Here are two articles, both from CapX, which I think are well worth reading.

    In the first, Niall Ferguson has a lot to say, especially about the Union.

    “But I think………..that the spectacle of incompetence in Westminster just serves to erode the commitment of middle class Scots to the Union, I was up in my hometown Glasgow last week……… I heard repeatedly the worry expressed that if anything was going to get Nicola Sturgeon over the line, it would be the fiasco down south…”


    The second, by John Ashmore, addresses “the rupture between an ‘out of touch’ political class and ordinary voters”, commenting on polls showing quite how big this divide now is.


    • Good pieces.

      Even The Guardian, I see, is beginning tor realise that Corbyn’s ‘Real Change for The People’ manifesto is very wide of the mark, even if some elements are very good (fairer terms for renting, end delays in payment of benefits to desperate new claimants, etc).

      Quite simply The People are not crying out for most of those things promised in it, which are based more on ideology than reality.

      The damage Brexit has done to the Union is quite simply tragic.

      Serious error in the Ashmore though: we will almost certainly not be seeing ‘longer careers’ as people work into advanced old age, as the author supposes.

      In a declining economy -and it must decline, what else is ‘De-growth’ ?- workers will be shed as much as possible, many then finding no worthwhile employment from their middle-aged years. This is the case now.

      We can expect a growing wave of closures of bank branches, supermarkets and above all retail in general -the trend is already established.

      And, although people may be kept alive by surgery and medicines, they will still fail mentally and physically far in advance of the final decline and death. So, they will be stuck in a dreadful hopeless limbo….

      Quite right, though, that the sheer preponderance of the frail elderly has the potential to crash the NHS.

      Much elderly care is now funded by bubble property prices (with those with assets to sell notoriously subsidising the poor): if those crash to a more realistic level, we may expect to see lots of sudden home closures, failure of care companies and, of course, deaths. Just calculate the consequences of a 30-50% fall in property prices…. But even 20% might be enough to nudge the industry into a tail-spin.

      Certainly, the major London hospital where my mother spent several weeks after her fall was simply chock-full of elderly people with multiple problems, and the (excellent and very patient) nurses barely able to cope. If her assets and savings go to pay for care, they will be used up in the blink of an eye, and she has more than most and may benefit from the London bubble.

      Massive immigration, supposedly to address this demographic imbalance, does nothing to address the sheer logistical scale of this impending problem – which no earlier society has yet had to face, the frail elderly constituting in the past an acceptable and manageable % of the total population, for which solutions could be devised which were not too burdensome.

    • The Old and Frail
      Everyone worried about this subject, and everyone should be, needs to take a look at David Sinclair’s book:
      Lifespan: The Revolutionary Science of Why We Age – and Why We Don’t Have To

      Briefly, experiments with animals and observations in the human Blue Zones have shown that we already know how to extend ‘health span’ , so that health characterizes almost all of our life and the decline into death is swift. The solution is applying modern medicine to acute care, but relying on proven lifestyle interventions to avoid the need for chronic care. I also suggest taking a look at the statistics in GrowBabyHealth to look at the effectiveness of lifestyle interventions among pregnant women and how that affects the epigenome of infants and their prospects for a healthy life.

      Sinclair is also an optimist in terms of extending human lifespan to, perhaps, 150 healthy years. That raises all sorts of questions, but Sinclair does present some evidence that people who expect to live 150 years will become better stewards of the planet.

      While the statistics show that Americans are losing lifespan, the lifestyle message may be getting through their dense skulls. I was recently looking at the closure of chain restaurants. It could simply be a result of declining prosperity as measured by Dr. Morgan. But one theme was that the chains need to find credible ‘healthy options’. The obstacles in the search for ‘healthy options’ are enormous, as the current craze for keto and paleo and gluten free in the US illustrate. It is very hard for common sense to get a foothold in the craziness.

      Don Stewart

  14. Re the “any attempt to repeat the 2008 banking rescues would be likely to meet with huge popular opposition”

    The repetition is already guaranteed. When a house bought using ‘Help to Buy’ is re-sold at a lower price, the governbankment reimburses the bank their losses. The governbankment is now on the hook for billions of bank losses.

    Re the reduction in disposable income it’s largely caused by the increase in joint income mortgages at higher lending multiples. 4.5x joint income, tripled house prices, compared to 3x Main plus 1x second income.

    • Re “any attempt to repeat the 2008 banking rescues would be likely to meet with huge popular opposition.”
      We seem to be having a very successful trial here in the U.S. of dong the bailout covertly. If Congress and the press aren’t talking about, it is not happening. There is no, ZERO, public outcry or demands for an explanation, except for a handful of niche blogs or websites. I think the assessment of “likely” public opposition overlooks the fact that, at least here in the U.S., “the People” are very well trained to care about only what the government and press tell them they should care about.
      In the now infamous podcast interview where Hillary Clinton implied that Tulsi Gabbard was a Russian agent, she also complained about the problem of fake news in the unregulated social media space and internet generally. Unlike when the narrative was controlled by a handful of reputable media outlets, the problem, now, she said, is that “people don’t know what they are supposed to believe.” Yep, that’s the view from on high. Every once in a while, she blurts out the truth.

    • Yes, what’s happening now in the US is ‘covert QE’. But the general public can’t be expected to take much interest in that. In my comment, I’m thinking in terms of full-blown crisis, grabbing both the headlines and the attentions of ‘ordinary’ people. Congress took its time over backing the bail-out back then, and members thinking about re-election might take an even tougher line on ‘Wall St vs Main St’ next time around. Ordinary people throughout the West are a lot more sceptical about ‘the establishment’ now than they were back in 2008 (n.b. Trump, “Brexit” and so on).

      Elsewhere, it’s been suggested that US economic policy now has a single objective – preventing a stock market crash.

      My own view is that QE etc will certainly be tried, but won’t work – though it may cause huge damage when it’s tried. It’s ironic that most ‘conventional’ economists now seem to think that QE and ZIRP ‘didn’t work’, but they (no less than market participants) still assume it’ll happen. It’s hard to find the logic in that!

    • In my view, Tulsi Gabbard and Andrew Yang are the only straight shooters of all the would be candidates. I wouldn’t trust Hillary or slick Willie as far as I could throw them. And O’Bummer was out of his depth and narrowly educated. The banksters bamboozled him through his two terms. Of course now Mr Social Justice and his school teacher wife are mega wealthy from book deals, talk deals, and ?? Have you heard about the mega mansion they bought? Almost as cynical as Al Gore and his 26 room energy hog mansion.

    • I’m impressed by Gabbard, but don’t know much about Yang. From this distance (Europe), Warren seems interesting. Also from this distance, the real issue seems to be Mr Trump, who people seem either to love or to loathe.

      Back in 2016, SEEDS analysis of trends in per capita prosperity led me to expect Mr Trump to win – and it amazed and amused me that ‘expert’ pundits couldn’t understand it this way. The “Brexit” outcome was similarly predictable, and for the same main reason. As I see it, nothing has changed, giving Mr Trump an edge going into 2020.

      There was much euphoria – which I shared – when Mr Obama was elected. Accordingly, expectations were absurdly high.

      In the current UK debates, it’s interesting to observe how members of the public are so much more in touch with reality than party leaders. In particular, questioners (including staunch Remainers) in TV debates are asking how a party calling itself the Liberal Democrats can justify ignoring the referendum vote and scrapping “Brexit”!

    • Voters have also wised up to ridiculous spending plans.

      Compared to Labour’s spend spend spend the Conservative manifesto was quite muted.

      I expect Johnson to get elected in the strength of his Brexit promise – Corbyn is just dithering – but it could be very close.

  15. There’s a very interesting story on the BBC news website about One Coin perhaps one on the biggest currency scams in history.

    Unfortunately real money was used to invest in it and billions have just disappeared.

  16. Few thoughts about the US political situation
    Hillary Clinton was bemoaning the challenges to the Mainstream Media…”nobody knows what to believe anymore”. The solution, of course, is censorship favoring her side of any argument. And so Kurt Cobb’s blog today is a requiem for the freedoms we are losing…which is obvious to Iranians or Chinese who now live here.

    Hillary is a lawyer. Lawyers have a certain way of thinking. For example, the county I live in saw the erection of a Confederate monument about 150 years ago. The dedication speeches extolled the eternal dominance of the white race. So there is not much doubt about the attitudes of the people who erected the monument. They located the monument in front of the Courthouse…which turns out to be critical from a legal standpoint. Making arguments deriving from ‘the rights of man’, a local group began to agitate for the removal of the monument. (So far as I know, there are zero monuments in memory of the ex-slaves who fought for their freedom in the Union Army.)

    So the County Commissioners decided to remove the monument. Now the State of North Carolina has passed some laws prohibiting the removal of Confederate monuments on State property…such as college campuses. But the County went to Court and pointed out that there was no evidence that title to the monument had ever passed to the County. And so the statue is trespassing on County property. And the court ruled in favor of the County. And so now the statue is hidden somewhere in a ‘safe place’.

    I use this case just to illustrate how hard it is to address issues from a ‘rights of man’ position in the US.

    Back to Hillary. When she favors censorship, she is thinking like a lawyer:
    *Determine the facts
    *Examine the thousands of pages of law
    *Try to find some legal issue which moots the real question and seek a declaratory ruling
    *Barring that, determine what you want the jury to hear
    *Tell them only what you want them to hear…not the whole truth

    Our position now is very much like that faced by Lincoln. His approach was ‘whatever it takes’ to rid the country of slavery…which was morally reprehensible. But, as you can see from the case of the statue, attitudes die hard.

    Don Stewart

  17. This is a very interesting view, worth quoting at length. The original can be found here. (My emphasis).

    “And, like in Japan, the cost of pretend and extend is increasing. We are all well-aware that monetary policy is not the right tool to stimulate the economy and the disadvantages of negative rates surpass the advantages, but we are doing more of the same and we are slowly reaching the point where central banks are becoming market makers in some market segments. This is already the case in the euro area sovereign bond market. Based on our calculations, the ECB owns around 70% of France’s public debt and around 80% of Germany’s public debt. At some extend, I tend to agree with some of my colleagues that consider the stock market is the economy. We – and I mean mostly policymakers – cannot afford the stock market falls, as it would lead to contagion effect to the real economy. So much liquidity has been injected in the stock market over the past years, it is now almost impossible to withdraw it. The only solution is to keep injecting liquidity, which explains why around 60% of central banks are easing globally. This is the highest level since the GFC. Higher interest rates and QT are virtually impossible in a world of debt. Looking only at USD-denominated EM debt, it is reaching 3.7 trillion USD, which represents an increase of 156% since 2008. This debt burden is not manageable if interest rates considerably increase. Policymakers are not ready to accept the social cost resulting from the end of the expansionary monetary policy. “

    • Tim, thank you for the nudge towards an article that I found extremely interesting and informative. I have a couple of thoughts on the matter.
      First, while overall price inflation across the UK may be low there is significant price inflation in essentials, such as food and fuel. This is the reason that I believe an Essentials Prices index is required to better judge the issue.
      Secondly, the idea of other developed economies ‘Turning Japanese’ was discussed by Bill Bonner in one of his books nearly a decade and a half ago.
      Thirdly, the ‘political chickens are now well and truly coming home to roost’ from the effects of long-term Financial Repression.
      Fourthly, I have come to the view that TBTP will do all they can to try in their utter desperation to maintain high asset values – stocks and shares and house prices – in order to support the illusion of BAU.
      Those who read beyond the MSM know that beneath the surface things are FFN – Far From Normal.

    • As some people might know, when I was head of research at Tullett Prebon I created the UK Essentials Index, which got a lot of media coverage. I now compile this Index myself. I don’t publish it often, though, as my research workload now is international rather than UK-focused. It reveals dramatic increases in the cost of essentials, most especially during the years 2000-08.

      Second, of course, asset prices have soared. Though excluded (for no very good reason) from how ‘inflation’ is usually discussed, this has real implications in things like the cost of housing. Back in the 1970s, the Nixon adminstration invented ‘core inflation’, which excluded those things (especially, in those days, energy) where prices were rising fastest. It was described by someone as ‘inflation with the inflation left out’. Excluding asset price inflation is not dissimilar.

      Additionally, of course, asset price inflation artificially inflates GDP. For example, imagine an estate agent who sells 30 houses per year, and charges 2.5% commission. If the price of the average house sold is £200,000, his/her commission is £150,000. Raise the average price to £300,000, though, and that rises to £225,000, but the work done (number of houses sold) hasn’t changed. The same principle applies across all asset-related activities.

      I like what I’ve seen of Saxo’s research. We’re in an odd situation when, to paraphrase, we know that something doesn’t work, but are condemned to carry on doing it in perpetuity. Incidentally, Mr Trump seems to have grasped, pretty early on, that ‘the stock market IS the economy’.

      Lastly, it won’t work. There are limits to the efficacy of liquidity injection. This deserves a whole article, which might be worth adding to my ‘to do’ list, because it’s one of the two things that are likeliest to crash the system.

    • Excellent stuff Tim , thank you. Yes, I would love to see an article on the fudged stats for inflation, etc which I mention at length in my book (it’s very much one of my hobbyhorses). John Williams at http://www.shadowstats.com/ which I use quite a bit and is referenced in my book often does a great job calling out the established fake economists and PhDs

      If anyone would like a copy pdf, just email me at peter@underco.co.uk

    • Yes, shadowstats is great on US numbers. The chapter in my book looks at this, and similar issues in other countries. I’m not pushing the book when I recommend this chapter to you – it’s succinct but pretty comprehensive.

      When considering how inflation reporting has been distorted, please note that it means that real interest rates have beern lower, and for longer, than is generally supposed.

    • Yes and it distorts the GDP numbers (the deflator).

      I already have your book Tim, read with relish, thanks. I have passed it to all my friends and ‘pushed’ SEEDS in which I have total confidence.

    • FYI, I found a used copy via Abe Books at US$5.00, plus 4 shipping from UK. I may get it by X-MAS. 😉

    • Regarding inflation Tim don’t forget the Americans also adjust for technological improvements like computers getting faster ( which they also use to inflate GDP).

      Now there are many figures around regarding the amount of money in circulation around the World. $90trn is one estimate.

      Now at the most extreme example I can imagine this huge cash mountain sitting next to the final barrel of oil that could be extracted.

      This seems to be where we’re headed with current monetary policy.

    • That set of adjustments is called ‘hedonics’. This, plus ‘geometric weighting’ and ‘substitution’, is covered in a chapter of my book Life After Growth, together with statistical quirks from the US and elsewhere.

      I read somewhere that “hot money eventually catches fire”….

    • Thanks hedonics was the term I was looking for.

      It’s now 5 years since I read your book and I remember being shaken to the core so to speak.

      I wonder if anyone in the UK Treasury ever read your book after I referenced it in the letter to my MP.

      You will recall that my letter eventually disappeared below the Event horizon with the only reply querying what EROEI stood for.

      Clearly a quick Google was beyond the massive intellects of those who decide our financial policies.

    • Thanks for the link. Interesting piece. One question to the list: if recessions hit hard, and corp. profits tank, wouldn’t dividends get cut and many people take profits in equities? To remain in a bull trend, it seems to me that the CBs and other government agencies would have to buy most of the shares on offer to keep markets from a steep correction.

    • Steven

      It’s worth noting that, between 2014 and 2018, outside investors, both US and foreign, were net sellers of $1.1tn of US equities. But the market was supported by over $2tn of stock buybacks, heavily debt-funded. When that reaches its logical limit, the market seems likely to crash anyway…..

    • On Marketwatch (website) this am:

      Despite equities remaining vulnerable to an escalation in trade tensions, JP Morgan said 2020 could be another strong year for stocks.

      In our call of the day, JP Morgan analysts said 2020 could be the year of the “great rotation” — retail investors abruptly shifting away from bond funds to buying equity funds, last seen in 2013.

      Analysts said the “extremely cautious stance” of retail investors this year had been puzzling and acted as a drag for equity markets.

      JP Morgan has previously argued the cautious behavior left equity markets vulnerable and at the mercy of institutional investors, and now predicts a shift leading to more gains in 2020.

      Years of high bond flows, such as 2012 and 2017 — and now 2019 — have typically been followed by weak bond fund flows the following year, analysts said.

      “Given this year proved to be a strong year for equity markets, helped by institutional investors, then we should see retail investors responding to this year’s equity market strength by turning [into] big buyers of equity funds in 2020. This suggests 2020 could be another strong year for equities driven by retail rather than institutional investors,” JP Morgan said in a note.

      Analysts accepted this call faced “a major challenge” from already elevated retail investor equity positions but said that it was justified by cash and bond yields being significantly less than before following central bank rate cuts.


    • If one believed that, for policymakers, “the stock market IS the economy” – that Mr Trump wants to re-elected – and the Fed places the same importance on the market not falling – then one might agree.

      Except for one little snag – it won’t work….

    • Tim, I wondered of you had any views on the Workplace Pensions initiative that was brought in in the UK?

      1) Was it brought in, just as pension fund managers, and the stock market needed a boost?

      2) Are working people, especially younger workers, being auto-enrolled (pushed) into a ponzi scheme – just to keep it going a bit longer? (Under the guise of “saving for their futures”?)

  18. BTW Tim I should have exemplified what ShadowStats results are (I know you know this in your book):but for your readers:
    “ShadowStats reveals that “fancy accounting” may put the real unemployment rate closer to 20%, and not the official number of just under 5%.”
    Which explains that the USA is in fact in recession/depression already.

  19. Note: I am not suggesting that people shouldn’t save for the future. I was just very sceptical of this policy.

    • As we seem to be nudging towards negative rates could these deliver the coup de grace to pensions, already decimated by ZIRP? In these circumstances the cost of pensions is so high and the chance of a financial crash is increasing as a result it’s a legitimate question as to whether saving for a pension rather than buying assets is the best strategy for retirement.

      Workplace Pensions keeps people in the present context (save cash; accumulate; purchase annuity) but is this right?

    • Workplace Pensions, introduced under the “auto enrolment” legislation a few years back, are all “defined contribution” (or “money purchase”) regular savings plan. Contributions are 8% of salary (after a brief qualifying period), with 5% of this being deducted from the employee’s pay and 3% paid by the employer. They are operated by several well-known life insurance companies (Aviva, Legal & General, etc.), but the biggest provider, by far, is the NEST scheme set up as a kind of “state sponsored” basic choice. NEST is a bundle of debt that happens to administer a DC pension scheme.

      In the early years of joining NEST, most money goes into a deposit like fund, but then, as with the life companies, into a default “lifestyle” fund. This will, for younger members, hold a high level of equities (the funds are “indexed”), gradually switching to “safer” investments like bonds and cash as the scheme retirement age nears. In my professional opinion, there are many flaws with this approach (for various reasons) and I fear for the future of members.

      The biggest problem, badly explained to workers, is that it is they that bear the capital risk and costs of these schemes, not the employers, unlike the case with “final salary” pensions.

      Now, if the Thatcher government hadn’t introduced “contribution holidays” 30-odd years ago, we might all enjoy the luxury of defined benefit (“final salary”) still!

    • Mark

      Thanks for clarifying this for us. In the interests of balance, Mrs Thatcher’s mistake was compounded – and some! – by Gordon’s 1997 pension tax raid, which appalled me (and many others) at the time, and has wreaked enormous damage. Additionally, there is the odd situation in which interest on corporate debt is deductible against earnings, whereas dividends are not – a system that incentivises debt over equity, with many adverse effects.

      My view on this is influenced by the WEF report identifying a ‘global pensions timebomb’. It calculated the pension gap in eight countries at $67tn at end-2015, and forecast that this would rise to over $400tn (at constant values) by 2050. The inference, as I see it, is that effective pension provision is dead.

      Though demographics and other factors play a role, the really lethal factor here is the collapse in returns on capital, whether on equities or on bonds. I’ve estimated that, for the same sum at the same number of years in the future, the savings required now are 2.7x what they were pre-ZIRP/QE. Remember that returns on money already accumulated pre-ZIRP, as well as money invested since, have been crushed.

      None of this – ZIRP, QE etc – happened by accident. It was a flip-side of the same monetary policy which has inflated asset prices. This isn’t to say that the authorities made the ‘wrong’ decisions in 2008-09, based on what they knew at the time. But there was a failure to ‘look through’ the implications. If we knew that asset prices would soar whilst pension returns would collapse, we might at least have considered fiscal redress, i.e. increased taxes on capital and capital gains, with revenues used to support pensions.

      At the end of the day, though, we’re left with monetary policy ‘signals’. Ultra-low/negative rates send the signal ‘borrow, don’t save‘.

      The logic here is that the World economy is now in such a parlous state that it can no longer afford the sums previously put aside by savers, but has to channel all output into consumption in order to keep the ship afloat.

      This turns its full circle if – or, rather, when – asset prices collapse. This seems to make a nonsense of portraying equities as a way of buying into “growth”, other than in the short-term, i.e. between now and the crash.

    • You are, of course, quite right about the dividend tax raid.

      The fundamental problem, as I see it, is that individuals do not understand the difference between a guaranteed income for life and a seemingly large pot of “investments” in a pension fund. When I started out as an IFA 29 years ago, when you reached retirement age with a DC pension fund (i.e. the self-employed, or those with AVC’s, for instance) you had access to 25% of the fund as a tax-free lump sum (you still do, by-the-way) and the remaining 75% was used to buy a “compulsory purchase annuity”. This continued, excepting for those with large pots, until 2015, when pension freedoms were introduced, although you can still use the fund to purchase an annuity if you want.

      The argument was that this patrician view was outmoded, hence the introduction of so-called freedoms, but I fundamentally disagree as too many people are “cashing-in” as they seriously underestimate their life expectancy and the need for income. As we know, it is difficult and high risk to obtain an income from capital, and this risk in now borne by the individual, not their former employer and the scheme trustees, as with defined benefit schemes.

      When I tell them of their new responsibilities, most people recoil in horror, and find it very difficult to understand all the things (sequence of return risk, interest rate risk, fees, sustainable withdrawal rates, etc.) they need to.

      Read a Trollope novel, and we read about characters banging on about wealth; they refer to INCOME not CAPITAL, and they were right!

    • Thanks all for taking the time to provide a view.

      I broke the thread, from the original question, with my own reply sorry.

      I recently encountered the workplace pension scheme after being in the ‘unfunded’ Civil Service Nuvos then Alpha schemes which are both DC. This also became auto-enrolment.

      I was uncomfortable with the way the UK Workplace Pension schemes were advertised and ‘pushed’ by HMG, and the auto-enrolment. It just seemed the risks were not clearly explained, and the people ‘pushing’ it are not aware of conclusions from Tim and others and the effect could have on these ‘investments’.

      I won’t be extracting from these schemes for another 30 years, at least. As a “long-term” investor it concerns me that we will be in a very different situation in 30 years. ECoE and all that!

  20. Pingback: The Incomparable Professor Smil. Energy Matters without the spin and The Late Professor Sir David MacKay, Energy Without Hotair.#GrubStreetJournal #GrubStreetScience #GrubStreetEnergy #TheExergist #TheExergyst Exorcising the stupid from the discourse on P

  21. A wealthy friend is always moaning about his ‘lack of income’. The thought of all that loot in Switzerland being eroded by inflation is infinitely painful to him.
    ‘But I have no income!’ bleat, bleat…. Unfortunately, he is not at all entrepreneurial (although highly numerate) so is struggling to make it work for him. Wealth taxes bring him out in a cold sweat.

    Of course, in the Victorian age a common occurrence was for the well-off elderly to grossly over-estimate their likely longevity, and impose draconian regimes on their dependents and carers (usually a suffering spinster daughter or niece) in the effort to ‘avoid the workhouse’. They usually died leaving the equivalent of a million or two today.

    My great-great grandfather retired to live off income from investments and his former business, c 1880, and died broken-hearted when the business collapsed due to fraud and mismanagement, and his investments all failed – a double-blow.

    I fear that many of us, comfortable now, will be facing similar failures in the near future.

    Spare income that I may have is put partly into firewood in order to season: an investment in my health and comfort that, as long as I retain this property, can’t possibly fail! Next year I’ll buy a ton or two of coal. If I lose the property, someone else gets a splendid free bonus….

    • As Dr Milevsky, a noted expert on annuitisation wrote a few years ago, to get an idea of what a true guaranteed pension will set you back these days, consider the following example.

      “imagine you’re a 62-year old contemplating retirement. You ask your financial adviser to provide a quote for a personal pension. They offer something in the following price range: for every $10,000 of guaranteed income you would like to receive for the rest of your life, you must give a life office $211,500 up front. Yes, you read that correctly: you need to ante up with more than 20 times the desired annual income. If you want $50,000 of annual income with an annual cost of living adjustment of 2% for the rest of your life, that’ll cost you about a cool million. No, this is no Madoff-like scheme to make off with your retirement savings account – this is the fair price in the open market for an indexed life annuity, which is the closest thing to a DB pension that exists in the retail market. If this type of retirement income seems too expensive, the market price is telling you something about what true pensions are actually worth.

      Now you might decide, “Heck I have $1 million in retirement savings and I can invest it myself to create my own $50,000 pension.” Well, here is my warning to you: There is no risk-free lunch. There is a very good reason the insurance company charges you what seems so much. First, interest rates are abnormally low right now to historical rates, and these low rates increase the cost of any guarantee. Second, and more importantly, by offering you a lifetime income stream, they are taking the risk that you’ll outlive your savings off your personal balance sheet – and placing it on their corporate balance sheet. Generating $50,000 per year might not seem much if you have a million to spare, but if you have that viewpoint, you are probably not seeing the whole picture, and it’s time to nudge you back to reality. Pensions are expensive because they are valuable, even if you don’t think so.”

      In 1993, when annuity rates were much higher than they are today, my firm arranged a pension annuity for a 60-year old lady with a purchase price of £775,000 – which was a great deal of money then. She is still with us ad has received about £2.7m in pension payments. Five years ago I arranged an annuity for a 65-year old man with a fund of £100,000. He died in the spring, but I know he enjoyed the secure income he received before he did.

      I genuinely believe that annuities will stage a comeback in comparison with “drawdown” sooner rather than later; we shall see.

    • A missing element in most analyses of annuities and insurance is the probability of the guarantor going broke during one’s lifespan. If/when TSHTF as Tim, I, and many on the list think is within a decade, many of those contracts could become toilet paper.

      My decision has been, as of 7 years ago, to invest 2/3 of my “liquid” capital in State of Massachusetts (our domicile) bonds. The income is tax free (Federal & State). The credit rating is tops among the 50 states. And they can raise money in many ways.

      As this locks me into the $US, the other third is in non-$ inflation protected Sovereign bonds and physical precious metal. There is an ETF (NYSE) holding those bonds: WIP The yield is low, but I judge the safety as good. And I think the $US is ready for a 1/3 decline the next few years.

    • Sounds suitably diverse. My only (slight) reservation might be that, when the USD falls, almost every other currency might fall further….

      This reminds me of a phone conversation, many years ago, with a senior executive at one of America’s largest multinationals-

      (Q – Me) “What’s the outlook for your non-US results next year?”
      (A) “That’s so hard to say, because all of the foreign currencies have gone up, at once”
      (Me) “Yes, all of them – amazing”
      (A) “Yes, every single one has gone up”
      (Me) “And all exactly the same time!”
      (A) “Yes, remarkable!”

      The point being, of course, that a fall in the dollar (which is what had happened) was literally unthinkable, even at this rarified level…..

  22. “The logic here is that the world economy is now in such a parlous state that it can no longer afford the sums previously put aside by savers, but has to channel all output into consumption in order to keep the ship afloat.”


    Neil Wilson says:
    August 26 2015 at 7:07 am
    “”It’s the secondary sale of tokens that funds the pension scheme.

    If I hold Token X as a pension saving, when I retire I sell a Token X to somebody who is currently saving for a pension, and then I spend the money the other person has saved. The income from all the Token X’s I stlll hold plus the ones I’ve just effectively sold to somebody else is what forms a pension in payment.

    In other words the money I spend as retirement income comes from somebody else who thinks they are saving for a pension. In reality Token X is just held by a pension company and they change the notional ownership in a database somewhere, depending how nominalised the investment pool is.

    Essentially the person saving is ‘taxed’ (increasingly so since we now have ‘compulsory pension savings’) so that the retiree can receive an income. All the Token X holding bit is a charade to make the private sector think they’re doing something useful.

    You’d get exactly the same effect if you just put up income tax, scrapped all the pension saving and increased the retirement pension (and made it graduated to reflect earnings).

    Then all the pension middlemen can be let go and go off to relieve the skills shortage the CBI is always moaning about.

    Pensions are always a current production issue. How much of current production should be reserved for people who have not been involved in creating it today, but have bequeathed a public investment pool by which the current production can occur.””

    That comment from Neil Wilson, I think probably my favourite MMT’er and challenging Richard Murphy, with whom I have some strong disagreements over the Green New deal with. sets the limits on what Pension Saving really represents under the Fiancialised View of the Dismal Science.

    Here in a supposedly energy Savvy DIscussion community, I would expect the discourse to be rather more advanced with its prescriptions for the ailments to follow the coming sickness in the aged and likely terminal Patient of the Debt-based dollar hegemon.

    The Economic System, The Financial System and the Economy are separate even within the financialised Economic Regime currently crumbling, and under which we all persevere. Of course, the World Economy is an Energy system and is Resource-Based. The Energy, the resources and the demand remains exactly as they were the day after a financial collapse as they were the day before. the only thing that changes is the ability to communicate and express that demand through the Financial media at our disposal.

    The bourgeoisie and narrow viewpoint adopted in the chattering classes regarding our own interface with the Lived day to day experience of the “reality-based” pantomime does not change the fact that the headlines are not the News and are certainly nothing to do with daily life and the potential that exists with all the tools at our Individual and community networks.

    I really do feel that when a more clued up blog and discussion group like this lapses back into the formulaic and hackneyed language of “Unfunded Pension provision” without blushing at the vacuous circularity of such a statement, we should after sharing the Joke dig a little deeper and try a little harder to practise that which we preach. When, supposedly, it is obvious to those of us regulars here that the Economy is, in fact, an energy transformation system, we can expect very little better from the clowns who are supposed to be running the show, if we ourselves do not apply our own insights to all aspects of the system in a more vigorous manner.

  23. I might have replied disagreeing, Roger – until I saw the term MMT!

    Richard Murphy had a curious flirtation with MMT, all of my encounters with its disciples have been unpleasant. Neil is thoughtful and I find a rational and lucid student of the monetary system. I have said many times and repeat MMT would be more accurately called Modern Monetary Practice. The Theory bit is the ideology part which is pretty unabashed Stalinism, which I think is totally bonkers as is the Insane How things Ought to be, a logic free zone of the Green New Deal. But that’s enough sitting on the fence for me for one day.

    • Thanks Roger.

      My position is very simple. The economy is an energy system, with money simply a ‘claim’ on the output of the energy economy. There’s a heirarchy of relationship here, in which energy, being primary, can explain and change the behaviour of money, not vice versa.

      Therefore, no theory based on the independent (of energy) behaviour of money can explain how the economy works. It might explain how money itself works, but not the economy. A spanner is useful in its right context, but won’t fix an ailing house-plant.

  24. We should, perhaps, always bear in mind that the most likely trajectory is that individuals – and governments – will continue to do what they have been doing, with declining efficacy, until the collapse of the system, our societies, and the whole ecosystem.

    Expect irrationality and folly, denial of reality, etc, and you will not be far wrong.

    In the past, growing energy surpluses have spared us the consequences of our actions -most notably in the wake of the great world wars between the advanced states, after which it was comparatively easy to rebuild.

    We will clearly not have that luxury and good fortune in the future.

    Having said that, not being a misanthrope (although sorely tempted!) I sincerely hope that the best in mankind, and of mankind, will somehow survive.

    • Although I’m gregarious and reasonably respectful of people, misanthropy has increased lock step with my intolerance of superstitious behavior. Religious fundamentalists and other strongly patriarchal cultures are growing fast due to their high fecundity, while birthrates have plummeted on average. My Sci-Fi dream for years has been the emergence of a sterility virus which affects only the superstitious.(witches, ghosts, devils, deities, etc) The result would be a species with fewer members and better long term societal planning skills.

      I think I’ve hit my quota for today. 😉

  25. Annuities in the UK are 100% protected by the FSCS and thus, effectively, by the state. I think I’m right in saying that the last time an annuity (although it wasn’t called that at the time) failed was when Henry VIII was king (the monasteries offered them, and he abolished them).

    • We might safely assume that certain things will hold until the collapse of the state itself: annuities; some kind of welfare for the destitute and retired (but decreasing rapidly in value) ; water supply; although not necessarily safe to drink); electricity supply -again, not invariably reliable; most existing train (but not bus) services; police and hospitals (but most likely inadequate and possibly corrupt); capacity of the state to issue rations f some kind in a food crisis.

      These might set the parameters of planning for oneself and family.

  26. And should we not be bearing in mind that, as we move into the phase of permanent acute crisis, life expectancy can be anticipated to crumble in the manner similar to that experienced in the former Soviet Union?

    • Xabier
      We are heading into a situation whereby the populations of the Western countries are reaching a tipping point. An ageing population, declining birth rates, a gradual increase in mortality rates are one thing. Reports doing the rounds about declining life expectancy of Millennials, and their life styles being predominantly sedentary is another. The Uk’s life expectancy declined for the first time recently – the US life expectancy has been on a downward trajectory since the election of Donald Trump. I strongly suspect we will see a slow decline at first in Western countries populations (Japan’s is already declining by close on 300,000 a year now) in the coming years – a Seneca Cliff style collapse in Western populations is a distinct possibility at this stage.
      Immigration is growing in significance and can work both ways. Al Jazeera reported that over 85,000 Poles left the UK last year – with Brexit (if it ever happens) may well see more East Europeans head back.

    • On “Brexit”, I read an interesting and, it seemed, well-informed analysis which said that the chances of “no deal” and of “no Brexit” have both dwindled, making Mr Johnson’s deal a highly probable outcome.

      First, Mr Johnson is widely expected to win.

      Second, public opinion has hardened, not so much pro-“Brexit” (though that apparently is the trend), but against the Westminster ‘remainers’.

      In other words, ‘get it done’ is the winning slogan.

      Third, the Conservatives are expected to be much more united, with the ‘hard “Brexit”‘ group accepting Johnson as the best they’re realistically going to get, and many ‘remainers’ no longer party candidates.

      I’m not sure which markets might fear more – Boris and “Brexit”, or Jeremy C!

      No comments were made about the Lib Dems – and I’m too polite to add my own……

    • https://lordashcroftpolls.com/2019/11/my-perspective-on-the-uk-and-us-elections-and-how-politics-ended-up-like-this/#more-16252 This analysis from Lord Ashcroft is excellent Tim. The Focus Group write-ups are also highly entertaining and very informative for slices of the mood music of the mundane the ordinary and Precarious lives of the Left Behind Fly over cannon fodder of Neo-Liberal Elitism.
      And a Word on FIllial rivalry from Peter Hitchins.


      His Brother.

      “The last thing that Peter and I agreed on was the impeachment of President Clinton. But this is not simply a political-party difference. These things rarely are. In England, for instance, Sir Charles Powell is an eminent figure. He first rose to fame as a foreign-policy adviser to Prime Minister Margaret Thatcher. His younger brother Jonathan Powell is chief of staff to Prime Minister Tony Blair. But many people do not even know that they are related, because they resolutely decline to pronounce the family name in the same way. Sir Charles prefers to say it so as to rhyme with “pole,” the slightly affected form that was also insisted upon by that supreme novelist of the English elite, Anthony Powell. Young Jonathan, perhaps more the man of the people, chooses to do what most readers of the name would do, rhyme it with “towel.” I know for a fact that one political-summit trip meant that the brotherly duo had to board the same official aircraft. This did not mean, however, that they had to exchange a single word with each other.
      The Poleists and Towelists have nothing on the Hitchenses.”

      A favourite Novel of mine is the Scheme for Full Employment, it is Dry Kafkaesque absurdism done at it’s best. There are two Factions, The WOWrk to Rulers and Early Swervers, both factions are engaged in an Enterprise of the circular manufacture and dismantling of UNI Vans. Its an Allegory of some sort I would be interested if anyone else has read it.

      How Interesting to compare, Jo Johnstone and his Brother Boris, Piers Corbyn and His Brother Jeremy, Ed Milliband and his brother David, perhaps some Father-Son lineage might also prove informative, Tony Benn, Hilary Ben, Neil Kinnock Stephen Kinnock, George Bush 1 George Bush the Second.

      I noticed this morning that Channel 4 will be screening a leaders debate on “Climate” this coming Thursday, Boris Johnson and Nigel Farage will apparently not be taking part? I think I will tune in and as a bit of fun, I might pre-write the script and publish before the show goes out to see how accurate I am.

      Final Word for Peter Hitchins,

      “…Edward describes, it suggests that my late brother’s attitude towards the Soviet experiment was more, er, nuanced than he might later have wished to acknowledge. Of course he was not a Stalinist, the charge which he angrily denied, though I had not made it. He was a Trotskyist, first as a member of a Trotskyist grouplet and later as an admirer (as he states clearly here) of Trotsky himself, see https://www.bbc.co.uk/programmes/b0076zht

      (This, by the way, was recorded in August 2006).

      But in my experience, quite a lot of Trotskyists (and he was definitely one of those) still defended aspects of the Soviet experiment, as Trotsky did himself. I was keenly aware of this as, even in my most fervent Trotskyist phase, I could never bring myself to see anything good about the USSR, and once got into trouble with my International Socialist comrades for issuing at the University of York (above the IS imprint) a leaflet saying that the Soviet Union was ‘no more socialist than Surrey’.

  27. Tim, re the stock market is the economy and can’t be allows to crash, fwiw I think the CBs will continue to prop up the market forever until it simply stops working. In this regard I believe your new “to do” article on the limits of endless liquidity is possibly a most important investigation. What will really cause the CBs to lose the ability to prop up the market? When will liquidity injections and asset purchases with freshly minted money cease to work?

    I saw an article last week that pointed out that the market- by which is really meant an index- was up despite record outflows. Time was when record sales and cashing out brought prices down. The CBs managed to reverse that effect. It’s really astounding

    The stock market is not just the market it’s also the golden handcuffs that keep the apparatchiks “bought into” the status quo. Should the upper middle class suddenly suffer a loss of half of a lifetime of work’s savings, this time on the brink of retirement, politics as usual will not survive.

    • Indeed so, and let me add a brief comment on my current thinking.

      First of all, the world economy is slowing, ahead of any recession, in a way that strikes me as extremely significant. Production activities in the EMs are slowing, and in many cases falling, in some instances pretty sharply. The significance of this is that this production is the stuff that the West shipped out to the EMs. If they’re not doing it, who is? You can run a line through what this means for production in the World economy.

      Second, ‘doing whatever it takes to prop up stock markets’ will fail. First, it’s like pushing on a string – third party investors (i.e. excluding buybacks) seem to be established net sellers. Nobody wants to be punished by getting out before Fed efforts fail, but neither do they want to be there if that happens.

      Second, there’s psychology – would you want to own a market with only the Fed standing between you and a crash? (remembering that, when there’s a stampede for the exit-doors, those doors shrink).

      Third, you can’t isolate the stock market entirely. For stimulus to work, it has to be taken up by ‘real’ people – consumers – as well. I suspect that we’re at or very near “credit exhaustion“, a concept seemingly not understood in the closed worlds of markets and policy-makers.

    • With regards to the possibility of a Stock Market crash, one factor that has kept share prices well beyond any level of sanity is the extraordinary levels of share buybacks, particularly in the US. The current buyback rate dwarfs actual day-to-day trading and therefore the Stock Market indexes give a monumentally distorted picture. So if it does fall to anything like reality, then the herd like investors will get crushed in a way never seen before.
      A lot of cheap money has been thrown after bad investments – Uber, Lyft, etc are just apps they are not businesses. Elon Musk’s Tesla – the wrong answer to the wrong question – is another cash burning machine that also has the added bonus of catching fire when you least expect it to. Meanwhile the fracking industry – another cash burning exercise – at least to be beginning to meet with reality. . https://wolfstreet.com/2019/11/23/fracking-blows-up-again-phase-2-of-the-great-american-shale-oil-gas-bust/
      It is all a very Wile E Coyote economy at the moment

  28. Morning Coffee Reading
    Nora Bateson writing in Small Arcs of Larger Circles:

    “Evolution is what happens when patterns that used to define survival become deadly”

    Part of her worldview is that everything has to change, but most will continue to follow the patterns that define survival today. There are obvious risks in getting ahead of the curve of necessity, but also risks in failing to recognize where the curve is heading.

    Don Stewart

    • Listening to Max and Stacy’s current post, I learn that Michael Bloomberg’s wealth has ballooned from something like 12 billion to 25 billion since he retired. Their point is to rant about the criminal class running the central banks who are shoveling money at the already rich.

      My point would be to ask the question:
      *The current survival strategy is to go all-in on stocks: purchase, option, buy-back, be long, etc.
      *Some billionaires in Texas have also become millionaires by betting on real assets.
      *Is the successful survival strategy of today about to become deadly tomorrow?

      Don Stewart

    • An excellent clear thinking approach

      There was also a very good documentary called The Mathematics of climate change on the BBC which will be on their iPlayer.

      We’re in a lot of trouble but it’s no use protesting about it as you’ll
      just get arrested or beaten up.

      Russia has an interest because if the potential amount of methane that could be released from the Siberian tundra.

      My own view is that many people are aware of the impending crisis but just want to consume and enjoy themselves while they can.

    • As we’ve discussed before, decision-makers continue to believe in a false dichotomy which sets climate issues against growth.

      In reality, adopting climate-friendly policies is not anti- but pro-growth, because continued reliance on fossil fuels ties the economy to the rising ECoEs of those fuels.

      That ECoE trend has already killed most growth, which is exactly why we’ve been using reckless financial policies as a form of denial based on delusion.

  29. Recommended reading, or at least scanning:
    Art Berman on energy in the US, very recent talk:

    Click to access LSU-NOV-22-2019_REDUCED-1.pdf

    Not necessary to read whole thing. I do suggest looking at his final slide. And I point to his final bullet point:
    The best path forward is to stop looking for improbable solutions that allow us to live like energy is still cheap, and find ways to live better with less.

    As for the climate change connection, it has been a mistake to laser focus on emissions. The view must incorporate a broad array of influences: rising ECoE; rising chemical pollution; rising CO2 and other warming gasses such as methane…perhaps offset by human engineered changes in the soil carbon cycle, little critters in the oceans, and management of water vapor through trees, and how a return to wood and biochar used in a cascade may help. Along the way, we have to understand that the central banks doubling and tripling the assets of billionaires was a reversible operation which may happen before we can ever get around to the hard work ahead.

    The reason for optimism is that our genes do enable us to live in a world of solar energy, and we have much better science than the last of our ancestors who lived on solar energy alone. Those with epigenomes fitted to such a world, or who are able to give themselves experiences which change the epigenome appropriately, have a better chance of survival. But, very likely, homeostasis will involve a lot fewer humans.

    Don Stewart

  30. Belief in ‘witches, ghouls gods’, etc, is no obstacle to effective long-term planning and adaptation to the cycles of the ecosystem.

    Archaeology and history show this: ‘superstitious’ societies have survived very well indeed for very long periods; while the aggressively ‘scientific’, materialist atheist Soviet Union proved very destructive environmentally – and Russians in general still won’t face up to Climate Change.

    The crucial distinction is between living within natural limits, or seeking to escape them -even worse, to pretend that they don’t have any relevance.

    Since the 18th century the dominant world culture, born in Protestant NW Europe, chose the latter course, in a mistaken belief that resources were infinite.

    We are now, all of us, about to pay the bill for this gross miscalculation and self-indulgence.

    • Primitive societies were not in overshoot. Their mysticism was an evolutionary asset giving social cohesion and courage facing the unknown. As homo superstitious became too successful, long term planning was discarded by most. That has made mysticism vestigial. Now tribes/cultures circle wagons ever more tightly, and fight outsiders for resources/energy.
      See Reg Morrison’s book The Spirit in the Gene, fad by Lynn Margulis, co developer of Gaia theory. (Microbiologist)
      Google book title and Kurtz for my review
      Google Reg Morrison for website essays

    • Talking of being scientific – here is a video that combines a botany lecture in with some very telling images and commentary into modern day California. At just over 50 minutes it is well worth anyone’s time:

      What the Rentier economy on steroids has done to Middle America: eviscerated it completely

    • My point is simply that the technological and organisational level attained is the crucial thing to long-term human survival, not the belief system adopted or inherited: so long as human societies remain deprived of the technological (and hence energetic) means to break the limits of the ecological envelope, they are fine, and can believe literally almost anything about the Unseen Worlds, or nothing at all.

      We have over the last two centuries, and above all since WW2, created technologies allowing the maximum possible expansion of the human population (and our associated domesticated animals) at the inevitable cost of long-term viability (I would say even medium-term).

      Primitive societies must often fall, briefly into over-shoot, but this is solved quite naturally by the consequent famine and disease, or as a last resort by the emigration of surplus populations – the Great Migrations famous from history and recent genetic researches. In which case the most useful technology is weaponry, and perhaps mors effective tarnsport (eg Viking longships, etc) allowing the seizure of lands from others.

      I fully agree that the ‘It doesn’t matter what we do to the Earth, as Jesus or the Hidden Imam are coming soon!’ line of thought is dismaying, and we could do without those people at this time of deepening crisis, above all in positions of power.

  31. People will wish to stay comfortable, not necessarily ‘have fun’, for as long as possible.

    Particularly when forrner authorities have generally lost all credibility: who would now believe in the honesty of calls for sacrifice and austerity in the hope of a better future by the masses?

    The Russian author Teffi, who lived through the Bolshevik Revolution, once observed a man being led off across the ice on his way to execution.

    She noted that he still stepped carefully to avoid any puddles and put his collar up, even though he was destined to die in the next few minutes.

    As with the individual, so with society in general: in fact, every animal that can do so seeks to make itself as comfortable as possible at all times.

  32. On the subject of the UK, and looking at Mr Johnson and Mr Corbyn, both have positions which make much sense, both have other positions which make no sense at all, and neither, I believe, knows that the economy is an energy system.

    If we could cherry-pick the best policies of both, stir in Surplus Energy Economics, and add a few policy implications which follow from SEE, the result could be close to a good plan.

    This is a lot better than, say, Mr Cameron vs Mr Brown in 2010!

    This said, Mr Johnson seems to have been dealt all the high cards by fate or circumstances. With Labour’s anti-semitism row, Mr Corbyn’s lack of clarity on “Brexit”, and with both Tony Blair and Michael Heseltine coming out against him, I don’t see how Boris can lose.

    This almost justifies another article!

    • Hi Tim

      I agree that with an opponent like Corbyn you could come to the conclusion that Boris can’t lose. I’m not so sure as the polls are getting tighter it seems and that means that the potential Tory majority may be much less than was thought even a few days ago.

      My guess, when the election kicked off, was for another hung parliament and I see no reason to change this at this stage.

    • From what I’ve seen, the Tories are at least matching rises in Labour’s poll ratings, with both the Lib Dems and the Brexit Party losing ground. In this sort of situation, the FPTP system favours the two big parties, and I can’t see the Lib Dems or the BP taking enough votes – or seats – to deny Boris a majority.

      Of course, ‘never say never’!

  33. The ‘anti-semitism’ row has, though, clearly been manufactured on the ‘give a dog a bad name and then hang it’: no effort is being spared to avert the threat of a truly radical Left government in the UK -perhaps with the best intentions form one point of view.

    The intelligence services have orchestrated a steady drip of anti-Corbyn news items for some time, this is just the icing on the cake, or indeed the cherry on top. My old Ph.D supervisor was used by them as a conduit – his ‘researches’ always made a convenient political point; and another was placed at my old College in order to give him academic cover -they then appear in the media as objective historians and political commentators……

    The overtly political interventions of the Chief Rabbi and the Archbishop of Canterbury are deplorable.

    Corbyn has, however, been utterly incompetent in dealing with it; as with everything else, most notably the awful and unconvincing Brexit fudge.

    A shame, as the more humane elements of the Labour manifesto are excellent, in so far as they address rapidly growing impoverishment. Poor people should not have to wait over 5 weeks before receiving welfare support, that they do so is a disgrace.

    Much ill-thought out and doctrinaire rubbish too, though……

    ‘When all lack sense, God takes a text and preacheth Patience’.

    • I can’t comment on how this is being used in electoral politics.

      However, I believe that Mr Corbyn, and others (mainly of the same vintage) supported Palestianian and similar causes in the past. It’s a short step from there to criticizing the government of Israel, and another fairly short step to anti-Zionism. That in turn can be perceived, rightly or wrongly, as anti-semitism.

      I’ve always loathed anti-semitism, like any other form of racism.

      Not related really, but I’ve always understood that my late uncle, having falsified his age to “get into the war before it finishes”, was amongst the first group of British soldiers to enter one of the Nazi concentration camps. Unlike his other campaigns, he never talked to me about this – which is hardly surprising.

    • The anti-Semitism scandal is basically a power battle within the Labour party between the Blairites (who are backed by wealthy globalist Jewish interests) and the traditional Left, whose power base lies within the trade union movement.

      Under Blair, the Blairites obviously had control of the party agenda. They have very specific interests in transforming Britain into what George Soros would describe as an ‘Open Society’. Hence, anything that tended to reinforce national self-consciousness in the native population, based upon shared racial origin and cultural heritage, was threatening to these people and interest groups with that particular world-view were scandalised, if not outright criminalised. Immigration restrictions were relaxed, with the ultimate end goal of breeding out the white population.

      The Corbynists are the present controllers of the party. Their interests lie in social equality in a more traditional sense. They do not need globalist money and have no particular interest in the ‘Open Society’ project. Hence the anti-Semitism scandal – an attempt to return Blairites to power.

    • In my view it’s not if, but when the buck has a sharp decline. This is like a junkie who needs larger fixes each month to keep from crashing.

    • The developed world looks to be headed for competitive devaluation tactics to attempt to spur exports. (beggar thy neighbor is the slang term)

    • The decoupling of ‘money’ from reality was the madness in my opinion.

      They’re just adding more water to the shampoo and tell us to close our eyes to prevent the soap coming into your eyes.

      Works just fine until someone starts looking for the brush.

  34. Off topic but important, I think
    I am still reading Nora Bates book and also read an early version of Albert Bates weekend post on the upcoming Madrid climate conference. Nora makes the point that any living thing, which includes the biosphere, is NOT a Swiss watch with moving parts. Instead, she suggests, it is an evolving organism which consists of creatures who learn from their interactions with each other.

    So I suggest the following in terms of a climate deal:
    *Recognition that the Biosphere is a living thing which needs to find metabolic homeostasis.
    *Recognition that each of the creatures will follow a Maximum Power Principle
    *Realization that the natural world consists of creation, destruction, and recycling. Different organisms may be involved in each step. We understand these steps more scientifically than any preceding generation.
    *So COP goals should be stated in terms of metabolism.
    *For example, fossil fuel emissions should be balanced by net sequestration of carbon in soils and products such as Biochar so that there is not net carbon load added to the air or the oceans. And in fact, the carbon load should decline over the next decades.
    *There should be no zones of eutrophication at the mouths of rivers.

    If this scheme were adopted, then countries would need to make choices. For example: do we spend our remaining fossil fuels on SUVs or on remedial activity in the soils so that carbon sequestration is achieved? (I am assuming a ‘point of consumption’ measurement as opposed to a ‘factory smokestack’ measurement.). The more rapid the microbes in the soil can turn carbon dioxide into stable carbon, the more fossil fuels can be burned. Or the more Biochar in the production process, the more production we can afford.

    It seems to me that the metabolic approach might be more easily understood. Almost everyone in the ‘advanced’ countries experiences it every day in terms of body weight and balancing their budget.

    Don Stewart

    • This is not correct in the view of most scientists I know of:

      “…the Biosphere is a living thing which needs to find metabolic homeostasis.”

      It is not a closed system. Solar and other radiation enters constantly along with occasional asteroids and fragments of other material. As conditions change over millennia, (like temperature) the composition of the living systems changes.

      In any case, it is worthwhile maintaining conditions which favor us! That does involve *seeking* a narrow band of conditions.

  35. @Steven Kurtz
    I’m using the word ‘homeostasis’ the way Antonio Damasio uses it. But in his usage, it is not a static point, nor is it a static point in Nora Bateson’s usage. Damasio pointed out that some people prefer language that involves the use of the word ‘dynamic’ to indicate the changing nature of the desired state as the larger environment changes, but he stuck with the simple word ‘homeostasis’.

    So I don’t think we have any disagreement among myself, Damasio, Bateson, and yourself.

    Don Stewart

  36. I present three references here that may give some hope (in the UK at least) for the prospects of a renewable energy transition at an affordable cost.

    Exhibit 1: Gridwatch allows generation from all sources supporting the UK electric grid to be tracked on an hourly, monthly and annual basis. Go to the generation column and select ‘renewables’.

    Note that whilst there is substantial hourly variability, with an apparent installed renewable capacity of about 15GWe, there is fairly consistent generation above 5GWe from renewable sources. There are comparatively few periods in which renewable generation drops beneath 5GWe (about once a week on average) and those lulls do not last more than 1 day. It is also observable that solar power tends to peak at times of year when wind energy is at its weakest.

    Exhibit 2: Energy consumption in the UK. Scroll down to ‘End Use Datatables’, which are in Excel format.

    Note that across all sectors, space heating and hot water account for some 56.7% of UK end use energy consumption. Adding in cooking, that increases to 60.7%. There is no indication as to what proportion of end-use energy is used in refrigeration. If some allowance is made for this, we might estimate that two-thirds of UK end-use energy consumption involves the generation of hot or cold.

    Why would this be significant? Because energy in the form of hot and cold can be stored very cheaply in bulk materials, close to where the heat is needed. A single cubic metre of water heated from 15 to 100 Centigrade, will store about 100kWh of heat. That is enough to meet space heating requirements in an average dwelling for about 2 days and the hot water requirements for about 5 days. A few cubic metres of water in an insulated tank could contain sufficient thermal energy to heat the average dwelling and provide hot water for a week. Heat can be provided by resistance heaters within the tank. Similar arrangements can be made for cooking and other high temperature applications in industry. Heat can be stored in insulated accumulations of refractory materials like rock; with the heat provided by resistance heaters drawing electricity from the grid.

    Exhibit 3: The grid-interactive storage heater. This is a storage heater, using heating elements to heat a tank of water or blocks of ceramic. The difference is that it can be turned on and off by the grid operator. Going back to the grid-watch graphs, notice that over 1 year, there is a fairly reliable base of 5GWe and a lot of peaks and troughs between 5-15GWe. The grid interactive storage heater allows all heating applications (60.7% of total end-use energy) to be drawn from the peaks. This allows the more consistent bottom third of renewable generation to power other applications, like lighting, electronics, mechanical equipment and rail based transportation.

    There would still need to be some amount of storage or back-up power to cover deeper lulls. There were six occasions in October 2019 when renewable generation dipped beneath 5GWe, each lasting less than 1 day and for a short time dipping as low as 2GWe. As these occur only once a week on average, pumped storage would not be a suitable mitigation. One option would be the use of open-cycle gas turbines, burning biogas, hydrogen or a mixture of both. These have low capital cost (~$400/kW) and their total generation in 1 year would be low enough that their relatively poor energy efficiency would be tolerable in the context of the whole system. UK baseload electricity consumption is about 30GW. Let us assume that we install 20GW of open cycle gas turbines and these operate, on average, for six 12 hour periods each month at full power. Total generation from these gas turbines would be less than 7% of total generation.

  37. Lagarde, among a few other central bankers, mentioned using monetary tools against possible disasters caused by climate change.

    All ‘problems’ that arise out of degrowth will be papered over by MMT like actions.

    That’s why currencies will fail. There’s no possibility to save the fiat system, that system will be misused to ‘solve’ every problem we face until the currency becomes worthless. Period.

    We are way too far over the top to go back; managed degrowth. The whole worldwide political mindset (and with that, social behaviour) will fail at the first tryout.

    The bacteria will crawl against the petri dish wall like in the movie World War Z.

    How will western consumers react when millions die when supply chains in the third world stop functioning? They will lose faith. And stop consuming black friday stuff. And Christmas stuff. And…

    Remember: full faith & credit.

    Our fully overstretched and leveraged system cannot handle a critical mass of 5%.

    That’s why Lagarde proposes to pump fiat in failure after failure.

    It cannot stop. When it stops, the burnings start.

    • A fair view, Houtskool.

      It’s not just the case that Lagarde and Co. are conceptually inadequate to the challenge – as indeed they are (established beyond doubt by our host) – but that managed, steady, ‘De-growth’ is likely a delusion, society being now far too complex, and our institutions, infrastructure , technologies (and even psychology) suited only to a context of energy-growth, which has lasted now for some 250 years in the West, with a fantastic oil-fuelled burst after WW2.

      Monetary expedients cannot possibly solve -or even ameliorate for very long – a physical problem of this magnitude, unprecedented in human history (although the decline and collapse will, of course ,have many of the features of previous civilizational collapses – scanning the news every morning one has evidence of this stark fact).

      I believe this was called, in more primitive but perhaps wiser times, Fate: the thread has been spun, measured out, and is now about to be cut by the implacable old woman with the scissors………

      Having said that, it’s a delicious frosty day here in England, and I’m off to enjoy it!

  38. As far as infrastructure is concerned, Ugo Bardi has an interesting article on Italy’s ‘melting’, old, concrete structures, eroded by the heavy and prolonged rainfall that now accompanies climate change – familiar to all of us in Europe these days.

    • Funny that many of us, including me, follow the same blogs and writers. Bardi, Tverberg, Zero Hedge, Naked Capitalism, Nate Hagens, are a few off the top of my head. If you seek a slightly different view as well, see the essays of Reg Morrison:

    • Seen the concrete structure lifespan debate being discussed on more than one forum recently. The average lifespan for concrete structures to be regarded as “safe” according to structural engineers is around 50 years. On the Life Without Humans vid they reckon concrete structures could stand for up to 300 years before some start failing spectacularly. The probable answer is somewhere in between depending on a number of contributory factors. Concrete itself has poor tensile strength and needs iron rebar to reinforce it. Trouble is this rebar – particularly the older stuff – has a habit of rusting and expanding thus creating spalling – aka concrete cancer – and weakening said structure. Another key contributory factor is the bedrock on which said structures are built on. Some of the new build estates are going up on ground that are suspect to say the least: old spoil sites that have been compacted and old clay pits amongst others. The Climate Change models projected periods of drought and intensive rainfall which is coming to pass. Add spoil on top of a natural clay surface – I think you have probably worked out where I am heading with this..

  39. Thanks for link – they mentioned demand in China but there’s also India and Africa too.

    However looking at the congested roads in China and India why would anyone want a car apart from being brainwashed by adverts that to be truly Middle class you need one.

    Regarding batteries progress is being made on solid state versions with far more energy density which do not need precious metals.

    However we all are going to have to make do with less.

    • ewaf88 posted: However looking at the congested roads in China and India why would anyone want a car apart from being brainwashed by adverts that to be truly Middle class you need one.
      You are definitely onto something there and I believe that this is a deliberate policy. I seem to remember an article (by Andre Vletch, I believe) that said about the state of Indonesia and Jakarta in particular. The article stated that the planning policy had been heavily influenced by the Japanese car makers who wanted everyone to drive one of their vehicles. Needleess to say that this won at the expense of everything else and now we see a heavily car dependant society being replicated nearly everywhere (Sark excepted!)
      I recently met up with a friend who now lives in France and he had been to Vietnam – he said that there is no adherence to anything resembling a Highway Code out there at all! Crossing the road was like closing your eyes and praying!

    • Well we all love our cars although mine is a necessity at the moment.

      As one comparison of trip to a friend’s house.

      Car – 50 minutes

      Public transport – Walk – Bus -train – walk – train – bus.

      Assuming perfect connections it’s two hours twenty minutes.

      This is because we don’t have an East to West train line where I live.

    • In 18th century England, those who walked about rather than taking a cart or carriage were generally stigmatised, until the Romantic poets made it fashionable: our version is ‘Get a car or be a nobody!’ (and, being the animal we are, fail to perpetuate your genes…)

      Clever marketing pressure, swallowed by almost everyone.

      Myself, I have just a rusty bike, and some good boots, and will not be perpetuating my genes; although -despite the bike – I still get flattering offers.

    • @ewaf88
      I have been astonished at the sudden explosion of battery powered scooters and bicycles at Duke and UNC.
      Don Stewart

  40. Chris Martenson; Art Berman; Bucky Fuller
    ” It has to do with emotional, psychological adjustment. Learning that I can be happy or gratified or satisfied without buying a new Tesla tomorrow. People have survived on this planet for hundreds of thousands of years at subsistence level and they led good lives, or at least they thought so.”

    Bucky Fuller said:
    “Humans can be happy with less and less and less and less.”

    My quip: ‘But will they vote for it?”

    Don Stewart

    • I’m rather tired of these naive sentimentalists about subsistence-level living, promising a good life.

      We might say that hunter-gatherers are fairly content, as long as their bellies are full (more violence, cruelty and turmoil in their lives than we care to admit, though) but subsistence agriculture is very different indeed.

      It is hard, and – in many regions – always full of fear lest the winter or summer kill you, the crops fail, pests descend on them, etc.

      To survive that, you have to be very hard, proud of simply enduring as an individual virtue.

      I’ve quoted before interviews with peasants from the part of the Pyrenees my family come from: real small-farm subsistence living based on the family unit, in cohesive villages.

      ‘What was the past like?’ asks the interviewer.

      ‘Terrible, just terrible!’ say the old people, with a look of sadness as they sit by their modern gas or electric heaters in a comfy ‘English-style’ armchair. They are recalling typhus, epidemics of all kinds, TB, crop failures, working injuries that couldn’t be treated, fearsome cold, semi-starvation always a possibility, and so on. I’ve read many accounts of this life.

      Anyway, our civilisation cannot reform or ‘de-grow’ to one based on subsistence agriculture: it will collapse. Everything indicates this: the evidence comes up every day in the news.

      We should stop running away from the stark truth of our situation.

      All we can possibly implement are, like the Romans, temporary holding actions, no more.

      In doing so, we will destroy what is left of a viable ecosystem: that is the inevitable result of our vast populations and level of technology.

  41. Less and Less
    Albert Bates and Company’s pitch at the COP in Madrid:

    You may not be able to read everything due to small print, but you will get the idea. Modern technology allows us to use woody waste (or specially grown coppice wood) to produce heat, electricity, and a variety of products containing carbon. Relatively little of the carbon in the wood goes into the air as carbon dioxide…so they are drawdown machines. These machines are not fantasy, China builds them. There is not an existing fully fleshed out downstream of companies making all of the useful products, however. Such downstream companies could not likely compete with the current system of dispersed factories dependent on cheap fossil fuels. Bates and Company do not claim that their proposal can create all the energy we get from fossil fuels…only that it is better than nothing and better than extinction.

    A very tough sell in a world which believes that printing money can solve the problems.

    Don Stewart

  42. the past was just terrible
    We can wallow in tales of how bad the past was, or we can take a cool look at what is possible for the future, borrowing good ideas from the past. I have previously referred people to the recently translated from the German book, The Modern Grower’s Guid to Terra Preta: Making Super-Fertile Black Earth for Garden and Farm. The Author is Caroline Pfutzner.

    The basic idea comes from what the Amazonian Indians were doing when the first Spaniard sailed down the Amazon from Peru. Today we regard Amazonian soils as being ‘poor Tropical soils which won’t hold carbon’. So the first explorers tales of large, prosperous cities was dismissed in Europe as a fantasy. And by the time of the decades later trips by subsequent Europeans, the native population had been decimated by European diseases. Centuries later, people found the mysterious ‘black earths’, which are productive to this day. Where did they come from? And now we understand pretty well how the Amazonians did it, and Pfutzner shows us how to do it very efficiently with a ‘food waste to terra preta’ system. Using some technology, we can make it work better than the Amazonians made it work. For example, Pfutzner uses a stacked plastic crate system where the top crate is growing food and the bottom crate is creating additional black earth. A circular economy if you have a garden…more complicated, of course, if you have a farm feeding a distant city.

    She also integrates Effective Microbes, which were discovered in Japan about 40 years ago. So our choices include doing it the very simple way the Amazonians did, using crates or perhaps hand-made baskets in a garden, farm scale implementations, and using effective microbes if we can keep that technology alive. The wood based system described and quantified by Bates and Company can provide us with some energy and useful products…but can’t support us in the style to which we have become accustomed.

    Of course, curling up and dying is also an option.

    Don Stewart

    • Don,

      What % of all humans do you estimate will research and follow the best practices for growing food in their areas? What % are urban, and have no chance to do so? What % have ample access to safe water for drinking and irrigation?

      I estimate at best 25% of current numbers could succeed in feeding themselves. And their lives would be quite basic. Delivery of water, food, and pharmaceuticals to remote as well as urban areas requires energy. Grids, water and sewer systems, bridges and roads are crumbling in many parts of the US.

    • Don, thank you for your continual focus and hopeful outlook on what can be done. I’ve benefited from many of your book recommendations.

      Xabier, the family farm is indeed a dead end. Not that long ago Don referred to an article at EnergySkeptic by Sarah Taber, “America loves the idea of the family farm. That’s unfortunate,” the gist of which is that historically, the most viable model for food production is small scale community farming among groups of about 75 – 150 people as occurred in the Middle Ages and as done very successfully today by the Hutterites.
      We know the macro picture and really there is nothing that will be done at that level that will be of great help. There is nothing but paralysis, frustration, and hopelessness at that level. Once one “gets it,” in my opinion the best response is to focus on the local level and prepare it and transition it as best as one can in conversation and cooperation with one’s neighbors and township.
      People do not operate from principles, we are very much “monkey see, monkey do.” We need people, like albert bates’ farm and the Hutterites, to model the way forward.

Comments are closed.