Tipping Points

Epiconomics 102 : The Sunlight Economy

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Published on Peak Surfer on May 15, 2016

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"It is green capitalism, we admit, but the gene expression for capitalism must and will change."

 

 

 

 

The adoption of The Paris Agreement by 195 countries on December 12, 2015 marks the end of the era of fossil fuels. There is no way to meet the targets laid out in this agreement without keeping 90 percent or more of remaining coal, oil and gas in the ground. The final text still has some serious gaps, and the timetable will have to speed up, but the treaty draws a red line on atmospheric CO2 we cannot cross. As science, economics and law come into alignment, a solar-powered economy is barrelling at us with unstoppable force.

Nafeez Ahmed, a former Guardian writer who now blogs the System Shift column for VICE’s Motherboard recently pondered the Energy Returned on Energy Invested (EROEI) problem with renewables and came up with something that might form the basis for smoothing the transition.

First, you have to get a sense of the scale of the driving force behind this change. Ahmed observed that since the crash in oil prices (underlying causes here) and the Paris Agreement, more than 65% of the world’s oil companies have declared bankruptcy. The Economist puts the default at $2.5 trillion. The real number is probably much higher. Following Paris, Goldman Sachs surveyed over $1 trillion in stranded assets out in the fracking fields that will never be booked. Carbon Tracker puts the likely cash that will be thrown down bad wells by the still standing 35% of fossil industry dinosaurs — and never-to-be recouped — at $2.2 trillion.

In our book, The Paris Agreement, we described why the fossil shakeout is likely to liberate huge cashflows into renewable energy, but with one giant caveat. There is significantly lower net energy (EROEI) in renewables than the fossils provided in their heyday. That augurs economic contraction no matter how you slice it.

Degrowth is already happening. Carbon Tracker identified Peabody Coal as one of those energy giants unable to pass a 2C stress test. Peabody scoffed. Six months later, Peabody went bankrupt.  There are now more solar installers than coal miners in the US and the gap widens each month.

Mark Harrington, an oil industry consultant, tells his clients now the cascading debt defaults will shake the global economy by late 2016 or early 2017 and could make the 2007-8 financial crash look like a cakewalk. Utilities are the new housing bubble.

The EROEI on Texas Spindletops was 100 to 1. The net energy produced from Canadian tar sands or Bakkan shale is less than you can get from green firewood, maybe 3 to 1. Oil rig count in the Bakkan as of this morning: zero. Lost investment exploring and drilling there? billions.

Nafeez Ahmed says:

The imperative to transition away from fossil fuels is, therefore, both geophysical and environmental. On the one hand, by mid-century, fossil fuels and nuclear power will become obsolete as a viable source of energy due to their increasingly high costs and low quality. On the other, even before then, to maintain what scientists describe as a ‘safe operating space’ for human survival, we cannot permit the planet to warm a further 2C without risking disastrous climate impacts.

Staying below 2C, the study finds, will require renewable energy to supply more than 50 percent of total global energy by 2028, “a 37-fold increase in the annual rate of supplying renewable energy in only 13 years.”

Let us leave aside the 2C discussion for now. Two degrees is in the bank and 5 degrees is what we have a slim chance of averting, assuming we can muster the collective will to plant enough trees, make soil, and stop dumping carbon into the atmosphere. Whether 4 degrees, which is likely to be reached by about mid-century, give or take 10 years, is survivable by mammals such as ourselves remains an open question. The odds do not favor our collectively recognizing the risk in time, all of us must acknowledge.

Those odds get even longer once President Trump, taking advice from the Koch brothers, Dick Cheney and Mitch "Black Lungs Matter" McConnell, appoints an Energy Task Force sometime in the first hundred days. Within a few months, Congress will attempt to bend energy economics around their political gravity well. They will superincentivize coal, nuclear and fracked gas and raise even more impossible hurdles for solar power, responsible biomass waste conversion and energy efficiency. Chances then of humans surviving another century: nil.

Trump's tweet has now been retweeted 27,761 times.

Last year the G7 set the goal of decarbonization by end of century, which, like Trump, is a formula for Near Term Human Extinction. At the Paris gathering 195 countries agreed to bounce the date to 2050, with a proviso that it could even accelerate more if needed. More will be needed.

The Bright Shining Hope

Analysts like Stanford’s Tony Seba say that solar power has doubled every year for the last 20 years and costs of photovoltaic power have dropped 22% with each doubling. If you believe these numbers, eight more doublings — by 2030 — and solar power will provide 100% of the world’s electricity at a fraction of today’s prices with significant reductions of carbon emissions. But there is a hitch.

The EROEI of solar power is not improving as quickly as the price. Energy efficiency, especially the embodied energy of components like turbine towers and rooftop arrays and the mined minerals for crystal manufacture, is substantially less than the concentrated caloric punch of oil and coal. Fossil sunlight is to sunlight as crack cocaine is to coca leaves.

And a decarbonated SMART is not your daddy’s muscle car.

That is not to say a civil society living on sunlight can’t still be very nice, and nicer, in fact, than the dirtier industrial civilization, especially if you only have a generation or two left before you go extinct to enjoy it.

All of this revolution could be accomplished, and paid for, simply by a small epigenetic hack in the DNA of central banks. They need to express the gene that prints money. As Ellen Brown explains:

"The combination of fiat money and Globalization creates a unique moment in history where the governments of the developed economies can print money on an aggressive scale without causing inflation. They should take advantage of this once-in-history opportunity . . . ."

Don't panic, and it might be a good idea to follow Ford Prefect's example of carrying a towel, in the unlikely event that the planet is suddenly demolished by a Vogon constructor fleet to make way for a hyperspace bypass.

Despite the paucity of intelligence in the throne room of the Empire, there is, however, a faint glimmer of light coming from a corner of the dungeon, should we peer farther. Ahmed latches on to Eric Toensmeier’s new book, The Carbon Farming Solution, that quotes a Rodale Institute study:

Simply put, recent data from farming systems and pasture trials around the globe show that we could sequester more than 100 percent of current annual CO2 emissions with a switch to widely available and inexpensive organic management practices, which we term ‘regenerative organic agriculture’… These practices work to maximize carbon fixation while minimizing the loss of that carbon once returned to the soil, reversing the greenhouse effect.

As we described in our books, The Biochar Solution and The Paris Agreement, it is possible to unleash the healing powers of the natural world — not by tampering further but by discerning and moving with its flows the way indigenious peoples did for eons — that doesn't just halt climate change but restores it to the pre-industrial. By using a permaculture cascade — regenerative cropping to food, feed and fiber; to protein and probiotic extracts (from waste byproducts); to biofuels (from waste byproducts); to biochar and biofertilizers (from waste byproducts); to probiotic animal supplements and industrial applications like fuel cells (from biochar) — bioeconomics can transform a dying planet into a garden world. But, again, there is a hitch.

Ahmed says:

According to a 2011 report by the National Academy of Sciences, the scientific consensus shows conservatively that for every degree of warming, we will see the following impacts: 5-15 percent reductions in crop yields; 3-10 percent increases in rainfall in some regions contributing to flooding; 5-10 percent decreases in stream-flow in some river basins, including the Arkansas and the Rio Grande, contributing to scarcity of potable water; 200-400 percent increases in the area burned by wildfire in the US; 15 percent decreases in annual average Arctic sea ice, with 25 percent decreases in the yearly minimum extent in September.

The challenge climate change poses to bioeconomics is where epigenetic agents come in. There is a permaculture army waiting in the wings. We have been training and drilling for 30 years. Cue marching entrance, stage left, with George M. Cohan’s arrangement of Yankee Doodle Dandy.

 

 

This will require more than Busby Berkeley. First, as we described here last week, we will need a change of the command switches that express civilization’s genes. This is unlikely to come from Hillary Clinton, central banks, the G7 or the International Monetary Fund — just witness the debacle at Doha in April.  It will more likely arise spontaneously from the grass roots, led by regenerative farmers, treehuggers and degrarians, but funded — massively — by institutional investors in search of safe havens from petrocollapse and failing confidence in a stale, counterproductive paradigm.

It is green capitalism, we admit, but the gene expression for capitalism must and will change.

"If you think about it, economic growth could happen through dematerialization," says Jack Buffington, a researcher at the Royal Institute of Technology in Stockholm and author of Progress, Technology and Seven Billion People: A Solution to Save Capitalism and The Recycling Myth: Disruptive Innovation to Improve the Environment.

"Think about all the different things your smart phone can do that 20 years ago you had a computer, you had a telephone. you had an alarm clock…. So, I think there is a way to transform things through the use of materials to dematerialize while at the same time leading to economic growth. Even if you tried to stop innovation you won't. What we have to push for is a model that between the environment and the economy is complementary, so we achieve goals of improving people's lives at the same time as improving the environment."

A bioeconomy is coming. Fast. There are demonstrations of it, large and small, popping up all over the world. The DNA for the global financial marketplace — our social customs for nations, currency systems and trade — has not changed. What is being transformed is the histone that occupies the space between the helices and flips the switches to turn expressions on and off. Who are the radical free agent proteins that are moving in to transform the histone?

You are.

 

Epiconomics 101: Our Fiscal Genome

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Published on Peak Surfer on May 8, 2016

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"Vital public services like health care, education, transportation and communication should be free."

 

In the May 2d New Yorker, Siddhartha Mukherjee wrote an ode to his mother and aunt, identical twins, taking the opportunity to dig into the roles of nature and nurture in shaping our lives, Going a step farther, he brought in one of our favorite topics here, epigenetics, or the ability of the same DNA strand to issue different instructions depending on external stimuli.

Last year, in our discussion of quantum entanglement, we observed how little of what we call our own bodies is actually our own DNA. More than 95 percent belongs to our unique, personal, coevolving microbiome that not only helps us breathe, digest, and heal illness, but influences our patterns of thought and intentions.

Mukherjee chronicled the gross result of this conspiracy, describing how two brothers, separated by geographic and economic continents, might be brought to tears by the same Chopin nocturne, as if responding to some subtle, common chord struck by their genomes, or perhaps by their epigenomes, and how two sisters — separated long before the development of language — had invented the same word to describe the way they scrunched up their noses: “squidging.”

Mukherjee overlooked the closely entangled microbial web of alien presences, but we’d observe that although these twins may have placed distance and culture between themselves, they had been together long enough to have nearly identical microbiomes from gestation, birth and infancy.

Nucleosome crystal structure at 2.8 angstrom resolution showing a disk-like shape. DNA helices at edge, histones and free proteins in center. The worm-like structures are RNA messengers. reasonandscience.heavenforum.org

Mukherjee writes:

It is a testament to the unsettling beauty of the genome that it can make the real world stick. Hindu philosophers have long described the experience of “being” as a web—jaal. Genes form the threads of the web; the detritus that adheres to it transforms every web into a singular being. An organism’s individuality, then, is suspended between genome and epigenome. We call the miracle of this suspension “fate.” We call our responses to it “choice.” We call one such unique variant of one such organism a “self.”

In his visits with various scientists Mukherjee probed the complex connections of the histones that occupy the empty spaces within the double helix and seem to possess a mysterious power to trigger or silence gene expressions. What he seems to overlook is the role of non-human microbiological agents in making these sorts of choices for their hosts. Indeed, his description of a histone begs comparison to other life forms:

In 1996, Allis and his research group deepened this theory with a seminal discovery. “We became interested in the process of histone modification,” he said. “What is the signal that changes the structure of the histone so that DNA can be packed into such radically different states? We finally found a protein that makes a specific chemical change in the histone, possibly forcing the DNA coil to open. And when we studied the properties of this protein it became quite clear that it was also changing the activity of genes.” The coils of DNA seemed to open and close in response to histone modifications—inhaling, exhaling, inhaling, like life.

***

These protein systems, overlaying information on the genome, interacted with one another, reinforcing or attenuating their signals. Together, they generated the bewildering intricacy necessary for a cell to build a constellation of other cells out of the same genes, and for the cells to add “memories” to their genomes and transmit these memories to their progeny.

While we were pondering these things, bicycling through a Spring rainstorm one morning, we tuned our mobile cyberamphibian prosthesis to Michael Hudson’s interview on Extraenvironmentalist #91. Hudson described how debt deflation is imposing austerity on the U.S. and European economies, siphoning wealth and income to the financial center while impoverishing the periphery. Its the theme of his latest book, Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

Crossing two hot wires in our rain soaked brain, the comparison between economic theory and genetics wafted a blue smoke that trailed out from under our bike helmet.

The system itself — the DNA code — is monetary policy, trade rules, labor, capital assets and other components of what we call “the economy.” The histones are the central banks and the FED that set the policies epigenetically by turning switches on or off. The wild cards are those alien protein agents that seem to bring about changes in the histones. A century ago those might have included J. D. Rockefeller and J. P. Morgan. Then came Henry Wallace and Franklin D. Roosevelt. Today they would include Jaime Dimon (Morgan Chase), Lloyd Blankfein (Goldman Sachs), Christine Lagarde (IMF), and Prince Mohammed bin Salman bin Abdulaziz Al-Saud.

It is pretty clear from most indicators that since at least 2008, and likely much earlier, our economic DNA has been instructed to express a cancer. As Gail Tyerberg observes:

Both energy and debt have characteristics that are close to “magic” with respect to the growth of the economy. Economic growth can only take place when growing debt (or a very close substitute, such as company stock) is available to enable the use of energy products.

Back in the era of cheap energy less debt was required. In our era of expensive energy, gigantic and growing debt is required. But you can only build debt on itself up to the point where confidence in repayment by those who are owed the money falters. After that, watch out. No debt, no energy. No energy, no economy.

Greg Mannarino of Traders Choice says:

Let’s just look at the stock market… there’s no possible way at this time that these multiples can be justified with regard to what’s occurring here with the price action of the overall market… meanwhile, the market continues to rise. … Nothing is real. I can’t stress this enough… and we’re going to continue to see more fakery… and manipulation and twisting of this entire system… We now exist in an environment where the financial system as a whole has been flipped upside down just to make it function… and that’s very scary. … We’ve never seen anything like this in the history of the world… The Federal Reserve has never been in a situation like this… we are completely in uncharted territory where the world’s central banks have gone negative interest rates… it’s all an illusion to keep the stock market booming.

… Every single asset now… I don’t care what asset… you want to look at currency, debt, housing, metals, the stock market… pick an asset… there’s no price discovery mechanism behind it whatsoever… it’s all fake… it’s all being distorted. … The system is built upon on one premise and that is confidence that it will work… if that confidence is rattled the whole thing will implode… our policy makers are well aware of this… there is collusion between central banks and their respective governments… and it will not stop until it implodes… and what I mean by implode is, correct to fair value.”

It’s created a population boom… a population boom has risen in tandem with the debt. It’s incredible. So, when the debt bubble bursts we’re going to get a correction in population. It’s a mathematical certainty. Millions upon millions of people are going to die on a world-wide scale when the debt bubble bursts. And I’m saying when not if… … When resources become more and more scarce we’re going to see countries at war with each other. People will be scrambling… in a worst case scenario… doing everything that they can to survive… to provide for their family and for themselves. There’s no way out of it.”

Jason Heppenstall, who lives in Cornwall, England, writes in the 22billionenergyslaves blog:

Aside from the police and the shops closing, public toilets are closed virtually all of the time, and the Post Office too is soon to close down, having been privatised and now asset stripped. The council is being forced to raise its taxation rates by 4% this year to cover the shortfall caused by spiraling costs and diminished funding from central government. Clinics and charities are being squeezed out of existence and the local council tried (and failed) to privatise the town’s midsummer festival.

My wife works in the care sector. The stories I get to hear will make you never want to be dependent on the state in your old age. If you can’t rely on your kids to look after you in your dotage it might be wise to keep a bottle of whisky and a revolver in your bottom drawer. Or maybe you'd rather die of thirst lying in your own mess because the 19-year-old unqualified carer who works for minimum wage is too busy checking Facebook on her phone to hear you pressing the emergency button by the bed.

Former US Budget Czar David Stockman wrote this week:

Owing to the recency bias that dominates mainstream news and commentary, the massive expansion of the Fed’s balance sheet depicted above goes unnoted and unremarked, as if it were always part of the financial landscape. In fact, however, it is something radically new under the sun; it’s the footprint of a monetary fraud breathtaking in its magnitude.

***

In essence, during the last 15 years the Fed has gifted the US economy with a $4 trillion free lunch. Uncle Sam bought $4 trillion worth of weapons, highways, government salaries and contractual services but did not pay for them by extracting an equal amount of financing from taxes or tapping the private savings pool, and thereby “crowding out” other investments.
 

This is not Al Gore. It is Elon Musk, a beneficiary of govt largess

Instead, Uncle Sam “bridge financed” these expenditures on real goods and services by issuing US treasury bonds on a interim basis to clear his checking account. But these expenses were then permanently funded by fiat credits conjured from thin air by the Fed when it did the “takeout” financing. Central bank purchase of government bonds in this manner is otherwise and cosmetically known as “quantitative easing” (QE), but it’s fraud all the same.

In essence, Uncle Sam has gotten $4 trillion of “something for nothing” during the last 16 years, while the Washington politicians and policy apparatchiks were happy to pretend that the “independent” Fed was doing god’s work of catalyzing, coaxing and stimulating more jobs and growth out of the US economy.

What the Fed was actually doing was falsifying and inflating the price of financial assets. As Michael Hudson points out, the prime error is placing the financial sector in the same column as honest labor or capital contributions. Finance is actually a drain on those things. It is a withdrawal from productivity, not a contributor to GDP.

Stockman agrees:

But financial engineering does not add to GDP or increase primary spending; it results in the re-pricing of existing financial assets. That is, it gooses stock prices higher, makes executive stock options more valuable and confers endless windfalls on the fast money speculators who work the financial casinos.

Last month, Mario Draghi, the European Central Bank president, became the first central banker to take seriously the idea of helicopter money – the direct distribution of newly created money from the central bank to eurozone residents.
 

Germany’s leaders have reacted furiously and are now subjecting Draghi to nationalistic personal attacks. Less visibly, Italy has also led a quiet rebellion against the pre-Keynesian economics of the German government and the European commission. In EU councils and again at this month’s IMF meeting in Washington, DC, Pier Carlo Padoan, Italy’s finance minister, presented the case for fiscal stimulus more strongly and coherently than any other EU leader. More important, Padoan has started to implement fiscal stimulus by cutting taxes and maintaining public spending plans, in defiance of German and EU commission demands to tighten his budget. As a result, consumer and business confidence in Italy have rebounded to the highest level in 15 years, credit conditions have improved, and Italy is the only G7 country expected by the IMF to grow faster in 2016 than 2015 (albeit still at an inadequate 1% rate).

The Automatic Earth

With England jumping ship and Germany saying nicht to every reform proposal, the EU is headed for a disaster but Italy seems to be able to still think outside the box. To us this suggests the potential for alien-led histone modification in the DNA of modern finance.

Heppenstall says:

The irony of being called anti-European is that I am ardently pro-European. I’ve lived in four different EU countries, travelled all over and am married to an Italian Dane. Europe, to me, is the most diverse place in the world and has an amazing spread of history and culture. My ideal life would involve spending several months each year travelling around Europe in a camper van and getting to know it in an even more intimate manner. The EU is not Europe; it’s an abstract concept masking a faceless undemocratic organisation that funnels wealth from one place to another and keeps its modesty intact behind a fig leaf of supposed liberalism.

It doesn’t have to be that way. We could still have a Europe united around some core values other than money and power and capitalism. How about a Europe focused on an emerging eco-consciousness? Or what about remaking it as a loose cooperative of bioregions? Or perhaps, at the very least, we could all agree on a shared constitution founded on liberty, equality and fraternity. Former Greek finance minister Yanis Varoufakis has suggested something along those lines, setting up a pan-European umbrella group called DiEM25 that aims to shake things up ‘gently, compassionately but firmly.’ Perhaps there could be more debate about what kind of Europe would be better suited to weathering the coming financial, ecological and energy shocks without causing so much collateral damage to both itself and other nations.

Until that happens we’ll just have to stand back and watch the fireworks. Big institutions like the EU are like skyscrapers; they don’t come crashing down to the ground without taking out plenty of other nearby buildings and the EU is like the leaning tower of Pisa on steroids.  Big things are an artifact of the age of oil – the future is necessarily smaller and more local. The best course of action is to stop arguing over whether it is best to be stood on top of the creaking tower it or beside it, and simply get the hell out of the way before it goes over. 

Draghi’s Italy, it should be recalled, was the country whose Supreme Court last month ruled that Roman Ostriakov, a young homeless man who had bought a bag of breadsticks from a supermarket but had slipped a wurstel – a small sausage – and cheese into his pocket, had acted out of an immediate need by stealing a minimal amount of food, and therefore had not committed a crime. Carlo Rienzi, president of Codacons, an environmental and consumer rights group, told Il Mesaggero, “In recent years the economic crisis has increased dramatically the number of citizens, especially the elderly, forced to steal in supermarkets to be able to make ends meet.” La Stampa said that, for supreme court judges, the right to survive still trumped property rights, a fact that would be considered “blasphemy in America.”

Michael Hudson

Hudson is another epigenetic secret agent. He advocates a debt jubilee similar to what Truman pushed on Europe after World War II, creating the “German Economic Miracle.” In Hudson’s view, the quickest route to reform would be shifting from taxing honest labor to taxing unearned income and capital gains; from burdening the shrinking middle class to shrinking the rentier class. Vital public services like health care, education, transportation and communication should be free.

Ellen Brown, who has been beating the drum for public banks from her Web of Debt page and books, notes that the Bank of North Dakota, the nation’s only state-owned depository bank, was more profitable last year than J.P. Morgan Chase and Goldman Sachs, and that was after the fracked gas bubble burst. She urges local governments everywhere to bypass the Fed and the vulture banking system and create their own public banks.

Ellen Brown

North Dakota has led the way in demonstrating how a state can jump-start a flagging economy by keeping its revenues in its own state-owned bank, using them to generate credit for the state and its citizens, bypassing the tourniquet on the free flow of credit imposed by private out-of-state banks. California and other states could do the same. They could create jobs, restore home ownership, rebuild infrastructure and generally stimulate their economies, while generating hefty dividends for the state, without increasing debt levels or risking public funds – and without costing taxpayers a dime.

The ability of these foreign antagonists to infect the global economy with a new narrative is a relatively recent phenomenon. The false narrative embedded by Bretton Woods and the Chicago School are not that thoroughly ensconced that they can’t be evicted. There is no reason why the inane policies of economic astrologers could not be quickly reversed by protein protagonists with simple but compelling histological reforms, such as basing the future on a bioeconomy that sequesters carbon and runs on sunlight.

Next week: Epiconomics 102: The Sunlight Economy 

Looking at the Crystal Ball

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One of the most common discussions that I see cropping up in the doomer blogosphere is the speed of collapse. Quite often there are two camps in this debate with one camp strenuously believing that a fast collapse is inevitable while another bunch will insist that a more measured slow collapse or even decline is the most likely outcome. What is most striking, at least to me, is the degree of certainty that some people have in these debates. In fact in many cases people can be so confident in their beliefs that quite often you can almost sense a sense of disdain to people holding an opposing opinion. I suppose this is only human nature but as I have often said before: the nature of complex systems is they are inherently unpredictable. You can only really predict a general trajectory and perhaps with enough knowledge assign probabilities to possible outcomes but anything more and it just amounts to a lot of guesswork. If anyone makes a long-term prediction with a strong degree of confidence then you can be sure the person either has a blind-spot or worse doesn’t have a clue or maybe pushing an agenda or all of the above.

Making predictions and the questions of timing have always been the most difficult questions to answer in the collapse blogosphere. Despite much analysis of information from various sources we are humbled time and time again when it comes to making predictions. Don’t believe me? Just check out the predictions of what pundits said five years ago and look at ALL their dialogues in the past. The pundit is sure to trumpet their successes but normally there is a heap of false predictions they will quietly brush under the carpet and not state. Making any prediction is always difficult especially if it is about the future. In fact one of the few things I can say with any confidence is that when all is said and done that there will be many twists and turns that will surprise everyone, collapse stars included.

The changes in the 20th century were great and totally unexpected but the changes in the 21st century, if you think about it, will have an even larger, more profound and lasting impact on humanity. Furthermore because of the drastic nature of these changes that will likely change human behaviour irrevocably and kill our religious type belief in infinite growth and cornucopian technological worship I expect these changes will surprise people to an even greater degree. It will have to be a bigger surprise because as we see today it will truly take a hammer blow of gargantuan proportions to prize these ideas out of our collective consciousness.

When we see the future in those lenses and anticipate the big changes that will come – that will have to come – to alter our minds so drastically you come to realise just how difficult predicting the future will be. The issue I see here is when change becomes so dramatic it can be hard to grasp the full magnitude of the situation; we cannot appreciate the weight of the words we speak. The discussion almost takes on an unreal element; like we are talking and describing a dream and not reality. In these cases though, it is always helpful to look back on history to gain a good perspective on matters. When we look back consider what people in 1910 thought the year 2000 would be like. Much of the dialogue there would be way off and likely much of the thinking, conventional thinking at least would have seen people imagine that the year 2000 would look a lot like the year 1910 with a few additions added here and there. As you can see this is normalcy bias at work.

Granted in today’s world it can be argued that communications is far superior and our means of acquiring and analysing data is far better today than it was in 1910 so people can make much better predictions. But has that really been the case? I would say the normalcy bias is as strong as ever and if anything it has grown more entrenched. Our belief in progress, technology and infinite growth have only solidified during this time while older or opposing belief systems to counter this culture or belief structure have been systemically eliminated during this time. So in light of that we must always be aware of not only this normalcy bias but also the cultural bias that we are exposed to.

It is also very prudent to remember that because our industrialised society is so truly unsustainable on so many levels that very dramatic changes must happen for society to regain a balance with nature. And these changes must be sufficient to not just alter the way our relationships with one another but our views on nature must change dramatically as we must finally confront the issues we have been trying to hide in the past few centuries namely that humans are not gods and are actually bound by the laws of nature and do have a finite capacity for ingenuity (only gods have infinite ingenuity). We will have to realise our well-being is dependent on the state of our ecosystem and we cannot detach our economies from the resources of the planet (as much as economists will try and convince you otherwise). Our Earth has a finite amount of resources, our society is dependent on energy (and not technology) and the Earth has a limited capacity to handle the pollution from our daily activities. All these ideas, as basic as they may seem, must be grasped by our collective minds and for that to happen we need some major change for people to alter their behaviour in such a drastic matter. In fact at this point I can only see a hammer blow working in waking zombies people from their collective slumber.

We must also note that these profound changes will be so big they will affect mankind for a very long time. This is especially true if you are to believe that these changes will result in a mass die-off. If the die-off is more than 50% of the population then there has been no historical precedent to this and so the changes will truly be unprecedented (at least in absolute terms thus excluding the Toba event). Therefore if the changes you are projecting will result in unprecedented outcomes it stands to reason that the unprecedented changes that will need to occur to reach the final state will become very difficult to predict as we have no historical measuring stick to base our analysis upon. By its very definition it is guesswork, educated guesswork perhaps but guesswork all the same.

This means that a drastic turning point, of some shape or form must occur. Since turning points are so notorious hard to predict (various experts, in various fields have a very bad record of predicting changes in trends) it is curious how people can say with such confidence what the year 2100 or even 2050 will be like when we consider how much the future will have to change to fit in with reality. We were never good in the past in predicting the future so when we make predictions we must be aware of this and aware of the bias that work against us. When looking at such deep matters it pays to reflect for a moment and stick our heads out to gain a greater perspective when making these debates.

And if you really think about it, it is still early days in terms of collapse. The century is still young so I do feel it is premature to make such strong bets that we can predict what will happen in the coming decades. To me it would be a bit like betting on a football game and me predicting that the score would finish 3-0 to the home team. Then after only 15 minutes in, when the score line still says 0-0, we get some people coming out and saying my prediction are wrong because there has been no sign of a goal nevermind a collapse from the away team. We got to wait a decent amount of time before we can really say with any confidence whether the predictions made by you or I are anywhere near right. I think most collapsers (Greer included) foresee a die-off of some sort by 2100 or even 2050. The question is whether this collapse will be slow, fast or step-wise. Can’t say which path will be right with any certainty until at least 2025 IMHO and we probably need even longer than that. I suspect there will be various twists that take Greer and others by surprise because there are simply no historical precedents to the globalised economy we see today. The Roman Empire or any other empire for that matter cannot sufficiently cover all the difficulties modern society faces.

At the minimum what I think we need to be aware of is how the financial system will handle a scenario when global crude oil production leaves the plateau and begins declining year after year. Even more significant turning points would be when total gross energy of ALL fossil fuels reaches a peak and begins declining. In my Energy part II article I had a graph were this point would be reached sometime around 2025. At that point the amount of total possible wealth in the economy will peak and the claims to wealth that money/credit represent will become fundamentally broken. It will become much harder to continue playing the shell games that is QE or massaging various economic statistics to cover up the fundamental mismatch between claims and actual wealth.

Also as the system continues to deteriorate and get even more stressed you increase the probability of the system reaching a tipping point. It is this tipping point that creates the fast collapse scenarios, this happens because the system will leave its island of stability that is its dynamic equilibrium and system behaviour will suddenly change quite radically. You see this in the Arab springs where the economic, political and social systems were under stress for a prolonged period of time (decades) and all it took was a trigger and poof you got massive cascading failures in successive governments. The spark or trigger was quite small but since the system was already under severe strain that this was all it took to break the camel’s back. You see a similar phenomenon occurring in biological systems when the body fails in cascade fashion when certain the parameters leave a certain threshold. Indeed the definition of a tipping point is the disproportionate reaction of a system to a particular stressor and it is this particular behaviour of systems that is the trigger of fast collapses.

As always it is most difficult to determine precisely when this tipping point occurs or when the parameters become too extreme to push the system out of its dynamic equilibrium but most systems have them. I don’t think we can dismiss them and we certainly cannot dismiss tipping points with any degree of confidence until we have experienced periods of sustained declines in either crude oil production or more important total energy production. It is because of this why I feel Greer’s confidence in slow collapse is unwarranted. I am not saying he is wrong but he should exercise more caution and not be dismissive of these notions after all one of the main points about complex systems is they are inherently unpredictable.

The other complication that trips a lot of people up is the fact that most systems have delayed responses to signals. This issue of a delayed response was most notably seen when production of crude oil began to plateau in 2005. As production plateaued, the price of oil increased from around $50 to $148 a barrel and it is only when oil prices reached the upper threshold did the general economy react in a profound manner. It can be noted this response to a plateau in oil production took three years before the effects truly manifested. This delayed response is a common feature of many complex systems and the nature and responses to these delays in signals is dependent on how efficient or resilient and healthy a system is. A more resilient system will have more redundant sub-systems or buffers in place to handle potential shocks. For example a factory with a large well stocked warehouse is more capable of handling a surprise influx of extra orders from customers before needing to restock (which again restocking is a delayed response to a stimuli) than a factory that operates with a small warehouse which operates a more just-in-time regime.

It is these delayed response to signals that give rise to issues such as population overshoot in the first place as temporarily resources can be consumed at a faster rate than the Earth can replenish resources because it takes time for the negative feedback loops to gain sufficient strength to overcome the momentum of the system which is to grow. And just think, this momentum of growth has got a number of centuries under its belt so it will take some time before the negative feedback loops gain sufficient strength to overcome this forward momentum of the overall system again this is a delayed response. We cannot expect immediate responses even if we believe so on an intuitive level.

In fact when it comes to delayed responses there are two types of delay: the first is perception delay and this is the time it takes before it can be observed there is a change in a system. To offer an example of a perception delay let us consider a bacterial infection. It takes a certain amount of time for the person to exhibit symptoms after contracting the bacteria infection and this incubation time can last anything between a few hours or years depending on the particular bacteria. In system dynamics this would be the perception delay. The second form of delay is response delay and this delay is the time taken between when an action is initiated and the time it can deliver a response. Applying the same example of the bacteria it takes a certain amount of time to for the medication (the action or external agent) to take effect and reduce the symptoms from the disease. The elapsed time to take effect is the response delay.

These delayed responses can also be observed in the price of goods and services because the price of goods will not reflect the true scarcity of resources as it takes time for these price signals to filter through the economy. These distortions are only made worse when we introduce various subsidies such as tax breaks, subsidies or do not pay for the full environmental costs of various activities as all these activities serve to mask the market signals that permeates through the system.

How a system handles these responses is, as stated earlier, dependent on how healthy and resilient it is and the length of delay in responding to various signals. If a system is less resilient and the responses are more delayed then the eventual counter-response is likely to be greater. To go back to the economy if there was another financial crisis similar to the one observed in 2008 then the economy would be in a less healthy state plus it would be less resilient. This means any shock coming from a delayed response (say the plateau of global crude production is left) then it would be less able to handle this shock and therefore the probability of a tipping point being initiated will be that bit higher since the stresses being placed on the system are greater.

On the note if global crude oil production it can be noted that more and more experts seem to believe that we will leave the plateau sometime this decade and the period of terminal declines in production will begin. What percentage these declines will take is difficult to say and there is some source of controversy on the magnitude of these declines but most seem to agree on the time-frames. A notable poster called Ron Patterson (also known as Darwinian in The Oil Drum) has followed crude oil numbers like a hawk for various years and has predicted a decline occurring sometime around the year 2015 give or take one or two years (to follow his analysis please follow his blog that is Peak Oil Barrel). If this really materialises then we can say that if the reaction time is similar to the one before to crude oil production plateauing then we could expect a reaction to this decline in oil production sometime in 2018. Again though, this is merely speculation so it must be taken with a grain of salt. What should be noted in this is that we must look out for changes in trends AND then factor in the amount of time needed for the market to respond to these trends for the reaction is not going to be immediate especially if there are distortions in the pricing mechanisms of the commodity in question.  Plus as alluded to earlier the most important variable would be the turning points in total gross energy or better yet gross net energy which is likely to occur shortly after one another as demonstrated in the graph below:

As to zombies, resources wars etc. if there is a major die-off it seems to me there is a good probability those events will transpire in some shape or form. I can’t see how half the world’s population (or more) will die-off without some of them putting some kind of fight so I think if you believe in a die-off, be it fast or slow, then you need to believe the probability of war and zombies is highly likely. I don’t think it is really possible to have one without the other. If you think the two events are not mutually exclusive then you need to lay out how the die-off will occur in such a way those zombies or wars won’t occur. For such a die-off to go unnoticed it must be really slow. The only way I can see it going silently is if people slowly starve to death and die from the various diseases that come from chronic malnutrition. This chronic malnutrition could also act as a means of preventing people from rebelling and thus starting wars because they don’t have the energy to do so. It is not the scenario that is most likely to happen in my opinion but you are welcome to postulate alternate scenarios were people can slowly die. I will say mass die-offs that involve acute starvation of vast chunks of the population or death through wars would tend to suggest more mad Max type collapse scenarios. The other final possibility is you have a hybrid where certain sections of the world have slow collapses while others have fast collapses or flash crashes. If you think about it, everything is up in the air because it is still early days. We are only in the second decade of the 21st century. The Limits to Growth book still said the world economy would still be growing at this point in their standard run so really it would be a surprise to see fireworks just yet, but just because there are no fireworks does not mean there will be none.

To summarise, we cannot know for sure what will happen and we must recognise the fact that predicting the future especially the distant future is largely a fool’s game. Most people who engage in star seeing will look like fools. Remember that. The main things one can do is appreciate the uncertainty that is life and learn to live with it. It is this feeling of wishing for certainty, wishing for absolute control that contributed to some of the problems to begin with. All we can do is be humble, be honest about our shortcomings and observe the patterns that occur in nature closely and most important of all respect the laws of nature. If we observe the phenomenon that occur in nature we can build models that can give us a better understanding of the world around us which can be enough to offer a general idea of what to expect. However all models are flawed and do have their shortcomings so we must know acknowledge their weaknesses. As Ugo Bardi likes to say all models are wrong. I wouldn’t quite go as far to say that but I do like to use the analogy of a torch. Models are like torches they shed some light to the path ahead of us and make navigation somewhat easier. Some torches especially well built torches are better than others but ultimately no torch can show you the whole picture and most of your environment will still be shrouded in darkness. After all torches are no real substitutes for natural sunlight so the best we can do is acknowledge their shortcomings but use their small benefits to maximum use.

Podcast: David Korowicz- Financial Contagion & Tipping Points

Off the microphones of David Korowicz, RE & Monsta666

Published on the Doomstead Diner on July 13, 2013

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Discuss at the Podcasts Table inside the Diner

Today we begin the first of a 3 Part Podcast with David Korowicz, a Physicist and Human Systems Ecologist doing research for the FEASTA organization who also has his own blog at DavidKorowicz.com

David is best known in the Collapse Blogosphere for his Research Papers
Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse  and Tipping Point: Near-Term Systemic Implications of a Peak in Global Oil Production – An Outline Review Catastrophic Shocks in Complex Socio-Economic Systems—a pandemic perspective, which analyze the parameters involved in Fast Collapse scenarios.

Part 1 of the podcast focuses on the effects of Lock-in, Irreversibility and Tipping Points in Complex Systems.  We look at analogies to biological systems as well as geophysical systems in this podcast.

Part 2 of the Podcast features discussion of Financial Contagion as well as alternative Currency regimes and replacement monetary systems.

Part 3 looks at possible solutions from both Top Down planning and Bottom Up construction of more resilient systems, as well as Community Development and Planning.

As we air them, the following 2 parts of the Podcast will appear here in this article, as well as on the Podcast Page of the Doomstead Diner.

RE

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