#243. The Great Inflexion



As everyone surely knows by now, the global economy has entered a recession which is likely to be both severe and protracted. For the most part, governments and central bankers are concentrating on the task of trying to tame inflation.

Their critics tend to argue for more expansionary fiscal and monetary policies, contending that stimulus could soften or shorten the recession. They claim, in defiance both of experience and of logic, that expansionary monetary policies needn’t contradict the effort to bring inflation under control.

Where almost everybody is in agreement is that, however long it takes, the recession will end. But there’s a striking absence of explanations for how or why growth is supposed to resume. The fall-back position is no more than an assumption – a recovery will arrive for no better reason than that all previous economic downturns have been followed by rebounds.

The underlying presumption here is cyclicality, a process accepted as routine, not just by policy-makers and central bankers, but by investors, business leaders and the general public alike. It is well understood that the Big Numbers – like economic output, and the aggregate value of the markets – oscillate in sine-wave patterns around central trends.

It’s further assumed that these secular trends are always positive – each recovery exceeds the preceding recession, and each market rebound more than cancels out the latest dip.

This latter assumption has reached the point of invalidation. What economies and markets are now experiencing is trend-inflexion. Cyclicality may indeed continue but, from here on, it will do so around downwards-inflected trends. This process of reversal can only be managed if it is recognized.

The consequences of trend inflexion are readily summarised. On an ex-inflation basis, economic output will deteriorate, whilst the real costs of necessities will carry on rising, even if there are some retreats from the severe spikes experienced in recent times.

The resulting process of affordability compression will drive contraction in discretionary (non-essential) activities. It will also undermine financial flows from households to the corporate and financial sectors. We can anticipate a rolling process of investment contraction, business failures, defaults and rising unemployment.

Asset prices can be expected to fall, though the real risk to the financial system is on the liabilities side of the ledger. None of this is necessarily unmanageable, but its disruptive potential is enormous.

Beyond having to explain why the anticipated recovery has failed to arrive, governments will be under pressure to help out with the cost of living, and can anticipate increasing demands for redistribution. There will be a strident chorus of advocacy of looser monetary policy, risking a breakdown in the resolve to tackle inflation.

Before we get into the processes driving trend inflexion, it’s worth remarking that if, to many people, this recession starts to feel more severe and more unpleasant than any downturn in their previous experience, that’s because it is.


Understanding trend inflexion requires appreciation of how the economy really works, and this, needless to say, cannot be gleaned from orthodox economics, for which infinite growth is an article of faith. This is based on a seemingly unshakeable conviction that the economy can be explained in terms of money alone, a line of argument which dismisses any possibility that there are material limits to economic expansion.

This, of course, isn’t how the economy actually works. There are very real limits, not just to material prosperity but to environmental and ecological tolerance as well.

In a descriptive rather than a pejorative sense, the modern economy is a dissipative landfill system. Energy is used to convert raw materials into products, of which the vast majority are quickly relinquished, generally into landfill. This is a dissipative process because it operates by converting dense or concentrated energy into diffuse forms, essentially waste heat which, in a carbon-based economy, includes climate-harming gases.

The commercial economy has evolved in tandem with this dissipative landfill model. This is why there’s little mileage in supplying consumers with products that will last for decades, and plenty of profit to be made by accelerating the cycle of creation-disposal-replacement.

The dissipative process at the heart of the system is unravelling because access to concentrated energy is in retreat, and has been over a lengthy period. The economic value of concentrated energy is determined by an equation in which the conversion of energy into total worth is offset by the cost of doing so. This cost is known here as the Energy Cost of Energy. ECoE recognizes the fact that, whenever energy is accessed for use, some of this energy is always consumed in the access process.

As the ECoEs of oil, natural gas and coal have risen as a consequence of depletion, underlying growth has deteriorated along a trajectory that leads to contraction in the dissipative landfill system. Though nuclear and hydroelectric power may play an important role in providing alternatives to fossil fuels, the general assumption is that most of the energy of the future will be sourced from renewables, primarily wind and solar power.

Transition to renewables is not just possible, but imperative. The economy, no less than the environment, is at grave and worsening risk unless this happens. Sustainability is a worthy goal, and there’s no reason why it shouldn’t be an attainable one.

Where this logic breaks down is at the point at which transition is spun, not as sustainability, but as “sustainable growth.

This latter claim isn’t feasible, for a very simple reason – renewables cannot match the energy density of oil, gas and coal. As a result, a transition to renewables will truncate the process of diffusion which is central to the dissipative landfill economic system.

The characteristic of lesser density shows up right across the application of renewables. Despite widespread assurances to the contrary, the processes of renewables generation cannot be transformed by technological advances, because the potential of technology is bounded by the laws of physics.

The potential efficiency of solar energy is determined by the Shockley-Queisser Limit, with Betz’ Law doing the same for wind power, and best practice is already close to these physical maxima. Intermittency is part of the low-density character of renewables, and no advance in technology is going to enable batteries to match the power-to-weight ratio of the humble fuel tank.

In the absence of transformative technologies, the heavy lifting of transition is going to have to be done by volumetric expansion. This requires enormous quantities of concrete, steel, copper and other raw materials, and these can only be extracted, processed and delivered – where they exist at all in the requisite quantities – using legacy energy from fossil fuels.

Since the same unit of energy cannot be used twice, the question becomes one of what other energy uses are going to be relinquished to make this energy available for transition. We could, in theory, drive less, fly less, consume less and consign less to landfill, but there, is as yet, no acceptance of a need to do any of this.

None of the foregoing should be read as scepticism about the transition to renewables. There are compelling environmental and economic imperatives for committing maximum effort to transition, and there is no reason in principle why sustainability should not be accomplished.

An essential first step might be to drop, or at least water down, claims that transition can provide affordable growth, because this isn’t possible where the concentration of energy inputs is decreasing.  


The unfolding process of contraction is going to have a series of identifiable adverse effects, and it’s far better that we model them than resort to either guess-work or denial. Aggregate economic output, which has been decelerating over an extended period, is now very close to its point of inflexion. Prior growth in material prosperity, which is defined here as output minus ECoE, has already gone into reverse. In per capita terms, both output and prosperity have already turned down.

At the same time, the real costs of energy-intensive necessities are rising. The net effect is affordability compression. This, as remarked earlier, has two principal consequences. First, the ability of consumers to afford discretionary products and services is in retreat, and cannot be expected to return to growth.

Second, we should be prepared for contraction in the streams of income which flow from households to the corporate and financial sectors. Put colloquially, people will find it ever harder to ‘keep up the payments’ on everything from mortgages and credit to subscriptions and staged-payment purchases.

Readers who are so minded can decide for themselves what constitutes a discretionary or a stream-of-income sector. A question often asked here – the issue of timing – can now be answered, because trend inflexion has already started. Asset prices must correct as the underlying economy contracts, but we need to be in no doubt at all that the real threat to the financial system exists on the liabilities rather than the assets side of the equation.

Properly understood, money has no intrinsic worth, but commands value only as a ‘claim’ on the output of the ‘real’ or material economy. Monetary expansion can increase these claims, but governments, central bankers and the commercial banking system cannot create low-cost energy – or any other component of the material economy – out of the ether.

Prices, as financial values ascribed to material products and services, are at the interface between the ‘real’ economy of goods and services and the ‘financial’ or proxy economy of money and credit. We cannot expect to understand inflation, let alone manage it, until the reality of this relationship is appreciated.

Money, as a claim on products and services, is in reality, a claim on the energy required to make them available. Likewise, debt, as a ‘claim on future money’, is really a claim on future energy. Accordingly, as the dissipative energy system contracts, an increasing number of forward financial claims will be invalidated. It might be contended that, if we decided to allow inflation to run hot, we may be able to ‘inflate away’ part of our enormous mountain of debt and quasi-debt. But this wouldn’t work unless we could somehow curb the creation of new liabilities, and such curbs are irreconcilable with high inflation. In any case, debt elimination through inflation simply transfers losses from borrowers to lenders.

In the previous article, we looked at the mechanics of economic contraction, and these and other issues can be revisited in the future. For now, the following charts illustrate some of the most pertinent aspects of SEEDS interpretation.

Critically, mistaken interpretation of past trends has fostered unrealistic expectations for the future, illustrated here for overall economic output and for discretionary affordability. This leads to policy-makers, businesses and investors planning for a future that isn’t going to happen.

Systemic inflation has long been understated in orthodox data, leading to assertions that inflation ‘has been low’ despite the creation of the enormous “everything bubble” in asset prices. Although systemic inflation – measured here as RRCI – now exceeds 9%, this can be expected to trend downwards, with continuing increases in the real costs of necessities being offset by deflationary pressures in discretionary sectors and in asset markets. This, of course, assumes that the authorities continue to turn a deaf ear to siren calls for them to relax their concentration on defending the purchasing power of money.  

Fig. 1

289 thoughts on “#243. The Great Inflexion

  1. Tim, you said, “What I hope is that a real crisis – caused by slumping surplus energy, hopefully happening before irreversible ecological decline – brings us to our collective senses. I don’t think anything else can.”

    Tim, we already have several real crises. Irrationality and smash and grab operations are increasing because stress and uncertainty make people unhinged, not cool, calm and collected. You apparently mean something much more punctuated and dramatic. Presumably it would be worse than the 2008 GFC, since that was demonstrably insufficient to bring us to our collective senses.

    I do not smoke the come-to-our senses hopium crackpipe. I do not think that the Age of Enlightenment actually brought enlightenment. (See John Ralston Saul’s excellent book on this subject, “Voltaire’s Bastards: The Dictatorship of Reason in the West.”) Can you provide historical examples of where a nation or people have come to their senses after living in La-La Land? Were we acting in our collective senses when we Americans built out interstate highways, suburbia and arranged the our society and economy so that one had to drive everywhere because we were swimming in a sea of oil at that time? Just wondering what you think coming to our senses means and what a state of being in our senses looks like.

    I know my comment is unfair nit-picking and that you mean it in earnest as a next-to-last ditch hope (the very last being, well, only God can save us now, which is Gail Tverberg’s stance), and the implication of your statement is that we are well and truly screwed because we are down to hoping for a 180 degree change in mass consciousness. But I don’t think hope is useful. We are at the stage where preparing, as best one can, is what those who see the handwriting on the wall should be doing. And I don’t mean retreating to a cabin in the woods.

    • Society as we know it today – not just the economy, but attitudes and interactions – is the product of 200+ years of rapid growth made possible by low-cost fossil energy. This has left us with little or nothing in common with our pre-industrial forebears. If, as many of us believe, the industrial economy is in decline, then it’s likely that all or most of the attitudes attributable to it will fade away.

      The resultant changes could be almost incalculable. Take away the belief in growth and a huge swathe of attitudes becomes demonstrably irrational. If we think – as I do – that the benefits of super-rapid economic expansion have been heavily offset by bad practices and ideas, then there’s no reason, in principle, why these shouldn’t fade away as the industrial system unwinds. It’s interesting to reflect on pre-industrial norms when, to take just one instance, there was far less tolerance, let alone acceptance, of greed.

    • Surely *pre-1979* there was less acceptance of greed, in the UK in public anyway. The 2011 book ‘Treasure Islands’, i.e. on tax havens, starts at about the time of the 1978 Vestey tax avoidance scandal. That was a front page story, possibly because most people at the time paid the published tax rates.

      Surely it would hardly cause a ripple nowadays, i.e. tax avoidance has become standard practice.

    • I think we need to be clear that tax avoidance is legal, but tax evasion is not. If a government increases, say, taxes on fuel, and people drive less as a result, that’s tax avoidance.

      On the general point, though, there seems to have been less tolerance of greed back then, and certainly less tolerance of unscrupulous greed. As the economy deteriorates, attitudes may change, something I think has been happening, gradually, since the GFC.

  2. The Crux of the Problem

    If we take a look at health statistics, we find that the current system is not making people healthy and happy. It is making them sick and miserable.

    Yesterday I had a appointment with the eye doctor for a routine check up. (Everything is fine.). I have to drive to the other side of town, and there is a coffee shop across the street so I leave a little extra time which usually gives me time for a coffee before the appointment. Sitting next to me were two female’s who work at the hospital’s outlying facility across the street. They were laughing and drinking their coffee. When I got up, I said “you ladies have to understand that Americans are getting sicker and sicker and stop drinking your coffee and go back to work”. They laughed and said “we just got out of a training session, where we learned that it is worse than you can imagine, and the best thing we can do is drink our coffee and laugh”.

    I left and went to see my doctor. Since nothing was wrong with me, so nothing to be fixed except insurance boxes to be checked, we chatted a little. His office is now surrounded by Medical Conglomerates, Inc buildings. I said I appreciated so much that he is still independent, and not part of the financially driven mainstream which has come to dominate everything. I told him the joke about the two women at the coffee shop. He instantly understood it, and agreed wholeheartedly.

    If this dysfunctional system crashes and is replaced by something more in tune with biology and human nature, then we will all be better off. If it is replaced by some corporate bastardization of biology and human nature, we could be in even worse shape.

    Don Stewart

    • Don,

      Speaking of which, I’m wondering what the purpose at all was, of your two appointments. We’re in zero-sum times now… your luxury is someone else’s loss.

    • @reante
      The purpose of seeing the eye doctor is because I have been diagnosed with a chronic disease. Just before 9/11 I was scheduled to go on a photography expedition, but found I could not focus my camera. I went to the doctor, who told me I was in danger of a detached retina. I also had an eye disease. The retina never detached and my disease has not progressed at all in the 21 years since then. Since I pay my taxes for medicare, and thus am entitled to keep an eye on my eyes, I go to the doctor for regular check-ups. Whether a disease which is doing nothing is still a disease is a question I can’t answer. I had very poor eyesight as a child. I was in the third grade before anyone checked my eyesight, and I discovered that the other kids could see what was on the blackboard. So I’m a little cautious.
      Don Stewart

    • Don

      Kind of you to provide an explanation. And thanks for your equanimity. I still have a difficult time squaring your explanation with the final paragraph of your previous comment.

      I’m reminded or Orlov’s encouragement for us to “collapse first.”

      The relevant synthesis being that if we ourselves are more in tune with our own biology and human nature then we can crash the destructive system within us that legitimizes that selfsame system that then exists without us. That you played by the ROTG of the destructive system and, as a boomer, at the right time, only entitles you to more destructiveness. If you’re eyes are perfectly fine after twenty years I just don’t see the draw of an eye appointment because hanging onto past trauma isn’t a draw it’s a compulsion. If our sight is fine we don’t need them to tell us to come back again next year or whatever. We just need to continue to feed, exercise, and rest out eyes properly.

      Large public works projects all serve the same bastard corporate function which is to centralize power. I pay my taxes because I ‘absolutely’ have to but I’ll be damned if I hand over my natural born discernment.

      WADR, as I really enjoy your comments. 🙂

  3. I’ve watched this video presentation by Dr Albert A Bartlett several times now and each time it becomes increasingly compelling,

    if anyone was going to approach their elected representative or leader of any organisation it would be an excellent link to include,
    it speaks for itself and is applicable to any situation.

    another thing I’m finding myself fixating on is that in a self organising complex system the role that feedback plays is vital,
    if it is corrupted, omitted or brushed aside the complex system ceases to be able to self organise in a rational manner,

    the process was described and formalised by Colonel John Boyd of the USAF and presented as the OODA Loop,


    government censors and media gatekeepers should be aware of the harm they cause by interfering with the free flow of information.

  4. Could it be possible to assign a number to each comment ? It should be easier to learn them , day after day , isn’it ?
    Thanks .

    • Meanwhile, a small household, e.g. two adults/one child, could possibly be self-sufficient in food utilising a large suburban garden of 800-1,000 m2. Who needs small farms?!

      The lack of emphasis on self-sufficiency vs. the mid-1970s is surprising. It was so topical then that the BBC based a comedy upon the idea. Kenneth Mellanby’s book ‘Can Britain Feed Itself?’ appeared in 1975.

    • @David
      The kitchen garden is my favorite strategy for surviving and thriving. David Holmgren in Australia has been an outspoken advocate for “greening the suburbs”.
      Don Stewart

  5. Simon Michaux’s conclusion in a comprehensive survey:
    “In conclusion, this report suggests that replacing the existing fossil fuel powered system (oil, gas, and coal), using renewable technologies, such as solar panels or wind turbines, will not be possible for the entire global human population. There is simply just not enough time, nor resources to do this by the current target set by the World’s most influential nations. What may be required, therefore, is a significant reduction of societal demand for all resources, of all kinds. This implies a very different social contract and a radically different system of governance to what is in place today. Inevitably, this leads to the conclusion that the existing renewable energy sectors and the EV technology systems are merely steppingstones to something else, rather than the final solution. It is recommended that some thought be given to this and what that something else might be.”

    Don Stewart

    • To be fair Don, once anyone has read Simon’s work, the idea that there is any future for industrial society is pie in the sky 🙂

    • @Caomhin
      Agreed. That is why I insist that rethinking and retooling “essentials” IS the systemic challenge. Luxuries can be simply given up. Essentials require real work.
      Don Stewart

    • the existing renewable energy sectors and the EV technology systems are merely steppingstones to something else, rather than the final solution. It is recommended that some thought be given to this and what that something else might be.”

      To me, it’s obvious what that “something else” must be, an increasingly rapid deurbanization and return to living off sunlight via biological resources. In other words, a small farm future.

      Unfortunately, it is too late to make the deurbanization process comprehensive and gentle. A lot of people are going to be left in totally dysfunctional cities and will perish there.

      What’s also unfortunate is that a lot of thought actually has been given to our current predicament, from Malthus, to Limits to Growth, to Dr Tim Morgan, but too many people have ignored the danger of building a mammoth civilization on a one-shot pulse of easy energy.

      Now that the energy needed by industrial civilization for its continuence is starting to wane, the consequences of failing to heed the many warnings of danger will be felt by everyone, especially those in the rich world.

      Collapse is coming and there’s not much to be done to mitigate it. It remains to be seen whether what little mitigation is possible will even be attempted and whether widespread social unrest and warfare can be avoided. I’m not optimistic.

  6. Here’s a topic on which I’d welcome opinions.

    Since the GFC, ultra-low-cost money has created enormous increases in asset prices, and it’s often said that this has ‘further enriched the wealthiest’ – the “everything bubble”. On paper, it certainly looks that way.

    But these are notional or paper gains, not cash. If any billionaire, or big fund management group, tried to monetize even a modest proportion of their expanded asset wealth, prices would slump, and gains would be reduced, eliminated or reversed.

    We know the ways in which investors, in aggregate, have lost out – they can no longer earn a satisfactory, or indeed an above-inflation, return on their capital. Capital gains are routinely seen as a benefit that can be set against the loss of income returns. But what’s the real value of gains that can’t be monetized?

    My idea is that investors – as a class – may be amongst the early victims of economic de-growth – the economy can no longer pay them decent income returns on their investments, and they’ve been fobbed off with unrealizable capital gains instead. Then, of course, markets fall, perhaps as investors try to monetize at least some of their asset value whilst they still can.

    • a mini comment, perhaps off on a tangent:

      is this why we see corporate stock buybacks?

      companies can’t get any decent return on investing in expansion, so they pour their cash into buybacks which (they hope) raises stock prices, and stock holders realize the capital gains on paper?

    • @ Dr Tim,

      I think you’re right in your assertion that the investor class will be amongst the first victims of degrowth. The carnage seems likely to go well beyond a lack of positive real yields and impaired returns on capital.

      It seems likely that increasing numbers of investors will lose “all” as entire sectors fail, and bankruptcies sky-rocket. There will also be those who get suckered into dubious enterprises in search of real returns, only to discover they’ve “been had”, by the likes of Bankman-Fried (allegedly!).

    • it’s the intangible nature of many of these tech businesses that scares me, they might have an impressive market capitalisation but what are they?
      leased offices,
      leased server space,
      hired staff,
      a ‘Brand’
      proprietary software,
      customer lists,
      existing advertisers,

      I’m a Bulb customer, they’ve been in administration for about a year and are now being aquired by Octopus,
      Bulb is entirely online, a virtual business, their only asset is their customer list and I’m under no obligation to stay with Octopus after the handover.

      how much tangible stuff do Western stock markets actually represent?

    • This looks like a choice between the devil and the deep blue sea. Sell assets that are not now providing a positive income stream, when inflation is taken into account, and exchanging them for cash who’s value is also at the mercy of inflation ?
      So glad I’m not rich.

    • When asset markets go to “zero” the physical capital assets will still remain. The question is not so much whether any of them can be sold and monetized, they can’t, but whether any of them can remain operational and provide a stream of income to their owners.

      Since all capital requires energy to avoid being a “statue”, I expect a tremendous amount of infighting between asset owners as they try to grab as much access to energy as possible. This will be in an economy where many things, including energy, are rationed, so this infighting will include attempts to control the levers of rationing power at all levels of government. There will be lots of opportunity for corruption.

      But since energy is also critical to keeping the general population warm and allowing people access to food and water, hard decisions will need to be made about where limited supplies of energy go. I would hope they would go to sectors that are critical for life, like residential heating, the farming sector and water system operations, but those that have capital outside those sectors will be desperately trying to keep from having to walk away from their only source of income (since virtually all monetary assets are now worthless).

      In the end, energy triage decisions will have to be made. Will we let people die so that non-essential captial can operate (defense industries, perhaps)? Who will make these decisions? Will it be people in government who got their positions in free and fair elections or will governments be completely taken over by asset owners, or perhaps those with access to military power? These are hard questions to answer, but we’ll find out what those answers are going to be soon enough.

    • Early victims? I think you mixed up investing with working?

      Assets went to the moon, labor had to work hard to keep up with inflation.

      Crap doc. Paying 400k for a tiny pile of bricks with a poststamp backyard, or putting asylum seekers before domestic population when it comes to renting, it is theft and betrayel.

      Cheap central bank bits and bytes that serves all but the ones paying for it.

    • The trouble with going to the moon is there’s nothing there. Investments may have gone to the moon, but the gains cannot – in the aggregate – be turned into cash.

      My point is a structural one. In past times, it was normal for investors to earn a real (above inflation), bankable return on their money. I’m suggesting that this has ceased to be affordable, so investors have been stripped of income returns, and fobbed off with cosmetic capital gains which, if investors in aggregate try to turn into cash, will vanish.

      The ultimate owners of most investments are ordinary people, as pension policies, savings and so on. They are no longer remunerated in cash, but in the pixie dust of capital gains which can’t be monetized.

      Logically, what happens is that gains evaporate at the moment when a sizeable proportion of investors try to cash them in, and markets crash.

    • @ Joe Clarkson
      ‘Will we let people die so that non-essential capital can operate ( defence industries, perhaps ) ?
      MIC is profiting well ( on both sides ) in the ongoing slaughter that is the Russia/Ukraine conflict.
      So yes, we will.

    • Yes. First out the gate wins their freedom.

      I have always wondered what would happen if most investors cashed out at the same time.

      The US stock market as a limit down of 10% I think where if the market drops that much in one session then trading halts for the rest of the day.

      If we had 5 days in a row of 10% declines or even 3 or 4 days then you would in my opinion have a herd mentality where most would just want to get out whatever the cost.

      My thinking is if this was to occur it would leave only 1 option.

      The Fed would re-start QE to get people back into the market because at some point due to the leverage in the system some people would not get paid if they tried to cash out because there would be no liquidity in the system or no demand for their stocks etc.

      I am sure the Fed has knowledge of what that level would be or some idea of the danger threshold.

      This is why traders having stop losses makes me chuckle a bit. I have no doubt the trading houses have small print in their terms and conditions where in a market with no liquidity they cannot guarantee a stock gets sold.

      Therefore, in essence the stock price in all reality in that scenario is probably zero or close to that level.

      That might be the worst case scenario where people are left with stocks that go to zero assuming the Fed cannot restore confidence etc.

      Did something close to that scenario happen during the great depression???

      This is why I don’t invest in the stock market. The times we are in are just too uncertain.

      In my opinion we are getting closer and closer to this scenario.

      2022 has seen many worthless stocks that 1 year ago were trading at astronomical prices.

      Carvana, Snapchat, Netflix & Facebook (META) etc.

      There has been plenty and Wolf Richter has reported on a lot of them.

      Therefore, the avalanche has already started. First, it’s the weakest (cough fraudulent) companies getting sold but soon we will get onto the next group of companies that are overvalued.

      A game of musical chairs. The ones last at the table will probably be the real companies that do real things.

      Mining and energy companies such as oil, copper & gas etc. Food production companies etc.

      It’s a question of can this decline happen gradually and minimize the damage or does it at some point get crazy and everyone panics?

      In my opinion the panic cannot be avoided.

      No central bank can magically make companies profitable. This is why we have seen the casualties of the last year because none of the businesses made any money.

      As oil production declines and gets more expensive then more and more companies will start to lose money.

      At what point does the market get the memo?

      Not sure but it will be a sight to behold because there will be nothing any central bank can do to prevent it or even minimize the damage.

      We will certainly know when this time arrives because the 10% limit down days will go on until most stocks reach zero.

      Thanks for playing.

    • The Fed likely buys equity ETFs heavily under limit down days. Arbitrageurs buy shares and sell the ETFs to the Fed which supports the market. If enough sellers globally want out, I doubt the CBs can support all markets, though. It will be ‘interesting.’ Cryptos could also head towards zero, and I doubt CBs would care.

    • Rapid conversion from “Investments” to cash can become troublesome even in the early stages of a liquidation plague. Blackstone Investments just restricted withdrawals from their USA Real Estate RIET (ETF). Investors are stuck.
      Other US RIET investments are down 25% on average this year. Blackstone does not openly publish their closed fund performance, but we can guess that it’s not much better.

    • Joe

      “In the end, energy triage decisions will have to be made. Will we let people die so that non-essential captial can operate (defense industries, perhaps)? Who will make these decisions? Will it be people in government who got their positions in free and fair elections or will governments be completely taken over by asset owners, or perhaps those with access to military power? These are hard questions to answer, but we’ll find out what those answers are going to be soon enough.”

      Energy triage is happening. Large-scale engineered (political) demand destruction has been the defining dynamic post-peak total global oil liquids. I know you know that already.

      Regarding the narrative your questions beg: globalization (global finance) was governments getting taken over by asset owners, and with deglobalization, that power is returned to governments but, naturally, on the owners’ terms and not the owned’s. So the answer is nationalisms. Anti-imperialist, anti-capitalist nationalisms. Nothing else will work, and civilization is an adaptive function or it doesn’t exist.

    • That is true doc. Mass creation of currencies and debt made it all possible. It is way over the top, and lack of surplus cheap energy leaves 2 options.

      Create more or stop. Both options lead to disaster, they will create more, and they will try to implement cbdc’s.

      We must start and create local economies, and fast. And we will lose 80% of our ‘prosperity’ if we’re lucky.

      Oh, and a few hundred million of us will die. And that’s good. Ever less goes for us too.

  7. https://www.cnbc.com/2022/12/09/uk-finance-reforms-part-of-20-year-plan-to-be-the-next-silicon-valley.html

    “world’s next Silicon Valley” ha.

    Critics of the reforms have expressed deep concern.

    “Behind the spin, today’s announcements amount to wide-ranging deregulation that threatens to destabilise an increasingly fragile financial sector, with huge risks to the public and little benefit,” said Fran Boait, executive director at campaign group Positive Money.

    “With new objectives for regulators to promote the ‘international competitiveness’ and growth of the financial services sector, we are likely seeing only the beginning of a race to the bottom on standards,” Boait said.

  8. Dennis Meadows; Tom Murphy; Simon Michaux
    First, can mechanism models which are not time specific forecasts give us useful information. These two examples argue that they can. The first example is a comment by Dennis Meadows, of the Limits to Growth team from 1972. The second example is Tom Murphy’s predictions relative to food. The third example is Simon Michaux’s linlkage of depletion to the collapse of strongly interlinked elements of the global economy.

    I suggest that the question before us is:
    “Are the systemic problems sufficiently negative that modest course corrections cannot avoid collapse, as predicted by some of the best models we have?”
    Don Stewart

    “Our computer scenarios demonstrated that prevailing growth policies will lead to overshoot and collapse, not asymptotic approach to limits.”


    • @ postkey,

      The twitter threads you posted are a bit more than a critique of Michaux, they seem to rubbish his work and and question his credibility.

      It’s back to the same old issue of scientific argument and counter-argument. Who is right? Are either of them right? I don’t think any of us here can say for sure. It would take a scientific study in its own right to determine if either of them is on the money. I doubt that any of the regular contributors to this blog have the resources or the expertise for such an undertaking.

      Is Auke Hoekstra talking up his own business? It seems that he’s fronting a consultancy business that offers software for modelling renewable transitions. Why does he say that EROI is a meaningless measure, and any EROI > 1 is OK? Why does he say that Green Growth is possible? Really?

      In the end, we make judgements based on observations knowledge and experience, and unfortunately on our inbuilt biases. I see the rapidly falling prosperity we are now experiencing in Europe (and particularly the UK) being partly driven by hidden costs in the deployment of renewable power and EV’s. I’m willing to accept that the deployment has been flawed, and also accept that the way the energy market operates is probably a cost driver in itself, but none of that should take us away from the basic facts. On a cold winter’s night, when the wind turbines are still, renewable energy is non-existent. Cheap and effective energy storage is just another promise for tomorrow, just like nuclear fusion. That’s not going to help in the near future, and in the near future there’s a real risk of the lights going out.

      By the way, I’m certainly not against the renewables transition, just a lot of the hype that accompanies it. I have a solar PV system. I know what they can do and what they can’t.

  9. Dr Tim – I’d like to offer an anecdotal story that eventually makes a couple of points.
    For those outside the UK, Colne is a typical Northern former mill town about 35 miles north east of Manchester in North West England. Average wages are around -15% below the regional average, and -20% below the national average.
    Over the course of a working lifetime, a Colner will earn about £0.25m less than the averages.
    For the last half decade or so I have been bemused by the number of SUVs – Chelsea Tractors – across the town. How come folks earning substantially well-below the averages could be driving around in top-of-the-range above average priced motors? I came to the conclusion that they were funded through a combination of PPI-redress and PCP.
    Today, a newspaper article in my news feed: ‘Motorists could be forced to default on car payments to save their homes, experts warn’. Within the article Start Masson from The Car Expert said: ‘What the PCP has encouraged people to do is borrow more money on a more expensive car for the same monthly payments’.
    The take-aways are, I think as follows. First, PCP is another example of the financialisation of the economy, with a continual stream of monthly payments extracted from Colners. Secondly, it enabled Colners, at least in the short-term, to enjoy a lifestyle that was better than they were earning – the old ‘Champagne Lifestyle on a Lemonade Wage’. Thirdly, despite all the ‘affordability’ checks it was unsustainable in the longer term, and for many Colners the rebasing back to reality is going to be extremely shocking, and very, very painful. Fourthly, that shock and pain is highly likely to manifest in much anger directed at the governing, political class.
    I suspect that politicians, both national and locally, are utterly bewildered and very seriously disorientated by the current speed and intensity of economic and societal unravelling. As the old saying goes, I fear that they haven’t seen nothing yet.

    • I see the amount of credit getting used on the ground as I work as a food delivery driver.

      The amount of new cars I see on my travels at very modest houses is astounding.

      The areas I work in are also poor with a few average or slightly above average households here and there.

      There’s no doubt in my mind that most of these new cars are on finance. The houses will be mortgages too excepting the rentals.

      Whole system is debt/credit based. Most people just assume everything will continue as normal.

      A lot of people in the UK are financially illiterate (like most countries). They also don’t want to hear anything that might be negative even if that information might be close to the truth or helpful.

      It’s a common conception with regular British people that housing always goes up and is a sound investment. When you try to mention the interest you pay on all mortgages (even before the rate rises recently) and the energy required to keep houses in a livable condition you usually get a response of mockery or anger depending on the person.

      Did you see the recent news story regarding mortgages in the UK?

      The government is planning on temporarily removing repayments on all mortgages and making them interest only due to the cost of living crisis.

      The desperation is very sad and unfortunately will end up exacerbating the issue.

      Extend and pretend.

    • Time was when, if you saw two smart new cars parked outside an expensive house, you could conclude that the inhabitants were wealthy. Now, though, it’s just as likely to mean that they’re heavily in debt.

  10. @Postkey.

    Opinions really don’t matter, it’s simply about physics, the first and second laws of thermodynamics informs us that alternatives to hydrocarbons – to run a society built on hydrocarbons – cannot be done.
    Energy density is king, and entropy is constant.

    Our focus must be to use less, creating a, *quality of life*, within a regenerative economy of repair.

    • Quite so and, as I believe this is your first comment here, welcome to SEE.

      As you might know, the aim here is to apply these principles to the economy. If we picture the modern economy as a dissipative landfill system, REs can’t provide a full replacement for FF energy value as they are less concentrated, i.e. their use truncates the dissipative process.

  11. @postkey
    I’ll believe the story on wind and solar and unlimited minerals when the militaries of the world stop risking nuclear war to gain control of fossil fuels and minerals. As a suggestion, Mr. Hokestra should give his story to NATO and persuade them that the partitioning of Ukraine is a reasonable solution to stopping the bloodshed (e.g., Cyprus). No need to fight over Russian fossil fuels and minerals.
    Don Stewart

  12. Eliza Daley Sounds a Little Like John Michael Greer

    There is nothing really new here. Just some sane observations from a woman living frugally in Vermont. But her writing about the stair steps down reminds me of JMG. You may have noticed that Michaux credits both Gail Tverberg and Alice Friedemann as giving him facts and inspiration (along with a couple of dozen other people). Since Alice and Gail are both catastrophists, the question occurs to me about what a stair-step decline might look like. Alice simply cannot envision any stair step if the trucks stop running…which she predicts is not very far in the future. I have a hard time with it myself. Back in 1930, people could return to the farm. But we are now 8 billion, not 2 billion, and farmland is not what it used to be thanks to decades of fossil fueled degradation.

    Can anyone suggest some mechanics which might result in a stair step not too far below where we are today?
    Don Stewart

    • “Can anyone suggest some mechanics which might result in a stair step not too far below where we are today?”

      I’m a self-employed, house painter who spent some time as a Biology major at a university near the Michaux State Forest. I can’t speak to the mechanics of an orderly step down but personally I have been looking for a Plan B among my existing relationships.

      One of my repeat customers is an 80 year old couple who turned the farm over to their kids who then opened a farmer’s market. The farm is right off the highway, on a back road to a major retail district and surrounded by a new upscale housing development. We talked and I offered that I am available for farm work if times get tough.

      Speaking of cabins.. Dad and I have been improving our 30 acre property with a new wood shed, food plots for deer and water collection system as well as a DIY solar setup. My rural cousin runs a large landscaping service.. cuts and bags firewood for amusement parks and campgrounds. He says he can put me on the wood work if I decide to leave the city. Everyone will need firewood.

      I have been joking with my neighbors about turning the 7 acre soccer field and sports complex into a bio-intensive agriculture project and resource center. Neighbors have chicken coups and extensive gardens within a couple blocks.

      Locals in inner city Harrisburg (with the help of celebrity $) turned a former Catholic high school stadium into a food production facility. There is also a long-standing CSA run by a religious group in the same area of the City. The Capital Area Greenbelt, a 20 mile greenway set aside by the City Beautiful Movement led by pioneering early 20th century civic leader Myra L. Dock, surrounds the City and has new improved access and safety for bicycle and pedestrian traffic. The transition is gathering steam here.

    • “Can anyone suggest some mechanics which might result in a stair step not too far below where we are today?”

      besides “stair step”, she also sometimes thinks/writes more like Dr. Tim: “Negative feedback, in any case, will create a fluctuating downward curve.”

      a big picture “mechanics” would include population decline (especially urban) roughly in step with surplus energy decline.

      it might also include the system cutting off smaller/weaker peripheral countries from FF, which we may already be seeing in places like Lebanon and Sri Lanka.

      and perhaps lead to a scenario where the strongest countries with the most abundant resources (water, crop land, forests, FF) separate themselves from the have-not countries.

      leaving USA/Canada and probably Russia with “a stair step not too far below where we are today” (not sustainable in the long run), while most of the rest of the world collapses into dire poverty.

      life is not fair, and will likely get even less fair.

    • @davidinamillionyears
      I would tend to agree except for Michaux’s declaration that no country can manage the transition to wind and solar on their own. They need a global supply chain. The US and Canada are so heavily dependent on machines made in Asia that I doubt we could avoid a collapse if we tried to just cut ourselves off from them.

      I just bought a very interesting little book: Thinking 101. The first subject he addresses is our confidence that we know how to do something. I won’t describe the experiments here, but they are pretty compelling evidence that thinking and looking are not sufficient. We have to do. He cites evidence that IT projects are about 30 percent successful…which most of us would think of as more “cerebral” than “muscular”. His evidence on the ability of college students to mimic a Kpop dance routine destroys any illusions on that subject.

      My question was, in part, prompted by beginning to read the book. It’s easy for JMG and my friend in Vermont to cite the Roman Empire, but I am finding it much harder to actually even think through the stair-step strategy…..much less do it.
      Don Stewart

    • thanks, Don.

      Eliza Daley writes about the imperfect models we create in our heads, and one of my imperfect models currently is that USA/Canada and Russsia are two places which will stair step down while most of the rest goes down a cliff at various times within the next decade or two.

      the downward direction is certain, the timing is very uncertain.

      2023 will have its influence on all of our models.

      que sera sera.

  13. @Tim…
    Thank you very much for the welcome, and thank you for the SEE site.
    I understand the premise you lay out for the notion of ‘RE/alternatives’ unfortunately though, it isn’t compatible with thermodynamics, indeed, the dissipation starts even at the pre hydrocarbon extraction point then merely continues down the line of energy transfers throughout the industrial processes, leaving all alternatives as totems of energy, with entropic losses.

    Also, the more decentralised the totems, the more energy, materials, and maintenance they require, moreover,.. the ongoing maintenance and consumables, plus decommissioning required, all comes from the existing hydrocarbon, manufacturing, logistical supply chains, every bolt, pot of grease, tool, vehicle, etc etc,… totems take, comes from hydrocarbons that the totems are directly tethered to, and can never be decoupled from, and as nebulous as the complicated EROEI audit for it all may be, it simply cannot be dismissed.
    Even leaving issues, such as intermittency, battery storage and CCS to one side for a moment, the totems are still essentially just an energy sink, and do nothing to address our biospherical-climate impacts, would we not be better then, to utilise the existing hydrocarbon energy we currently have available, and redirect it to creating large scale ecological infrastructure and biospherical repair?

    The demands you cite are a consequence of the dysfunctional extractive operating system, and not the desires of the vast majority of humans working to/within that system, but what happens when we switch the operating system to a regenerative one, and humans function as a keystone species of biospherical repair?

    Thanks to you both.

    • but what happens when we switch the operating system to a regenerative one, and humans function as a keystone species of biospherical repair?

      I doubt that the switch can happen if we still keep an urban-oriented civilization. Cities place too much demand on the biosphere, so real repair would mean returning humans to the land so that their total energy and material demands can be dramatically reduced. The “back to the land” solution might have been possible 50 years ago, but now there are too many people in too many cities to make the transition (plus the lack of carbon budget available to facilitate a whole new rural infrastructure for ex-urbanites).

      Indeed, these problems with over-population and lack of carbon budget would prevent an energy transition to renewables (or anything else) even if the mineral natural resources for a transition were plentiful. We can always ignore the carbon budget and burn every last bit of coal, oil and gas, but then we will still face a reduced energy supply and have to confront a much warmer and volatile climate. But I suspect we are past the point where we can round up enough energy to make a transition and still support business as usual. We’re in the classic “energy trap”.

      The rich world has locked itself into a high-energy paradigm that can only fall apart when the energy runs out. We are going to see more and more energy crises like the one now vexing Europe, only worse. Eventually the whole world will struggle with lack of energy and then something big will break and civilization will collapse. I just hope it happens before the climate is completely ruined for a low-energy human society.

    • “Indeed, these problems with over-population…”

      I often wonder why I seem to be somewhat alone in my “optimism” that global population will begin its decline in 2023.

  14. EJ

    You have a deft touch WRT industrial cultural vibrations, if you will. I really like your use of the word totem.

    Regarding us as a keystone species of large-scale biospherical repair – that is an extremely dangerous ideological territory superimposed onto Natural Law that might be characterized as Deep Greenwashing. I say that with all due respect.

    Remember the words of a wisewoman: bigness is the root of all human [and, by extension, ecogical] misery.

    There can be no mature understanding of true ecological human potential without a full review of the greats of cultural anthropology, which begins with Marvin Harris and Robin Dunbar. Cultural anthropology is to human potential what entropy juggling is to civilization.


  15. If renewables were genuinely cheaper than fossil fuels as is claimed by the protagonists for renewables, then why are coal, gas and oil prices so high and in such demand??

    Every paper written about the future with renewables expects them all to continually get cheaper, while being oblivious to the current trend of them getting more expensive. All renewables prices have been rising due to 2 main factors, the first being the cost of energy to build them rising, since 2020, compared to falling from 2010-2020. Then there is the cost of money rising over the last 18 months, when it was also falling in the period between 2010-2020.

    Not one renewable ‘fan’ (or published paper) has suggested the energy cost of building any type of renewables from electricity, or the processes involved, nor do they ever mention the efficiency (or lack thereof) of converting electricity to synthetic fuels to allow things like mining, industrial processing and agriculture to continue.

    First we had natural biomass, then we added coal at the start of the industrial revolution, then we added oil, then hydro, then gas, then nuclear and now renewables. We never stopped using any energy form, we kept adding new ones and increased the use of the older ones.

    Renewables are only possible because of all the energy forms that came before them. There is zero evidence of building renewables with electricity. No-one does it because it’s too expensive to do in both dollar and energy terms.

    The energy cost of building renewables is way too high using fossil fuels, it will be multiples higher using just electricity…

  16. In a question here, I asked for thoughts on negative returns on capital, and related issues, and readers’ thoughts have been very helpful. At the same time, a lot of good points have been made here about the fundamentals of the energy economy.

    As things stand, I’m thinking of putting together an article on investment returns. This is a little tricky, as one runs the risk of appearing to defend investors, but the focus would be on structural issues, and certainly not on trying to justify market paper wealth soaring whilst working people have suffered austerity and been pushed further into debt.

    I also think it may be time for an update on economic fundamentals – along the lines of ‘how much do we now know?’ – though this might be better done after the festive season.

    • If the real economy is shrinking, physical capital will have to be reduced, since the resources for maintenance of that capital will be getting continuously smaller. Some owners of capital will have to go bankrupt just to free up resources for other owners. As you have often pointed out, “the logic of de-growth is that we should now start to concentrate on those issues – including de-complexification, simplification, de-layering, loss of critical mass and falling utilization rates – which will determine the rate of de-growth, and the shape of the shrinking economy”. This is what is now beginning to happen in the German industrial sector and what will happen everywhere in coming years.

      No amount of financial manipulation can save capital that can’t be used, but manipulation can shift the pain from one capital owner to another, so I expect that there will be many battles between owners for favors from those who control the money supply (central banks and governments).

      If, for example, the central banks start buying equities to maintain asset values and keep all owners of capital afloat, it will only exacerbate the disconnect between the financial economy and the real economy and accelerate the destruction of the value of money. This will hurt those who get money from their labor the most. Workers will get poorer and poorer and unemployment will skyrocket as simplification impacts their employers. I think Japan has managed to escape a financial and social reckoning from it’s central bank policies due to the shrinking of the labor force, down 14% from the peak in 1995. Maybe Korea, Germany and Italy, which also have shrinking workforces, can also escape some of the pain of a shrinking economy, but I expect most economic sectors to shrink faster than working-age populations.

      In most countries, I expect the competition between owners of capital will be mirrored by competition between workers for jobs. This is a recipe for social unrest everywhere. It’s going to take an iron hand to keep control of a society that has an economy that’s falling apart due to “de-complexification, simplification, de-layering, loss of critical mass and falling utilization rates” (DSDLF?). The most important economic and political strategy for the future will be maintaining control and making sure the pain is fairly distributed. I wonder if it can be done?

    • “The most important economic and political strategy for the future will be maintaining control and making sure the pain is fairly distributed. I wonder if it can be done?”

      in the future, the pain will be as unfairly distributed as it was in the past and is in the present.

    • Joe

      It stands to reason to me that the battles between owners of productive capacity (capital) will largely be a formality because the Degrowth is an agenda. (Degrowth doesn’t just happen, it’s a managerial plan just as is Growth, and any self-organizing dynamics within it are mere feedback loops of the agenda. This seems to be a concept that Gail Tverberg struggles with but fortunately she’s very open-minded.) So the winners of the battles of formality will obviously be those that fit the Degrowth Agenda. And we see that playing out already; anybody who thinks Musk’s hostile takeover and subsequent makeover was not a political orchestration of the Degrowth Agenda is not reading between the lines.

      Theoretical Degrowth politics has always been the province of political progressivism — true progressivism. True progressivism is the non/anti-Marxist Left because it’s the anti-imperialist Left, and Marxism is every bit as imperialist an ideology as Old Testament Capitalism.

      “It’s going to take an iron hand to keep control of a society that has an economy that’s falling apart due to “de-complexification, simplification, de-layering, loss of critical mass and falling utilization rates” (DSDLF?). The most important economic and political strategy for the future will be maintaining control and making sure the pain is fairly distributed. I wonder if it can be done?”

      You’re barking up the right tree, Joe, that’s for sure. The Degrowth Agenda in full political swing (it’s been in full operation for three years now but under political cover of the plandemic war theater and the Ukraine war theater) will indeed be an iron fisted attempt at distributing the pain fairly, and it will be a unity government of the antiestablishmentarian, traditional conservative (alt-)Left and (alt-)Right coming together, which is the populist politics historically known as National Socialism, but of course it will never be called that for obvious reasons. Russia is the contemporary template. The Italian version is emerging with Meloni. Gabbard’ will head the US version. Wagenknecht is the German prototype. Fill in the blanks. Let’s not forget that Hitler always insisted that NSDAP represented the True Left. And he was right of course if we accept the Left’s traditional definition of leftism which is an anti-imperialist (ie nationalist), anti- profiteering/financialization politics with a focus on environmental concerns and social equality. The SS was the only racially integrated fighting force in WW2.

  17. Tim

    Thanks for having me BTW.

    Are there certain words or ideas I can’t say here? I’ve had a couple comments on the same general theme not show up but I thought that maybe it was because I wasn’t logged in to WP when I hit the post button, and figured they might be hiding in a junk folder or whatever. But now I have a response to Joe regarding Degrowth prognostications awaiting moderation.

    Thank you.

    • You are most welcome, and it might be useful if I explain the processes to anyone interested, so far as I can.

      First, any comment which contains two or more links is automatically held for review.

      Second, there are some topics which could overwhelm and drown out our discussions of energy and economics if they were allowed to do so. These are covid, and the war in Ukraine, both of which are, in principle, excluded as off-topic. There are many sites where people can air their views on these if they so wish – this just isn’t one of them.

      Third, though actually first, our general themes here are courtesy to others, and respect for differing opinions – really a case of “play the ball, not the man”. So one can describe someone’s point as “idiotic”, but not call him or her “an idiot”. Part of this is the avoidance of what we might call “bad language” – intelligent, articulate people don’t need to use swear-words to make their point. Perhaps “old fashioned good manners” about covers it. Obviously we are politically neutral here, and comments must be relevant to our core interests, and not over-long.

      Then there is a list of trip-words – if any of these are used in a comment, it is held for review. These are mostly to stop anything offensive. In fact, in all the thousands of comments made here over the years, I can recall only two that failed this test.

      Finally, WordPress sometimes stops comments for reasons that are not altogether clear to me.

  18. Been a bit distracted by certain sporting events, over the last couple of weeks.

    Has made me think that, a casualty of discretionary spending due to a rising ECoE, will be large global sporting events. Or even, not so large, sporting events.

    In fact, organised sports of any kind are a product of fossil fuels.

    • Yes, that – and media more generally – are extremely exposed. Their financing depends on incomes from subscriptions and advertising, and both are very vulnerable to contracting affordability. People faced with rising food, energy, mortgage and rent costs may need to reduce spending on subscriptions, whilst advertising is vulnerable to efforts to reduce corporate outgoings.

      I’m neutral on the World Cup, by the way – or have been, since Wales were eliminated………………

    • Me too.

      Was disappointed with the England game but it was nice to go out playing well and even matching one of the best teams for a change.

      Football and English Premier League football in particular has been on my mind for a while regarding the decline of prosperity.

      We have actually in my opinion already seen the decline to a large extent in Italy.

      Serie A up until the end of the 20th century was the best league in the world with Spain probably close behind.

      The biggest clubs in Italy spent big sums on players attracting the best in the world and drew big crowds for games.

      Today Serie A is a shadow of itself. The best players in most cases go to England or Spain. The crowds are significantly smaller. Average attendances for the top clubs in the 98/99 compared to 21/22 season were as follows:

      Inter Milan 68,000 21/22 45,000
      AC Milan 57,000 21/22 44,000
      Roma 54,000 21/22 41,000
      Lazio 52,000 21/22 23,000
      Juventus 47,000 21/22 24,000

      Source: https://www.transfermarkt.com/serie-a/besucherzahlen/wettbewerb/IT1/plus/?saison_id=2021

      My guess is Italy has severely declined in the last 20 years economically. Their national debt might also be a good indication of this as they are a basket case.

      I fully expect English Premier League football to go the same way. I am keeping an eye on transfers during the windows to see if previous records get broken. The last window surprised me on the amount of spending. I was expecting less. Clubs like Chelsea were splashing the cash and bought big.

      In my opinion we are very close to transfers in England peaking. I expect the spending from clubs to decline from next year although it’s difficult to predict as inflation plays a part. Although the spending might have been higher in recent years with the inflation taken into account it’s probably not much higher than previous years.

      Premier League clubs get most of their revenue from television. The amount consumers spend is astronomical. Sky TV charge an arm and a leg to watch their games. I have always thought their football TV packages are daylight robbery but then again it’s all going to the clubs and players who are getting wages of £100,000 a week plus and then some if you are a top player.

      There is no way people in the UK are going to be paying those TV package sums going forward. My guess is the TV companies will really need to innovate to keep customers and revenues close to what they have been used to. Annual subscription prices will have to be reduced significantly as I presume there will be many cancellations in the next year or two.

      It will be interesting then if the football clubs continue to get sold off in political deals like Newcastle United getting purchased by The Crown Prince of Saudi Arabia, Mohammed bin Salman. I don’t think these foreign buyers will be too interested in buying English clubs when the TV money starts to dry up from the citizens having no money.

      That 3% or so of oil from Saudi Arabia that comes to the UK might not get increased if the well dries up from Tyneside football supporters.

      Maybe the future prime ministers will have to grovel even more than the previous ones for handouts:



  19. Is this the future for the developed world? Planning our lives around intermittent electricity supplies and fighting over firewood.

    The link I’ve attached is a fascinating piece on the BBC’s website about chronic power outages in Zimbabwe. I think most of us have heard about these kinds of problems in Africa (it’s not just Zimbabwe), but this article really brings it to life.

    OK, Zimbabwe has been a poster child for badly run states, but some of the issues reported are all too familiar to many of us in the supposedly well governed states of the developed world:

    -Insufficient and irregular power from renewable energy sources (hydro in this case)

    – Not investing in new capacity in a timely manner

    -Extended timescales to bring new projects on-line

    -Families lighting fires with plastic waste because natural gas is unaffordable

    Do any of those sound familiar to those of us in Europe, especially the UK?

    The one thing that made me shudder with me more than anything else, was the forced adaptation of businesses and families to lives their lives around the availability of power supplies. Even then, there was regularity or certainty of supply.

    For those of us alive in in the developed world today, all we’ve ever known is the on-demand availability of energy supplies. In the quest for decarbonisation, I suspect that we’ll become Zimbabwe, before we become net zero.


  20. Please accept my apology for a tardy series of typos and spelling mistakes in my posting regarding Zimbabwe power situation,

    The second from last paragraph should read –

    The one thing that made me shudder more than anything else, was the forced adaptation of businesses and families to live their lives around the availability of power supplies. Even then, there was limited regularity or certainty of supply.

  21. Pingback: #244. In search of illusory value | Surplus Energy Economics

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