Soviet Union

How to Destroy a Great Empire

Off the keyboard of Ugo Bardi

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on Resource Crisis on October 6, 2014

The Pythoness of the Oracle of Delphi told to King Croesus that if he were to attack Persia “a great empire will be destroyed.” Croesus did just that, but the great empire which fell was not the Persian one, but his own.

Discuss this article at the Energy Table inside the Diner

Unleashing the oil weapon against Russia: how to destroy a great empire

Do you remember the old Soviet Union? Dubbed as “The Evil Empire” by Ronald Reagan in 1983, it disappeared in a puff of smoke in 1991, crushed under a mountain of debts. The origins of the financial collapse of the Soviet Union are rather well known: it was related to the fall of the oil prices which, in 1985, went down from the equivalent of more than 100 (today’s) dollars per barrel in 1980 to about 30 (today’s) dollars and stayed low for more than a decade. The Soviet Union was relying on oil exports for its economy and, in addition, it was burdened with huge military expenses. It just couldn’t take a drop of more than a factor of three in its oil revenues.
There exists a persistent legend that says that the downfall of the Soviet Union was engineered by a secret agreement of the Western Powers with the Saudi government who agreed to open the spigots of their oil fields in order to bring down oil prices. This is, indeed, nothing more than a legend. Not only we have no proof that such a secret agreement ever existed, but it is not even true that the Saudis played the role attributed to them. In the 1980s, Saudi Arabia, actually, tried hard to avoid the downfall in oil prices by reducing (rather than increasing) its oil output; without much success. (Image on the right from Wikipedia)It is true, however, that after the first great oil crisis of the 1970s, the world’s oil production restarted its growth around 1985.  The reasons for the recovery can’t be attributed to the work of a group of conspirators sitting in a smoke filled room. Rather, it was the result of a number of new oil fields starting their production phase, mainly in Alaska and in the North Sea. This was the origin of the drop in oil prices and, indirectly, of the fall of the Soviet Union. (Image on the left from Wikipedia)
Today, Russia’s oil production has recovered from the downfall of Soviet times and the Russian economy is highly dependent on oil exports, much like the old USSR was. So, a drop in oil prices could do a lot of damage to Russia. Given the political situation with the Ukraine crisis, there are speculations that the West is trying to bring down Russia by repeating the same trick that seemed to be so successful in bringing down the old “Evil Empire”. Indeed, we are seeing oil prices dropping below $90 per barrel after years of stability around $100. Is it a fluctuation or a trend? Hard to say, but it is being interpreted as the unleashing of the “oil weapon” against Russia on the part of Saudi Arabia.
However, the world of today is not the world of the 1980s. One problem is that Saudi Arabia has shown several times to be able to throttle production down, but never to raise it significantly higher than the present levels; one could even question whether they will be able to maintain them in the future. Then, there is nothing today which could play the role that Alaska and the North Sea fields played in the 1980s. It had been said many times that we would need a “new Saudi Arabia” (or more than one) to offset the decline of the world’s oil fields, but we never found it.

Yet, there are good reasons to think that we could see a drop in oil prices in the near future. One factor is the downturn of several of the world’s major economies (e.g. Italy). That could lead to a fall of the demand for oil and, consequently, to lower prices (something similar took place with the financial crisis of 2008). Another factor could be the rapidly growing production unconventional oil (largely in the form of “shale oil”) is the U.S. This oil is not being exported in large amounts, but it has reduced the US demand of oil in the world’s market. Coupling these two factors, we might well see a considerable drop in oil prices in the near future, although hardly a sustained one. So, would that be the “oil weapon” that will bring Russia to its knees? Maybe, but, as with all weapons, there are side effects to consider.
As we said, unconventional oil is playing a major role in maintaining the world’s production. The problem is that unconventional oil is often an expensive resource. Then, in the case of shale oil, the decline rate of wells is very fast: the lifetime of a well is of just a few years. So, the shale oil industry needs a continuous influx of new investments to keep producing and it is very sensitive to oil prices. Its recent rise was the result of high prices; low prices might cause its demise. In contrast, conventional oil fields have a lifetime of decades and are relatively immune to short term variations of oil prices. If we see the situation in these terms, we might legitimately ask against whom the oil weapon is aimed. The US unconventional oil industry might well be its first victim.
History, as we all know, never repeats itself, but it does rhyme. King Croesus, at his times, believed the Delphic Oracle when he was told that he could bring down a great empire if he would attack Persia. He didn’t realize that he was going to destroy his own empire. Something similar may be in store for us in the coming years: a drop in oil prices might well bring down a great empire. Which one, however, is all to be seen.

Supply Chains, Population & Community: Conversation with Dmitry Orlov Part II

Off the microphones of Dmitry Orlov, Monsta & RE

Follow us on Twitter @doomstead666
Friend us on Facebook

Aired on the Doomstead Diner on August 21, 2014

logopodcast

Discuss this interview at the Podcast Table inside the Diner

In case you missed it, here is the first part of the Interview with Dmitry

Dmitry Orlov Part I

Latest Frostbite Falls Daily Rant Series: Riots in #Ferguson

SNAP to RIOT IN #ferguson,

SNAP to RIOT 2 in #ferguson,

SNAP to RIOT 3: Bring on the National Guard

In this part of the podcast, we discuss with Dmitry the issues of Supply Chains necessary to maintain our current Industrial Civilization, the possible effects of Supply Chain breakdowns, resiliency versus efficiency and how the various nations under the Soviet Union umbrella coped with the collapse of that mega-state.  Other topics include the possibilities for Near Term Human Extinction and principles underlying Sustainable Communities.

Coming soon to Diner Podcasts, a new Frostbite Falls Daily Rant on the 8th Crusade looking at the escalating assymetric warfare being pursued by the ISIS Caliphate in MENA.

isis

RE

The Anti-Empire Report #128

From the Keyboard of William Blum

Follow us on Twitter @doomstead666
Friend us on Facebook

 Obama Putin chess

Published originally in The Anti-Empire Report May 9, 2014

“The Russians are coming … again … and they’re still ten feet tall!”

So, what do we have here? In Libya, in Syria, and elsewhere the United States has been on the same side as the al-Qaeda types. But not in Ukraine. That’s the good news. The bad news is that in Ukraine the United States is on the same side as the neo-Nazi types, who – taking time off from parading around with their swastika-like symbols and calling for the death of Jews, Russians and Communists – on May 2 burned down a trade-union building in Odessa, killing scores of people and sending hundreds to hospital; many of the victims were beaten or shot when they tried to flee the flames and smoke; ambulances were blocked from reaching the wounded. Try and find an American mainstream media entity that has made a serious attempt to capture the horror.

And how did this latest example of American foreign-policy exceptionalism come to be? One starting point that can be considered is what former Secretary of Defense and CIA Director Robert Gates says in his recently published memoir: “When the Soviet Union was collapsing in late 1991, [Defense Secretary Dick Cheney] wanted to see the dismemberment not only of the Soviet Union and the Russian empire but of Russia itself, so it could never again be a threat to the rest of the world.” That can serve as an early marker for the new cold war while the corpse of the old one was still warm. Soon thereafter, NATO began to surround Russia with military bases, missile sites, and NATO members, while yearning for perhaps the most important part needed to complete the circle – Ukraine.

In February of this year, US State Department officials, undiplomatically, joined anti-government protesters in the capital city of Kiev, handing out encouragement and food, from which emanated the infamous leaked audio tape between the US ambassador to Ukraine, Geoffrey Pyatt, and the State Department’s Victoria Nuland, former US ambassador to NATO and former State Department spokesperson for Hillary Clinton. Their conversation dealt with who should be running the new Ukraine government after the government of Viktor Yanukovich was overthrown; their most favored for this position being one Arseniy Yatsenuk.

My dear, and recently departed, Washington friend, John Judge, liked to say that if you want to call him a “conspiracy theorist” you have to call others “coincidence theorists”. Thus it was by the most remarkable of coincidences that Arseniy Yatsenuk did indeed become the new prime minister. He could very soon be found in private meetings and public press conferences with the president of the United States and the Secretary-General of NATO, as well as meeting with the soon-to-be new owners of Ukraine, the World Bank and the International Monetary Fund, preparing to impose their standard financial shock therapy. The current protestors in Ukraine don’t need PHDs in economics to know what this portends. They know about the impoverishment of Greece, Spain, et al. They also despise the new regime for its overthrow of their democratically-elected government, whatever its shortcomings. But the American media obscures these motivations by almost always referring to them simply as “pro-Russian”.

An exception, albeit rather unemphasized, was the April 17 Washington Post which reported from Donetsk that many of the eastern Ukrainians whom the author interviewed said the unrest in their region was driven by fear of “economic hardship” and the IMF austerity plan that will make their lives even harder: “At a most dangerous and delicate time, just as it battles Moscow for hearts and minds across the east, the pro-Western government is set to initiate a shock therapy of economic measures to meet the demands of an emergency bailout from the International Monetary Fund.”

Arseniy Yatsenuk, it should be noted, has something called the Arseniy Yatsenuk Foundation. If you go to the foundation’s website you will see the logos of the foundation’s “partners”. Among these partners we find NATO, the National Endowment for Democracy, the US State Department, Chatham House (Royal Institute of International Affairs in the UK), the German Marshall Fund (a think tank founded by the German government in honor of the US Marshall Plan), as well as a couple of international banks. Is any comment needed?

Getting away with supporting al-Qaeda and Nazi types may be giving US officials the idea that they can say or do anything they want in their foreign policy. In a May 2 press conference, President Obama, referring to Ukraine and the NATO Treaty, said: “We’re united in our unwavering Article 5 commitment to the security of our NATO allies”. (Article 5 states: “The Parties agree that an armed attack against one or more of them … shall be considered an attack against them all.”) Did the president forget that Ukraine is not (yet) a member of NATO? And in the same press conference, the president referred to the “duly elected government in Kyiv (Kiev)”, when in fact it had come to power via a coup and then proceeded to establish a new regime in which the vice-premier, minister of defense, minister of agriculture, and minister of environment, all belonged to far-right neo-Nazi parties.

The pure awfulness of the Ukrainian right-wingers can scarcely be exaggerated. In early March, the leader of Pravy Sektor (Right Sector) called upon his comrades, the infamous Chechnyan terrorists, to carry out further terrorist actions in Russia.

There may be one important difference between the old Cold War and the new one. The American people, as well as the world, can not be as easily brainwashed as they were during the earlier period.

Over the course of a decade, in doing the research for my first books and articles on US foreign policy, one of the oddities to me of the Cold War was how often the Soviet Union seemed to know what the United States was really up to, even if the American people didn’t. Every once in a while in the 1950s to 70s a careful reader would notice a two- or three-inch story in the New York Times on the bottom of some distant inside page, reporting that Pravda or Izvestia had claimed that a recent coup or political assassination in Africa or Asia or Latin America had been the work of the CIA; the Times might add that a US State Department official had labeled the story as “absurd”. And that was that; no further details were provided; and none were needed, for how many American readers gave it a second thought? It was just more commie propaganda. Who did they think they were fooling? This ignorance/complicity on the part of the mainstream media allowed the United States to get away with all manner of international crimes and mischief.

It was only in the 1980s when I began to do the serious research that resulted in my first book, which later became Killing Hope, that I was able to fill in the details and realize that the United States had indeed masterminded that particular coup or assassination, and many other coups and assassinations, not to mention countless bombings, chemical and biological warfare, perversion of elections, drug dealings, kidnapings, and much more that had not appeared in the American mainstream media or schoolbooks. (And a significant portion of which was apparently unknown to the Soviets as well.)

But there have been countless revelations about US crimes in the past two decades. Many Americans and much of the rest of the planet have become educated. They’re much more skeptical of American proclamations and the fawning media.

President Obama recently declared: “The strong condemnation that it’s received from around the world indicates the degree to which Russia is on the wrong side of history on this.” Marvelous … coming from the man who partners with jihadists and Nazis and has waged war against seven nations. In the past half century is there any country whose foreign policy has received more bitter condemnation than the United States? If the United States is not on the wrong side of history, it may be only in the history books published by the United States.

Barack Obama, like virtually all Americans, likely believes that the Soviet Union, with perhaps the sole exception of the Second World War, was consistently on the wrong side of history in its foreign policy as well as at home. Yet, in a survey conducted by an independent Russian polling center this past January, and reported in the Washington Post in April, 86 percent of respondents older than 55 expressed regret for the Soviet Union’s collapse; 37 percent of those aged 25 to 39 did so. (Similar poll results have been reported regularly since the demise of the Soviet Union. This is from USA Today in 1999: “When the Berlin Wall crumbled, East Germans imagined a life of freedom where consumer goods were abundant and hardships would fade. Ten years later, a remarkable 51% say they were happier with communism.”)

Or as the new Russian proverb put it: “Everything the Communists said about Communism was a lie, but everything they said about capitalism turned out to be the truth.”

A week before the above Post report in April the newspaper printed an article about happiness around the world, which contains the following charming lines: “Worldwide polls show that life seems better to older people – except in Russia.” … “Essentially, life under President Vladimir Putin is one continuous downward spiral into despair.” … “What’s going on in Russia is deep unhappiness.” … “In Russia, the only thing to look forward to is death’s sweet embrace.”

No, I don’t think it was meant to be any kind of satire. It appears to be a scientific study, complete with graphs, but it reads like something straight out of the 1950s.

The views Americans hold of themselves and other societies are not necessarily more distorted than the views found amongst people elsewhere in the world, but the Americans’ distortion can lead to much more harm. Most Americans and members of Congress have convinced themselves that the US/NATO encirclement of Russia is benign – we are, after all, the Good Guys – and they don’t understand why Russia can’t see this.

The first Cold War, from Washington’s point of view, was often designated as one of “containment”, referring to the US policy of preventing the spread of communism around the world, trying to block the very idea of communism or socialism. There’s still some leftover from that – see Venezuela and Cuba, for example – but the new Cold War can be seen more in terms of a military strategy. Washington thinks in terms of who could pose a barrier to the ever-expanding empire adding to its bases and other military necessities.

Whatever the rationale, it’s imperative that the United States suppress any lingering desire to bring Ukraine (and Georgia) into the NATO alliance. Nothing is more likely to bring large numbers of Russian boots onto the Ukrainian ground than the idea that Washington wants to have NATO troops right on the Russian border and in spitting distance of the country’s historic Black Sea naval base in Crimea.

The myth of Soviet expansionism

One still comes across references in the mainstream media to Russian “expansionism” and “the Soviet empire”, in addition to that old favorite “the evil empire”. These terms stem largely from erstwhile Soviet control of Eastern European states. But was the creation of these satellites following World War II an act of imperialism or expansionism? Or did the decisive impetus lie elsewhere?

Within the space of less than 25 years, Western powers had invaded Russia three times – the two world wars and the “Intervention” of 1918-20 – inflicting some 40 million casualties in the two wars alone. To carry out these invasions, the West had used Eastern Europe as a highway. Should it be any cause for wonder that after World War II the Soviets wanted to close this highway down? In almost any other context, Americans would have no problem in seeing this as an act of self defense. But in the context of the Cold War such thinking could not find a home in mainstream discourse.

The Baltic states of the Soviet Union – Estonia, Latvia, and Lithuania – were not part of the highway and were frequently in the news because of their demands for more autonomy from Moscow, a story “natural” for the American media. These articles invariably reminded the reader that the “once independent” Baltic states were invaded in 1939 by the Soviet Union, incorporated as republics of the USSR, and had been “occupied” ever since. Another case of brutal Russian imperialism. Period. History etched in stone.

The three countries, it happens, were part of the Russian empire from 1721 up to the Russian Revolution of 1917, in the midst of World War I. When the war ended in November 1918, and the Germans had been defeated, the victorious Allied nations (US, Great Britain, France, et al.) permitted/encouraged the German forces to remain in the Baltics for a full year to crush the spread of Bolshevism there; this, with ample military assistance from the Allied nations. In each of the three republics, the Germans installed collaborators in power who declared their independence from the new Bolshevik state which, by this time, was so devastated by the World War, the revolution, and the civil war prolonged by the Allies’ intervention, that it had no choice but to accept the fait accompli. The rest of the fledgling Soviet Union had to be saved.

To at least win some propaganda points from this unfortunate state of affairs, the Soviets announced that they were relinquishing the Baltic republics “voluntarily” in line with their principles of anti-imperialism and self-determination. But is should not be surprising that the Soviets continued to regard the Baltics as a rightful part of their nation or that they waited until they were powerful enough to reclaim the territory.

Then we had Afghanistan. Surely this was an imperialist grab. But the Soviet Union had lived next door to Afghanistan for more than 60 years without gobbling it up. And when the Russians invaded in 1979, the key motivation was the United States involvement in a movement, largely Islamic, to topple the Afghan government, which was friendly to Moscow. The Soviets could not have been expected to tolerate a pro-US, anti-communist government on its border any more than the United States could have been expected to tolerate a pro-Soviet, communist government in Mexico.

Moreover, if the rebel movement took power it likely would have set up a fundamentalist Islamic government, which would have been in a position to proselytize the numerous Muslims in the Soviet border republics.

Notes

  1. See RT.com (formerly Russia Today) for many stories, images and videos
  2. Robert Gates, Duty (2014), p.97
  3. If this site has gone missing again, a saved version can be found here.
  4. Voice of Russia radio station, Moscow, April 18, 2014; also see Answer Coalition, “Who’s who in Ukraine’s new [semi-fascist] government”, March 11, 2014
  5. RT.com, news report March 5, 2014
  6. CBS News, March 3, 2014
  7. Washington Post, April 11, 2014
  8. USA Today (Virginia), Oct. 11, 1999, page 1
  9. Washington Post print edition, April 2, 2014; online here

Any part of this report may be disseminated without permission, provided attribution to William Blum as author and a link to this website are given.

William Blum is an author, historian, and renowned critic of U.S. foreign policy. He is the author of Killing Hope: U.S. Military and CIA Interventions Since World War II and Rogue State: A Guide to the World’s Only Superpower, among others.

Any part of this report may be disseminated without permission, provided attribution to William Blum as author and a link to this website are given.

 

Die Off of the Top Predator

Off the keyboard of Ugo Bardi

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on Cassandra’s Legacy on February 13, 2014

BigFishLittleFish

Discuss this article at the Energy Table inside the Diner

The post below, by Dmitry Orlov, is the result of an exchange of e-mails about the similarities between the collapse of the Soviet Union (30 years ago) and the ongoing collapse of several Mediterranean countries, including Italy. Read Orlov’s post to understand his interpretation of a phenomenon that I tend to see as the result of the behavior of the so called “Apex Predators” (or “Top Predators”). If you work with socioeconomic systems, you can’t miss the similarity these systems show with ecosystems. In particular, in a socioeconomic system you can identify the top predator as the government; that is, the entity that controls the police and the army and which has the power of levying taxes on citizens without any specified limit. Now, in these systems, there exists a tendency of going in “overshoot”, when a predator takes more preys than the capability of the prey population to reproduce itself, or when the preys destroy the resource on which they depend. In this case, the predator eventually destroys the prey population and, at that point, is left without resources and no other choice than disappearing in turn. Models show that, in this case, the top predator population is the last to disappear. That is, the government of a country tends to persist as long as citizens own something that can be taxed. But if the wealth of citizens depends on non renewable resources, such as fossil fuels, then in the long run most citizens are spoiled of everything they have and there remains nothing to tax for the government. At this point, we can see the government as a predator without prey: it has no other choice than to go extinct. It folds over and leaves; the state structure collapses and disappears. That could be a good interpretation of what’s happening today in many countries. (UB) 

How To Time Collapses 

by Dmitry Orlov

Douglas Smith
Zeus

Over the past half a decade I’ve made a number of detailed predictions about collapse: how it is likely to unfold, what its various manifestations are likely to be, and how it will affect various groups and categories of people. But I have remained purposefully vague about the timing of collapse and its various stages, being careful to always append “give or take half a decade” to my dire prognostications. I wasn’t withholding information or being coy; I really had no way of calculating when collapse will happen—until five days ago, when, out of the blue, I received the following email from Ugo Bardi:

Hi Dmitry,
You may be interested in this post of mine.

Starting from this post, I’m trying to draw a parallel between the collapse of the Soviet Union and the impending collapse of Italy. There are, as always, similarities and differences. In particular, the Soviet Union collapsed almost immediately after that oil production flattened out and started declining. On the contrary, the Italian government survives despite a loss of 36% in oil consumption.

My impression is that it is all related to different taxation methods. I understand that the Soviet tax system was based mainly on commodity taxes and on taxes on production. When production stalled, people had nothing to buy and the government had nothing to tax because most people owned nothing and had little or no savings in banks. So, the government had no choice but to fold over and disappear.

Instead, the Italian system is based largely on income tax and property tax. The government is losing revenues on commodity taxes (e.g. on gasoline) but it can compensate with property taxes. Italians, on the average, are “rich,” in the sense that they have savings in banks and most of them own their homes. So, the government can tax their properties and their savings. As long as Italians still have something taxable, then the government will survive. It will disappear only when it has managed to strip citizens completely of everything they have.

Do you agree with this interpretation? (BTW, Italy as a state may be even more culturally diverse than the old Soviet Union was.)

Ugo

 

I wrote back:

Hi Ugo,

Very interesting article. Yes, the entire southern tier of the EU is in some early stage of collapse, but so far it hadn’t occurred to me to draw parallels between it and USSR. Now that you mention it, the parallel is obvious: it is financial collapse triggered by something having to do with oil, but with polarities reversed, and delayed by a period of wealth destruction.

In the case of USSR, taxation wasn’t really a source of government revenue. The national economy was based on government ownership of everything, central planning and budgets, and a system of assigning ministerial contracts to enterprises owned by the ministries. The external economy was a matter of exporting hydrocarbons in exchange for foreign currency, which was used to buy grain—mostly feed grain for cattle, without which the population would become protein-deprived and malnourished. Over the so-called “stagnation” period of the 1980s the Soviet economy became hollowed out because of several trends. Too much spending on defense was one of them. Another was that investment in capital goods (machinery, plant and equipment) reached the point of diminishing returns, which is very difficult to characterize but not so difficult to observe. Lastly, Solzhenitsyn and the dissident movement had done irreparable damage to Soviet prestige, destroying morale. The coup de grace, when it came, consisted of two pieces. One was the inability to expand oil production given the state of Soviet oil extraction technology of the era. The other was the fall in oil prices, down to $10/bbl at one point, because North Sea and Alaska both went on stream, and the Saudis pumped as much oil as they could based on a tacit agreement with the US to depress oil prices and thus crush the Soviets. In this they largely succeeded. The USSR became heavily indebted to the West, and, at the very end, needed Western credit to keep the lights on in the Kremlin. One of the final scenes featured Gorbachev on the phone with [West Germany’s Chancellor] Helmut Kohl asking him to ask the Americans to release some funds.

 

 

 

 

Now, I can see parallels to this in what is happening now in the US and in the EU, but with all the polarities reversed: here oil flows in and money flows out, and the coup de grace [will be] high oil prices rather than low. Instead of failures of central planning, which failed to allocate production effectively, we have failures of the globalized market, where production is effectively globalized but consumption is ineffectively localized among the wealthy and the formerly wealthy, and has to be fueled by credit. Instead of diminishing returns from deployment of capital goods, we have diminishing returns from deployment of capital itself, where a unit of new debt now produces much less than a unit of economic growth. The damage to reputation and morale is mostly on the US side of the Atlantic, where in place of Solzhenitsyn and the dissident movement we have Abu Ghraib [scandal], [Wikileaks’ Julian] Assange and [Edward] Snowden. With the EU, most of the damage has to do with [the] experience of economic disparities between the rich core and the increasingly impoverished periphery, and the recent move in Ukraine to walk away from the EU, and the ensuing Western-financed mayhem in Kiev, show that the bloom is off the EU rose as well. The runaway military spending is likewise mostly a US issue, although epic failures in Afghanistan, Libya and Syria, in which the EU is complicit, are likely to have some effect as well.

 

 

 

Comparing USSR to Italy is difficult because of the disparity of scale: 1/5 of the planet’s dry surface versus a smallish peninsula; an economy that slowly decayed in isolation versus an integral part of the EU; a country where the choice is between burning hydrocarbons or dying of exposure versus one where the choice is between riding a scooter or taking the bus; a country with a ravaged agricultural sector unable to grow enough protein calories versus a nation of foodies where corner groceries make worthy subjects for oil paintings. But I think that when it comes to the actual collapse, when it finally comes, there will still be identifiable similarities. Financial collapse always comes first: all sorts of financial arrangements unravel as the center becomes unable to float the periphery, and in response the periphery starts to withhold economic cooperation. The result is a breakdown in supply chains, shutdown of production, and, shortly thereafter, shutdown of commerce. In the case of the USSR, this unfolded in 1989-91 as the various republics and regions refused to cooperate with Moscow. I suspect that this will also happen in the EU, at some point. But I think that you are exactly right that whereas the average Soviet citizen could not be fleeced, Italy, and much of the EU, still have plenty of fat sheep that the government can shear to keep things running. Thus we are looking at a few more years of steady decline before the lights start going out. This, then, is the key distinction: the USSR collapsed promptly because it was already skin and bones, whereas the US and the EU still have plenty of subcutaneous fat to burn through. But they are, in fact, burning through it. And so, the conclusion is, collapse will come, but here it will take a little longer.

 

 

 

-Dmitry
Ugo responded:
 

 

I agree with you, of course. It makes perfect sense to me and it is the main point I was making: the Soviet government couldn’t tax Soviet citizens too much because they owned very little.


The Italian government instead has some luck in the sense that Italians have some savings and most of them own their homes. So, the government is progressively strangling their citizens to squeeze out of them all that they have—while they still have something.

The last round of tax increases in Italy is targeting homes and it is really, really hurting, especially the poor. You can be poor here, and still own a house that you inherited from your parents. Now the government asks you to pay as if that house were revenue! That is truly evil. People who don’t have the money to pay this property tax can only indebt themselves with banks (or worse). Eventually, they’ll have to sell their homes or give them to the bank (or to the Mafia)—the result is disaster for everybody, including for the banks, and even the government. But the whole thing has a perverse logic. It has the advantage that it generates some immediate cash which is badly needed, then the hell with the future.

The [next] phase will be to target bank accounts. Then, when there will be nothing left, the government will decamp and say bye to everybody. Hell, what a planet I landed in…..

All the best,

Ugo

 

And so here is the outline of the method for calculating the timing of collapses:
1. Find out when the collapse clock starts running by looking for a significant drop in energy consumption
2. Calculate how long the clock is going to run by dividing the total wealth of the citizenry by the economic shortfall of the shrinking economy
For any industrial economy the collapse clock starts running as soon as the consumption of fossil hydrocarbons starts dropping appreciably. It is sometimes difficult to tell whether this has already happened if the country in question is still a major hydrocarbon producer. Gross production numbers can still be holding steady or even seem to go up a bit, but once you subtract all the energy that is being expended on energy production itself, and on the unprofitable mitigation of its many undesirable consequences, you might be able see a decline sooner rather than later. Notably, the net energy yield, or EROEI, is very low for all the newer unconventional sources that have been trumpeted as panaceas in recent years, such as ones that require hydrofracturing and drilling in deep water, tar sands and so on. (The so-called “renewables,” such as wind, solar and biofuels, are an even bigger joke, because all of them with the exception of hydroelectric plants have net energy that is too low to sustain an industrial economy, plus they all depend on technologies that are “nonrenewable” unless the country maintains a vast industrial base which happens to run on fossil fuels.) And so the drop in net energy consumption is clear for Italy, which produces 7% of the oil it consumes and imports the rest, whereas the picture is somewhat less clear for the US, which still manages to supply around a third of its oil.
Since all industrial economies literally run on fossil fuels, lower energy consumption immediately translates into a lower level of economic activity and a shrinking economy. The gap between the expectations of economic growth that are dialed into all of the financial arrangements, and the reality of economic decline driven by lower energy availability, has to be plugged with the population’s savings. There are a number of ways of expropriating wealth, generally proceeding from various kinds of stealth taxation measures, to more overt measures, to outright expropriation. Taking the US as the example (since I am most familiar with it) the expropriation cascade is proceeding as follows:
1. Central bank policy of zeroing out of interest rates on savings combined with massive money-printing. This forces money into speculative markets (stocks, real estate, etc.) creating huge financial bubbles; when these bubbles pop, savings are said to be destroyed, but in reality that money has already been spent by the government or used to fill the private coffers of those closely associated with the government.
2. Government policy of canceling retirements or short-changing retirees. The federal government has worked hard to make its official measure of inflation all but meaningless so that it can justify its policy of making cost of living adjustments to social security payments that are far less than the the real increases in the cost of living. Another federal expropriation scheme is via guaranteed student loans, which cannot be discharged through bankruptcy, and which have created an entire class of indentured servants. At the more local level, state and municipal governments are curtailing or canceling retirement programs by virtue of going bankrupt.
3. Ever more onerous reporting requirements for financial transactions, especially for those who try to leave the country and expatriate their savings. All foreign bank accounts must now be reported, and people who work abroad are now forced to file voluminous annual reports that cost thousands of dollars to prepare. Those who decide to repudiate their US citizenship are made to pay a hefty exit tax. Nevertheless, record numbers of US citizens have been doing just that. Just having a US passport often makes it impossible to set up accounts in foreign financial institutions, which have little desire to comply with US demands for financial disclosure.
These are the measures that are already in place. Looking at what’s been tried before, here and elsewhere, we can see what other measures are in the works. Among them:
1. So-called “bail-ins” where insolvent financial institutions are rescued by confiscating depositor funds. We can expect the script to be similar to what happened in Cyprus: politically connected depositors get word ahead of time and yank out their money forthwith; everybody else gets shorn.
2. Limits on bank withdrawals. You might still “have” money in the bank, but that’s the only place you can “have” it. The semantics of the verb “to have” can be quite tricky, you see…
3. Ever-increasing taxes on property resulting in property confiscation. It works like this: government prints money and hands it out to its friends; its friends use it to temporarily bid up property values; property taxes go up to a point where the property owners can’t pay them; owners lose their properties. A staggering 63% of real estate purchases in Florida last December were cash purchases.
4. Various kinds of sudden, new, super-complex regulations, noncompliance with which results in very large fines. In turn, nonpayment of these fines results in forfeiture of assets. The US has some very curious laws according to which inanimate objects such as cars, boats and houses can be charged with a crime, seized and auctioned off. We can expect lots more of such property grabs in the future.
5. Gold confiscation, which happened once in the US already, so there is a precedent for it. Yes, I know that this will make a number of people upset, but I am yet to hear a convincing argument for why the US government would not resort to gold confiscation when that turns out to be one of the few remaining cards it can play.
This list is by no means comprehensive. If you feel that I have missed something major, please submit a comment, and I will consider it for inclusion.
Now, it would be nice if all of these measures worked like clockwork, always producing the right amount of wealth confiscation to levitate the government, and the financial scheme on which it is based, for a little while longer. Alas, as with most things, something is bound to go wrong at some point, most likely when you least expect it. And it seems like a dead certainty that something will in fact go wrong well before every last American citizen is relieved of every bit of their accumulated wealth and is living peacefully in a roadside ditch, wearing an attractive loincloth and a stylish mudpack for a hat, quietly perfecting a nouvelle cuisine that features snails au jus and dandelion salad au chaume. Maybe you can imagine it, but I can’t. Beyond a certain point, I can only imagine reports of widespread “public disturbances” followed by “breakdown of law and order.”
Still, I hope that this framework will allow us to set an upper bound for how long collapse can be deferred for any given country. Once hydrocarbon consumption drops appreciably, the clock starts running. Then it is possible to estimate how long the clock can theoretically run by dividing the remaining net worth of the population by the size of the hole in the economy created by falling energy consumption.
But after that things get messy. Some countries will hollow themselves out quite peaceably, and go softly into the night, while others will explode and fast-forward though the financial-commercial-political collapse sequence. And so perhaps the most useful thing to know is whether the collapse clock is already running for any given country, because if it is already running, then it becomes a fool’s game to wait around for the inevitable outcome.
One reasonable approach is to get another passport and quietly relocate to another country. It is important that this country be one for which the collapse clock is not running and won’t be for a long time yet. Ideally this would be a financially secure, politically stable, energy independent, militarily invincible, underpopulated, non-extradition country which will be among the last to be severely disrupted by climate change and where you could have lunch with Edward Snowden. But this approach doesn’t appeal to everyone, and I understand that.
And so another approach is to adapt to what’s coming while remaining in the US, or in any other country for which the collapse clock is running, by making yourself, and your wealth, should you have any, illegible. Here is a very nice article by one smart cookie by the name of Venkatesh Rao on the concept of illegibility. And here is his very nice primer on being an illegible person. This kind of illegibility has nothing to do with bad handwriting; it is about hiding in plain sight. Please read these as homework, because I will have more to say on this topic in the near future. And I would love to see a list of countries for which the collapse clock is running, along with first-order estimates for how long it could possibly run for each one, based on their population’s net worth and the country’s economic shortfall. But since this post has just gone over 3000 words, I am leaving this as an exercise for the reader.

Knarf plays the Doomer Blues

https://image.freepik.com/free-icon/musical-notes-symbols_318-29778.jpg

Support the Diner

Search the Diner

Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D

Archives

Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

Quote from: K-Dog on Today at 11:37:29 PMQuote from: RE on Today at 02:47:41 PMQuote from: K-Dog on Today at 02:20:51 PMNow you can't miss it.W...

Quote from: RE on Today at 02:47:41 PMQuote from: K-Dog on Today at 02:20:51 PMNow you can't miss it.Will try again later.Right now trying to work out communications with a Ru...

Quote from: K-Dog on Today at 10:18:43 PMIf the odds of one security guard being asleep on the job is one in a thousand, the odds of two being asleep at the same time is one in a million.You could increase the...

Quote from: Surly1 on Today at 03:08:43 PMQuote from: azozeo on Today at 11:03:40 AMThree more woman seek cut of his Jeffrey Epstein’s estateThree victims of Jeffrey Epstein sued the mu...

They took over one smart device from 360 feet away.Countless millions of people use AI assistants such as Siri or Alexa to do everything from make purchases online to control the locks in their smart homes.Just say the command that triggers th...

Recent Facebook Posts

Evacuation orders lifted after Palisades Fire leaves 2 injured and burns at least 40 acres in Los Angeles

The Los Angeles Fire Department ordered mandatory evacuations Monday as a fire ripped across a hillside in the affluent Pacific Palisades area,..

3 weeks ago

US troops pelted with rotten fruit and stones as they leave Syria – video

People have thrown rotten fruit and stones at US troops as they left Syria in armed vehicles, with one man appearing to shout: ‘You liars!’..

3 weeks ago

Corporate America's Second War With the Rule of Law

Corporate America’s Second War With the Rule of Law- Uber, Facebook, and Google are increasingly behaving like the law-flouting financial empires..

3 weeks ago

Photos from Rafael Nadal's Spanish wedding show a reception fit for tennis royalty

From Business Insider:

3 weeks ago

The best toothpaste for kids

From Business Insider:

3 weeks ago

Diner Twitter feed

Knarf’s Knewz

Diner Newz Feeds

  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

Doomstead Diner Daily November 13The Diner Daily i [...]

Alex Jones Under Oath Is an Antidote to a ‘Post-Tr [...]

Doomstead Diner Daily November 12The Diner Daily i [...]

Schiff should call Donnie & Ivanka as witnesse [...]

[html]Donald Trump Jr. walks offstage after being [...]

Quote from: UnhingedBecauseLucid on March 18, 2019 [...]

CleanTechnicaSupport CleanTechnica’s work via dona [...]

QuoteThe FACT that the current incredibly STUPID e [...]

Scientists have unlocked the power of gold atoms b [...]

Quote from: azozeo on August 14, 2019, 10:41:33 AM [...]

Wisconsin Bill Would Remove Barrier to Using Gold, [...]

Under extreme conditions, gold rearranges its atom [...]

The cost of gold futures on the Comex exchange inc [...]

Kicking off with the death of the Marlboro Man.RE[ [...]

Now UP on Global Economic Intersection!http://econ [...]

Alternate Perspectives

  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

Politicians’ Privilege By Cognitive Dissonance     Imagine for a moment you work for a small or medi [...]

Shaking the August Stick By Cognitive Dissonance     Sometime towards the end of the third or fourth [...]

Empire in Decline - Propaganda and the American Myth By Cognitive Dissonance     “Oh, what a tangled [...]

Meanderings By Cognitive Dissonance     Tis the Season Silly season is upon us. And I, for one, welc [...]

The Brainwashing of a Nation by Daniel Greenfield via Sultan Knish blog Image by ElisaRiva from Pixa [...]

Event Update For 2019-11-11http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-10http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-09http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-08http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-11-07http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

Daily Doom Photo

man-watching-tv

Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

Of Warnings and their Ripple Effects"We need wooden ships, char-crete buildings, bamboo bicycles, moringa furniture, and hemp cloth [...]

"Restoring normal whale activity to the oceans would capture the CO2 equivalent of 2 billion tr [...]

Ukrainian Rhapsody"Our future will be more about artificial intelligence, cybersecurity, and non-state actors tha [...]

LeBron’s Chinese Troll Mobs"In the 36 hours after James’ delete, a troll mob with bot support sent a flame tsunami at the [...]

Soft Paths to Zero"While reducing emissions should be a priority, it is morally questionable to focus on relative [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

What extinction crisis? Believe it or not, there are still climate science deniers out there. And th [...]

My new book, Abolish Oil Now, will talk about why the climate movement has failed and what we can do [...]

A new climate protest movement out of the UK has taken Europe by storm and made governments sit down [...]

The success of Apollo 11 flipped the American public from skeptics to fans. The climate movement nee [...]

Today's movement to abolish fossil fuels can learn from two different paths that the British an [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

I do have a new post close to finished, but my computer does not like the hotel internet. I can answ [...]

Interesting point! This is related to the falling price of coal and oil. The currency value of these [...]

Let's amend that slightly that to 'correcting the so-called 'growth' of the last [...]

Chinese imports and exports have basically seen zero growth for five years. https://pbs.twimg.com/me [...]

Yeah, when the water heater goes out the day after you just put new tires on one of the cars, etc... [...]

I join the chorus in welcoming you back. Any thoughts on how the shift away from bunker fuel on Janu [...]

@Front Range Mike "Most everyone I know is trying to figure out how to cut back and sell their [...]

RE Steve's comment about "gestures that let us get what we want while allowing the illusio [...]

@Steve, I don't post many comments but thank you for continuing the blog. I found your stuff in [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction

Useful Links

Technical Journals

The effect of urbanization on microclimatic conditions is known as “urban heat islands”. [...]

Forecasting extreme precipitations is one of the main priorities of hydrology in Latin America and t [...]

The objective of this work is the development of an automated and objective identification scheme of [...]