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Guest Post: Prediction: Things Will Unravel Faster Than You Think
Submitted by Chris Martenson
Prediction: Things Will Unravel Faster Than You Think
By my analysis, we are not yet on the final path to recovery, and
there are one or more financial 'breaks' coming in the future.
Underlying structural weaknesses have not been resolved, and the
kick-the-can-down-the-road plan is going to encounter a hard wall in the
not-too-distant future. When the next moment of discontinuity finally
arrives, events will unfold much more rapidly than most people expect.
My work centers on figuring out which macro trends are in play and
then helping people to adjust accordingly. Based on trends in fiscal
and monetary policy, I began advising accumulation of gold and silver in
2003 and 2004. I shorted homebuilder stocks beginning in 2006 and
ending in 2008. These were not ‘great' calls; they were simply spotting
trends in play, one beginning and one certain to end, and then taking
appropriate actions based on those trends.
We happen to live in a non-linear world; a core concept of the Crash Course.
But far too many people expect events to unfold in a more or less
orderly manner, with plenty of time to adjust along the way. In other
words, linearly. The world does not always cooperate, and my concern
rests on the observation that we still face the convergence of multiple
trends, each of which alone has the power to permanently transform our economic landscape and standards of living.
Three such trends (out of the many I track) that will shape our immediate future are:
- Peak Oil
- Sovereign insolvency
- Currency debasement
Individually, these worry me quite a bit; collectively, they have my full attention.
History suggests that instead of a nice smooth line heading either up
or down, markets have a pronounced habit of jolting rather suddenly
into a new orbit, either higher or lower. Social moods are steady for
long periods, and then they shift. This is what we should train
ourselves to expect.
No smooth lines between points A and B; instead, long periods of
quiet, followed by short bursts of reformation and volatility. Periods
of market equilibrium, followed by Minsky moments.
In the language of the evolutionary biologist Stephen Jay Gould, we
live in a system governed by the rules of "punctuated equilibrium."
Complex Systems
Our economy is a complex system. The key feature of such systems is
that they are inherently unpredictable with respect to the timing and
severity of specific events. For the uninitiated, they can look
enormously fragile and prone to flying apart at any minute; for the
seasoned observer, there is an appreciation that the immense inertia of
the economic system will almost always delay and dampen the eventual
adjustments.
Like everybody else, I have no idea exactly what’s going to happen, or precisely when. Anybody who says they do know
should be greeted with a furrowed brow and a frown of suspicion. As
my long-time readers know, I prefer to assess the risks and then take
steps to mitigate those risks based on likelihood and impact.
Which means that although we cannot predict the size (exactly how much) or the timing (precisely when) of economic shifts or world-changing events, we can certainly understand the risks and the dimensions of what
might happen. Just as we cannot predict when an avalanche will
release from steep slope, or even where or how big it will be, we can
readily predict that constant snowfall coupled with the right
temperature conditions will lead to an avalanche sooner or later, and
more likely in this gully than that one. Given certain conditions, we
might expect one that is larger or smaller than normal. Although we
don't know exactly when or how much, we do know that when snow
accumulates, so do the risks of more frequent and/or larger avalanches.
Such is the nature of complex systems. While inherently
unpredictable, they can still be described. The most important
description of any complex system is that it owes its order and
complexity to the constant flow of energy through it. Complex systems
require inputs. This is one way in which we can understand them.
Given this view, one easy "prediction" is that an economy without
increasing energy flows running through it will stagnate. To take this
further, an economy that is being starved of energy becomes simpler in
the process -- meaning fewer jobs, less items produced, and a reduced
capacity to support extraneous functions.
Accepting "What Is"
The most important part of this story is getting our minds to accept
reality without our passionate beliefs interfering. By ‘beliefs’ I
mean statements like these:
- “Things always get better and are never as bad as they seem.”
- “If Peak Oil were ‘real,’ I would be hearing about it from my trusted sources.”
- “Dwelling on the negative is self-fulfilling.”
While each of these things might be true, they also might be false
and therefore misleading, especially during periods of transition. Our
job is to remain as dispassionate and logical as possible.
Let's now examine more closely the three main events that are
converging -- Peak Oil, sovereign insolvency, and currency debasement --
using as much logic as we can muster.
Peak Oil
Peak Oil is now a matter of open inquiry and debate at the highest
levels of industry and government. Recent reports by Lloyd's of London,
the US Department of Defense, the UK industry taskforce on Peak Oil,
Honda, and the German military are evidence of this. But when I say
“debate,” I am not referring to disagreement over whether or not Peak
Oil is real, only when it will finally arrive. The emerging consensus
is that oil demand will outstrip supplies “soon,” within the next five
years and maybe as soon as two. So the correct questions are no longer,
"Is Peak Oil real?" and "Are governments aware?” but instead, "When
will demand outstrip supply?" and “What implications does this have for
me?”
It doesn't really matter when the actual peak arrives; we can leave
that to the ivory-tower types and those with a bent for analytical
precision. What matters is when we hit “peak exports.” My expectation
is that once it becomes fashionable among nation-states to finally
admit that Peak Oil is real and here to stay, one or more exporters
will withhold some or all of their product "for future generations" or
some other rationale (such as, "get a higher price"), which will rather
suddenly create a price spiral the likes of which we have not yet
seen.
What matters is an equal mixture of actual oil availability and
market perception. As soon as the scarcity meme gets going, things will
change very rapidly.
In short, it is time to accept that Peak Oil is real - and plan accordingly.
Sovereign Insolvency
Once we accept the imminent arrival of Peak Oil, then the issue of
sovereign insolvency jumps into the limelight. Why? Because the hopes
and dreams of the architects of the financial rescue entirely rest upon
the assumption that economic growth will resume. Without additional
supplies of oil, such growth will not be possible; in fact, we’ll be
doing really, really well if we can prevent the economy from
backsliding.
Virtually every single OECD country, due to outlandish pension and
entitlement programs, has total debt and liability loads that Arnaud Mares (of Morgan Stanley) pointed out
have resulted in a negative net worth for the governments of Germany,
France, Portugal, the US, the UK, Spain, Ireland, and Greece. And not
by just a little bit, but exceptionally so, ranging from more than 450%
of GDP in the case of Germany on the 'low' end to well over 1,500% of
GDP for Greece.
Such shortfalls cannot possibly be funded out of anything other than a
very, very bright economic future. Something on the order of
Industrial Age 2.0, fueled by some amazing new source of wealth.
Logically, how likely is that? Even if we could magically remove the
overhang of debt, what new technologies are on the horizon that could
offer the prospect of a brand new economic revival of this magnitude?
None that I am aware of.
In the US, the largest capital market and borrower, even the most
optimistic budget estimates foresee another decade of crushing deficits
that will grow the official deficit by some $9 trillion and the real
(i.e., “accrual” or “unofficial”) deficit by perhaps another $20 to $30
trillion, once we account for growth in liabilities. This is, without
question, an unsustainable trend.
It’s time to admit the obvious: Debts of these sorts cannot be
serviced, now or in the future. Expanding them further with fingers
firmly crossed in hopes of an enormous economic boom that will bail out
the system is a fool’s game. It is little different than doubling down
after receiving a bad hand in poker.
The unpleasant implication of various governments going deeper into
debt is that a string of sovereign defaults lies in the future. Due to
their interconnected borrowings and lendings, one may topple the next
like dominoes.
However, it is when we consider the impact of the widespread
realization of Peak Oil on the story of growth that the whole idea of
sovereign insolvency really assumes a much higher level of probability.
More on that later.
For now we should accept that there's almost no chance of growing out
from under these mountains of debts and other obligations. We must
move our attention to the shape, timing, and the severity of the
aftermath of the economic wreckage that will result from a series of
sovereign defaults.
Currency Wars
We could trot out a lot of charts here, examine much of history, and
make a very solid case that once a country breaches the 300%
debt/liability to GDP ratio, there's no recovery, only a future
containing some form of default (printing or outright).
In a recent post to my enrolled members, I wrote:
The currency wars have begun, and the implications to world stability
and wealth could not be more profound. Fortunately, all of my
long-time enrolled members are prepared for this outcome, which we've
been predicting here for some time.When pressed, the most predictable decision in all of history is to
print, print, print. So I can't take credit for a 'prediction' that
was just slightly bolder than 'predicting' which way a dropped anvil
will travel; down or up?The only problem is, widespread currency debasements will further
destabilize an already rickety global financial system where tens of
trillions of fiat dollars flow daily on the currency exchanges.
You can be nearly certain that every single country is seeking a path
to a weaker relative currency. The problem is obvious: Everybody
cannot simultaneously have a weaker currency. Nor can everybody have a
positive trade balance.
If a country or government cannot grow its way out from under its
obligations, then printing (a.k.a. currency debasement) takes on
additional allure. It is the "easy way out" and has lots of political
support in the home country. Besides the fact that it has already
started, we should consider a global program of currency debasement to
be a guaranteed feature of our economic future.
Conclusion (to Part I)
Three unsustainable trends or events have been identified here. They
are not independent, but they are interlocked to a very high degree.
At present I can find no support for the idea that the economy can
expand like it has in the past without increasing energy flows,
especially oil. All of the indications point to Peak Oil, or at least
"peak exports," happening within five years.
At that point, it will become widely recognized that most sovereign
debts and liabilities will not be able to be serviced by the miracle of
economic growth. Pressures to ease the pain of the resulting financial
turmoil and economic stagnation will grow, and currency debasement
will prove to be the preferred policy tool of choice.
Instead of unfolding in a nice, linear, straightforward manner, these
colliding events will happen quite rapidly and chaotically.
By mentally accepting that this proposition is not only possible, but
probable, we are free to make different choices and take actions that
can preserve and protect our wealth and mitigate our risks.
What changes in our actions and investment stances are prudent if we
assume that Peak Oil, sovereign insolvency, and currency debasement are
'locks' for the future?
I explore these questions in greater depth in Part II of this report (enrollment required)
»
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That is seriously funny. Of all of the possible responses, you come up with that one.
If they don't want to go crazy they shouldn't come our amusement-theme park.
Pyrites of the Carribean.
Yuk, yuk, yuk..
Very God damn interesting. Tyler Durden whomever he is is a highly intelligent individual. Skilled in the ways of propaganda and has a very good understanding of human nature. But we differ. I am not of the opinion that this is a gentlemen's club. In my estimation the current owners are the merely the slave holders of old and you and I are the slaves. While they have so far deferred from any overt beatings I do not put it past them as they just abunch of slave owning bastards. Beware. They will use the police power of the state against us.
What Kafka novel did you fall out of and what do I have to do to get you back where you came from?
You desperado types are idiots of your own making. Where do you get this garbage? Do you even believe it yourself?
It's a good idea to stock a few months worth of canned food. Don't forget the can-opener.
And the banner they raised said, "give us bread and then ask for virtue."
So 1789ish. Give me flibberty or glib me gibbets.
Ok kids, we need Buffy:
http://www.youtube.com/watch?v=ahXcWTJTy1w
I am joking (sort of) but we are all facing a common enemy, no? And given the demographics of this site, I know some will not get Buffy - but it really was one of the best and funniest (and most subversive) tv shows over the past decade or so - all television isn't bad:
http://en.wikipedia.org/wiki/Buffy_the_Vampire_Slayer_(TV_series)
Buffy is way cool.
Buffy!
We're at a sort of crossroads in human history:
Either we innovate, or we reduce our numbers. Could the world have supported current day world population 1,000 years ago? The answer is: no. That's where 'innovation' comes in. We're either going to have to find a way to develop new technology and infrastructure to support a growing world population, and find some way to turn those #'s of people into a prosperous system, or else all we'll see is war, disease, and famine.
Hey, I'd be happy just living my life, but the way things are working right now, we're going to have to shoot/kill one another. I don't make the rules, we just sort of have a tendency to murder one another when resources are scarce. I'm sure you're all nice people, but life's a bitch.
I'm all for innovation but since you are so gung-ho on reducing the population - are you offering you and your family first? Do you have children, nieces, nephews?
If things do get to that point (which I hope it doesn't) what can you offer? Are you a protector, soldier, craftspersons, healer or farmer?
Grow up.
Perhaps you've misunderstood me. I'm not some peddler of "we're overpopulated" bullcrap. I'm just saying that people have the habit of killing one another when they're forced into a situation of limited resources. I'd like to think we'd all get together and work out some way to get through this, but do you honestly think that'll happen?
I don't 'believe' that we're overpopulated as some sort of absolute: the reason why we're going to face such issues is because of our practices over the decades, the same sort of practices that led to such growth will be our undoing. I'm sure there's technologies out there that could be invaluable in advancing societies & their populations, but they'd cost too much [right now] to implement, or would kill whatever goose is currently laying golden eggs for them.
Simply put: There may be a "salvation" for us, but the way the system works, it'll be cheaper in the long run to just let us kill one another off. Like I said, I don't write the rules, I don't even want to play by them. You and I both have values assigned to us by our functioning societies, and at some point in the future, we may be seen as excess. Just as they toss away people that they deem as redundant from jobs, they'll do to you, with your life...
...and what would you do, then? Plead with men who would kill you?
As the system functions right now--to the people running the show--the total/perceived future worth of the world's population is not equal to expenditures towards its upkeep and growth. These are the rules everyone wants to play by. If you wanted to know, I'm a bit of a commie at heart, I was never big on the whole capitalistic dream, but when everyone is forcing you to play by their rules, what can you do?
I'm of the doctrine that all human lives are equal. Too bad there's enough people in the world who think they're better than others: so, we know what it'll come to.
edit:
If this were some post-civilized society scenario, you'd have already shot me, right? It's OK. I'd only haunt you sometimes, when I felt like it.
What is that last part from, 'Leader of the Pack'?
How does the last part go,
'Sorry I'm so bad, peak oil knocked me off the track,
But if I kill you all, I'll be the leader of the pack.'
Let me know how San Quentin turns out.
of course it will unravel faster...thats what happens to a coiled spring....every day i see that coil being tightened beyond belief...someday soon law of physics will take over.
The coil has unsprung, it's nearly unravelled, time is slowing, it's almost stopped. Now for the big surprise.
It's not the laws of physics taking over. They're getting ready to wish us all buona notte.
Act II begins and no one's got a clue. Stock up on that gold and buck shot. Pathetic.
You have done all this posting, the most of anyone on this thread. What did you accomplish?
Had a good laugh. Several. I Have a low amusement threshhold.
Fair enough. Tell us why we "pessimists" have the wrong perspective. What is it we are missing and do not understand?
The hall monitor was always a kid that wanted to be popular.
But always nice.
And firm.
Be firm with me, Ms. Creant, I can take it.
Cool. Firm it is. I see that this is the response you choose instead of telling us why you are not pessimistic. Guess you are just here to fuck around rather than test your thinking and see if it works, or not.
Why I am not a pessimist:
Faith in the Holy Trinity.
Why I let my fingers do the talking:
Fun to deflate you phony priests of pessimism giving each other a shiver.
Why I am having so much fun at it:
I don't know, ask my dog. He does all my thinking for me.
I've been drilling for oil for 38 years around the world. It is more difficult (expensive) to find and produce. Those shale oil fields referred to previously do contain high calculated reserves but permeability, or lack thereof, reduces ultimate recovery. Actually I'm on location right now for a company that shall remain nameless so I won't get fired. Our budget for this well is a shade over $7 million and it's a land well. The decline curves on these wells even after multi-stage frac jobs fall off rapidly. Basically what I'm trying to say is the reserve numbers thrown out there don't mean shit. Demand will outstrip supply. And soon.
Appreciate the report from reality. The exponential function is a bitch.
For those who wish to understand:
http://www.youtube.com/watch?v=F-QA2rkpBSY
I finally am breaking down and posting after lurking for months.
Whether or not you believe peak oil is real or not, the fact is, we aren't going to see it the way things are going. I'm guessing that in the next couple of months we are going to see a major crash in the economy caused by a multitude of black swans, most of which were called out and identified on this blog months in advance. I'm actually thinking that the foreclosure freeze is the one that is going to do us in. As the news gets out that people aren't getting thrown out of their homes, watch the mortgage payment rate go drastically lower. Banks will start panicking and all hell is going to break loose. From there, it's a real short step to shooting and looting.
It might be a little late for some folks to get properly prepped, but a supply of food and a dependable weapon are a very good idea.
Damn, I shouldn't have watched "The Road" and "The Book of Eli" last night.
"book of eli" is crap....
Most sane commentators agree that the current economic model is unsustainable and a crash is imminent( i agree), but they talk about wide spread looting and society going Mad Max like( i disagree). The breakdown of the current paradigm, will most likely usher in changes for the better.
What kind of crash is imminent? Banks panicking?? Don't think so. Election of 2012 will be upon us and life will be little different from today. Muddling through. Morphing. Some will manage to make money, and have fun doing it. Others will just buy guns and not feel any better for doing so. A few banks will be failed every Friday. Gas prices will go up in the spring and fall in the fall.
Life will go on. Life has always been hard. But some have managed to whistle while they worked. Many go to the barn dances on Saturday night. Some even manage to enjoy themselves there. Find a girl. Make babies. Get married. Build a life. All while life is hard. That is the way it has been. That is the way it will be. Scaremongers have always been among us. I have to help my daughter figure out what college she will attend in four years. Shall we live our lives today like the college won't be there in four years? What good will that do me, or my daughter? Perhaps you would counsel her to stop studying her science and biology and chemistry and math (and Spanish language). Our world is coming to an end so stop preparing for the future? I don't think so.
MsCreant - I think you must not have any grandchildren, to wonder why you shouldn't be pessimistic. Those who have been optimistic have always been optimistic in the face of life is hard and everything is falling apart. That is how one builds a life - creating order out of chaos - not hiding from it.
Bravo,
Some of us have to be strong for others. Some of us just realize that 'on a long enough timeline the survival rate is zero'; and get on with it.
Some of us are like the protagonist in Dusty 'yes' key's 'Notes from Underground' - and deserve to be treated appropriately.
Taking yourself seriously is going to cause a lot of deflationary pressure to arise.
You're right about the movies, bad move. I watched the same two on consecutive days last week. Don't worry, the nightmares will gradually subside.
TPTB don't know the future, they just know their plans for it, which can be foiled. Only God knows the future, and whom he chooses to reveal it to. The tiger still must arise...........
23 And the counsel of Ahithophel, which he counselled in those days, was as if a man had inquired at the oracle of God: so was all the counsel of Ahithophel both with David and with Absalom.
30 And David went up by the ascent of mount Olivet, and wept as he went up, and had his head covered, and he went barefoot: and all the people that was with him covered every man his head, and they went up, weeping as they went up. 31 And one told David, saying, Ahithophel is among the conspirators with Absalom. And David said, O LORD, I pray thee, turn the counsel of Ahithophel into foolishness.
21 And it came to pass, after they were departed, that they came up out of the well, and went and told king David, and said unto David, Arise, and pass quickly over the water: for thus hath Ahithophel counselled against you. 22 Then David arose, and all the people that were with him, and they passed over Jordan: by the morning light there lacked not one of them that was not gone over Jordan.
23 And when Ahithophel saw that his counsel was not followed, he saddled his ass, and arose, and gat him home to his house, to his city, and put his household in order, and hanged himself, and died, and was buried in the sepulchre of his father.
2 Samuel 15-17
King James Version
Take your stone age campfire stories somewhere else.
hate much?
No. Thanks for asking. How about you?
chumba-lite you're back.
"In the language of the evolutionary biologist Stephen Jay Gould, we live in a system governed by the rules of "punctuated equilibrium.""
Lol, you mean Gould's way of trying to explain away the fact that the fossil record in no way supports his view. It happened in really fast short bursts, that's why there's no evidence. Science? Bah. Karl Popper is spinning in his grave.
http://en.wikipedia.org/wiki/Falsifiability
Peak! Oil!, per se, is a completely silly concept. It's a shame to see it Playing on ZH.
Newsflash - at a pinch you can turn COAL, for goodness sake, in to oil very easily. (Coal is in hyperabundance worldwide, if you don't kno
Newsflash, you can simply MANUFACTURE oil from scratch using Molecules -uh, observe that all engine oil is now totally synthetic.
Oil sands used to Impossible To Use Wonder Of Nature Locked Beyond Man's Comprehension By Gaia Oh The Mystery, now trivial ("you need a big truck. and did we mention steam")
Deep water drilling used to be The Stuff Of Science Fiction, now you just rent a rig.
Seeing in to the Earth used to be performed by mystics. Now you can see in to the Earth using incredibly expensive (Over Twenty Dollars Per Unit) microphones and an iMac. Et cetera, et cetera, et cetera.
There will never, ever, ever, ever, ever be the slightest shortage of oil.
People selling Peak! Oil! newsletters, the ones that are at least trying to pull a tissue over the idiocy, have moved on to "Peak! Easy! Oil!" or some such confusing term, trying to get around the fact that oil production simply depends on technology.
Or they pull out environmental insanity ("Sure you can get all the oil you want! But you'll have to USE WATER!" or ... whatever).
Peak! Oil! is, very simply, a Malthusian concept: i.e. it is as exactly utterly pathetically hopelessly totally completely fully wrong as Malthus. IE, Malthus, making the Biggest Mistake Ever Made In History By Any Thinker, failed to notice that production of a resource depends on technology.
His conclusions were only valid for a given technology.
Peak! Oil! has been predicted every ten years since oil came in to popular use. In a sense ..... the prediction has been correct EVERY SINGLE TIME.
Thus, some fool probably figured out how much oil one could make using the old wooden rigs and got Malthusian ("pshaw, what, you gonna build them out of steel? peak! oil!")
If you think about it, Peak! Oil! *only has meaning* FOR a given technology. Next time you see a Peak! Oil! newsletter hawker, just remember that you can easily get gasoline from coal (for goodness sake). So, it's an utter non-starter.
Correct, just another Illuminati hoax to bring in the new world order. Mama told me as a boy in the 70's about all the capped wells. Mama was pretty smart...
http://www.youtube.com/watch?v=NbakN7SLdbk
Neither of you understand differential equations and the math.
10% of China and India have cars. 90% want them.
There's plenty of oil, but it can't come up fast. The old fields die, the new fields are drilled frantically NOT to increase production and serve those new car buyers. To simply try desperately to hold production where it is.
The old fields die. So do the engines on the agricultural tractors. And then, so do you.
There will be no new world order. There will be little of anything.
(I majored in three things, math, comp sci and physics.) Your post is completely incoherent. (1) Yes, demand will always increase, and tremendously. So what? (2) As explained at length, the "Peak! Oil!" idea is precisely The Malthusian Mistake, over again.
Is there much discussion on ZH at a higher level than this?
And what if the Dinosaur Kings (They are not Illuminated) wanted you to believe that they made it up? Pretty tricky huh? I think it is time we start references some books here for you folks to read. My favorite, as it sites some names such as Rotheschildes, Rockefellers (what a name huh!) and Nobels. Read "The Party's Over". Great book. Facts, charts and graphs are abundant.
Ouch, I was waiting for this. The process of turning coal has a horrible EROEI. Guess who tried to turn coal into gas to further their agenda? The Nazis. It didn't work out too well for them. It was what ended their regime.
Um - no, it's now very easy to turn coal in to oil. You make a good point that it was somewhat difficult, say, 70 years ago.
Does ZH discussion reach a more competent level? I'm new.
No, it doesn't. You need to go somewhere else.
yup, speak with Johnny Bravo
Do some research please, the process has been greatly improved as of late. Also, I think it quite a stretch to say it ended the Reich..
See if i can't find a link for that process improvement :)
Peak Oil is a turning point for mankind. It is a big subject.
In short, the population only doubled over the first 17 centuries of the last millennium. But then came coal followed by oil and gas, and the population increased six-fold. These new energy sources, especially oil, the easiest, allowed the rapid expansion of industry, transport, trade and agriculture allowing the economy to expand greatly. It was accompanied by the growth of financial capital as banks lent more than they had on deposit, confident that Tomorrow's Expansion was collateral for Today's Debt.
But now we face the dawn of the Second Half of the Age of Oil when supply declines from natural depletion, meaning that debt goes bad (as is already happening) and the economy contracts.
http://europe.theoildrum.com/node/5315
This is the largely unappreciated connection, i.e., that between fractional-reserve lending and oil depletion. For it was cheap credit that let to cheap (as in under-priced) oil and thus to depletion that a free market would not have "allowed." Indeed, the "Oil Age" per se is simply a function of the century-long corruption of money that is collapsing under its own weightlessness.
"These new energy sources, especially oil, the easiest, allowed the rapid expansion of industry, transport, trade and agriculture allowing the economy to expand greatly.".......
This is a vague meaningless pop-anthropology guess. It's about as valuable as saying "ABBA had such great songs because of the cold weather spurring them on!"
You might as well assert that "easily available oil held back better technology like nuclear" ..or whatever.
"from natural depletion,.." What depletion? Every ten years we would have reached "Peak! Oil!", but technology moved on. Oil sands are now trivial, as easy as pie (gosh, you need STEAM ... and wait ... LARGE TRUCKS).
As mentioned, the funny Peak! Oil! web sites, that are at least trying for a tissue of logic, have started moving the phrase to "Peak! Easy! Oil!" or something as equally idiotic.
It's hilarious that weaker-minded people are getting in to Malthus again. We only all exist because of *technology* ... "resources" are meaningless.
ZH not looking real potent so far.
It's not potent at all. There are other blogs that are miles better. You need to go somewhere else.
You are absorbed into our collective.
You are contributing mightily.
Include your own additions when computing ZH aggregate consciousness.
No. We want him to go away. He speaks before thinking. We don't need more of that.
Looks like peak alcohol nearly occurred here late last night.
I'm ready for peak justice and peak pitchfork!
We have not even started the ascent up that curve.
You don't understand differential equations.
You will be dead soon. Like the rest of us.
There is no requirement that there be a solution. The universe doesn't care if 6 billion die and leave 900 million alive.
The universe doesn't care if part of the die off is one group killing off another group in the name of justice, either.
We are up against the edges of the petri dish, and it is one minute before midnight, and us germs are getting ready to double, yet again, and spill over the edge of the petri dish, even as others die in their toxic waste products, which are also crowding the germs out of the dish. Did I miss anything?
So what, friend, is your point? That it is useless to try and think about how to get through the bottle neck? Useless to consider better systems of living together? Shall we all kill ourselves now, save mother earth the trouble?
I am alive, here, now today. How about you?
Suppose we bacteria go and find ONE THOUSAND times as much growing space for ourselves. Like a whole nother galaxy worth of earths or 1000 Ghawars.
At the stated doubling rate, how long does that buy us? Less than 10 fucking minutes.
Time to face it, there is no way through the bottleneck. The only route forward is what is considered brutal eugenics.
People will have to be prevented from reproducing and from consuming. The NWO people already want that, however, they reserve the right for themselves and their progeny, even though they have no merit.
You just came up against my barrier. There are people out there who think and do all kinds of stuff. There is a corporate culture out there that has taken over all the power centers all over the world by lobbying/bribing. I am not fooled, that culture is sociopathic and when it is not that strong, merely narcissistic. It is an entire culture of it, no doubt. You can see some of the same behaviors and values replicated in dictators and gangs. They are disconnected from you and I and disconnected from the world. They exist in loosely associated (and unassociated) pockets all over. What I don't buy is that they are organized with a common agenda, that this collapse is all being smoothly engineered, that there a is NWO and they are winning. When I start reading materials from sites discussing stuff like that, my bullshit alarms go off. The tone is like, I don't know, a fairy tale or a bad movie. Too much drama not enough proof.
I wish I could believe in a NWO group. It would make things so much more clear and easy. I'd know just what to do, no lie.
I think our problems are systemic, structural, not agentic. We have grown too large and disconnected from one another. There is too much complexity and at the same time too much centralization of power and resources. But an actual gang of hoods? An actual list of bad guys? Too easy.
I have seen a short movie about "The Creature from Jekyll Island." It went over some history. But those players are not the only players. The world is too big for any one group to have dominion over it all. I respect your head, not necessarily your manner, so since you brought this up, I dump it on your door step.
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I am alive, here, now today. How about you?
>>
Good answer.
Yes, it is useless to try to "solve the problem". There is no solution.
As for what to do, the answer is obvious and will be rejected.
Kill as many people as possible. Now. Start a war and win it. After it's won, kill the enemy civilians. Get the casualty count up to a few billion. Target China and India.
It won't happen soon enough. Mankind's pinnacle achievements are behind us.
Peak hangings in every major city a la mussolini.
"That's the flaw in the entire system, it's a Friken PONZI SCHEME, no more no less.
Sooner of later, someone has to lose."
Welcome to Albania 92-97!
5 years! Expect the END in 5 years at the latest.
Pushin through the market square.
So many people crying'.
News had just come over,
We had five years left for dieing.
David Bowie 1970
Wrong again!
Ms Creant is right.
We won't have to kill each other.
Most will just lie down and die without being asked. The violent will seek and find their own ends. And that leaves just me and mine and a billion other lucky, dazed survivors to collect up all that overflowing gas and oil into buckets to pour into our new Humvees right off the dealer lot.
But don't pout, doomsters, all your buried gold will never be found.
"That's the flaw in the entire system, it's a Friken PONZI SCHEME, no more no less.
Sooner of later, someone has to lose."
Welcome to Albania 92-97!
5 years! Expect the END in 5 years at the latest.
The squeeze is on. When a minority of people create a monopoly in every essential resource, then of course they can deliver the news that things are bad. Just tell the sheep that there aren't enough resources, and they will roll over and pay more money. The Malthusians love this crap.
Peak oil doesn't exist.
Farmland isn't in short supply.
Manufactoring has been offshored, but the know how hasn't disappeared.
We don't need to do anything globally. Read Buckminster Fuller's Critical Path for inspiration on the development of physical infrastructure and cost analysis to build a modern society.
In the meantime, local is better. Start growing your garden, build your water catchment and filter system, put together your energy systems (even if it is just collecting bees wax), store some energy supplies, and launch your own local currency.
There were about a 1,000 local currencies circulated during the 30s. And the analysis that I read speculated that it was the local currencies, not Fed actions, that got the economy moving.
We don't need s** from these globalists.
"Peak oil doesn't exist."
As I said above, it wouldn't exist without artificially cheap credit for nearly a century. But even if Peak Oil didn't exist, Geopolitical Oil would, by which I mean that geopolitics can achieve at a moment's notice what Peak Oil would take years to do: take the oil prices to hundreds of dollars per barrel. And if you don't think that Geopolitical Oil is a reality, bear in mind that just as RDR did -- http://www.lewrockwell.com/orig/stinnett1.html -- Obama or his successor stands to "change the subject" amid growing domestic turmoil by dragging the country to all-out war once again, with the likelihood that the "cause" will be Iran's or some "terrorist's" bombing of the Strait of Hormuz.
Most of you have lots of cash flow, and you've done the right thing until now. So did I.
But when I saw the writing on the wall and uncovered the fraud in our debt-based monetary system three years ago, that took the cake. Call it strategic withdrawal "coitus interruptus" since I was getting screwed and didn't enjoy the ride.
No Federal, state, or property taxes paid.
No fines paid on 401k withdrawal.
No mortgages paid.
There is no money, and there is no real debt.
I'm a good citizen and would never dishonor my fake debts. I discharge them as fast as I can sign my name and write the magic words "Accepted for Value and returned for Discharge, Settlement, and Closure of the account."
Almost no business with banks.
No business with all large corporations, when possible.
I use debt notes only to pay for a little gas, utilities, and food. Then I file 1099B forms to get back every bit of cash used for expenses during the year.
I'm the holder in due course and manage my own commercial affairs. They have no jurisdiction. I'm a preferred stock owner of the US Treasury and exempt from levy.
"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." -- Buckminster Fuller
And if peak oil did exist, how would that change your game plan? You may want to consider that resources are finite, therefore they peak.
You had me up to the point where you claim that peak oil will be the cause of sovereign insolvency rather than simply the horribly bad economic policies already in place.
"one or more exporters will withhold some or all of their product "for future generations" or some other rationale (such as, "get a higher price"), which will rather suddenly create a price spiral the likes of which we have not yet seen."
It's not in their best interests to destroy the world's economy through a sudden upward spiral in prices. Speculators may do that as they did prior to 2008, but the oil producers know they'd kill demand disproportionately by raising prices too quickly.
This whole economic collapse has to do with peak oil. Yeah sure, Rubin/Summers looted the place as production plateaued, but that does not change the fact that oil production has plateaued.
As far as the Dinosaur Kings having some amazin' plan to continue to loot us forever, they do, but it probably will not work. Dudes are idiots of a first degree.
Regardless of what the exporting nations want or think, exports will be increasingly constrained by geological realities and increasing rates of domestic consumption within their own countries (rates which have been growing at a substantial clip). It's not in their best interests to be hung by their local populations because they couldn't take care of basic infrastructure needs, either.
The more time goes by, and the more the trolls post, the more I like the fact that you are just...sort of....here!
Grand supercycle's post is gone.
Learn the differential equations.
Learn what it means to have old fields die, as they do each day. Plug and Abandon is a phrase that would not exist if they did not.
As they do, the new production, which is all that gets publicity, has a gap to fill before it can *add*. Globally, it can't keep up. Worse, regionally, the exporters will supply domestic consumption first, and possibly decide they won't produce beyond domestic needs. In the final analysis, that's the path to them becoming dominant, as all humans strive to be.
They will produce for themselves and not bother with more. When you're dead, they win.
This is a great article, and the initial focus on complexity is key. Behind energy, complexity is really the main driver of the economic, social, political and cultural forces we see today.
Anyone who wants to explore the intersection of our current economic predicament and complex dynamics further should check out the following pieces:
"The Limits to Complexity" - http://peakcomplexity.blogspot.com/2010/09/limits-to-complexity.html
"A Complexity Manifesto" -
http://peakcomplexity.blogspot.com/2010/09/complexity-manifesto.html
I think many comments here about gold are almost worshipping level, and many commentators look to gold in returns in USD compare to US indexes without comparing other alternatives. The fact is over the last years, or YTD there are many other investments available that beat the gold return, or very much moved in tandem. Which suggests to me gold is just one of places investors diverted money from the US markets. For example it is said it is 22nd outflow from US equities, many many times here, I think this is not surprising, but if I am not mistaken there is money going global equities, listed in US, there are now all kinds of foreign ETFs, and many Emerging markets are up 20-40 percent this year in local currencies, on top of 2009 performance.
My point is what is the point of concentrating on Gold/silver so much? I am an international investor, and I always have some money in USD. During crisis I bought USD treasuries, so as not be a depositor of the bank in case it fails, but a custody client. And then I bought Brazil and Korea etf s-I am from Turkey, so my main money is in Turkish Lira they are both up more than Gold, more than doubled in USD terms, -after I freaked out and sold them in this spring- I also bought/sold Gold, with little profit/losses.
What I mean is there is nothing special in Gold in terms of last 2 years, or even 10 years performance. It is just the US has done poorly, and some economies like it, UK, Spain etc. And when there is no interest and no risk of financial crisis like in 2008/9, there is not much reason to hold USD cash, that is all. You guys look at SPx, its performance, volatility, flash crash etc, and I think feel a bit too smug about not meddling in US stocks, but holding Gold, which is fine, and doing fine, but dont exaggerate it.
Some talk alot about USD tanking, hyperinflation where u cant get food at reasonable prices. etc, but do u really thing all the other governments, China, Arabs ets, will let US have an unintended USD collapse.
USD depreciated against german mark, yen fourfold in '74 I belive, did it make anarchy, chaos in the US? (The 80s oil crisis was later, more about emborgo, I believe)
Or against Euro it fell from .9 cents to 1.5 in 2000-8 s was there even an increase of half of that in price of german cars, other Eu imports?
Alot of talk also of Ag inflation, yes I am sure there is but corn for ex is now 460, from 340s, almost same increse happened last year then it fell.
what i am saying is as investors traders we need to try to benefit from these moves, not be religious about any of them. Instead of selectively collating all these moves to USD is doomed buy Gold rant, we should be flexible in thinking -to profit-.
Thought Experiment;
If I gave you $500 million in your checking account, but you could only use $500 a month.
How rich do you feel?
If anyone posts about Peak Oil and starts talking about Reserves, write them off.
It's FLOW RATE.
Mexico-Terminal Decline, North Sea-Terminal Decline, North Slope-Terminal Decline... Bergan-Terminal Decline, Ghawar-ProbablyTerminal Decline.
As an example of it's effect. Mexico a few years ago exported 3 million barrels per day. About 50% of their budget came from export money. Well, Canterell and the rest are in terminal decline, this year+/- we will see them to to zero export amount(btw their internal consumption is going up at the same time hence ExportLandModel effect).
You will see Mexico crater from a complete drop in revenue.
The depletion curve in 1-5 years will start declining a few percents per year from that point forward forever.
Human Economic/energy consumption must decline also to about 2-5% per year compounded.
Listen to a Prof. Albert Bartlett youtube on Geometric Progressions.
Read a few hundred articles on;
www.EnergyBulletin.com
www.TheOilDrum.com
and www.DieOff.com
Hilarious web sites, Malthus lives!
Why bother with Peak Oil? Peak Food is here you know? Whoooo...
Why has no one mentioned coal gasification? Hasn't the technology been around since Germany 1940's and South Africa 1960's? Isn't it being used today? What proportion of our consumption could it be ramped up?
If you've heard of a technology that has been around since the 1940s and it's not in wide use today, then you can safely forget it. It won't scale to size.
Chris,
I agree with most of your analysis except peak oil. Yes, we will reach a point where supply outstrips demand, similar to the 1970s. But that is when fear and greed will take over and the oil companies will be allowed to search and drill for oil in all of the areas that are now off limits. During the time it takes to bring new oil to the market, yes oil will become much more expensive. This cycle has occurred many times in the last 100 years. Then when all of the new oil hits the market there will be a glut of oil and prices will drop like a rock. I mean it was only about 10 years ago that oil was at $10 per barrel. Also we have enormous amounts of known oil available, but the environmentalists have successfully prevented our drilling or developing those sources. Lets see how that plays out when fear and desperation hit all of the worlds economies. I think environmentalists will get out of the way or become extinct. There are several sites that can list for you all of the available currently known sources.
There are studies that project the size of the currently know sources that can't be harvested because of environmental restrictions. These studies also contain the projected flow rates of these untouchable fields. There are also figures that approximate the currently daily oil consumption worldwide.
billw, as support for the statements you have made, have you compared the projected daily production rates of the off-limits oil fields with the worldwide daily consumption rates of oil? If you have, can you tells us the figures. If you have not made this comparison, upon what facts are your comments above based?
This discussion is depressing. Given what I have read in this thread, I'm long nuclear missiles, short peak oil debate...
It is depressing only if you buy into the premise that, historically, humans don't go with the flow and reinvent their lives whenever necessary.
I'm here to learn.
Except Chris forgets a couple of major points. Which completely fuck his shit up.
1. Nuclear Breeder plants
2. Fusion
(those two take care of energy)
What about resources?
Fusion Arc
Not to mention a UNIVERSE of materials.
We all know the Queen of England and other monteraists want extreme scarcity, but we have unlimited resources at our fingertips, if we research it.
So do we do anything to really change our future?
If the answer is STUPIDLYl, MORONICALLY, BEN BERNANKE-ESQUE.....NO, then we're screwed like Chrris says.
If we pull our head out of ASSES, then we're anything but screwed.
Then Glass/Steagall will wipe the fraud away, and economic collapse is turned around with a stroke of a pen.
Glass/Steagall or Die
Fusion or Die
Fusion arc or Die
....or we can listen to Chris and just care about hiding our scraps in a cave.
There is no future that way.
Glass/Steagall
Fusion
Fusion Arc
Nuclear Power
NAWAPA
These are things that will avert what CM is so worried about.
If you want to be a dummy, do nothing, and prepare like CM says.
If you want to live, then pass the above REAL measures, and have a REAL future. One that doesn't invovle fighting over scraps. Let me be clear, even the RICH, will FIGHT over scraps. No future except what's real.
Too bad we're living in fantasy land. One that says, don't fix the problems, just prepare for 'the end'. Screw that. Fix it, or be an idiot.
If we go down Chris Martensen's way we're the biggest dumbfuck, shitass, no nothing species that ever hobbled on two feet. Because CM's way is for losers. For when it's...AFTER we lost.
Why listen to CM's tantamount to 'take your toys and go home' approach?
If you're hungry; hunt, forage, or farm.
If you've got peak energy in one of many energy comodities, and a fucked up fraudulent monetary system, then you pass Glass/Steagall and you kick the British Monetary System out, and use the recovered money (some of) to build NAWAPA and embark on Fusion and Space programs.
Or we could do nothing, and act like that's the preferred outcome. No, it's the IDIOT'S outcome.
We have problems AND solutions. So why are people in a Jerry Lewis telathon way, running around like idiots acting like there is no way out? Because as Jerry Lewis said, “I've had great success being a total idiot".
Sound familiar? It's rampant, in fact it's the far majority. Be part of the 10 percent or hell even 1 percent that aren't complete knobs.
Glass/Steagall or die
Fusion
THE HUMAN RACE HAS NO EXCUSE TO FAIL WHEN THE ALTERNATIVES ARE THERE. (and lots of people sounded like idiots in 1902 saying the man could not fly...because one year later, man flew, rendering everybody who said that previously, a fucking idiot)
Get it? Well if you don't, we die. Enjoy.
This is the best comment I have seen coming out of your camp. Food for thought. I'll check back later to see who else weighs in. I see problems, but I hear the spirit and find that very appealing.
What, you didn't like mine?
http://www.zerohedge.com/article/guest-post-prediction-things-will-unrav...
dupe
At the risk of getting steamrolled:
You take a mature field. It has tens of millions of bbls, but perhaps you can turn 15% into production - or maybe its 10%. Since the oil is not LIGHT SWEET CRUDE, you get hit with a wellhead discount. Additionally, the crude must be trucked to a refinery or pipeline station that can be say 2 to 9 hours away. Lets say the "aggregate" wellhead "disco" is 20%. Additionally, you pay royalties and mineral taxes, which can amount to 25% of your wellhead price. So, you are paid 60% of the WTIC price. This is almost never discussed. Someone said this earlier, but in new fields the oil pumps itself; in mature fields you have to pump the oil UP outta the ground - very expensive in terms of electric expenses, not to mention that the pumps are not cheap. Also, the pumps can pass ALOT of water, much more than the amount of crude, so chemicals are used to separate the oil from the oil/water mixture. Chemicals are not cheap. Also, everytime you touch a rig, whether it is to relocate or change out a pump, it seems to cost $80,000 to $100,000 a pop. Remembering that an oil field is a depleting asset, a 15-year resource life would be 7%/year depletion - so if your investment is yielding 15% a year, 7% of that is return of investment via depletion; so its only 8% "net" and that is before considering changes in the underlying commodity price. Of course, when the commodity price spikes as it did in Summer 2008, every marginal source of production is pressed into service - we saw a large increase in lower grade oil coming from Canukistan as every Canadian in the oil patch started looking between the cushion on their couches for extra bbl of production.
So, whether its peak or not to me is not the question - I really think that probably most of the easy oil has been discovered and exploited. I have not looked for a long time, but the % of US domestic production from fields or wells producing less than 100 bbls per day was incredibly high... The US has a date with an energy problem.