Japan

Steady State Economies

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Published on Cassandra's Legacy on April 17, 2016

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What is it like to live in a steady state economy? Miss Hokusai in Edo Japan

 

 

"Miss Hokusai" is a delicate and beautiful movie set during the late Edo period in Japan. It may give us a feeling of what it is like to live in a steady-state economy. In the picture from the movie, you can see O-Ei (Miss Hokusai) together with her father, the painter Tetsuzo, better known by his pen name of Hokusai.

We owe to Kennet Boulding the concept that “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” And we call the end of this impossible growth a condition of "no growth", "zero growth" or "stable state." Many people argue that such a condition is not only necessary because of physical reasons, but it is also a good condition to be in.

In practice, we don't know what a true "zero-growth" society could be, simply because it has never existed in the modern Western World. The only hint we can find on how such a society could be is from history. Probably the best example of such a society, close in time and very well known, is Japan during the Edo Period, that historians place between 1603 and 1868.

We have no data about Edo Japan that we could compare to our modern concept of "Gross Domestic Product," which is at the basis of our idea of "economic growth". However, we have good data about the population of that time and there is no doubt that it remained nearly stable during the whole period. We also know that the extent of cultivated land in Japan didn't vary over almost one century and a half, from 1720 to 1874 (source). The large cities, such as Edo (the modern Tokyo) grew during this period, but that can only be the result of people moving away from smaller cities or from the countryside. Overall, I think we can say that, for some two centuries, Edo Japan was as close to a "zero-growth" society as we can imagine one.

So how was life in a zero-growth society? Clearly, Edo Japan very different than our society. The large majority of the people (around 90% of the population) were peasants living in country villages. On the other side of the social spectrum, there was the elite, the warrior class who ruled the country with an iron hand and meted harsh punishment to the smallest sign of disobedience. There was no such a thing as "democracy", to say nothing about concepts such as "personal freedom", "human rights," or "social security."

But it would be wrong to dismiss Edo Japan as a harsh dictatorship of no interest for us. In between the peasants and the warriors, there were people whom we could identify as close to our concept of "middle class:" craftsmen and merchants. These people were not rich, but they seem to have been reasonably free of worries about near-term survival. And they seem to have been thriving. Basically, as long as they didn't attempt to rebel against the ruling class, they were left in peace by the government. This sector of the Japanese society was lively and innovative. Edo Japan was a country of artists and of master craftsmen in all fields: the Japanese were very advanced in technologies from metallurgy to paper-making, and they created a culture that we still know and admire today: from poets such as Matsuo Basho to painters such as Hokusai and Hiroshige.

Today, we have a large number of fiction works, from Manga to Samurai movies, that try to convey something of a period that, evidently, modern Japanese still remember very well and, probably, with a certain degree of nostalgy. From all these works, we can have a visual impression of what it could have been to live in Edo Japan as a member of the craftsmen or merchant class. And the impression is that, yes, so many things were different but, maybe, not so much. Everywhere and at all times, people face the same troubles, challenges, and opportunities. So, the "middle class" of Edo Japan lived in a simple world, dressed in simple but elegant cotton kimonos, their only drink was sake, and wherever they wanted to go, they had to walk there on their own feet. But they seemed to be able to live a fulfilling life. They enjoyed nature, poetry, literature, music, and each other's company. Not even their oppressive government could take that away from them.

The movie "Miss Hokusai" is an especially good portrait of life in Edo Japan, showing a great attention to the details of everyday life. It is a delicate and beautiful movie, centered on the life of O-Ei, the daughter of the famous painter Hokusai. It has no great dramas nor scenes of battles or fights (although it does have quite a bit of supernatural hints). But it is an unforgettable portrait of human life that transcends its historical setting and tells us something of what it means to be human anywhere in the world.

We cannot say if in the future we will be able to attain a global "zero-growth" society as Japan did during the Edo Period. Maybe empires will continue to grow and fall as they have done during the past millennia. Or, maybe, we will be able to create a worldwide stable society that might look like ancient Japan. Will it have to be a harsh dictatorship as it was then? We cannot say for sure, although is at least possible that, in order to maintain stability, it is necessary to block social mobility and to suppress every attempt of rebellion. But, in any case, nothing can stop human beings from being human. The future remains open and it will be what we will want it to be.

 
 

 

 

 

Japan: The Canary in the Coal Mine

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Published on The Economic Collapse on April 5, 2016

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Watch Japan – For All Is Not Well In The Land Of The Rising Sun

Tokyo - Public DomainOne of the epicenters of the global financial crisis that started during the second half of last year is Japan, and it looks like the markets in the land of the rising sun are entering yet another period of great turmoil.  The Nikkei was down another 390 points last night, and it is now down more than 1,300 points since a week ago.  Why this is so important for U.S. investors is because the Nikkei is often an early warning indicator of where the rest of the global markets are heading.  For example, the Nikkei started crashing early last December about a month before U.S. markets started crashing really hard in early January.  So the fact that the Nikkei has been falling very rapidly in recent days should be a huge red flag for investors in this country.

I want you to study the chart below very carefully.  It shows the performance of the Nikkei over the past 12 months.  As you can see, it kind of resembles a giant leaning “W”.  You can see the stock crash that started last August, you can see the second wave of the crash that began last December, and now a third leg of the crash is currently forming…

Nikkei - Federal Reserve

And of course the economic fundamentals in Japan continue to deteriorate as well.  GDP growth has been negative for two out of the last three quarters, Japanese industrial production just experienced the largest one month decline that we have seen since the tsunami of 2011, and business sentiment has sunk to a three year low.

The third largest economy on the entire planet is in a comatose state at this point, and Japanese authorities have been throwing everything but the kitchen sink at it in an attempt to revive it.  Government stimulus programs have pushed the debt to GDP ratio to 229 percent, and the quantitative easing that the Bank of Japan has been engaged in has made the Federal Reserve look timid by comparison.

But none of those extraordinary measures has been successful in stimulating the Japanese economy, so now the Bank of Japan has been been trying negative interest rates.  Unfortunately, these negative rates are also having some unintended consequences.  According to the Wall Street Journal, the negative interest rate program is putting additional stress on the Japanese financial sector…

The Bank of Japan started imposing a minus 0.1% rate on some deposits held by commercial banks in February, meaning that those banks now have to pay a small fee when they add to their money parked at the central bank. The financial sector has suffered amid worries that banks can’t pass on negative interest rate to their depositors and therefore will take a hit to their profits.

I would keep a very close eye on the big banks in Japan.  It is my conviction that there is a lot more brewing under the surface than we are being told about so far.

In addition, many analysts in Japan are complaining that all of this manipulation by the BOJ is essentially destroying normal market behavior.  The following comes from Bloomberg

Nobuyasu Atago, who also had worked at the BOJ and is now the chief economist at Okasan Securities Co., pointed out that instead of serving as a important source of cash for borrowers, the credit market has become a profit center for dealers looking to buy securities from investors and sell them to the central bank. While the strategy may be lucrative now, financial institutions face the risk of massive losses, he said.

“By making the trade with the BOJ the only source of profit, markets are exposed to unexpected volatility when that trade ends and the BOJ moves toward the exit,” Atago said. “Markets are being destroyed.”

The more global central banks try to “fix things”, the more they make our long-term imbalances even worse.

To me, it makes no sense to have a bunch of unelected, unaccountable central planners constantly monkeying with the financial system.  In a true free market system, we would allow market forces to determine the course of events.  But of course we don’t have a free market system anymore.  Instead, what we have is a heavily socialized system that is greatly manipulated by the central planners.

That is why global financial markets gyrate wildly if Janet Yellen so much as sneezes.  They know who holds all the power, and investors are constantly on edge as they wait for the latest pronouncement from our central banking overlords.

At this point, 99 percent of the global population lives in a country with a central bank.  Our world is more deeply divided than ever, and yet somehow everyone in the world has agreed to adopt this insidious system.

It sure is quite a coincidence, isn’t it?

Getting back to Japan, things are so bad now that the Japanese government is actually considering giving gift certificates directly to low-income young people.  The following originally comes from Bloomberg

The Japanese government plans to include gift certificates for low-income young people in its fiscal 2016 supplementary budget, Sankei reports, without saying who provided the information.

Recipients would be able to use them for daily necessities.

The government sees gift certificates as more effective in stimulating consumption than cash handouts, which may be deposited.

This is what the end of democracy looks like.

When the government just starts handing out money like candy, you might as well turn out the lights because the party is over.

Since 2008, global central banks have cut interest rates 637 times and they have injected approximately 12.3 trillion dollars into the global financial system through various quantitative easing programs.

Has all of this monkeying around solved our problems?

Of course not.

Instead, our long-term problems have grown progressively worse and now a new financial crisis has begun.

Keep an eye on Japan, and also keep an eye on Europe.  Huge problems are bubbling right under the surface, and when they come bursting into the open they will deeply affect the United States as well.

 

 

 

 

 

Predatory Militarism on the Rise

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Published on the Doomstead Diner on October 19, 2015

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Throughout history, different societies have opted for different “solutions” to energy scarcity and collapse. Some might try to adapt to this new socioeconomic reality (Cuba 1990s), others may protect the elite at the expense of the general population (North Korea 1990s), while some may turn to external aggression and predatory militarism (Japan 1918-45) (Friedrichs, 2012). Predatory militarism is, according to Friedrichs, the result of desperation and temptation to gain resources through military means. In the Japanese case, the element of desperation prevailed. In the 1930s Japan started its aggressive military campaigns against China in attempts to prevent fuel starvation and external dependence on strategic resources. However, ironically this predatory militarism instead lead Japan to become increasingly dependent on importing critical commodities (oil) from the US (about 70-80% of gasoline). So when the US put in place a trade embargo (1941) Japan started looting oil from Borneo, Sumatra and the East Indies. And we all know what happened after that. In short, Japan tried gain critical resources from other countries, prompted by the potential of fuel starvation, which lead them to scrap free trade policy and to radicalize a strategy of predatory militarism to secure access to energy.

 

Worrying Trends 2015

Countries prone to military solutions like the US and Russia seems to have followed a Japanese-style strategy of predatory militarism. The US (and Nato) involvement in the Middle East to secure access to oil by military force is a clear example of this. We also see a worrying trend of potential US involvement in the South China Sea, as well as China’s use of its military power to secure oil and gas in Central Asia. However, it seems unlikely that China will stray further than that in terms of military force, instead they have been making trade deals with Iran and Russia for oil. China will probably hesitate to anger the US which has a much stronger military than China, but the country may become increasingly desperate for more energy as it's population continues increasing while demanding reductions to coal pollution. I am more concerned about what the US might do next. Since 2001 the US have been in constant warfare, and for no benefit of the people of those countries (Afghanistan, Iraq, Libya, Syria, Yemen, Pakistan) or the countries receiving all the migrants from these war torn regions. Then we have Russia's invasion of Ukraine (or support of separatist movements as some like to call it), to secure the flow of natural gas, and now its involvement in Syria. This shows signs of major geopolitical instability in the oil rich Middle East and in Europe due to global scarcity of energy, and an escalating power play between NATO and Russia over "what's left".

 

October – Outlook from a Swedish perspective

On the military side of so called strategic deterrence we have seen an increase in military drills in our neighborhood. During the summer both NATO and Russia conducted naval exercises in the the Baltic Sea. Now, during the fall, drills have intensified both in Russia, Belarus, and on NATO territory. Both naval and air forces have been deployed to show “might” on both sides. However, it is on the nuclear side of the deterrence strategy where most activity have been going over the last couple of months. It is likely that Iskander with nuclear capability is located in Kaliningrad and that the US has started to upgrade their capability with the new B61 nuclear bombs for fighters at German, Italian and Turkish air bases. At least according to credible Swedish commentators. Furthermore, the UK has voiced a wish to join NATO:s exercises on nuclear escalation (i.e. in the case of transitioning from conventional weapons to high alert for nuclear weapons deployment).

 File:Nuclear weapons.png

WikiCommons

 

The Russian intervention in Syria has increased the likelihood of confrontation. Perhaps not intentional but the risk of unintended consequences, with potentially catastrophic results, getting out of hand has risen. Russian rocket launches from the Caspian Sea was, according to most experts, mostly a demonstration of power for mainstream media and the domestic audience back home. But because the robotics system, similar to Iskander, can launch both conventional ammunitions as well as nuclear this illustrates a serious upper hand that Russia has gained in terms of tactical and potentially mid range weaponry. It is, however, yet unclear if the images shown were real or potentially tampered with. The propaganda war between Russia and the West has reached such high levels that it's becoming increasingly difficult to know what is actually going on down on the ground.

 

For Sweden this escalation of tension between NATO and Russia is very troublesome, especially since exercises have been occurring on and around our borders. We don’t really have any defense to speak of and so popular support for joining NATO is increasing within Sweden, a similar trend is visible in Finland. Experts over here are mostly concerned with the unpredictability of Russia, which is very good at hiding its true intentions and preparations. The larger issue, however, is the political confusion over Russian statements and lack of insight into Kremlin's actual behavior. The West’s analysis of Russia have been wrong all along and there has been little focus on the actual geopolitical consequences on the ground. This is of course a consequence of the whole propaganda war going on and the increasing inability of the government to solve complex problems.

 

Furthermore, there is very low public support for NATO and military interventions in Europe, which probably annoys the hell out of US "diplomats". Few soldiers have been mustered in Europe and the few who are in service are not ready for combat. Most Europeans don't want to get involved with either Russia or the US, but if they have to chose, well, Russia supply's almost all of Europe's natural gas and oil so… yeah… I think you know the answer. As for other European countries turning to the predatory strategy we have seen some of that in terms of the nuclear powers (France, the UK, Italy) engagement in the Middle East. It is unclear what these countries may do under pressure, any large-scale military response inside Europe seems unlikely, but then again, history has shown that any liberal democracy can turn into a authoritarian military machine when conditions turn really ugly. The current economic crisis and hardship for people in southern Europe could perhaps lead to extremists rising to power again if there is another major economic blow (which looks like its on its way now with the global economic slowdown). Even here in Sweden I see a trend towards people voting for the Sweden Democrats (far right wing) in pure frustration over the current governments incompetence. Of course, the problem is not so much political as it is a resource problem but most people don't see the connection. And so on and on the debate goes, and more irrational political behavior, which in turn angers the public even more.

 

Despite all these worrying signs in our close proximity our dear politicians, here in Sweden, have not been able to come to any agreement about funding emergency preparedness and response. So we are basically helpless if there is a conflict in our neighborhood and will have to rely on Finland and other countries to help us out. I think many Swedes secretly hope that Finland will work as a human shield against Russia, which the Finns of course is not to happy about. No one would ever admit to this opinion of course. Or perhaps we would simply hope that there is nothing of value to Russia and NATO here, we have no oil, coal or natural gas. Perhaps we will be as lucky as during WWII, and be spared, or perhaps we won’t.

 

It is 3 Minutes to Midnight

IT IS 3 MINUTES TO MIDNIGHT

 

The Dimming Bulb 2: Peak Electricity

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Published on the Doomstead Diner on October 18, 2015

City Lights 2012 - Flat mapComposite Night Image of the Earth taken by the NASA Suomi NPP Satellite in April-October 2012

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LAST CHANCE TO TAKE THE ENERGY SURVEY BEFORE THE COUNT!

A few days ago, doing my usual Web Surfing for Collapse articles to link to on the Diner and our new r/globalcollapse Reddit sub, I ran into an article on the Greanville Post titled WHAT IS EUROPE. CONTINENT OR PENINSULA?

europe-map-of-europe-nightlights-satellite-woodleywonderworksThe article featured as its Header Pic a NASA image of Europe taken at night from Space.  The image is actually just a crop of the much larger composite night time map of the world assembled from data acquired by the Suomi NPP satellite from April through October 2012, which I reduced in size and heads this article.   The full size pic in all its glory can be accessed by hitting the link under the header photo to the NASA website.

What that article was meant to show was how Europe really isn't a "Continent", although it is defined as such in most of your Geography Textbooks, but really just a Peninsula of the much larger Eurasian land mass.  However, that is not what really struck me when I looked at the Header Pic, what struck me was the vast difference between the Brightness of the Eurozone versus the Darkness of the African continent below, at least the portion of it visible in that cropping.  Africa is the "Dark Continent" in more ways than one here.

During the middle of the 19th century, Africa was referred to as the "Dark Continent," because little was known about the mysterious land itself. The term "Dark Continent" was most likely used for the first time by United States explorer and journalist Henry Stanley.

Obviously, with that thin band of lights on the Northern end of Africa, it's pretty obvious they're burning a whole lot less energy there than is going on nightly on the European Peninsula.  Although most often conversation amongst Energy Kollapsniks TM revolves around the availability of Liquid Fossil Fuels for powering the transportation systems we use, in reality it is the Electricity that defines the culture and lifestyle of Homo Industrialis.  When you look at the whole Map of the Globe lit up like a Suburban McMansion at Christmas, you can actually track the progression of Industrialization; you can see why the countries that are in control of Industrial culture are who they are and why everybody else out there is not particularly happy these days.  I have discussed this aspect of Industrial Civilization and Electricity before in The Dimming Bulb, in this installment I want to look at it from the Historical and Geopolitical perspectives.

You can easily tell where the Industrial lifestyle began, and you can trace it's march around the Globe as well.  The Brightness of the lighting tells the whole story if you know just a little history, and it tells you a lot about where things are going in the future too.  Before we go Back to the Future though, let's do a little review of how this all got started.

Practical application of Electricity began in the mid 1800s, and by the late 1800s the frst central power stations came online in Jolly Old England and in the Northeast of the FSoA.

Central power stations and isolated systems

The first central station providing public power is believed to be one at Godalming, Surrey, U.K. autumn 1881. The system was proposed after the town failed to reach an agreement on the rate charged by the gas company, so the town council decided to use electricity. The system lit up arc lamps on the main streets and incandescent lamps on a few side streets with hydroelectric power. By 1882 between 8 and 10 households were connected, with a total of 57 lights. The system was not a commercial success and the town reverted to gas.[16]

The first large scale central distribution supply plant was opened at Holborn Viaduct in London in 1882[17] Equipped with 1000 incandescent lightbulbs that replaced the older gas lighting, the station lit up Holborn Circus including the offices of the General Post Office and the famous City Temple church. The supply was a direct current at 110V; due to power loss in the copper wires, this amounted to 100V for the customer.

Within weeks, a parliamentary committee recommended passage of the landmark 1882 Electric Lighting Act, which allowed the licensing of persons, companies or local authorities to supply electricity for any public or private purposes.

The first large scale central power station in America was Edison's Pearl Street Station in New York, which began operating in September, 1882. The station had six 200 horsepower Edison dynamos, each powered by a separate steam engine. It was located in a business and commercial district and supplied 110 volt direct current to 85 customers with 400 lamps. By 1884 Pearl Street was supplying 508 customers with 10,164 lamps.[18]

By the mid-1880s, other electric companies were establishing central power stations and distributing electricity, including Crompton & Co. and the Swan Electric Light Company in the UK, Thomson-Houston Electric Company and Westinghouse in the US and Siemens in Germany. By 1890 there were 1000 central stations in operation.[7] The 1902 census listed 3,620 central stations. By 1925 half of power was provided by central stations.[19]

City Lights 2012 - Flat map Lights UK April-October 2012

City Lights 2012 - Flat mapLights NE USA April-October 2012


The wiring spread outward from there, and India got wired up pretty well.

City Lights 2012 - Flat mapIndia Lights April-October 2012

South America a bit less wired.

south-america-space-nightLights South America April-October 2012

Africa barely got wired at all.

Africa_Space_NightLights Africa April-October 2012

So how come India got wired up but Africa did not?  Ask yourself who was running the show in India in the 1800s?  It was the main colony of the declining British Empire, the one the Sun Never Set On because they were running all those new Lightbulbs!  LOL.  The Brits were not at the time in charge of Africa, really nobody was far as Westerners were concerned, that's why it got called the Dark Continent, besides the fact it was populated by dark skinned natives.

As time went by into the early 1900s, a couple of other places got decently wired up, Japan & China.

City Lights 2012 - Flat mapLights China & Japan April-October 2012

In the mid to late 1800s, the Anglo-Amerikan Industrial Empire was in an Expansionary Phase, and the Gunboats of Cmdr. Matthew Perry "opened" Japan forcibly in the 1850s to join the expanding Industrial Empire, as I covered some time back in the Mr. Peabody Visits Japan article. Still in the Coal fired period at this time, the Gunboats weren't using Oil yet.  The Brits were bizzy trying to make China the same kind of colony that India was, but unfortunately had some Boxers willing to fight them on this.

By the end of the 19th century, the Western powers and Japan had forced China’s ruling Qing dynasty to accept wide foreign control over the country’s economic affairs. In the Opium Wars (1839-42, 1856-60), popular rebellions and the Sino-Japanese War (1894-95), China had fought to resist the foreigners, but it lacked a modernized military and suffered millions of casualties.

The Chinese weren't happy Kowtowing to the Japanese, and the Japanese weren't happy Kowtowing to the Gaijin Imperialists either, so everybody got in a big ass fight over this eventually.  The fight was called WWII, which got ended with this:

https://awesometalks.files.wordpress.com/2008/08/ng30.jpg

The Nips were outclassed with Industrial Killing and their well wired Island was turned into an Industrial Factory for Carz and Electronic toys, starting with Transistor Radios moving through Walkmans up to the latest in Smartphones, though of course in recent years have had serious competition on this stuff from the other slaves on the Asian Continent from Korea to Thailand to China.

However, at this point in the post-WWII years the further Wiring of the World began to slow, if not come to a complete halt.  With the Victory over Japan and Germany, why was further electrification of Africa and South America not undertaken?  SA is a little more wired than Africa, but not by much.

south-america-space-nightLights South America April-October 2012

As with most places that have been wired up post WWII, it's mostly along the coastline not much going into the interior.  There are a few reasons for this.

First one is that by and large, most population centers and Big Shities lie along the coastlines.  Reasons for this?

1- It's easiest to do trade with many places via boats.  You can put a lot of cargo on a boat and move it around the world over the oceans without using a whole heck of a lot of energy to do it.  In fact in the Sailing Era, that energy was all Renewable.

http://www.portmellon.net/uploads/1/0/0/7/10078822/5846457_orig.jpg

Even in the modern Container Ship era utilizing Fossil Fuels, this is relatively low energy consumption.  The ships can run on "Bunker Fuel", which is basically unrefined Oil.

http://www.transinfo.am/img/services/big/1392130262-7142.jpeg

2- Coastline areas are usually pretty flat land condusive to large scale Agriculture.  The fresh water flows down from higher elevations to these neighborhoods, so you have a continuous source of water if you are at the mouth of a decent size river, long as nobody upstream is using it all or contaminating it.  New York Shity at the terminus of the Hudson River or London at the terminus of the Thames river are typical examples of this.

http://oceanservice.noaa.gov/education/kits/estuaries/media/est01c_600.jpg

http://media-2.web.britannica.com/eb-media/14/78514-004-9E98EDAD.jpg

3- It's relatively EZ to get rid of all your WASTE if you are right on the coast.  The Sewage goes into the Big Sink of the Ocean.

https://www.sydneywater.com.au/Publications/Reports/AnnualReport/2007/images/WollongongSTP_above.jpg

Woolongong Sewage Treatment Plant in Oz

So the vast increase in global population since the Industrial Era began has occurred mostly at the coastlines, which of course is not Good Newz with Sea Level rising.  Just ask Miami.

http://www.rsmas.miami.edu/blog/wp-content/uploads/2014/10/miami-flooding.jpg

For the most part, the Build Out phase stopped in the early 1970s at the latest, and the last 40 years has been all about continuing to bring in the necessary energy to all the places already built out to keep running them.  In some of the older industrial Big Shities like Detroit, that has already failed/collapsed.

http://opencityprojects.com/wp-content/uploads/2013/09/7499108236_7fd417857d_c.jpg

So your next question is just how does all the energy flow INTO the places it still goes to?  This is a pipeline and transport question mainly, although there are many geopolitical conseqences of trying to take energy stores from one location and move them to another one.  Let's look at the current pipeline networks for Oil and NG in North Amerika and Eurotrashland.

http://www.refinerlink.com/userfiles/RL%20MAD%20Pipeline%20Map.jpg

http://3.bp.blogspot.com/-YDdCkW9AqmY/UT31FYeVCDI/AAAAAAAABdc/1239kdVouUc/s1600/pipeline+accidents+final+animation1-2.gif


As you can see the greatest density of pipeline networks is in the TX/LA/OK neighborhood, and then filtering up from there to the North East and Upper Midwest.  This of course because in the early days, all the BIG FINDS of EZ to extract low EROEI oil in the FSoA came in these locations, and then that oil needed transport to the Industrial centers of the Midwest and to the Northeast trading ports with Europe.

As the amount of oil that could be extracted at a cheap price inside FSoA borders began to decline, those same networks were used to ship around Oil accessed/stolen from other big repositories on earth, most notably Saudi Arabia of course.  The Louisiana Offshore Oil Port (LOOP) was built to be able to offload oil from VLCCs (Very Large Crude Carriers), more commonly referred to as Super Tankers.

http://wwwsp.dotd.la.gov/Inside_LaDOTD/Divisions/Multimodal/LOOP/Loop%20Images/clove.gifhttp://wwwsp.dotd.la.gov/Inside_LaDOTD/Divisions/Multimodal/LOOP/Loop%20Images/loop.gif

A few more large pipelines were built as time went by to move the oil out of the ground to the places that were burning it, most notably the Alaska Pipeline:

The Trans-Alaska Pipeline System (TAPS) includes the trans-Alaska crude-oil pipeline, 12 pump stations, several hundred miles of feeder pipelines, and the Valdez Marine Terminal. TAPS is one of the world's largest pipeline systems. It is commonly called the Alaska pipeline, trans-Alaska pipeline, or Alyeska pipeline, (or the pipeline as referred to in Alaska), but those terms technically apply only to the 800 miles (1,287 km) of the pipeline with the diameter of 48 inches (122 cm) that conveys oil from Prudhoe Bay, to Valdez, Alaska. The crude oil pipeline is privately owned by the Alyeska Pipeline Service Company.

The pipeline was built between 1974 and 1977 after the 1973 oil crisis caused a sharp rise in oil prices in the United States. This rise made exploration of the Prudhoe Bay oil field economically feasible. Environmental, legal, and political debates followed the discovery of oil at Prudhoe Bay in 1968, and the pipeline was built only after the oil crisis provoked the passage of legislation designed to remove legal challenges to the project.

https://upload.wikimedia.org/wikipedia/commons/3/36/Trans_alaska_international.jpg

http://assets.enuygun.com/media/lib/750x525/uploads/image/2880.jpeg

As the Wiki article indicates, it only became economical to build this behemoth of a pipeline after the Arab Oil embargo of the 1970s drove up the price of Oil.  Lately there has been talk about building a natural gas (NG) pipeline out of there, either going across into Canada to join up with the current system of NG pipelines down there, or along the same route as the Oil pipeline down through Alaska, to be shipped out by liquifying the gas and dropping it onto specialized Liquified Natural Gas (LNG) ships, for sale then to the Japanese and Chinese slaves.

The problem with either of these pipelines being built is that the price you can get for NG doesn't justify the CapEx for building it.  You'll never even pay off building the pipeline, much less make a profit off of it at the current prices.  You would have to bet the price the consumer will pay for it will rise substantially, but how can that happen with fewer people working all the time at ever downward spiralling wages?  So both projects have stalled, although the Alaska Goobernator is still pushing for it because something is necessary to keep the economy running around here as the Oil in the Prudhoe Bay fields depletes and gets lower prices all the time.  He's got a huge hole in the state budget these days, and things are getting desperate down in Juneau.

Stalling also is the drive for further Oil exploration either in the Arctic Ocean or the Arctic National Wildlife Refuge (ANWR).  Shell Oil recently stopped their exploration there after sinking around $9B into that White Elephant, and this week Da Goobermint decided not to offer up any leases for the oil companies to even bid on.  Why not?  Because they will get the same result that the Brazilians got a couple of weeks ago when they offered up leases for sale in the supposed Giant Oil Reservoirs in Deep Water off their shores.  They got no bidders practically speaking.  Same as the NG pipeline for Alaska, with the price of Oil as low as it is, the CapEx involved in accessing and drilling up this Oil is huge, and you can't pay it off at the prices the consumers of the oil can afford to pay.  Although Environmentalists are gladdened by this decision and hope some Polar Bears will be saved, this decision has nothing to do with Environmental consciousness on the part of Da Goobermint or the Oil Companies.  It's strictly an economic decision.

Now let's move over to Europe, where you see a similar history and similar economic issues as far as continuing to move the Oil from under the ground where it still remains to the places that have been burning it since Oil replaced Coal as the main energy driver for their industrial economy.  First, let's look at the Pipeline Maps for Europe:

http://static1.squarespace.com/static/546f7732e4b095d2722abd0f/t/5499bde8e4b0439c6133934f/1419361773962/?format=750w

http://www.mappery.com/maps/Proposed-European-Crude-Oil-Pipelines-Map.mediumthumb.gif

As you can see, similar to the build out of Oil Pipelines in North America from where the Oil was found down in TX and OK to where it was burned in places like Detroit and Cleveland in the early part of the 20th Century, pipelines were built to take Oil from where it was found in the Middle East and North Africa (MENA) and bring it to the Industrial Factories  where it was being burned, primarily in Britain and Germany in the early 20th Century.  While the Boxers were fighting in China, you had a similar battle going on in Europe over who would get to control the Oil coming from MENA, and the first big battle was fought for this, that was WWI.

http://i.kinja-img.com/gawker-media/image/upload/n3mzmahboqu4lhmtgqkp.jpg

The Brits won this war against the Krauts, with the assistance of their then still flush with oil former colony of the Amurkans.  They carved up MENA into a bunch of random countries from the old Ottoman Empire with the Sykes-Picot Agreement to insure the flow of energy would come their way after the war.

The Sykes–Picot Agreement, officially known as the Asia Minor Agreement, was a secret agreement between the governments of the United Kingdom and France,[1] with the assent of Russia, defining their proposed spheres of influence and control in the Middle East should the Triple Entente succeed in defeating the Ottoman Empire during World War I. The negotiation of the treaty occurred between November 1915 and March 1916.[2] The agreement was concluded on 16 May 1916.[3]

The agreement effectively divided the Arab provinces of the Ottoman Empire outside the Arabian peninsula into areas of future British and French control or influence.[4] An "international administration" was proposed for Palestine.[5] The terms were negotiated by the French diplomat François Georges-Picot and Briton Sir Mark Sykes. The Russian Tsarist government was a minor party to the Sykes–Picot agreement, and when, following the Russian Revolution of October 1917, the Bolsheviks exposed the agreement, "the British were embarrassed, the Arabs dismayed and the Turks delighted."[6]

As you can see here, even prior to WWII and the Holocaust, there was an "agreement" about Palestine, later to become Israel.  Essentially, Israel was designed to be the Military Base from which to maintain control over all of MENA Oil assets.  Endless Military Aid has been furnished to the Israelis since WWII as a means to maintain this control, and the warfare down there between the Israelis and all the Arab states which surround them has been virtually continuous since WWII.

Despite the ongoing wars down there through the time period, overall the Oil was successfully transported through the pipeline system to the factories in Northern Europe, and even the Krauts who lost both WWI and WWII actually did fine here, since the same banksters financed both sides in the battle and after the war was finished, refinanced rebuilding of all the factories in both Britain and Germany that had been destroyed in the war to begin with!  LOL.

Like North America with the building of the Alaska Pipeline, the Northern Europeans also got a fresh infusion of Juice with the discovery of North Sea Oil, and both Britain and Norway got a big bonus from this over the last 40 years, but this bonanza is starting to run thin now, and there are no new good sources of local Oil to be accessed at anything within a reasonable price range to justify the CapEx.  So the Western European Nations are getting desperate for Oil and NG, and their last, best hope for this is…the RUSKIES!

Mother Russia still has a decent supply of Oil left, not just in the Arctic Ocean but out there in the vast land mass of Siberia too!  What's the problem?  PIPELINES!  Getting the Oil from where it still is in Mother Russia to where the Eurotrash would like to burn it will take extensive construction of new pipelines, which in some cases are even longer than the fucking Alaska Pipeline!  Besides that, the Eurotrash are competing against the Chinese, who would like to have new pipelines for this treasure trove of still remaining Fossil Fuel Energy piped in THEIR direction.  Who if either will the Banksters finance for contstruction of said new pipelines?  Just like Alaska, they won't fund either one of them, because there is no Return on Investment (ROI).  in no place left on Earth is it possible to sell the energy at a price the consumer can afford to pay for it.

Knowing all of this, it is now possible to predict where the Lights will go off first and how the Powerdown off Industrial Civilization will proceed.

You have two Legacy Infrastructure Projects here, built out from the beginning of the 20th Century to move the energy around, the Electrical Grid and the Pipeline Network.  Both systems are decaying, and the ROI for either fixing and maintaining what has already been built or for building new ones simply is not there anymore.  It just costs too much to drag the energy out of the ground and move it over to places where fewer and fewer people all the time can afford to burn it.  The persistent GROWTH necessary to finance such a system has come to a halt now.  The population of Homo Sap across the whole planet has exceeded the capacity of the planet to support that population on an Environmental and Resource level, and so that population must and will contract.  The easily accessed Fossil Fuel Energy that allowed for the exponential growth of this population is now all gone, it exists now as CO2 up in the atmosphere.

The population of Homo Sap will begin its decline first in the Peripheral countries, better known as the "3rd World".  Similarly, the Lights will start going off first in these countries, and the Legacy Pipeline and Electrical Grid systems that deliver the Energy to the 1st World Nations will continue to function a while longer, but become ever more difficult to maintain and to continue to input new Energy to ever more impoverished consumers of the Energy, and they too will then begin to shut down one by one at first perhaps, but at some point the whole system will crash.  This may occur in tandem with or shortly after the crash of the monetary system controlling this distribution of Energy.

The Last Big Shities to still have Lights On from central grid power?  In all probability, Berlin,the City of London and New York Shity on Wall Street, the centers of the Finance that built the whole system to begin with.  When the Lights Go Out on Broadway, you can say that TEOTWAWKI has arrived.  It may take a little while yet, but you can watch the progress inward, you can see it happening in real time.  It's not a conjecture anymore, it's reality.

More Econ & Energy Blogs & Rants off the keyboard & microphone of the Rogue Economist, AKA Reverse Engineer

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Welcome to Blackswansville

From the keyboard of James Howard Kunstler
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avalanche
 
Originally Published on Clusterfuck Nation July 6, 2015
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While the folks clogging the US tattoo parlors may not have noticed, things are beginning to look a little World War one-ish out there. Except the current blossoming world conflict is being fought not with massed troops and tanks but with interest rates and repayment schedules. Germany now dawdles in reply to the gauntlet slammed down Sunday in the Greek referendum (hell) “no” vote. Germany’s immediate strategy, it appears, is to apply some good old fashioned Teutonic todesfurcht — let the Greeks simmer in their own juices for a few days while depositors suck the dwindling cash reserves from the banks and the grocery store shelves empty out. Then what?

Nobody knows. And anything can happen.

One thing we ought to know: both sides in the current skirmish are fighting reality. The Germans foolishly insist that the Greek’s meet their debt obligations. The German’s are just pissing into the wind on that one, a hazardous business for a nation of beer drinkers. The Greeks insist on living the 20th century deluxe industrial age lifestyle, complete with 24/7 electricity, cheap groceries, cushy office jobs, early retirement, and plenty of walking-around money. They’ll be lucky if they land back in the 1800s, comfort-wise.

The Greeks may not recognize this, but they are in the vanguard of a movement that is wrenching the techno-industrial nations back to much older, more local, and simpler living arrangements. The Euro, by contrast, represents the trend that is over: centralization and bigness. The big questions are whether the latter still has enough mojo left to drag out the transition process, and for how long, and how painfully.

World affairs suffer from the disease of terminal excessive complexity. To make matters worse, much of the late-phase complexity operates in the service of accounting fraud of one kind or another. The world’s banking system is mired in the unreality of so many unmeetable obligations, cooked books, three-card-monte swap gimmicks, interest rate euchres, secret arbitrages, market manipulation monkeyshines, and countless other cons, swindles, and hornswoggles that all the auditors ever born could not produce a coherent record of what has been wreaked in the life of this universe (or several parallel universes). Remember Long Term Capital Management? That’s what the world has become.

What happens in the case of untenable complexity is that it tends to unravel fast and furiously. That’s exactly why avalanches and earthquakes happen all at once, not stretched out over a six week period. The global financial scene not so different. It’s just another matrix of linked mutually-supporting relationships that can implode if a few members weaken.

One question worth reflecting on is whether the implosion is actually well underway on-the-ground in real economies, with just the scrim of illusion to make the surface appear intact. That surely seems to be the case in the USA, where the so-called economy has already avalanched into a rubble heap of part-time scut jobs, defaulted college loans, underwater mortgages, and groaning pension funds — with an overlay of pointless and endless motoring.

Over in Euroland, the Greek “no” also implies that every other sovereign nation wallowing in deep financial shit will demand a haircut (and a disinfectant shower). Italy, Spain, Portugal, Ireland, and even France cannot possibly meet their debt obligations. Their citizens are being taunted with currency controls, too, and they have every bit as much potential to go ape-y as the Greeks. Notice you haven’t heard much from their leaders and financial ministers in recent weeks. They are all standing on the sidelines watching the Greeks go through the wringer — but you can be sure they are all making plans of their own.

The failure of the European experiment will be extremely demoralizing to the hopeful citizens of that continent, who emerged from the bloodbath of the early 20th century to become the world’s premier peaceful tourist theme park. I don’t know that they necessarily have to go back to fighting each other on battlefields with things that blow up and destroy human flesh, but they surely have to decentralize and re-fashion some kind of simpler, local way-of-life if they expect to remain civilized.

It’ll happen everywhere. The Japanese are next, of course, and they may be the most fortunate, since they retain more than a few shreds of memory for exactly that mode of life: the Tokugawa shogunate (the Edo period, 1600 – 1853), a manner of high pre-industrial economy and culture that might have persisted indefinitely had not Commodore Perry come knocking on their door, so to speak, in his “black ships.”

Ukraine is about halfway back to being medieval with excellent potential to overshoot even that. The Euroland PIIG(F) nations don’t have the energy resources to extend Modernity, even if the banking system wasn’t terminally ill, and then on top of that they have the ethno-demographic quandary of creeping Muslimization — plus the additional flotillas of desperate boat people arriving daily.

America, count your blessings. Tattoos, obesity, drug use, and shiftlessness are all basically behavioral choices. You don’t need a finance minister or a central banker to overcome those problems.

 

James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

Do it for Denmark

logopodcastOff the microphone of RE

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Aired on the Doomstead Diner on March 10, 2015

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Tune in to the full list of Diner Rants & Interviews on the Diner Soundcloud Channel!

Featuring interviews with Steve Ludlum, Gail Tverberg, Ugo Bardi, Nicole Foss, David Korowicz, George Mobus, John David Hughes, Albert Bates and many more….

Snippet:

…In the last rant, I went ballistic on the Economista Clowns & Jokers who must be Smoking Crack to come up with the numbskull ideas of impoverishing people to stimulate growth and lending more money to already bankrupt borrowers as a solution for economic collapse. This was inspired by the FACT that one of the World Class Economistas currently making policy on the global level, one Douglas McWilliams of CEBR was documented on camera really smoking crack in a London Crack house, wasted to beat the band.

http://profile-pics-cdn.xvideos.com/videos/profiles/profthumb/79/ed/11/beezbone--ym/profile_1_big.jpgFor today, the latest in hilarity is the Danish Ad Campaign, “Do it for Denmark”, designed to encourage Danish girls to start getting PREGNANT! They are supposed to go out on Vacation and find willing foreigners to inseminate them and then return to Denmark to bring new Great Danes into the world, so that they can pay taxes to support the current crop of aging Great Danes! LoL.

Charitable folks that Diners are, several have already stepped up to the Plate as Volunteers here to keep Danish social security programs solvent. Given our aging demographic, we also will purchase our own Viagra to make this possible! It’s a gift to the Danish People, and hopefully the cost of the Viagra can be deducted from the income tax as a Charitable Contribution to needy Danish Girls. LoL…

For the rest, LISTEN TO THE RANT!!!

Here’s the last rant on Crack Smoking Economistas, in case you missed it…

The Double Whammy

Off the keyboard of RE

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Published on the Doomstead Diner on November 6, 2014

black_swan

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Over the course of the last week, we have had two MAJOR Black Swans come in for a landing.

The first one actually has been ongoing for a couple of weeks now, the collapsing price in the Oil Market, plunging from its recent “set point’ at around $90/barrel to $77 for WTI as I write this article:

The second Swan came in the form of an announcement by BoJ Chief Psycho Kuroda that the BoJ would ENGAGE Warp Drive on the Printing Press and buy up every last JGB the Nip Goobermint sells in order to meet their ever increasing need for cash.  The Yen was already sliding, this announcement however sent it on a Downhill Run worthy of an Olympic ski course.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/11/20141103_NKY.jpg

Flip this upside down to get JPYUSD.  Nobody publishes it that way, I wonder why?

Are these two events unrelated coincidence?  Of course not.

Demand Destruction has taken hold all across the globe now, and Oil consumption is dropping everywhere.  Here in the FSoA, we’ve seen a 10% drop in gasoline consumption since 2008, and the end to this is nowhere in sight either.

Screen Shot 2014-10-27 at 11.57.00 AM

Fewer miles driven means fewer Japanese Carz sold here in the FSoA, and it is no different over in Eurotrashland, in fact it is worse over there, particularly in the PIIGS Nations.  Fewer Japanese carz sold means a ballooning trade deficit for Japan, and their trade surplus over the years is the only thing that kept them able to support ever increasing Goobermint deficits, which now have reached the Ionosphere and soon will encompass the entire solar system, including UR-ANUS.

Global Deficits in aggregate soon will reach the Edge of the Visible Universe.

https://alexwilgus.files.wordpress.com/2011/07/fileuss-enterprise-d-in-distant-galaxy.jpg

Going Where No Man Has Gone Before in Debt

kuroda-laughingWhat Psycho Kuroda-san wants to do here is devalue the Yen so far that Amerikans can by Japanese Carz for Pocket Change, and with Gas Prices dropping at the pump EVERYBODY hopes this will stimulate Demand and Happy Motoring Amerikans will once again start burning oil as fast as the Saudis can pump it out of the ground.

The Saudis themselves have promised to be the Walmart of Oil Wholesalers and sell their Oil at Low, Low Prices Every Day into the forseeable future, because they too have hefty obligations in subsidies to keep their population from rising up and beheading the Saudi Princes.  What they have lost in high prices they hope to make up for in VOLUME!

Sadly for the Saudi Royal Family, it appears they will have some difficulty getting this Oil to Market however, since they seem to have Pipelines mysteriously BLOWING UP, another mere coincidence of course.  Pipelines Blow Up regularly over there, nothing to see here, please move along.

Even if the pipelines remain intact however, it is unlikely that the Happy Motoring Amerikans are going to start increasing consumption again just because Gas Prices drop even $1/Gallon here.  Millions of formerly Middle Class Amerikans have completely dropped out of the “Workforce”, and they can’t afford to drive around willy nilly at ANY price.  They divested themselves of their cars already, and they aren’t buying enough new ones from Toyota because they can’t afford car payments either, even at ZIRP for 5 years!  Unless the newly elected Republican Majority magically starts creating Jobs that pay better than Minimum Wage, there is ZERO chance these folks will be Happy Motoring ever again.

Besides this problem on the Consumption End, there is still more Blowback from Low Oil Prices on the Extraction end just around the corner here if Low, Low Prices Every Day continue for any significant period of time, which is the enormous DEBT BUBBLE worked up by the Energy Extraction Industry here during the “Fracking Miracle”, which dimwitted Pols and Energy Shills and the Corporate Media have been selling non-stop as the Ticket to “Energy Independence”.

https://firlebeaconcelebrations.files.wordpress.com/2014/10/shale-boom_0.png

http://www.postcarbon.org/wp-content/uploads/2014/10/cover_Drilling-Deeper_300w-2.pngDepending on the particular play and the costs involved in production, generally speaking only the very best of these plays can bring in Oil at under $80/barrel, so anyone drilling for it in less than perfect locations starts losing money with each well they drill, and the more they drill, the more they lose.  They borrow more money to keep drilling, because to stop is to realize the losses, and nobody wants to do that!  At some point though, and sooner rather than later if the prices stay below $80, the copious debt money being issued to these folks from Wall Street will stop flowing, many companies will go Belly Up and production at all but the best places will be shut in.

http://new.postcarbon.org/wp-content/uploads/2014/08/hughes-thumb.jpgDon’t believe me?  Read the report DRILLING DEEPER from the Post Carbon Institute for 300+ Detailed pages to get a picture of this nonsense.  We will have a Podcast discussing the Drilling Deeper report with Author David Hughes up in the next couple of weeks here on the Doomstead Diner.

Don’t believe David Hughes?  Go to Bloomberg in the Heart of the MSM/Wall Street Oligopoly:

“There’s a lot of Kool-Aid that’s being drunk now by investors,” Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management LLC. “People lose their discipline. They stop doing the math. They stop doing the accounting. They’re just dreaming the dream, and that’s what’s happening with the shale boom.”

Will this cut the supply sufficiently to outpace the ongoing Demand Destruction and finally get Oil prices to start climbing upward again?  Eventually, it probably will, except by the time this occurs about the only people left able to afford the $200/barrel Oil still produced will be the 1% still on the Gravy Train of Funny Money from Da Fed.

Can 1% of the population pay for all the Road Maintenance, Bridge Repair and drive enough miles every day to keep Gas Stations open along their driving routes to fill up?  Of course not, this is a volume bizness, and in order to build out the whole system it required constant Growth, issuance of ever more Debt on the supposition this growth would continue in Perpetuity, which of course is an impossibility on a Finite Planet with Finite Resources.

Has the Oil Run Out here?  No it hasn’t, and it never will, but most of what is left will never come up from the rock formations it is wedged into, or deep under the sea or way up in the Arctic Ocean, where the costs for producing it are even higher than the tight oil formations in Marcellus and Eagle Ford, which already are higher than the Consumers of the Oil can afford to pay.

It doesn’t matter who gets elected into office here, the only solution to this problem is reduction in per capita energy consumption, and this will occur either through enforced rationing or “Conservation by Other Means” as Steve on Economic Undertow likes to phrase it, the reduction will occur as more and more people simply cannot afford to buy the Oil, or the products made with it.

Since most of our current economy is based on this, it has nowhere to go but DOWN now, which means fewer Jobz in this economy, lower tax receipts and further Defaults at all levels from Goobermint to Corporations to Consumers, and further Defaults means a reduction in the total Money Supply, because the money supply is entirely based on Debt and the belief that the Debt will at some point be repaid, which it will not be.  It is all IRREDEEMABLE DEBT.

Financial Gimmickry has kept this Ponzi going here for a long time, but there are some Hard Limits that gimmickry cannot fix, and one of them is Consumers who just will not BUY oil, because they don’t have the money to buy it.  This is not a “Choice” Consumers are making, it is not a “Paradox of Thrift”, the endless reams of Toilet Paper Da Fed and the BoJ are printing are not filtering out to the end consumers.  You do not have an Economy when you have Sellers but No (or really too few) Buyers.  That is Common Fucking Sense.

CALL ALAN!

It’s the FINAL COUNTDOWN now.

RE

Japan Goes Full Retard

logopodcastOff the microphone of RE

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Aired on the Doomstead Diner on November 2, 2014

Kuroda Sez…ENGAGE!

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You think FSoA Debt problems are Bad?  Try TURNING JAPANESE!

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It’s RANT TIME!

Snippet:

seppuku…The first thing you have to realize is that the Japanese are PURPOSEFULLY trying to inflate their economy. They have been mired in a 20 going on 30 year deflation, which makes it ever harder for them to service their own debt, which of course they mostly owe to themselves but try not to let that confuse you. Things have been getting exponentially worse since Fukushima and the Global Financial Crisis of 2008 before that, steadily eroding Japan’s former trade surplus, which now is basically negative since carz aren’t selling well and the Nips have to import all their energy. The idea you can cure this problem with any kind of monetary stimulus is ludicrous of course, but the alternative is for their economy to completely implode, and they are trying to put off the Day of Reckoning as long as possible here. Normally, you would expect this type of berzerk economic behavior to compeltely crash the currency on Day 1, but that isn’t going to happen here immediately, though in the medium to long term it is inevitable. Why not?…

For the rest, LISTEN TO THE RANT!!!

Japan Gets ONGED!

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Aired on the Doomstead Diner on October 10, 2014

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Great Screen Saver!

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Let’s Go Hiking!

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It seemed like a good Parking Spot yesterday!

Onged Definition:

Having your society systematically destroyed by a combination of Natural and Man Made Disasters, Population Overshoot and Resource Depletion.

Snippet:

…All things considered, it’s a pretty quiet day today in the world of collapse, besides the fact the first Out of Africa case of Ebola transmitted in Spain to a local nurse, and the fact yet ANOTHER Super Typhoon is bearing down on the Nips, following just a week or so behind the path of PhanFone, this one called VongFong. The next one is sure to be HongKongLongDong. LOL.

This is another one of those Picture Perfect Cyclonic Storms that make great Screen Savers for the Doomophile TM, and it’s even bigger than Haiyan which devastated the Phillipines in 2013, which itself was a good deal larger than Katrina was.

So basically what you have here for the Nips is something an Order of Magnitude or so larger than the equivalent of NOLA being hit by Back-to-Back Katrinas. To be fair, the reason Katrina caused so much Havoc in NOLA is the city is at or below Sea Level in many places, so when the levees failed the water did not simply drain back out to sea, it had to be pumped back out, which took some time and plenty of fossil fuels to run the pumps.

The geography of Japan is a bit better for taking a Typhoon hit than New Orleans, it’s basically an archipelago of Volcanic Islands which rise fairly regularly from sea level up to the tops of Mt. Fuji and a few other choice Volcanoes currently getting more lively, including Mt. Ontake which blew off last week while numerous Hikers including Sum Dum Phuk and Wrong Dope Wrong Time are now missing, while the Nip rescue squads attempt to locate them before the next Typhoon rolls in…

For the rest, LISTEN TO THE RANT!!!

Germany & Japan Hit the Skids

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on October 8, 2014

Pigs on the Wing in Japan & Germany

Pigs on the Wing in Japan & Germany

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Serious Financial Trouble Is Erupting In Germany And Japan

Stock Market Collapse - Public DomainThere are some who believe that the next great financial crash will not begin in the United States.  Instead, they are convinced that a financial crisis that begins in Europe or in Japan (or both) will end up spreading across the globe and take down the U.S. too.  Time will tell if they are ultimately correct, but even now there are signs that financial trouble is already starting to erupt in both Germany and Japan.  German stocks have declined 10 percent since July, and that puts them in “correction” territory.  In Japan, the economy is a total mess right now.  According to figures that were just released, Japanese GDP contracted at a 7.1 percent annualized rate during the second quarter and private consumption contracted at a 19 percent annualized rate.  Could a financial collapse in either of those nations be the catalyst that sets off financial dominoes all over the planet?

This week, the worst German industrial production figure since 2009 rattled global financial markets.  Germany is supposed to be the economic “rock” of Europe, but at this point that “rock” is starting to show cracks.

And certainly the civil war in Ukraine and the growing Ebola crisis are not helping things either.  German investors are becoming increasingly jittery, and as I mentioned above the German stock market has already declined 10 percent since July

German stocks, weighed down by the economic fallout spawned by the Ukraine-Russia crisis and the eurzone’s weak economy, are now down more than 10% from their July peak and officially in correction territory.

The DAX, Germany’s benchmark stock index, has succumbed to recent data points that show the German economy has ground to a halt, hurt in large part by the economic sanctions levied at its major trading partner, Russia, by the U.S. and European Union as a way to get Moscow to butt out of Ukraine’s affairs. The economic slowdown in the rest of the debt-hobbled eurozone has also hurt the German economy, considered the economic locomotive of Europe.

In trading today, the DAX fell as low as 8960.43, which put it down 10.7% from its July 3 closing high of 10,029.43 and off nearly 11% from its June 20 intraday peak of 10,050.98.

And when you look at some of the biggest corporate names in Germany, things look even more dramatic.

Just check out some of these numbers

The hardest hit sectors have been retailers, industrials and leisure stocks with sports clothing giant Adidas down 37.7pc for the year, airline Lufthansa down 27pc, car group Volkswagen sliding 23.6pc and Deutchse Bank falling 20.2pc so far this year.

Meanwhile, things in Japan appear to be going from bad to worse.

The government of Japan is more than a quadrillion yen in debt, and it has been furiously printing money and debasing the yen in a desperate attempt to get the Japanese economy going again.

Unfortunately for them, it is simply not working.  The revised economic numbers for the second quarter were absolutely disastrous.  The following comes from a Japanese news source

On an annualized basis, the GDP contraction was 7.1 percent, compared with 6.8 percent in the preliminary estimate. That makes it the worst performance since early 2009, at the height of the global financial crisis.

The blow from the first stage of the sales tax hike in April extended into this quarter, with retail sales and household spending falling in July. The administration signaled last week that it is prepared to boost stimulus to help weather a second stage of the levy scheduled for October 2015.

Corporate capital investment dropped 5.1 percent from the previous quarter, more than double the initial estimate of 2.5 percent.

Private consumption was meanwhile revised to a 5.1 percent drop from the initial reading of 5 percent, meaning it sank 19 percent on an annualized basis from the previous quarter, rather than the initial estimate of 18.7 percent, Monday’s report said.

For the moment, things are looking pretty good in the United States.

But as I have written about so many times, our financial markets are perfectly primed for a fall.

Other experts see things the same way.  Just consider what John Hussman wrote recently…

As I did in 2000 and 2007, I feel obligated to state an expectation that only seems like a bizarre assertion because the financial memory is just as short as the popular understanding of valuation is superficial: I view the stock market as likely to lose more than half of its value from its recent high to its ultimate low in this market cycle.

At present, however, market conditions couple valuations that are more than double pre-bubble norms (on historically reliable measures) with clear deterioration in market internals and our measures of trend uniformity. None of these factors provide support for the market here. In my view, speculators are dancing without a floor.

And it isn’t just stocks that could potentially be on the verge of a massive decline.  The bond market is also experiencing an unprecedented bubble right now.  And when that bubble bursts, the carnage will be unbelievable.  This has become so obvious that even CNBC is talking about it…

Picture this: The bond market gets spooked by a sudden interest rate scare, sending a throng of buyers streaming toward the exits, only to find a dearth of buyers on the other side.

As a result, liquidity evaporates, yields soar, and the U.S. finds itself smack in the middle of another debt crisis no one saw coming.

It’s a scenario that TABB Group fixed income head Anthony J. Perrotta believes is not all that far-fetched, considering the market had what could be considered a sneak preview in May 2013. That was the “taper tantrum,” which saw yields spike and stocks sell off after then-Federal Reserve Chairman Ben Bernanke made remarks that the market construed as indicating rates would rise sooner than expected.

If the strength of our financial markets reflected overall strength in the U.S. economy there would not be nearly as much cause for concern.

But at this point our financial markets have become completely and totally divorced from economic reality.

The truth is that our economic fundamentals continue to decay.  In fact, the IMF says that China now has the largest economy on the planet on a purchasing power basis.  The era of American economic dominance is ending.  It is just that the financial markets have not gotten the memo yet.

Hopefully we still have at least a few more months before stock markets all over the world start crashing.  But remember, we are entering the seventh year of the seven year cycle of economic crashes that so many people are talking about these days.  And we are definitely primed for a global financial collapse.

Sadly, most people did not see the crash of 2008 coming, and most people will not see the next one coming either.

Volcanoes, Earthquakes, Arctic Oil and Hong Kong Riots

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http://cdn.pjmedia.com/lifestyle/files/2013/09/duck-and-cover-drill.jpg…I’ll start today’s Rant with a personal story, we got a 6.2 magnitude Quake in Willow a couple of days ago, just about 80 miles or so from where I am located, which was the cause of much excitement and conversation around here, but very little in the way of damage. Preppers may have lost a few Pickle Jars off the shelves and a few paintings may have dropped off some walls, but not much more than that.

Still, it was the biggest Quake here since I moved to Alaska, and you definitely felt it. The cabin did some nice shaking for around 30 seconds or so. Kidz were in skule, and they got the opportunity to do a Duck & Cover Drill under their desks. There was enough time while it was going on for me to think, “Is this gonna get bigger? How long will it go?” Then it stopped.

For me, it gave me my first physical Benchmark feeling for what 6 on the Richter Scale feels like. It’s a logarithmic scale, so a 7 is 10X as severe, 8 100x etc. Anchorage did experience one of the few 9s ever recorded, a 9.2 in 1964, that is 1000X the 6 we just got. Yowza.

10X definitely would have caused damage in the cabin, and 100X would have brought it down for sure. 1000X is overkill here…

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West Isolating Itself with Sanctions Against Russia

Off the keyboard of Anthony Cartalucci

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Published on Land Destroyer on July 30, 2014

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July 30, 2014 (Tony Cartalucci – NEO) – Citing the downing of Malaysia Airlines flight MH17 as impetus, US President Barack Obama announced stronger sanctions against Russia leveled by both the US and EU. This comes after previous sanctions implemented before the downing of MH17 failed to garner support across Europe, leaving the US measures politically and economically impotent. In the wake of American sanctions, pundits, politicians, and corporate-lobbyists decried Europe’s desire to continue doing business with Russia, claiming US sanctions alone would only hurt US corporations leaving a void gladly filled by Europe and others. 

MH17 – The Convenient Impetus 

With the “serendipitous” downing of MH17, this geopolitical calculus changed abruptly, and US President Barack Obama, even while admitting investigations were ongoing, invoked the tragedy to justify both the pressure put on Europe to finally impose stronger sanctions against Russia, but also as a means to sell the decision to a public targeted by weeks of baseless anti-Russian propaganda 

Clearly MH17 is being exploited, and especially so since investigations are still under way and no conclusions – or even preliminary results – have been announced. At face value, the West exposes itself as shameless opportunists leveraging human misery to advance their geopolitical ambitions. But Washington, London, and Brussels’ actions also raise serious suspicion over their possible role in the downing of the aircraft. While evidence is forthcoming, a motive for the West to have shot the aircraft down and blame Russia has been demonstrably established. 

Despite the “convenience” of the MH17 tragedy and the expediency with which the West has exploited it, this latest attempt to ram through ineffectual sanctions indicate increased desperation from Washington, London, and Brussels, not a renewed initiative in Ukraine, or against Russia as a whole. 


Sanctions Don’t Work

Sanctions haven’t worked against nations many times smaller and economically weaker than Russia, and they won’t work against Russia. In fact, the sanctions will instead motivate Moscow to build stronger ties elsewhere, as well as become stronger internally. Many of the sanctions will not even bite for years to come – if ever. Europe was initially reluctant to level sanctions against Russia, not because of any particular affinity for Moscow, but because they would suffer economically as a result of implementing them. Western think-tanks bemoaned Europe’s insistence that the “pain” be shared equally – pain the sanctions were surely to cause all those who agreed to them. 

It took the shameless political exploitation of a tragedy to twist Europe’s collective arms into agreeing to the measures now being taken, measures that will immediately begin effecting European nations dependent on long-standing economic ties with Russia and ties that cannot be easily replaced.

Japan likewise, citing nothing other than a desire to “cooperate with G7,” issued new sanctions against Russia – Japan also being a nation that cannot afford narrowing prospects for its declining economy.

ITAR-TASS News Agency in an article titled, “Japan prepares to impose new sanctions on Russia,” stated:

“Japanese government is preparing to impose new sanctions on Russia, Japanese Chief Cabinet Secretary Yoshihide Suga told a news conference on Wednesday.

“We are preparing to take additional measures, including freezing of bank accounts. We intend to give a proper response with an emphasis on co-operation with G7 partners,” Suga said.

Russia responded by pointing out Japan’s inability to establish independent foreign policy of its own and instead pursue self-destructive edicts dictated by Washington. Indeed, what the West is doing is isolating itself from a growing mulipolar world that refuses to recognize or remain beholden to a waning unipolar international order centered around Wall Street and London. While the US, EU, and Japan constitute immense economies, technology and progress elsewhere has led to emerging economies that have the potential to eclipse them all. In China alone, Russia has been looking to hedge economic risk by developing ties with the growing nation.

Despite attempts to disrupt growing Russian-Chinese relations through terrorism and political subversion, sanctions against Russia and continued belligerence as part of the West’s “pivot to Asia” serve only to drive these two emerging powers closer together.

The Myth of Ukrainian Self-Determination 

In addition to citing MH17 as grounds for leveling new sanctions, Obama also claimed that Ukraine had a right to determine its own destiny and therefore continued interference from Russia could not be tolerated. This betrays the true genesis of the current Ukrainian conflict. The current regime occupying Kiev was installed by NATO to serve EU interests – with US Senator John McCain whose National Endowment for Democracy (NED) subsidiary, the International Republican Institute (IRI) funded the various fronts that led and supported the 2013-2014 “Euromaidan” mobs, literally taking to the stage during the protests to offer support for the Neo-Nazi Svoboda Party in Kiev

What the US means to say is Russia’s interference with NATO’s plans to subvert, overthrow, and replace political orders along Russia’s borders with belligerent NATO proxies will not be tolerated – a similar scenario that played out along Russia’s borders when Adolf Hitler’s Nazis likewise carried out a regional campaign of covert and outright military aggression ultimately aimed at Moscow itself.    

Rush to War? 

Provocations against Russia are increasing, as is the rhetoric to attempt to sell some sort of wider confrontation between NATO and Russia. Unfortunately for the West, sanctions, grisly disasters they “serendipitously” stood to benefit from but can’t, and even attempting to wind up their respective populations for a military confrontation with nuclear-armed Russia appear only as “bad, worse, and the worst” of all possible options. 
Analysts fear growing desperation from the West who can neither move forward, nor retreat, will resort to increasingly desperate and destructive tactics to change the tide in Ukraine, and against Russia and the growing multipolar order it represents. But when sanctions and what appears to have been a false flag attack have failed utterly, what is left besides war? However, even war is an untenable prospect for the West – that while feasible and likely to catch most off guard as an opinion not considered to be on the table – it is a prospect that could initially succeed but ultimately backfire just as Hitler’s invasion of the Soviet Union did during World War II. 

But when it’s not the money or the blood of the special interests driving this confrontation with Russia being spent, what does the West have to lose by trying?  Russia will have to continue being smart, patient, prudent, and let the West’s ill-intents destroy itself. No matter how weak or desperate the West may appear throughout was appears to be irreversible decline, the one mistake to be made would be underestimating what Washington, London, and Brussels could do in their death throes. From theaters along Russia’s immediate peripheries, to interests across the Middle East and North Africa – Syria included – maximum vigilance is required to guard against the vindictive spite of an antiquated, dying international order.

Fukushima: The Gift that Keeps on Giving

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Fukushima-Simpson…Topic for today is the Disaster Gift that keeps on Giving, Fukushima. You may not remember this since it long ago dropped off the pages of the MSM and Faux Newz, but Fukushima was the Nip Nuke Reactors that melted down, caught on fire and began spewing radioactive material out into the environment back in 2011 in the aftermath of Sendai quake and ensuing Tsunami that hit the coast of Honshu Island smack dab in the Fukushima prefecture.. The latest newz from the Tokyo Electric Power Company, aka TEPCO is that so solly, we will need to start dumping 100 tons of radioactive water into the Pacific every day. However, we ASSURE you the radiation level of this water is perfectly safe. The reason we can assure you of that is because every time the readings go higher, we declare higher levels to be safe!

Da Goobermint here in the FsoA follows much the same path, in this case though rather than keep raising the bar on what is an acceptable level of daily Radiation Vitamins to ingest, they simply elect not to monitor it! On the theory that if you don;t know about it, it can’t hurt you. Not to mention when leukemia victims start suing, they can claim this wasn’t under their jurisdiction and therefore they are not liable. Go sue TEPCO…

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WWIII BEGINS!

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…Whatever happenned to the Good Old Days, when a World War got underway the POTUS would get on the radio and make a rousing speech Declaring War, the Congress would back him up and they start sending out the Draft Tickets?

Nowadays when the whole WORLD goes to war, nobody mentions it and after one or two articles it gets shuffled to the back pages of the MSM.

Newz for today is that the Thai Army has declared Martial Law because Thailand hasn’t had a working Goobermint for 6 months. Nobody has a working Goobermint right now, the FSoA Goobermint has been completely dysfunctional for at least 5 years…

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Good News, Bad News

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Published on Economic Undertow on January 22, 2014

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The World holds its breath …

… as we wait to see what kind of beating we are going to absorb from ourselves. After a season of ‘happy talk’ there are now voices of discontent; it seems there are consequences to our actions and we must face them … at least some of us (Telegraph):

 

‘Fatal spiral’ of fiscal crises threatens global economy in 2014Ballooning debt levels in advanced economies pose biggest threat to the global economy, World Economic Forum report warnsFiscal crises triggered by ballooning debt levels in advanced economies pose the biggest threat to the global economy in 2014, a report by the World Economic Forum has warned.Szu Ping ChanFiscal crises triggered by ballooning debt levels in advanced economies pose the biggest threat to the global economy in 2014, a report by the World Economic Forum has warned.Ahead of next week’s WEF annual meeting in Davos, Switzerland, the forum’s annual assessment of global dangers said high levels of debt in advanced economies, including Japan and America, could lead to an investor backlash.

This would create a “vicious cycle” of ballooning interest payments, rising debt piles and investor doubt that would force interest rates up further.

 

Funny, seems like two weeks ago we were all hearing about how everything was coming up roses; there was a return to ‘growth’ in the Europe, more ‘growth’ in the emerging markets, how well Japan’s ‘growth’ was responding to Abenomics, how the US was ‘growing’ (like a cancerous tumor) so well that the US central bank could rein in its easy-credit regime. Now, out of the blue, it’s a ‘Fatal Spiral’ of bad news, (Bloomberg-Businessweek):

 

Is China facing the prospect of a financial meltdown? That’s a question gaining new urgency as its economy decelerates: Growth in the second quarter came in at 7.5 percent, its second consecutive decline. Total debt now amounts to more than $17 trillion, or an astonishing 210 percent of gross domestic product, up 50 percentage points from four years ago, estimates Wang Tao, chief China economist at UBS Securities .The scale of the problem suggests the worries are well founded. Take China’s highly leveraged corporate sector. Company debt reached 113 percent of GDP at the end of 2012, up from 86 percent in 2008, when the country’s leadership directed banks to open their lending spigots during the financial crisis, estimates Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong. Making matters worse, the biggest company borrowers—state-owned enterprises in heavy industries like steel, aluminum, solar, and ship-building—are now saddled with overcapacity funded by the easy credit.A significant portion of new lending is going towards paying interest on old loans, according to UBS’s Wang. “Manufacturers facing oversupply issues will be the most likely source of new non-performing loans for banks this year,” says Liao Qiang, director of ratings for financial institutions at Standard & Poor’s. “And next year banks will see growing pressure, from [stressed] property developers, construction companies, and local government borrowers.”

 

This is from an article that says that China won’t crash. There are more recent articles in Bloomberg suggesting that China will indeed crash … and it will be spectacular! Here is the good news:

 

… With its high personal savings and $1.7 trillion in net foreign assets, China has ample resources to bail out banks and ailing industries. Kuijs figures that even under a “severe stress” scenario, where one-third of loans went bad, the cost of a rescue would push up government debt by only seven percentage points, to a still-manageable 60 percent …

 

Then again … maybe not. The ‘high personal savings’ and ‘net foreign assets’ are chimeras. The savers won’t voluntarily commit their funds to bail out decrepit companies … that are owned and operated by greedy cronies of the corrupt leadership. The funds will have to be committed for them — or from them — involuntarily.

All of this will be for the good of the country, of course.

At the same time, the foreign assets are simply claims on funds already pledged elsewhere … as vendor financing for continuing rounds of exports, for instance. China can indeed bail out its firms with its ‘reserves’ but only by starving the firms’ customers of credit at the same time. This will be a neat trick if they can pull it off; in a crisis there is far more likely be a depositor stampede out of Chinese banks. From here, ‘Rescue’ 营救 looks a lot like ‘Bail-in’ 在保释.

In a crisis, China managers would have to make a lot of very precise moves at the drop of a hat. Policy errors are inevitable because China has a) not been in a serious economic crisis since its modernization began, and, b) the managers believe a crash is impossible due to the farsighted wisdom (arrogance) of the Chinese Communist Party leadership. Because few managers have any crisis experience, few will know what to do. Bosses will be unreachable — or they will simply not answer the phone. Other bosses will stuff what liquid assets they can grab onto planes and fly out of the country … to follow (too late) on the heels of the others who have already fled. The markets will be overrun with wild rumors; bad news. Chinese investors will be revealed as market fools. The tide would run out and everyone will be naked … more bad news!

Unlike 2008, the Chinese government cannot simply order banks to lend; they look to have lent far too much already. It is the same in the West, the banks are lending as much as they dare, albeit to themselves and each other; the central banks are already committed. In a crisis there is little more any of them can do, there is no ‘Plan B’.

Meanwhile, the US military warns of energy instability while an industry insider warns of a peak-oil driven recession, (Guardian, UK):

 

At a lecture on ‘Geohazards’ earlier this month as part of the postgraduate Natural Hazards for Insurers course at University College London, Dr. Richard G. Miller, who worked for BP from 1985 before retiring in 2008, said that official data from the International Energy Agency, US Energy Information Administration, International Monetary Fund, among other sources, showed that conventional oil had most likely peaked around 2008.Dr. Miller critiqued the official industry line that global reserves will last 53 years at current rates of consumption, pointing out that “peaking is the result of declining production rates, not declining reserves.” Despite new discoveries and increasing reliance on unconventional oil and gas, 37 countries are already post-peak, and global oil production is declining at about 4.1% per year, or 3.5 million barrels a day (b/d) per year:

“We need new production equal to a new Saudi Arabia every 3 to 4 years to maintain and grow supply… New discoveries have not matched consumption since 1986. We are drawing down on our reserves, even though reserves are apparently climbing every year. Reserves are growing due to better technology in old fields, raising the amount we can recover – but production is still falling at 4.1% per annum.”

 

Gloom-and-doom; this comes on the heels of British Petroleum telling us that everything is going to be alright (2013 World Energy Outlook):

 

Last year’s edition led the way in showing how North America is likely to become self- sufficient in energy. This year’s edition follows up by examining more closely the phenomenon which is driving America’s energy revival, the revolution in shale gas and tight oil, including its global prospects.

 

Sadly, the good news is made up of advertising slogans: “North America is likely to become …” that must include Mexico and Canada and “self-sufficient” must include coal, nuclear, hydro and natural gas. Yet the implication is that the sufficiency is the outcome of drilling for oil and gas. The average reader would just stumble across that good news and stop thinking. For BP, good news = customer stupidity … that is bad news for the rest of us.

More bad news masquerading as good news, (Falls Church News Press):

 

The Peak Oil Crisis: Hydrinos In Your Future?By Tom WhippleIn recent months I have written about the progress being made in “cold fusion” which is short hand for a third way to extract energy from the forces binding atoms together. Some who are familiar with the details of what has been going on appreciate that we are nearly over denying that cold fusion is real as at least three companies have mastered the technology at lab bench level and are working on commercial-scale hydrogen powered devices that hopefully will one day replace fossil fuels as a source of energy for heat, electricity, and transportation.The Italian developer Rossi seems to have linked up with a North Carolina company that not only is supplying the cash he needs to develop a marketable product, but apparently has made contacts to develop the technology in China.The California company Brillouin was recently the subject of a series of videos detailing the current state of development of the prototype commercial boiler it is developing along with SRI to replace fossil fuels as the source of heat in electric power stations.

 

It’s a sign of something imminent when otherwise hard-headed analysts fall for perpetual motion machines scams, just like it is when stock market bears become raging bulls … then again, maybe not! A looming energy shortage is fertile ground for pump-and-dump swindles like fracking, electric car manufacture, Thorium power research as well as old-fashioned nuclear fusion. All of these have proven to be excellent investment (sucking) opportunities to the tune of tens-of billions of dollars, euros and whatnot in subsidies, tax credits, grants and share offers. That’s very good news indeed, for entrepreneurs (thieves) and innovators (more thieves).

Electric cars are inexpensive only when there are very few of them, when there is no excess demand for grid electricity. Adding enough battery cars to affect petroleum market would push electric rates much higher, to the point of equilibrium between electricity and liquid fuels. Any successful car would have to scale, meaning a substantial percentage of today’s 280 million vehicles on US roads would have to be replaced with electrics. Millions of electric cars would require very many more power stations and high-tension transmission lines, more substations and transformers, more fuel to consume — presumably coal — all of these would have to be paid/borrowed for. There would be the cars themselves plus their batteries and the battery material as well as the continued cost of operating the existing liquid fuel powered fleet. There is nothing about this that screams, ‘Bargain’, yet it must be so! Otherwise nobody will choose the electrics. For there to be a bargain = subsidies. Yet, the cost of subsidies for the auto industry to date is what is bankrupting entire countries. This is indeed bad news, there is no way around it.

There is little in the way of a practical Thorium reactor other than design and research. A functioning Thorium power station is certain to arrive the same time as one that runs on nuclear fusion … forty years from now. What is visible is the non-stop hype for these things. Nobody discusses how these reactors are supposed to be paid for. The current fleet of fairly straightforward fission reactors is a finance-and fiscal black hole. Anything less than operational perfection is ruinous … and this is with massive government subsidies.

There is little difference between today’s energy gambles and Internet stock debacles such as Pets.com. Look for variations on ‘thorium.com’, ‘fusion.com’, ‘teslamotors.com’, all swathed in ‘good news’ which is actually a trap, bad news for the gullible. As for ‘fusion in a bottle’ … it’s nonsense, not worthy of discussion.

Here is more good news that is really bad news … if it occurs, (Telegraph):

 

Coming ‘oil glut’ may push global economy into deflationAmbrose Evans-PritchardOne piece of the jigsaw puzzle is missing to complete the deflation landscape across the West: a slide in oil prices. This is becoming more likely each month.Turmoil across the Middle East and parts of Africa has choked supply over the past two years, keeping Brent crude near $110 a barrel despite a broader commodity slump. Cotton and corn prices have halved, as has the UBS index of industrial metals. Such anomalies rarely last.“We estimate that crude oil is now the mostly richly priced commodity in the world,” says Deutsche Bank in a fresh report.Michael Lewis, the bank’s commodity strategist, said markets face an “new oil supply glut” as three forces combine. US shale will add 1 million barrels per day to global supply for the third year running; Libya will crank up shipments after a near collapse in 2013; and Iran will come out of hibernation. “This will push OPEC spare capacity to levels last seen in the depths of the financial crisis in 2009,” he said.

 

In this case good news is also bad news as the good news will produce a not-so-good outcome …

 

A sudden slide in oil prices against this background may not be entirely benign. While it will boost spending power in the US and Europe, we also know from academic studies that oil shocks are asymmetric at first.The losers take an immediate hit, and that will be Bahrain, Nigeria and Algeria with a “fiscal break-even point” above $120, Russia at $117 and Venezuela at $110, among others. Some will face crises.The winners in Europe, America and Japan will enjoy slower and less concentrated gains. It is, in any case, double-edged. The risk is that it will “unhinge” inflation expectations as the headline rate keeps dropping. Half of Europe already has one foot in deflation, with prices falling over the past five months once austerity taxes are stripped out. Any shock at this point could start to frighten the horses.Albert Edwards, from Societe Generale, said investors are strangely nonchalant about the deflation risk, seemingly taking it for granted that there is no risk of recession and that central banks can and will bail out equities. “They do not seem to care that they are sitting on the edge of a cliff. They believe with all their heart that we are at the start of a self-sustained recovery,” he said.

 

Investors are just like the Chinese, believing in the wisdom and omnipotence of managers. Deflation appears as much to be the outcome of US strategy to export disruption in order to import consumption. The US will have its glut at the expense of the rest of the world. At the same time, there can be no good outcomes for the United States from a Chinese recession. Cheap gasoline is not useful for those without jobs:

fredgraph-capy-util

Figure 1: More good news: build it and they won’t come: the relentless southbound march of US industrial capacity utilization, (St Louis Federal Reserve, click on for big). The trend has been nobody’s friend since 1966. This is what tens of trillions of dollars of debt over the past forty years has paid for; less with which to build anything.

It takes a stout heart to peer for a long time into the void and to carefully draw outlines of the beasts within. Yet, this is exactly what managers are supposed to do, that is their job, to anticipate difficulties, to discuss them like grown ups then agree what to do … Right now the managers pretend everything is fine, they talk their books, they invent fairy tails while whistling past the graveyard. They leave their duties undone, examinations and warnings are left to amateurs who lack the standing within society to affect any positive changes. The fault resides within both public- and private sectors. The governments have punted, there is no leadership; the politically easy way is the only way. The private sector lays blame on the government in advance of being caught out as the result of their own ineptitude. Business proprietors seem universally bent on fleecing their companies and flying away with the loot. They have insulated themselves from the consequences of their own mismanagement, they are rewarded whether their companies stand or fall. It is left to the customers — who are coincidentally firms’ workers — to bear the costs.

We need better management, we need to start facing our problems rather than hoping that Thorium or Chinese savers can bail us out. There are strategies for dealing piecemeal with large problems … those that have ballooned due to our own negligence. None is really that hard …

 

– Implement a world-wide moratorium on road- and highway building. This is yet another easy fix that is cost free, both it and the moratorium on logging are easily enforced by way of satellite surveillance. A parallel step is to eliminate World Bank subsidies for logging, road building, dam building and other environmentally destructive policies that also produce climate gases or reduce the ability of the biosphere to sequester carbon.– Electrify railroads and increase both freight and passenger capacity.– Ban land-grabbing in undeveloped countries by 3d parties. Much of the so-called ‘new’ farm land becomes biofuel plantations, cash crop industrial monocultures that produce climate gases.- Provide incentives — pay people — not to consume energy or other resources, not to have children, not to own or drive cars. Subsidizing the non-purchase of autos provides a direct capital return on investment that remains with the recipient. Subsidizing resource consumption leaves the consumer without the resource … without the subsidy either. He’s older … and poorer even if his consumption suggests otherwise.

This was just a small part of a long list of low-cost, non-controversial steps that could be taken to rein in climate change. The step-by-step approach would work with our other ‘issues’. Taking any steps at all would be good news.

We really don’t have a money problem, per se. Money is the embodiment of certain specific sets of rules, these rules can be changed, certainly to meet new challenges such as those we face right now. We can change money rules then solve money problems, afterward we can invent a more rational regime regarding resource capital. Money is important because it is the instrument by which we destroy capital. This must change or else: money must become the means to husband capital and improve it wherever we can. Those who have responsibility over capital much be given the incentive to conserve it; so that money is used to save capital rather than destroy it.

Ides of December

Off the keyboard of Steve from Virginia

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Published on Economic Undertow on December 31, 2013

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The future is always obscure to us. We see it after it emerges in the past … any troubles the future bears become apparent only long after it is possible to do something about them.

This is the time of year when there is a blizzard of predictions. Most of these turn out to be wrong:

(Posted last year) “One thing to keep in mind, the world’s central banks are fully committed already. If/when there is a deleveraging event, there is little more that the central banks can do other than lend from their discount windows. Administrative interest rates are nearly zero in the US, Japan, the EU and in UK. They cannot be lowered further. Also, Japan, US, EU and UK central banks are now credit providers for both governments and large sectors of their respective economies. The (small) incentives the private sector had to lend have disappeared. It also means that promissory notes/IOUs for loans made in the past — which are the collateral for the central banks’ loans — are in diminishing supply. The central banks can lend additional amounts to governments and the private sector, but the positive shock of such lending is diminished and the danger of central banks making unsecured loans increases.

Unsecured lending by the central bank is a danger because leverage is the reason why the commercial lenders have failed in the first place. When the central banks take on all the private sector unsecured loans or they offer their own loans in excess of collateral they become super-sized, insolvent commercial lenders. The consequence is no effective lenders of last resort. Depositors look to remove funds from banking system which in turn accelerates system insolvency. Nobody wants to be caught where the only effective collateral is deposits (currency) and where claims against currency exceed it.”

This isn’t a prediction but an observation. It is always true …

Will central banks be tested in 2013? Maybe not but that certainly does not mean clear sailing.

Not quite a prediction but central banks were indeed tested in 2013. They had little choice but to retreat as their open-market operations reached the limits of usefulness or offered diminished returns.

– In 2013, look for the ongoing bank/deposit runs underway in Europe to accelerate and for Spain and Greece to default (Greece is already in Selective Default according to the Standard and Poors rating agency). The depositor runs indicate that central bank has been making unsecured loans and that system is insolvent rather than individual banks.

Only partially correct. There was a great ‘silent run’ out of the euro system toward US stock market. Ditto runs out of Japan and China.

– In a shocker, look for the French government to seek an IMF-EU bailout.

Incorrect … France was able to continue to borrow from the private sector and avoid bankruptcy proceedings.

– France’s automobile- and banking sectors will collapse in 2013.

Incorrect. These French industries are under tremendous strain.

– EU fuel consumption will decline sharply in 2013. Regardless of the price for fuel in Europe, it will be too high.
Screen Shot 2013-12-31 at 9.36.44 AM
This is certainly correct and will be reflected in the next year’s BP Statistical Review (Mazama Science).

– German auto production and sales will also decline … perhaps not as sharply as makers in other western European countries … as Chinese and US car buyers vanish.

Not quite correct. Americans stepped up and bought more cars and trucks, so did the Chinese. This offset tepid sales in the EU.

– Look for auto sales, registrations and production to decline in western Europe while Eastern European manufacturers will continue to hold steady or decline more slowly than their western counterparts. The eastern European manufacturers have a wage advantage over the counterparts and a local market that has not been completely saturated. Furthermore, these manufacturers are not dependent upon sales to China (Germany) or the US (Japan) or to southern European countries such as Spain and Greece … as are the car makers in France and Italy.

Not quite correct. Europeans did not buy as many cars as the ‘recovery’ in Europe has been confined to the well-off and finance markets. However, access to China and US markets was a life saver for automakers during 2013.

– As long as the European Central Bank lends there will be no pressure for any country to leave the euro-zone and (re)introduce their own currency. However, if any one country abandons the euro, all of them will be effectively gone as Germany will be the second country out the door. Europe’s liabilities are currently the shared burden of the ‘EU’ but will be effectively lodged against Germany if the EU cracks … Germany is one of the few countries in Europe with any money. The Germans will not invest it in European ‘solidarity’ that no longer exists.

Correct. The ECB continued to lend although credit multipliers have collapsed across Europe creating both a liquidity trap and dire, delfationary conditions in the countries across the South.

– Look for the politics in Europe to become more conflicted as the governments endeavor to restart chimeric ‘sustainable’ growth and fail miserably. The economic problems on the Continent can only be solved by stringent conservation, not attempts to waste more resources, faster. Europe cannot afford the resources.

Correct. Notable is the increase of neo-Nazi parties across Europe, generally blaming immigrants and non-nationals for economic problems.

– Angela Merkel will easily win her re-election bid as the main opposition party is unable to find a candidate who can pass the sniff test. Merkel will remain in charge even if the Eurozone falters and Germany exits.

Correct.

– Segments of the populations of Spain, France, Greece, UK and in many eastern European countries will descend further into poverty, with food- and fuel shortages and homelessness.

Correct. The segment of EU society that has not suffered is the ‘investor class’.

– Look for more weather ‘events’ in 2013 including more severe drought and flooding. The pressure on governments to ‘do something’ about climate change will increase … Europe, China and India will respond by burning more coal …

Correct. This has been the year of ‘super-smogs’ in China and India as well as destructive cyclones in India and Philippines. The establishment response has been denial … and burning more coal.

– Look for higher prices for grains due to bad weather. Humans have to buy and drive cars to keep economies alive. Humans have to buy and eat food to keep themselves alive: the marginal human will choose paying for food at any price … versus paying for expensive/useless cars.

It is hard to say whether this prediction is true or false. Bad weather affected consumers more than it did producers world-wide = less pressure on food prices.

– The US government will propose a minuscule carbon tax of $10 per ton along with a ‘cap and trade’ system that rewards energy speculators and big polluters.

Incorrect. The US government lied about energy and climate and did nothing else but subsidize the fossil fuel industry and give credence to climate change deniers.

– Look for at least two wide-area gasoline/fuel shortages occurring in the US as preludes to permanent shortages occurring in 2014. The prices needed to bring fuels to market are becoming unaffordable by rapidly impoverished Americans.

Also incorrect. Creeping poverty eliminating fuel consumers has kept US prices in check. So has the ‘Incredible fuel supply glut caused by fracking’ … What kept upward pressure on fuel prices was US purchases of goods from China and India with Wall Street credit; this in turn subsidized fuel waste in these countries.

– Look for fuel prices on spot and futures markets to generally decline (as customers continue to go broke).

Generally correct.

– Look for Japan’s Shinzo Abe government to fail over its pro-nuclear power policies. The nuclear industry is completely discredited in Japan, ‘Shinzo Abe 2.0′ will be a failure like the first version.

Incorrect. Abe hasn’t failed yet but the cracks are visible.

– Look for Japan to have a funding crisis next year: such a crisis has been predicted for the past twenty years but 2013 will be the year when the prediction becomes reality. The Bank of Japan will be unable to fund the government plus the country’s massive debts by itself. That the establishment cannot imagine a change from the current state of affairs indicates a change is imminent. The difference between next year and the past is Japan’s declining electronics industry and tepid car sales. The outcome is an decreasing foreign trade surplus, which has been the means by which Japan has financed itself.

Correct to some degree. Japan is being funded by its central bank-as-conduit for the private sector in the place of overseas customers. Japan is going broke, it just isn’t there yet.
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Figure 1: from the OECD, noting the secular decline in both the Japan auto industry and manufacturing in general. A business can borrow against its own account(s) such as credit lines or consumer credit (if an individual). A business can borrow against the accounts of its customers (when they borrow to buy the business’ products), against the accounts of the state (by direct credit subsidy, a tax benefit or by way of currency issue) and against the accounts of overseas customers (by way of foreign exchange). Japan has been able to borrow from foreign customers and undercut competitors: now the customers are broke or going.

Still correct.

– In light of the foregoing, Japan will do everything within its power to depreciate the yen to support its flagging car- and electronics industries’ exports: the Bank of Japan will lend without restraint.

Correct.

– The other major economic powers will attempt to depreciate their own currencies by offering more central bank loans. The biggest issue for 2013 is how long can the economies function when sole provision of credit is by central banks … and when there are no real lender(s) of last resort?

Correct. Attempts have been made but all have failed as the cost of money is outside the reach of central bankers, being set at the world’s gas pumps by millions of motorists buying fuel with money every single day.

– For this reason, gold prices will hold up relative to other commodities which will will tend to follow the price of crude oil.

Incorrect. Gold has been the sole collectible asset that behaves as an agricultural commodity.

– US Congress will not agree to tax increases by January 1, the sequestration process will take effect the following day. Thousands of Federal government employees are set to be furloughed as the Congress struggles to resolve related debt ceiling/revenue issues in a politically palatable way.

Correct, although sequestration has turned out to have only marginal effect on government spending.

– The US debt ceiling will be reached at the end of January (approximately) and the tedious discussion will take place regarding increasing US debt and by how much. The Congress will ultimately cobble together a can-kicking ‘solution’ that lifts the government’s debt ceiling while leaving the US debt burden largely unaltered. The debt is an unproductive claim against economic output … the debt can only be serviced by more borrowing. The US public sector deficit finances the private sector’s surplus. The US cannot increase output to effect the debt as increases are borrowed, the alternative to borrowing is default … the US economy is trapped.

Correct.

– Look for the Chinese economy to continue to unravel as its overseas customers find it difficult to borrow.

Correct. China faces a credit crunch in 2014.

– Look for more repressive measures in China as its downturn effects workers in cities rather than farmers losing property rights. There will be more riots and work stoppages followed by crackdowns.

Incorrect. The biggest problem in China in 2013 turned out to be air- and water pollution.

– There will be more business bankruptcies in China and capital flight as Chinese tycoons take whatever dollars they can find and run.

Correct about bankruptcies and correct about capital flight out of China.

– The Syrian government of Bashar al-Assad will fail with US-supported militant jihadis gaining ascendency. This in turn will give a reason for the US to intervene and destabilize the country further.

Incorrect. The war in Syria appears to be winding down as combatants run out of human- and other resources needed to continue.

– Look for Salafist consolidation in Egypt. That Salafi- and Shiite extremism are the only coherent, ongoing anti-modern enterprises reflects a world-wide failure of imagination.

Incorrect. Egypt has returned to military dictatorship and the Salafists have been crushed.

– As US military involvement decreases in Afghanistan, look for compensating increased involvement in Somalia, Yemen, Uganda, Kenya, Mali, Democratic Republic of Congo, Nigeria, southern Africa, Venezuela, Honduras, Bolivia and elsewhere.

Correct.

– Look for more diplomatic- and military crises in South China Sea between China, Vietnam, the Philippines and India; between China and Japan over the Sea of Japan; between Iran and the West in the Persian Gulf; between Russia, Norway and Canada over the Arctic Ocean. All of these disputes — plus US military operations in Africa — concern petroleum and mineral resource claims.

Correct. Look for more aggression in 2014 in these areas as well as in Central Asian republics and in Africa.

– Argentina will default in 2013.

Incorrect. Argentina did not default … but it will in 2014!

– Canada will have a banking crisis as the worth of real estate in areas of the country outside of Vancouver, BC, will plummet. The government will be forced to bail out its major banks.

Incorrect. Economic Undertow continually underestimates the ability of the establishment to prop up the status quo.

– Australia will likewise have a banking crisis due to declining real estate prices and an over-leveraged banking system.

Incorrect, see above.

– US real estate prices are now in a short-term quasi-bubble peak and will decline over the course of 2013.

Incorrect. The real estate ‘bubble’ is still inflating across the US. Higher interest rates and the absence of a shadow banking network are making short work of it.

– US natural gas prices will increase due to declining output in shale plays. The cause will be less drilling activity and declining prices for gas liquids and stock prices of gas drillers (New York Times):

“… while the gas rush has benefited most Americans, it’s been a money loser so far for many of the gas exploration companies and their tens of thousands of investors.”

 

Correct. There is a shake-out underway in the ‘gas patch’ as drillers switch to oil- and other liquids plays. Gas is uneconomical at current prices.

– The recent increase of US oil output will level off. This will be ‘a big shock’ to the public which has been promised increased production and lower prices. There will be declines in conventional oil fields to offset gains from tight-oil deposits. Any gains in high-priced export market will be more than offset by losses in domestic markets as customers cannot meet the higher world price.

This is hard to tell as good data is not available. The establishment will do whatever it can to avoid the truth about our energy situation.

– Russian petroleum production will continue to decline: keep in mind, the arc of Vladimir Putin’s political career has paralleled the output of Russian oil fields.

It is hard to say whether this is correct or not. Any changes in Russian Federation output are very small.

– Kurdistan will make a deal with arch-enemy Turkey to ship its oil and turn away from dealings with the Shiite Iraqi government. The Iraqi government lacks the military horsepower to have its way with the Kurds, the decline of petroleum revenue will weaken the Iraqi government further.

Correct.

– Israel will not attack Iran in 2013. The country cannot afford a major war because the Israeli’s sponsor America cannot afford one. At the same time, any significant petroleum shortage will be blamed on Middle Eastern suppliers, if a war is necessary to provide cover for politicians in Washington, one will be started.

Correct. The US has begun rapprochement with Iran antagonizing the Saudis and Israelis.

– The steady unraveling of the … economy will continue. Both bonds and stocks in the US will be largely unchanged over the course of the year, largely due to ‘capital’ flight from Europe and the Far East. Given large-scale central bank lending, the credit spreads for European sovereigns and the UK will narrow somewhat. Japan credit costs will climb as the need for credit will be greater than what the Bank of Japan can provide by itself.

Largely correct: citizens around the world became poorer as they exhausted their meager supplies of credit. Meanwhile, the US- and other bourses reached new, all-time highs. This was a consequence of ‘closed-loop’ lending by finance institutions to themselves to support stock Ponzi schemes. Credit spreads did indeed narrow in the EU but did not change in Japan.

– A wildcard would be gunmen shooting up a police station in the US instead of a school. Government would be exposed as vulnerable, the militarization of the police would be demonstrated to be a failure. Putting police into fortresses as a reaction would make them even less effective, would further isolate government police power. There is a reason for militant attacks on police stations overseas: they work.

Incorrect. Gunmen attacked the vulnerable, there was no political action to speak of other than the rise of extremist hard-liners and neo-Nazis in Europe and elsewhere.

– 2013 will be the year of the Marginal Human: among other things, Mr. and Ms. Marginal will have less purchasing power.

Correct. The decline of purchasing power on the part of ordinary citizens has been notable, with the exception of credit-driven purchases of new cars by Baby Boomers.

Only a little more than half-right with some ambiguity due to incomplete data or activities not yet fully ripened. The undercurrent of unraveling is plain to see behind the scrim of media-sphere happy-talk and propagandistic ‘Good News’. Everywhere, the can is being kicked … there is the taint of desperation in the air.

Coming up next: predictions for 2014!

The Oil Shell Game

Off the keyboard of RE

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Published on the Doomstead Diner on December 1, 2013

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No, not the Shell Oil Game.  Although the difference is sometimes hard to make out.

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Two very interesting pieces of Geopolitical Newz tonight, on another of those frustration filled occassions with the Diner Down, this time apparently due to a DDoS Attack.  NSA?  Disgruntled Diner Hacker?  Ruskie Spammers?  Who knows? Techies are changing the IP addy, and I am twiddling my thumbs waiting/hoping to get back up. So with nothing better to do, time to start another article!

First piece of interesting Newz is that finally after much Posturing on both sides, the Iranians have apparently capitulated and agreed to some type of halt to their Nuclear development program. In return for this, NATO supposedly will begin lifting the Sanctions that have been strangling the Iranian economy. Or have they?

http://www.awesomestories.com/images/user/107b7d5d54.gifIn theory here according to the Experts in the Biz, Iran coming back online will bring a lot of Oil back on the market, and will depress the prices back down below the $100/bbl mark, which would make Oil Importing countries very happy. However, was this Oil ever really OFF the market? Far as I know, the Chinese were still buying it regardless of NATO sanctions. They’ll likely still be buying it. The production wasn’t stockpiling up in Iranian Tanks, it was getting burned SOMEWHERE. So removing sanctions in and of itself doesn’t bring any NEW Oil to market.

The corollary idea that would bring new Oil online is that with the new Nuke Agreement, the Multinational Oil Companies will now feel SAFE enough to go back in and start dropping down more investment money to Ramp Up production. Well, maybe they will but anything they do start tomorrow will take quite some time to bring into production, even assuming you buy the idea they have a whole lot more wells they can drill and exploit.

Thing is here, neither of the possibilities does a whole lot to bolster the Iranian Economy.  If prices drop because of additional production from their end, actual revenue won’t increase, and may decrease. If prices stay high or go up, there will be more Demand Destruction in the Oil consumptive states and additional Oil will just glut the market, eventually causing it to crash again. Rinse and Repeat.

Similarly over in Ukraine where they have been playing both sides against the middle for a while now, in a semi-surprise move the Ukranians have climbed back into bed with Mother Russia, after splitting off from them when the Soviet Union Titanic sank. Like many othe Eastern European nations, they have been flirting with joining the EU for years, but apparently this inexorable March of Capitalism eastward has come to a halt. The EU is a Clusterfuck, Ukraine is just about outta money, so running back into the arms of Mother Russia seems like the wise course of action there. Who do they get the NG from to heat their homes after all? Not Brussels. Gazprom.

However, for similar reasons to Iran, Mother Russia herself is pretty Fooked here, because between Demand Destruction and the possibility of more Iranian Oil making it to market AND the Saudis maybe trying to put North American Shale plays outta biz, there seems to be a high likelihood of an Oil price DROP in the near future.

From Ambrose:

Goldman Sachs and Bank of America have both warned over recent days that crude prices will slide in 2014, much to the alarm of states that depend on oil to make ends meet. The “fiscal break-even point” needed to balance budgets is near $120 for Bahrain, Nigeria and Algeria, and $110 for Venezuela, and Iraq.

Oil duties furnish half the budget in Russia where the break-even price reached $117 last year. Moscow is tightening its belt but Fitch warns that it may downgrade the country if there is a prolonged fall in crude prices.

Even Saudi Arabia is feeling the pinch. It boosted spending by $130bn in 2011 to avert social protest, and its break-even cost has jumped to $98, though it still has $700bn of foreign reserves to be used in extremis. The implicit threat to dump US dollars is unusable at a time when monetary tightening by Washington is likely to drive up the dollar.

Mr Skrebowski said Riyadh may try to “rap America’s knuckles” by flooding markets with enough oil to puncture the US shale oil revolution. Production costs at the US Bakken shale field are around $80.

It is unclear whether the Saudis still have the spare capacity to pull off such a feat, or whether other Gulf OPEC producers would join forces in a replay of the Arab oil embargo of 1973. The Saudis have played a responsible role over recent decades as the swing force in global markets ensuring stability.

What should be apparent here is that a massive Shell Game is being played,  with two of the shells empty and one ball of Oil/Money being shifted around from one shell to the other, but you can never have all 3 shells filled up with Oil OR Money at the same time.  Price goes UP, the Industrial apparatus groans, companies and individuals go BK, Goobermint loses Tax Revenue.  Price goes DOWN, Oil producing economies are starved for revenue and expensive Oil Production facilities get shut in as unprofitable.  You cannot win in aggregate, in the simple Shell Game, 2 out of 3 Shells are SOL.  For today, you can call the current Shells SOL “Greece” and “Spain” on the most obvious level in the West, but in reality this Shell Game encompasses hundreds if not thousands of shells, which include Nation-States, TBTF Banks and Hedge Funds too.  There is only one little marble of energy/money here,  at the moment being shifted around by Supercomputers through High Frequency Trading (HFT), but still only one truly EXISTS.  Unlike Human Hands, super computers can move this around SOOO FAST it can fool any Human Eyeball, and that is what is occuring.

If on the HUMAN level you only Observe one “Crisis” at a time (call it “Cyprus” or “Ukraine” or “Iran”), but on the Computational Level you can shift around the focus far faster, you can make it SEEM like the Marble is under EVERY shell.  Turn up the Ukraine shell, and it appears the Ruskie Shell can save them.  The reality of course is that this marble that gets shifted around can’t really save ANYBODY, because during the whole game of shifting, said marble is constantly SHRINKING in size!  In REALITY, if the Ruskies can keep producing enough Oil and Gas just to keep Lights On in Moscow for a few more years this will be a challenge.

On top of all THAT Geopolitical Nonsense being played out here this week, the Chinese have decided to Flex Some Muscle not just on the Monetary side of this game, but now also on the Military end!  They have decided it is time to put the Thumbscrews to the Nips, who are seriously on the Ropes anyhow from Fukushima and dying Exports and claim some more Hegemony over their territory.

From Zero Hedge:

Following the to-ing and fro-ing of the last 2 days with US and Japan “testing” China’s new Air Defense Zone (ADIZ), China has not only escalated (as we noted earlier) but as the day begins in Asia is stepping up the rhetoric significantly. Official media said that Japan is the “prime target” and it is an “urgent task for China to further train its air force to make full preparation for potential conflicts.” Japanese lawmakers, meanwhile, are pushing for a bill “demanding an immediate withdrawal of China’s ADIZ.” While the Western world goes on its merry way buying S&P futures, China’s concluding message rings its most defint so far, “We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China.”

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

China’s official media pointedly said Friday that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.”

China’s declaration of its Air Defense Identification Zone (ADIZ), announced last week, has sparked strong resistance from Japan, the United States, South Korea and other neighboring Asian nations. The new zone partly overlaps those of South Korea and Japan.

The U.S. flew two B-52 bombers through the Chinese zone without informing China this week. South Korea and Japan followed suit. In response, China sent several fighter jets and an early warning aircraft on patrol Thursday into the disputed air space.

In an editorial titled “Japan prime target of ADIZ tussle,” the official Global Times newspaper said, “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ.”

If Tokyo flies its aircraft over the zone, we will be bound to send our planes to its ADIZ,” the editorial said.

“If the trend continues, there will likely be friction and confrontations and even tension in the air like in the Cold War era between the U.S. and the Soviet Union,” it said.

“It is therefore an urgent task for China to further train its air force to make full preparation for potential conflicts,” the editorial said.

“We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China,” it said.

Analysts said the Chinese declaration of air control zone is mainly aimed at bolstering its claims to a group of islets in the East China Sea at the center of a bitter territorial dispute with Japan, which are known as Diaoyu in China and Senkaku in Japan.

The Japanese are not backing down…

Via Kyodo News,

An official of Japan’s ruling Liberal Democratic Party is considering asking lawmakers to adopt a bill demanding an immediate withdrawal of China’s air defense zone in East China Sea

http://2.bp.blogspot.com/-kzv2JEPOBDw/UFlqOzALItI/AAAAAAAACUY/sHiVkEb7PmA/s1600/Japan-China-island-dispute-map-location.jpgNow, WTF do the Chinese give a damn about a few disputed Islands, and WTF do they feel it necessary here to Flex Muscle, overfly the area and send their brand new Aircraft Carrier steaming around the neighborhood?    Far as I know, there is no OIL on or around these disputed Islands though there is a Gas Field in the nabe, and do the Chinese REALLY want to take over Japan and all the liabilities of their Nukes?  Its an externalization of blame thing here, if they can make enough NOISE vis a vis the Japs, maybe the locals won’t notice they can’t BREATHE the air and have no decently clean water left to drink?

Already it has been demonstrated that even with the very BEST and most Technologically Superior Weaponry, NATO is unable to keep client states like Syria, Libya et al running here.   They can Bomb any of them back to the Stone Age, but they can’t get them producing more Oil no matter how many bombs they drop, in fact of course the more bombs they drop, the less Oil gets produced!  This makes CFS? NOT!

So why all the Saber Rattling here?  Basically because all of these societies, the Japanese, the Chinese, the North Koreans et al have their BACKS AGAINST THE WALL here.  Moreso even than the FSoA.  They are in the DEEP DOO DOO already here, and revving up the Military Option is all that is left here. The Chinese don’t HAVE further resources to exploit within their own borders.  The Japanese don’t HAVE further resources to exploit within theirs either.  If they cannot acquire resources through some type of trade, they HAVE to strike out. The only other option is to Peacefully Die Off, and generally speaking no society of Homo Sapiens will choose to do that.  Frankly no other species capable of striking out (all Predators) would do it either.

All the rest of the Geopolitics going on here is just Kabuki Theater.  None of the ongoing wars in MENA have anything to do with “Democracy”, which has always been a sham even inside the so-called “Democratic” countries of the 1st World.  It is all about resources, specifically fossil fuel energy resource.  Same Game in Ukraine, it has nothing to do with Ukrainians liking Ruskie rulers any more than they like Brussels Sprout Rulers.  Just at the moment, the Ruskies appear able to provide the ENERGY the Ukrainians NEED to keep an industrial lifestyle going, whereas all Brussels Sprouts have to offer is more Debt Money.

Far as the Chinese and Japanese go, they have Old Axes to Grind, and neither one has much in the way of Resource to get from the other.  In this battle, really Japan just serves as Proxy for the Power game being played between China and the FSoA, Creditor vs Debtor.  The Chinese in their typical stupidity loaned money they never had to Amerikans who could never pay it back.  Some people think this is Inscrutable Wisdom, IMHO it is Incredible Stupidity.  Now they can BUY THE WORLD with the Debt Money!  Except, too bad, nothing left worth buying here, and it will be damn difficult to hold onto anything you did buy on some other continent where other people are living.  So unless you propose to load up Troop Transport ships and physically take control of any of these spots, you can kiss your “investment” goodbye.

Of course, nobody likes getting left holding the Debt Bag, as the Chinese do.  As their society spins down, they will resort as Guido does to trying to use FORCE to squeeze Blood from a Stone.  There is no way they will be repaid, the best they can do is Repo all the Toys they sold us.  That is the PRODUCT of their years of Slave Labor.  Said toys mostly not Repoable now unless you wanna dig through the local Landfill.

http://images.nymag.com/news/features/freshkills081201_1_560.jpg

On the upside, the Big War with all the Big Toys won’t last long.  The carriers and frigates and troop ships will all go down to the bottom of Davey Jones Locker inside a few years, sunk mainly by much cheaper to build missiles.  Then the REAL fun begins internally in each of these places, as the survivors fight amongst themselves for what little is left on their patch of the Earth.

Barring Climatic or Nuke disturbance of significant level, SOMEBODIES will walk away from this conflict in some places.  Not many to be sure, but some.  Negotiating this shitstorm is the Challenge for the coming Generation.

RE

 

Trying to Stay Sane in an Insane World- At World’s End

Off the keyboard of Jim Quinn

Published on The Burning Platform on September 10, 2013

Cuckoos_Nest

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In the first three parts (Part 1, Part 2, Part 3) of this disheartening look back at a century of central banking, income taxing, military warring, energy depleting and political corrupting, I made a case for why we are in the midst of a financial, commercial, political, social and cultural collapse. In this final installment I’ll give my best estimate as to what happens next and it has a 100% probability of being wrong. There are so many variables involved that it is impossible to predict the exact path to our world’s end. Many people don’t want to hear about the intractable issues or the true reasons for our predicament. They want easy button solutions. They want someone or something to fix their problems. They pray for a technological miracle to save them from decades of irrational myopic decisions. As the domino-like collapse worsens, the feeble minded populace becomes more susceptible to the false promises of tyrants and psychopaths. There are a myriad of thugs, criminals, and autocrats in positions of power who are willing to exploit any means necessary to retain their wealth, power and control. The revelations of governmental malfeasance, un-Constitutional mass espionage of all citizens, and expansion of the Orwellian welfare/warfare surveillance state, from patriots like Julian Assange, Bradley Manning and Edward Snowden has proven beyond a doubt the corrupt establishment are zealously anxious to discard and stomp on the U.S. Constitution in their desire for authoritarian control over our society.

Anyone who denies we are in the midst of an ongoing Crisis that will lead to a collapse of the system as we know it is either a card carrying member of the corrupt establishment, dependent upon the oligarchs for their living, or just one of the willfully ignorant ostriches who choose to put their heads in the sand and hum the Star Spangled Banner as they choose obliviousness to awareness. Thinking is hard. Feeling and believing a storyline is easy.

 

A moral society must be inhabited by an informed, educated, aware populace and   governed by honorable leaders who oversee based upon the nation’s founding principles of liberty, freedom and limited government of, by and for the people. A moral society requires trust, honor, property rights, simple just laws, and the freedom to succeed or fail on your own merits. There is one major problem in creating a true moral society where liberty, freedom, trust, honor and free markets are cherished – human beings. We are a deeply flawed species who are prone to falling prey to the depravities of lust, gluttony, greed, sloth, wrath, envy and pride. Men have always been captivated by the false idols of dominion, power and wealth. The foibles of human nature haven’t changed over the course of history. This is why we have 80 to 100 year cycles driven by the same human strengths and shortcomings revealed throughout recorded history.

Empires rise and fall due to the humanness of their leaders and citizens. The great American Empire is no different. It was created a mere 224 years ago by courageous patriots who risked their wealth and their lives to create a Republic founded upon the principles of freedom, liberty, and the pursuit of happiness; took a dreadful wrong turn in 1913 with the creation of a privately held central bank to control its currency and introduction of an income tax; devolved into an empire after World War II, setting it on a course towards bankruptcy; sealed its fate in 1971 by unleashing power hungry psychopathic elitists to manipulate the monetary and fiscal policies of the nation to enrich themselves; and has now entered the final frenzied phase of pillaging, currency debasement, war mongering, and ransacking of civil liberties. Despite the frantic efforts of the financial elite, their politician puppets, and their media propaganda outlets, collapse of this aristocracy of the moneyed is a mathematical certainty. Faith in the system is rapidly diminishing, as the issuance of debt to create the appearance of growth has reached the point of diminishing returns.

 

Increase in Real GDP per Dollar of Incremental Debt

“At the root of America’s economic crisis lies a moral crisis: the decline of civic virtue among America’s political and economic elite. A society of markets, laws, and elections is not enough if the rich and powerful fail to behave with respect, honesty, and compassion toward the rest of society and toward the world.”Jeffrey Sachs

Five Stages of Collapse

The day of reckoning for a century of putting our faith in the wrong people with wrong ideas and evil intentions is upon us. Dmitry Orlov provides a blueprint for the collapse in his book The Five Stages of Collapse – Survivors’ Toolkit:

Stage 1: Financial Collapse. Faith in “business as usual” is lost. The future is no longer assumed to resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings wiped out and access to capital is lost.

Stage 2: Commercial Collapse. Faith that “the market shall provide” is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down and widespread shortages of survival necessities become the norm.

Stage 3: Political Collapse. Faith that “the government will take care of you” is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance.

Stage 4: Social Collapse. Faith that “your people will take care of you” is lost, as social institutions, be they charities or other groups that rush to fill the power vacuum, run out of resources or fail through internal conflict.

Stage 5: Cultural Collapse. Faith in the goodness of humanity is lost. People lose their capacity for “kindness, generosity, consideration, affection, honesty, hospitality, compassion, charity.” Families disband and compete as individuals for scarce resources. The new motto becomes “May you die today so that I can die tomorrow.”

The collapse is occurring in fits and starts. The stages of collapse do not necessarily have to occur in order.  You can recognize various elements of the first three stages in the United States today. Stage 1 commenced in September 2008 when this Crisis period was catalyzed by the disintegration of the worldwide financial system caused by Wall Street intentionally creating the largest control fraud in world history, with easy money provided by Greenspan/Bernanke, fraudulent mortgage products, fake appraisals, bribing rating agencies to provide AAA ratings to derivatives filled with feces, and having their puppets in the media and political arena provide the propaganda to herd the sheep into the slaughterhouse.

The American people neglected their civic duty to elect leaders who would tell them the truth and represent current and future generations equally. They have neglected the increasing lawlessness of Wall Street, K Street and the corporate suite. The American people have lived in denial about their responsibility for their own financial well-being, willingly delegating it to a government of math challenged politicians who promised trillions more than they could ever deliver. The American people have delayed tackling the dire issues confronting our nation, including: $200 trillion of unfunded liabilities, the military industrial complex creating wars across the globe, militarization of our local police forces, domestic spying on every citizen, allowing mega-corporations and the financial elite to turn our nation from savings based production to debt based consumption, and allowing corporations, the military industrial complex, Wall Street, and shadowy billionaires to pick and control our elected officials. The civic fabric of the country is being torn at the points of extreme vulnerability.

“At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where, during the Unraveling, America will have neglected, denied, or delayed needed action. Anger at “mistakes we made” will translate into calls for action, regardless of the heightened public risk. It is unlikely that the catalyst will worsen into a full-fledged catastrophe, since the nation will probably find a way to avert the initial danger and stabilize the situation for a while. Yet even if dire consequences are temporarily averted, America will have entered the Fourth Turning.”  – The Fourth Turning – Strauss & Howe – 1997

Our Brave New World controllers (bankers, politicians, corporate titans, media moguls, shadowy billionaires) were able to avert a full-fledged catastrophe in the fall of 2008 and spring of 2009 which would have put an end to their reign of destruction. To accept the rightful consequences of their foul actions was intolerable to these obscenely wealthy, despicable men. Their loathsome and vile solutions to a crisis they created have done nothing to relieve the pain and suffering of the average person, while further enriching them, as they continue to gorge on the dying carcass of a once thriving nation. Despite overwhelming public outrage, Congress did as they were instructed by their Wall Street masters and handed over $700 billion of taxpayer funds into Wall Street vaults, under the false threat of systematic collapse. The $800 billion of pork stimulus was injected directly into the veins of corporate campaign contributors. The $3 billion Cash for Clunkers scheme resulted in pumping taxpayer dollars into the government owned union car companies, while driving up the prices of used cars and hurting lower income folks.

Ben Bernanke has peddled the false paradigm of quantitative easing (code for printing money and airlifting it to Wall Street) as benefitting Main Street. Nothing could be further from the truth. He bought $1.3 trillion of toxic mortgage backed securities from his Wall Street owners. He has pumped a total of $2.8 trillion into the hands of Wall Street since September 2008, and is singlehandedly generating $5 billion of risk free profits for these deadbeats by paying them .25% on their reserves. Drug dealer Ben continues to pump $2.8 billion per day into the veins of Wall Street addicts and any hint of tapering the heroin causes the addicts to flail about. Ben should be so proud. He should hang a Mission Accomplished banner whenever he gives a speech. Bank profits reached an all-time record in the 2nd quarter, at $42.2 billion, with 80% of those profits going to the 2% Too Big To Trust Wall Street Mega-Goliath Banks. It’s enough to make a soon to retire, and take a Wall Street job, central banker smile.

“The money rate can, indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk. But it is a policy of continuous inflation. It is obviously a process involving cumulative danger. The money rate will rise and a crisis will develop if the inflation is reversed, or merely brought to a halt, or even continued at a diminished rate. Cheap money policies, in short, eventually bring about far more violent oscillations in business  than those they are designed to remedy or prevent.” Henry Hazlitt – 1946

Any serious minded person knew Wall Street had too much power, too much control, and too much influence in 2008 when they crashed our economic system. When something is too big to fail because it will create systematic collapse, you make it smaller. Instead we have allowed our sociopathic rulers to allow these parasitic institutions to get even larger. Just 12 mega-banks control 70% of all the banking assets in the country, with 90% controlled by the top 86 banks. There are approximately 8,000 financial institutions in this country. Wall Street will be congratulating themselves with record compensation of $127 billion and record bonuses of $23 billion for a job well done. It is dangerous work making journal entries relieving loan loss reserves, committing foreclosure fraud, marking your assets to unicorn, making deposits at the Fed, and counting on the Bernanke Put to keep stocks rising. During a supposed recovery from 2009 to 2011, average real income per household grew pitifully by 1.7%, but all the gains accrued to Bernanke’s minions. Top 1% incomes grew by 11.2% while bottom 99% incomes shrunk by 0.4%. Therefore, the top 1% captured 121% of the income gains in the first two years of the recovery. This warped trend has only accelerated since 2011.

The median household income has fallen by $2,400 to $52,100 since the government proclaimed the end of the recession in 2009. Real wages for real people continue to fall. A record 23.1 million households (20% of all households) are receiving food stamps. After four years of “recovery” propaganda, we are left with 2.2 million less people employed (5 million less full time jobs) and 22 million more people on SNAP and SSDI. A record 90.5 million working age Americans are not working, with labor participation at a 35 year low. Ben’s money has not trickled down, but his inflation has fallen like a load of bricks on the heads of the middle class. Bernanke’s QE to infinity constitutes a transfer of purchasing power away from the middle class to the bankers, mega-corporations and .1%. This Cantillon effect means that newly created money is neither distributed evenly nor simultaneously among the population. Some users of money profit from rising prices, and others suffer from them. This results in a transfer of wealth (a hidden tax) from later receivers to earlier receivers of new money. This is why the largest banks and largest corporations are generating the highest profits in history, while the average person sinks further into debt as their real income declines and real living expenses (energy, food, clothing, healthcare, tuition) rise.

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Ben works for your owners. Real GDP (using the fake government inflation adjustment) since July 2009 is up by a wretched 5.6%. Revenue growth of the biggest corporations in the world is up by a pathetic 12%. One might wonder how corporate profits could be at record levels with such doleful economic performance. One needs to look no further than Ben’s balance sheet, which has increased by 174%. There appears to be a slight correlation between Ben’s money printing and the 162% increase in the S&P 500 index. With the top 1% owning 42.1% of all financial assets (top .1% own most of this) and the bottom 80% owning only 4.7% of all financial assets, one can clearly see who benefits from QE to infinity.

The key take away from what the ruling class has done since 2008 is they have only temporarily delayed the endgame. Their self-serving exploits have guaranteed that round two of the financial collapse will be epic in proportion and intensity. This Fourth Turning Crisis is ongoing. The linear thinkers who control the levers of power keep promising a return to normalcy and resumption of growth. This is an impossibility – mathematically & socially. Fourth Turnings do not end without the existing social order being swept away in a tsunami of turmoil, violence, suffering and war. Orlov’s stages of collapse will likely occur during the remaining fifteen years of this Crisis. We are deep into Stage 1 as our national Detroitification progresses towards bankruptcy, with an added impetus from our trillion dollar wars of choice in the Middle East. Commercial collapse has begun, as faith in the fantasy of free market capitalism is waning. The race to the bottom with currency debasement around the globe is reaching a tipping point, and the true eternal currencies of gold and silver are being hoarded and shipped from the West to the Far East.

Monetary Base (billions of USD)

When the financial collapse reaches its crescendo, the just in time supply chain, that keeps cheese doodles and cheese whiz on your grocery store shelves, Chinese produced iGadgets in your local Wal-Mart Supercenter, and gasoline flowing out of gas station hoses into your leased Cadillac Escalade, will break down rapidly. The strain of $110 oil is already evident. The fireworks will really get going when ATM machines run dry and the EBT cards stop functioning. Within a week riots and panic will engulf the country.

“At some point we are bound to hear, from across two oceans, the shocking words “Your money is no good here.” Fast forward to a week later: banks are closed, ATMs are out of cash, supermarket shelves are bare and gas stations are starting to run out of fuel. And then something happens: the government announces they have formed a crisis task force, and will nationalize, recapitalize and reopen banks, restoring confidence. The banks reopen, under heavy guard, and thousands of people get arrested for attempting to withdraw their savings. Banks close, riots begin. Next, the government decides that, to jump-start commerce, it will honor deposit guarantees and simply hand out cash. They print and arrange for the cash to be handed out. Now everyone has plenty of cash, but there is still no food in the supermarkets or gasoline at the gas stations because by now the international supply chains have broken down and the delivery pipelines are empty.”  Dmitry Orlov – The Five Stages of Collapse

We are witnessing the beginning stages of political collapse. The government and its leaders are being discredited on a daily basis. The mismanagement of fiscal policy, foreign policy and domestic policy, along with the revelations of the NSA conducting mass surveillance against all Americans has led critical thinking Americans to question the legitimacy of the politicians running the show on behalf of the bankers, corporations and arms dealers. The Gestapo like tactics used by the government in Boston was an early warning sign of what is to come. Government entitlement promises will vaporize, as they did in Detroit, with pension promises worth only ten cents on the dollar. Total social and cultural collapse could resemble the chaotic civil war scenarios playing out in Libya and Syria. The best case scenario would be for a collapse similar to the Soviet Union’s relatively peaceful disintegration into impotent republics. I don’t believe we’ll be this fortunate. The most powerful military empire in world history will not fade away. It will go out in a blaze of glory with a currency collapse, hyper-inflation, and war on a grand scale.

“History offers even more sobering warnings: Armed confrontation usually occurs around the climax of Crisis. If there is confrontation, it is likely to lead to war. This could be any kind of war – class war, sectional war, war against global anarchists or terrorists, or superpower war. If there is war, it is likely to culminate in total war, fought until the losing side has been rendered nil – its will broken, territory taken, and leaders captured.”The Fourth Turning – Strauss & Howe – 1997

In Whom Do You Trust?

“Use of money concentrates trust in a single central authority – the central bank – and, over extended periods of time, central banks always tend to misbehave. Eventually the “print” button on the central banker’s emergency console becomes stuck in the depressed position, flooding the world with worthless notes. People trust that money will remain a store of value, and once the trust is violated a gigantic black hole appears at the very center of society, sucking in peoples’ savings and aspirations along with their sense of self-worth. When those who have become psychologically dependent on money as a yardstick, to be applied to everything and everyone, suddenly find themselves in a world where money means nothing, it is as if they have gone blind; they see shapes but can no longer resolve them into objects. The result is anomie – a sense of unreality – accompanied by deep depression. Money is an addiction – substance-less and unreal, and sets itself up for a severe and lengthy withdrawal.” Dmitry Orlov – The Five Stages of Collapse

Our modern world revolves around wealth, the appearance of wealth, the false creation of wealth through the issuance of debt, and trust in the bankers and politicians pulling the levers behind the curtain. The entire world economic system is dependent on trusting central bankers whose only response to any crisis is to create more debt. The death knell is ringing loud and clear, but people around the globe are desperately clinging to their normalcy biases and praying to the gods of cognitive dissonance. It seems the only things that matter to our controllers are stock market levels, the continued flow of debt to the plebs, continued doling out of hush money to those on the dole, and of course an endless supply of brown skinned enemies to attack. With every country in the world attempting to the same solution of debasing their currencies, we are rapidly approaching the tipping point. India is the canary in the coal mine.

Government, Household, Financial & Non-Financial Debt (% of GDP)

An exponential growth model built upon cheap plentiful energy and debt creation has its limits, and we’ve reached them. With the depletion of inexpensive, easily accessible energy resources, higher prices will continue to slow world economies. Demographics in the developed world are slowing the global economy as millions approach their old age with little savings due to over consuming during their peak earnings years. Bernanke has already quadrupled his balance sheet with no meaningful benefit to the economy or the financial well-being of the average middle class American. Financial manipulation that creates nothing has masked the rot consuming our economic system. The game has been rigged in favor of the owners, but even a rigged game eventually comes to an end. Americans and Europeans can no longer maintain a façade of wealth by buying knickknacks from China with money they don’t have. The US and Europe are finding that their credit is no longer good in the exporting Far East countries. This is a perilous development, as the West has depended upon foreigners to accommodate its never ending expansion of credit. Without that continual expansion of debt, the Ponzi scheme comes crashing down. As China, Japan and the rest of Asia have balked at buying U.S. Treasuries with negative real yields, the only recourse for Ben has been to monetize the debt through QE and inflation. The doubling of ten year Treasury rates in a matter of three months due to just talk of possibly slowing QE should send shivers down your spine.

We are supposedly five years past the great crisis. Magazine covers proclaimed Bernanke a hero. If we are well past the crisis, why are the extreme emergency measures still in effect? If the economy is growing and jobs are being created, why do we need $85 billion of government debt to be monetized each and every month? Why are the EU, Japan, and China printing even faster than the Fed? The answer is simple. If the debt was not being monetized, it would have to be purchased out in the free market. Purchasers would require an interest rate far above the 2.9% being paid today. The debt levels in the U.S., Europe and Japan are so large that a rise in interest rates of just a few points would explode budget deficits and lead to a worldwide financial collapse. This is why Bernanke and the rest of his central banker brethren are trapped by their own ideology of bubble production. Just the slowing of debt creation will lead to collapse. Bernanke needs a Syrian crisis to postpone the taper talk. Those in control need an endless number of real or false flag crises to provide cover for their printing presses to keep rolling.

There are a couple analogies that apply to our impending doom. The country is like a 224 year old oak tree that has been slowly rotting on the inside due to the insidious diseases of hubris, apathy, selfishness, dependence, delusion, and debasement. The old oak gives an outward appearance of health and stability. Winter has arrived and gale force winds are in the forecast. One gust of wind and the mighty aged oak will topple and come crashing to earth. I think an even more fitting analogy is the sandpile with grains of sand being added day after day. Seven out of ten Americans receive more in government benefits than they pay in taxes. Goliath corporations and the uber-wealthy use the tax code and legislation to syphon hundreds of billions from the national treasury every year. We spend $1 trillion per year on past, current and future wars of choice. Annual interest on the debt we’ve racked up in the last few decades already approaches $400 billion per year. The entire Federal budget totaled $400 billion in 1977. The sandpile grows ever higher, while its instability expands exponentially. One seemingly innocuous grain of sand will ultimately cause the pile to collapse catastrophically. Will it be an unintended consequence of a missile launch into Syria? Will it be a spike in oil prices? Will it be the collapse of one of the EU PIIGS? Will it be an assassination of a political figure or banker? No one knows. But that innocuous grain of sand will trigger the collapse of the entire pile.

Worried people are looking for solutions. They often get angry at me because they don’t think I provide answers to the issues I raise about our corrupt failing system. They want easy answers to intractable problems. Sadly, I’ve come to the conclusion that our system and majority of citizens are too corrupted to change our course through the ballot box or instituting policies along the lines of those proposed by Ron Paul and many other thoughtful liberty minded people. We are experiencing the downside of a representative democracy.  Once a person is democratically elected a gulf is created between the electors and the person they elected, as the representative becomes corrupted and bought by moneyed interests. Elected officials become a class unto themselves. The political class grows to be puppets that resemble human beings but are nothing but cogs in a vast corporate run machine, pawns in an enormous game of chess played by powerful vindictive immoral men.

There are no cures for our disease. It’s terminal. Anyone telling you they have the answers is either lying or trying to sell you something. More people and organizations are on the take than are playing by the rules. The producers are being overrun by the parasites. The barbarians are at the gate. An implosion of societal trust is underway. The next stage of this crisis, which I believe will materialize within the next twelve months will try the souls of the weary.

“As the Crisis catalyzes, these fears will rush to the surface, jagged and exposed. Distrustful of some things, individuals will feel that their survival requires them to distrust more things. This behavior could cascade into a sudden downward spiral, an implosion of societal trust. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on.”The Fourth Turning – Strauss & Howe – 1997

As a nation we have squandered our inheritance, born of the blood of patriots. A freedom loving, liberty minded, self-responsible, courageous people have allowed ourselves to fall prey to selfishness, apathy, complacency and dependency. Once we allowed our human appetites of greed, power seeking, and control to override the moral responsibility for our own lives and the lives of future unborn generations, collapse was inevitable. The danger now is what happens after the unavoidable collapse. Will the millions of dependency zombies beg for a strong dictator to protect them, provide for them and lead them into further bondage? Or will the spark of liberty and freedom reignite, allowing citizens to throw off the shackles of banker and corporate control? I believe most of the people in this country are good hearted. We are merely pawns in this game of Risk being played by those seeking power, wealth and world domination. We are all trapped in our own forms of normalcy bias. Have I cashed out my retirement funds, sold my suburban house and built a doomstead in the mountains? No I haven’t. Do I second guess myself sometimes? Yes I do. But even the aware have families to support, jobs to go to, bills to pay, laundry to do, lawns to mow, and lives to live. I can’t live in constant fear of what might happen. We only get 80 or so years on this earth, if we’re lucky. The best we can do is leave a positive legacy for our children and their children. A drastic change to our way of life is coming, but most of us are trapped in a cage of our own making.

Each living generation will need to do their part during this Crisis if we are to survive the coming storm. Since no one knows the nature of how the next fifteen years will unfold, it would be wise to at least make basic preparations for food, water, heat and protection. This is easier for some than others, but you don’t have to star on Doomsday Preppers in order to stock up on items that can be purchased at Wal-Mart today, but won’t be available when the global supply chain breaks down. Make sure you have neighbors and family you can rely upon. A small community of like-minded people with varied skills is more likely to succeed in our brave old world than rugged individualists. With no financial means to maintain our globalized world, living locally will take on a new meaning. After much turmoil, chaos, violence, and likely mass casualties the best outcome would be for the Great American Empire to break into regional republics, incapable of waging global war, led by law abiding moral liberty minded individuals, and willing to trade freely and honestly with their fellow republics. Daily life would revert back to a simpler Amish like time. Would that be so bad?

This Fourth Turning could end with a whimper or a bang. There are enough nuclear arms to obliterate the world ten times over. There are enough hubristic egomaniacal psychopathic men in power, that the use of those weapons has a high likelihood of happening. It will be up to the people to not allow this horrific result. I love my country and despise my government. The Declaration of Independence clearly states that when a long train of abuses and usurpations lead toward despotism, it is our right and duty to throw off that government and provide new guards of liberty. My family comes first with my country a close second. I will fight with whatever means necessary to protect my family and do what I can to influence the future course of our country. Time is running out. Will we have the courage, fortitude and wisdom to make the right decisions over the next fifteen years? Will we choose glory or destruction? The fate of our nation hangs in the balance. Are you prepared? Are you ready to fight for your family and your rights?

The Fourth Turning could spare modernity but mark the end of our nation. It could close the book on the political constitution, popular culture, and moral standing that the word America has come to signify. The nation has endured for three saecula; Rome lasted twelve, the Soviet Union only one. Fourth Turnings are critical thresholds for national survival. Each of the last three American Crises produced moments of extreme danger: In the Revolution, the very birth of the republic hung by a thread in more than one battle. In the Civil War, the union barely survived a four-year slaughter that in its own time was regarded as the most lethal war in history. In World War II, the nation destroyed an enemy of democracy that for a time was winning; had the enemy won, America might have itself been destroyed. In all likelihood, the next Crisis will present the nation with a threat and a consequence on a similar scale.The Fourth Turning – Strauss & Howe – 1997

 

 IT’S OUR CHOICE.

Out On a Limb

Off the keyboard of James Howard Kuntsler

Published on Clusterfuck Nation on June 3, 2013

seppuku

Discuss this article at the Favorite Dishes Smorgasbord inside the Diner

There is one supreme and universal law of human relations in all its manifestations, social, political, economic, cultural: people create no end of mischief in the hours when they are not sleeping. Any vision of history-yet-to-come must be predicated on this principle.

A correspondent of mine objected to the idea I floated a couple of times that Japan would be the first advanced industrial nation to “go medieval.” This prompts me to clarify that emphasis should be on the word “first.” The re-set to a much lower scale and intensity of human activity is certain for all nations; the only questions are the time-frame and the quality of the journey and those are sure to vary from one group of people to another.

I picked on Japan because their journey seems to have compressed and accelerated in recent years and also because there’s a lot to admire in their possible destination if history is any guide: a graceful culture of lower energy and high artistry. The transition between that older culture and the point of industrial take-off was also much sharper for Japan than so-called Western societies. They did not look back on the startling episode of Rome and they didn’t experience a thrilling “Renaissance” of rediscovery in its technical achievements — which eventuated in the Western discovery of a “new world” and all its exploitable resources. The Japanese were pestered by Catholic missionaries for a brief time beginning in the 1540s, but tossed them out in 1620s, along with the merchants who accompanied them — and then very consciously barred the door. They even gave up on the guns that the Euro-people had introduced, regarding them as unsportsmanlike. Finally, Commodore Perry from the USA landed in the 1850s, with all the weight of Western technological momentum behind him, and demanded access to trade there and Japan, in effect, surrendered to modernity.

They also thrived on it for a while. For one thing, they had a lot of beautifully-made exotic cultural objects to trade with the west, and their artisan skill level in things like ceramics and metallurgy made the transition to industrial technology of their own easy. In half a century, Japan went from an isolated archipelago of tea ceremonies and silks to building steel battleships and airplanes, and we all know the mischief that led to during the first half of the horrid 20th century: the Rape of Nanking, the Bataan Death March, the bombing of Tokyo, and Hiroshima. Then came Act 2: postwar economic revival, the SONY stereo, Mitsubishi, major league baseball, and really excellent automobiles. That went on for while, too. About 40 years.

There was one insurmountable problem lurking in the background: Japan did not possess any fossil fuels, oil or methane gas, to run all the equipment of modernity that they had ramped up. That didn’t matter so much when imported oil was $11-a-barrel, but it became crucial when the cost quickly rose to $100-a-barrel, as it did in recent years. It also began to matter that Japan’s bigger neighbor and age-old rival (and sometimes victim), China, ramped up its own industrial economy which, of course, consumed a healthy portion of what the world oil market put up for sale. By the early 21st century, China was eating Japan’s lunch (its bento box, shall we say) by manufacturing the same stuff that the Japanese had excelled at making, and all of a sudden the whole project of modernity in Japan hit the skids.

Then came the Tōhoku earthquake of 2011, and the giant wall of water that slammed, among other things, the multiple nuclear reactors at Fukushima. The Japanese industrial confederation had taken a certain amount of comfort in its ability to keep the electricity going by other means than fossil fuels. Now, all of a sudden, a nuclear dragon was loose upon the land, a veritable Godzilla, Japan’s worst nightmare. A year later, all but two of Japan’s nuclear power plants were shut down. By no coincidence, Japan also found itself wallowing in a trade deficit after decades of enjoying trade surpluses, due to the amount of oil and gas the nation had to import to keep the electricity running.

Japan’s energy predicament is expressing itself in a financial crisis, naturally enough, since finance is a set of abstract markers for what is happening in an economy — and the country’s finances are pretty much running amok as its political leaders try desperately to adjust to the new realities of powerdown. They are employing accounting fraud to offset the inescapable failures of capital formation under the circumstances, the same as all the other advanced industrial nations. As a purely financial matter it simply amounts to no longer being able to generate enough new wealth to pay the interest on old credit, or to justify the creation of new credit. Since credit is the lifeblood of industrialism, the sun is setting on that phase of history. Japan finds itself in a dishonorable quandary and in tune with some of its older cultural infrastructure appears to be committing suicide with a sword thrust into the guts of its banking system.

America, in contrast, is driving over the edge of the Grand Canyon, Thelma-and-Louise-style. Europe is drinking a poison cup in sumptuous seclusion. China and India will just look like lemming marches into the increasingly vacant sea.

Financial hara-kiri might be the best outcome for Japan — better, say, than a war with China over some desolate islands — if Japan were to retreat as rapidly back into a traditional artisan economy as it bailed out of in the 1860s. I realize this is a long-shot and includes many knotty elements not under discussion here, such as population reduction and the fate of Fukushima. Also, history is almost never symmetrical. Things don’t retrace the arc they came up. The journey will surely be bumpier. But Japan might get there first and set some interesting precedents for the rest of us.

At the heart of the matter is this. Industrialism is an entropic project. It accelerates and intensifies entropy, which is to say the drive toward disorder and death. Tradition in human societies is the great moderator of entropy. Of course nothing stays the same forever, but some of us would like to see the human project continue, and to get to place where it can feel comfortable with itself for a while, perhaps even something resembling a new (and completely unfamiliar) golden age, when the people not asleep can be trusted.

Ostriches on the Blind Side

Off the keyboard of RE

Published on the Doomstead Diner on June 1, 2013

Discuss this article at the Economics Table inside the Diner

ostrich-head-in-sandAnyone watching the Financial Newz over the last couple of weeks has been treated to a marvelous show, watching the 3rd largest Industrial Economy in the world implode on the financial level.  The economy is of course that of Japan, and said Implosion is long overdue, it really should have gone into Overdrive right after Fuk-U-shima.   Keeping it Propped Up has been a Priority, since a Cog this big in the Industrial Machine going down has so many bad financial consequences that essentially the Disaster of the Physical Sense was Ignored by the Financial Markets, except for a couple of weeks in the direct aftermath of the Tsunami.  After that, it was assumed those Plucky Nips would get it all back together and go on with Biz as Usual, Pumping out the Nissans, Nikons and Hitachi Front End Loaders and Backhoes from the Factories surrounding Tokyo.  If they could not draw power from the Nuke Plants to power said Factories, they would replace it by importing more Coal & Oil, keep the JUICE Flowing, and keep exporting the toys to a Positive Trade Balance.

Sadly for the Salarymen and Mrs. Watanabe, this idea did not work out so good over the last couple of years.  Japan’s Trade Surplus evaporated, and it’s already OUTRAGEOUS Public Debt which was somewhere in the Stratosphere over 200% of GDP ballooned even more, with no end in sight at this time, that is for sure.

In the intervening Time Period since Fuk-U-shima, all Eyes have been focused on Eurotrashland.  Greece on the Greasy Skids, Cyprus puking Ruskie Gangsta Money, Spain and Portugal sucking up to the IMF…you know the story by now.  Somehow though, despite the fact absolutely ZERO has been resolved in any of these Eurotrash Nations, over the last two weeks any problems they have simply VANISHED into the Ostrich Head Sand of of the MSM.  Nobody in the MSM is talking about the Eurotrash now in the MSM, because you see, the Eurotrash are on the BLIND SIDE of this week’s Collapse Story.  We are focused here now on the Nips and THEIR collapse problem, which so surprisingly (sic) has emerged once again here.

http://www.kids.esdb.bg/images/ev2.jpgWhy has this story re-emerged here now?  Essentially because after a couple of YEARS of complete FAILURE getting their Mercantilist economy running at a PROFIT again, Da BoJ has gone on a Printing Spree that makes Helicopter Ben look like a PIKER.  Abenomics is giving a BLOW JOB to Paul Krugman, with the supposition that by simply SHOVELLING Credit at the Nip Banks, they can get the Toyotas moving out of the Factories again and heading for the Open Road of the Eisenhower Interstate.  Small problem here, the Happy Motorists who drove those miles are fresh OUT of Gas they can afford to buy, and there are PLENTY of decent Used Carz on the market which do quite the same job of getting you here to there as a new Nissan EV does. Most of said Happy Motoristas are in CC debt up to their EYEBALLS already, and can only even buy a Used Car on a “No Credit Check, No Money Down” deal from the local Used Car Salesman.  After buying said car to get to work at Mickey Ds for $7.25/hr, the only way they can afford Gas for it is to stop paying on the Mortgage.  Sense a PROBLEM here with this methodology?  LOL.

How many years/miles would you have to drive an EV priced at say $40K to match up to a Used Car you pick up for say $3000?Ballparking it here, this leaves you $37K to spend on Gas.  Say your workplace is 20 miles away, and your Used Car gets 20MPG.  So each week you drive 200 R/T miles to make it to the Workplace and Back to your McMansion, stopping at Safeway on the way home to pick up the Groceries.  You put approximately 10K miles/year on the Used Car this way, which takes about 500 Gallons-o-Gas to cover.  Price the Gas at $10/Gallon.  So it costs $5000/year in fuel to run the car to get you to work.  Even at $10/Gallon, it takes more than 7 YEARS for you to make up the price differential between the ICE Used Car and the New Prius utilizing Electric Power, and that is assuming the Electricity comes completely FREE!  Which it does not of course, even if you have enough Solar PV cells on your McMansion Rooftop to charge up your Prius every night, those suckers cost you a decent piece of change ALSO.  Absolutely BEST CASE scenario here, it would take a Decade at least to make up the cost differential between a Prius and a Used Car with Gas priced at the currently in the FSoA OUTRAGEOUS price of $10/Gallon!  How long do you think the Lithium-Ion Battery Pack in said Prius lasts?  If any of you have experience with Li-I rechargeables in your Laptop, you know these suckers generally give up the ghost after 2-3 years if you regularly charge and discharge them.  So at the very LEAST over this 10 year lifespan of the Prius, you will need to replace said Battery Pack 3 times, at a CURRENT price in the $15K range!  Not accounting for how much MORE it will cost to replace said Battery Pack 3 years from now, if you can even GET one shipped over from China.  On no level whatsoever is this the least bit economic or sustainable, and only if you are absolutely ROLLING in DOUGH can you afford such a vehicle as Insurance against a disappearing liquid fuel supply.

So overall, between Decreasing Demand for their Automotive product of ANY type, ICE or EV, and Increasing Energy costs due to the need to import still more Fossil Fuels to make up for lost Electric Production from their Nukes, the Nips have gone from Trade Surplus to Trade Deficit now, and they still got that ever ballooning 240% Debt to GDP ratio to deal with.  WTF is going to buy JGBs here to finance the massive QE Abenomics is trying? Only the BoJ, and maybe Da Fed to keep the Yen from completely collapsing.  The Ostriches here all have their heads in the sand, you obviously cannot solve a systemic problem like this just by shovelling Funny Money at it.

While Japan represents the Disaster of the Day in MSM Economic Newz and even on the pages of Zero Hedge, the very SAME Ostrich problem is going on in Eurotrashland, and here in the FSoA as well.  Eurocrat Clowns run around in a Kabuki Theatre presentation of a Keystone Kops movie as though they can really “solve” the problems every last nation in the Eurozone has (INCLUDING the Krauts!) by dropping Austerity down on everyone, slashing Goobermint Jobs and Pensions, doing “internal Devaluations” cutting salaries in the Private Sector also, all of which is supposed to lead to a “Recovery”.  How?  Cut everyone’s salary, tax receipts fall, they have less income to spend to buy Kraut Kars or Vacation Condos on the Costa del Sol and the Velocity of Money drops to near ZERO!  Super Mario Dragon can print money to his hearts content but it goes NOWHERE but into Ballooning Bubbles and never hits the street economy at all.http://doctorbulldog.files.wordpress.com/2010/03/keystonecops.jpg

Same deal goes on here in the FSoA, still masked a bit better in most places, though not in places like Detroit, Stockton and Harrisburg, already BK and far down the Toilet of FAST COLLAPSE.  I would challenge John Michael Greer to walk the Streets of Detroit and call that one “Slow Catabolic Collapse”.  LOL.

With the Ostrich Movement so prevalent at the very Top End of our society and its control structure, is it any wonder really that on the Personal, Local and Individual level you find Ostriches all around you, amongst your Family Members and Friends?  The “Big Boys” aren’t admitting the TRUTH here, they are busy spinning BULLSHIT on the pages of the Wall Street Journal and the UK Telegraph, courtesy of Shills like John Hilsenrath for the WSJ and Ambrose Evans-Pritchard of the UKT.  OK, granted most dimwit J6Ps don’t read either Hilsenrath if they live in the FSoA OR Ambrose if they live in Jolly Old England, but they do still absorb the next few levels down coming off Faux Newz and MSNBC.  When they can tear themselves away from Lindsay Lohan’s latest Rehab adventure or Kim Kardashian’s marital break up.

These folks are Ostriches of Ignorance, a sad evolutionary consequence of our “Culture”, but they are not RESPONSIBLE for what has gone down here, they are victims of it with about ZERO power to make any difference at all no matter WHAT they do.   Even if they do manage to wake up soon enough to possibly enhance their own survival chances, they sure can’t make a difference on how the Military-Industrial Complex will try to enhance its survival chances.  At least not until such time as the playing field is Level Enough that such a fight could be undertaken and actually WON, which still is a bit down the line here.  It will take a good bit of time for the Industrial Military to collapse on itself, it is likely going to be the very LAST of the Conduits to succumb to decreasing Resource availability to run the War Machine.

To Undercut this, to take DOWN the apparatus before it succumbs to Entropy as it must, at some point a fundamental Weakness has to be exploited, and that is the only real HOPIUM that exists for cutting short an unacceptable spin down of population reduction run by and for TPTB aka Illuminati.  The weaknesses are there all over the place to be so exploited, but dumb ass OSTRICHES on the BLIND SIDE do not see them.  YET.

http://2.bp.blogspot.com/-pHneOZTuq9Y/Ti9ySgiKtBI/AAAAAAAAI8o/LgNkY7ZD6dE/s400/StampedeMentality.jpgFor those of us who DO see the weaknesses, we sit and WAIT, and to the best of our ability try to wake people UP to what is coming down the pipe here.  Bringing round Loved Ones who do not see these things, do not WANT to see them is very tough.  Frustrating to be sure for many Doomers.  Trust me though, if you Stay the Course, keep hammerring down on what is EVIDENT here in the progress of Collapse, eventually you will break through the sand to reach the Head of even the most deeply buried Ostrich.  When that time comes, when FINALLY you can bring the Ostrich Heads from the Sand, when finally the Playing Field is sufficiently Level to make a real FIGHT of it you can WIN, THEN comes the time you make the Final Battle for All the Marbles.  Then you TAKE NO PRISONERS.  Then you TERMINATE WITH EXTREME PREJUDICE.  Then you make the Pigmen REGRET THE DAY THEY WERE EVER BORN!!!  Then you do not just GET MAD, YOU GET EVEN!  You ROLL over them with the POWER OF NUMBERS!  You STAMPEDE THE MOTHERFUCKERS.

This is NATURAL LAW. Backfire.  Fight Fire with Fire. You want some Darwinism here Mother Fucker?  I’ll give you some FIRST CLASS Darwinism.  Where’s my GUILLOTINE?  LOL.

RE

Knarf plays the Doomer Blues

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