Denial …


Denial is everywhere, we refuse to go to rehab and kick the waste habit:

 

 

Life imitates art: we attempt to live up to candy-colored assumptions about ourselves, even as these are only images projected onto screens.

The Amy Winehouse wannabes insist we have managerial control over our problems. We do but we first have to go to rehab:

the bonddad blog

People Are Finally Figuring Out: Austerity is Stupid

From the Financial Times:

“We can only win back confidence if we bring down excessive deficits and boost competitiveness,” he said. “In a such a situation, consolidation might inspire confidence and actually help the economy to grow.”

The above statement shows why austerity is simply one of the dumbest policies on the planet. First, The EU region was already growing at a slow rate when people started to talk about austerity.

 

Go to rehab, Bonddad! We have zero choice about austerity which is driven by energy constraints and high fuel costs and a hyper-competitive credit environment. More demand pushes fuel prices higher, past what we can afford to pay even with borrowing. What is taking place in the world economy is the ‘pricing out’ of non-remunerative (frivolous) goods and services. This pricing dynamic takes no prisoners: there is no ‘plan’ that will return Greece to the community of wasteful consumers. If Greece is lucky and bold it will not turn into Somalia.

What the Greeks — and the Somalis — don’t realize is they are competing against China and the US for exportable fuel demand. The Europeans lack the fiscal-federal structure needed to compete with the demand kingpins who bring guns to a knife fight. The lower bound for energy demand in ‘wasted’ EU countries and the EU itself is effectively zero. Simply declaring an end to austerity policies is an empty gesture because any policy that doesn’t actively suppress demand allows events to violently smash it.

More denial:

 

 

Go to rehab Michael Hudson! The argument is that policy has been reduced to monochromatic bailing out of finance creditors by their customers regardless of the consequences (or absence of logic). The counter-argument is that any strategy that does not include conservation is irrelevant. Behind all the doors is austerity whether the policy makers choose to open them or not.

More denial from estimable Steve Randy Waldman:

 

Depression is a choice

We are in a depression, but not because we don’t know how to remedy the problem. We are in a depression because it is our revealed preference, as a polity, not to remedy the problem. We are choosing continued depression because we prefer it to the alternatives.

 

He’s right of course! We reflexively choose our cars over everything else … including solvency. We’ve created a universal set of fake ‘problems’ that can only be solved by first jumping into cars. The cars presume to ‘solve’ the self-created problems which in turn justify the cars in a reinforcing, self-bankrupting cycle.

 

Usually, economists are admirably catholic about the preferences of the objects they study. They infer desire by observing behavior, listening to what people do more than to what they say. But with respect to national polities, macroeconomists presume the existence of an overwhelming preference for GDP growth and full employment that simply does not exist. They act as though any other set of preferences would be unreasonable, unthinkable.

But the preferences of developed, aging polities — first Japan, now the United States and Europe — are obvious to a dispassionate observer. Their overwhelming priority is to protect the purchasing power of incumbent creditors. That’s it. That’s everything. All other considerations are secondary. These preferences are reflected in what the polities do, how they behave. They swoop in with incredible speed and force to bail out the financial sectors in which creditors are invested, trampling over prior norms and laws as necessary. The same preferences are reflected in what the polities omit to do. They do not pursue monetary policy with sufficient force to ensure expenditure growth even at risk of inflation.

 

On the way to rehab Steve Waldman discovers end-game political economics is a Darwinian struggle with no winners only those who are prepared to lose less than others.

Steve Waldman assumes that Americans and others can simply choose to live beyond their means as we have for decades.

Steve Waldman insists managers’ “overwhelming priority is to protect the purchasing power of incumbent creditors. That’s it.” The intention is to defend sunk capital ‘investments’ that are stranded by higher fuel and credit costs. The finance demand for repayment is never satisfied because investments fail to provide a return. These returns simply do not exist: we have simply decided that consumption/waste is production because somewhere, somebody gains by it.

The same thing can be said about armed robbery.

Here is why the incumbent creditors are protected and not just their purchasing power. (Mark Grant/Out of the Box newsletter/Zero Hedge):

 

Michel Barnier, the head of Europe Financial Services, announced this morning that he will soon be offering new rules for the debt holders of the European banks. Under the plans, senior debt-holders would face losses after shareholders and holders of subordinated debt had their investments wiped out.

 

Michel Barnier acknowledges without saying so directly that most of the assets at ‘banks in crisis’ are worthless: this is another large reason why bank restructuring has been avoided at all costs. Restructuring will wipe out all liabilities including depositors.

 

Write downs may also be applied to bank’s derivatives counterparties, it has been learned, which could be a disaster for other European banks as well as American banks. Counterparty risk will have to be evaluated again after his announcement. Barnier is considering forcing lenders to issue at least 10 percent of their debt in securities that would be eligible for bail-ins and he is also prepared to set out alternative scenarios for debt that could be eligible for write downs. The proposals will also include requirements for national governments to set up so-called “resolution funds,” financed by the banks, to cover costs from failing lenders apparently which will add to the liabilities of the European banks. Now one does not consider these types of measures in a vacuum so one would suppose that there are reasons for the implementation of these proposals and that they will go from academic to realization in short order. One more reason to avoid European financial institutions.

 

All administrative proposals to date are inadequate because they do not address the central ‘value’ issue: national ‘bail-in’ funds are meaningless conjectures as there are no funds to deploy, they have been ‘wasted’ or are flying out of the banks’ doors. Deposit flight puts more bank assets at risk in yet another vicious circle. The normal operation of the economy uses value — capital — as fuel, the process replaces the value(s) with debt. After centuries of burning value little of it remains, only massive accumulated obligations that can never be satisfied.

 

 

Here is an Peter ‘I Don’t Wanna Go To Rehab’ Huber in 2006: According to Huber, we have ‘huge, enormous, colossal, stupendous’ fuel resources. Do we or don’t we … and does it matter? Huber makes an economic argument that the spread between high-order energy sources and the lower-order variety will overcome EROI. His argument fails the test of time: the resources he claims don’t arrive on the market fast enough to avoid contests over them. Nations are outbid for fuel and fall destitute or they bankrupt themselves competing for fuel with borrowed funds.

More denial:

 

 

Go to Rehab Godfrey Bloom! Anyone who claims central banks are “printing money” and causing inflation is a peak oil denier. Here is a more studied approach to denial:

 

Rethinking peak oil

Lin Shi and Yuhan Zhang (Climate Spectator)

China Dialogue

In recent years, Chinese scholars have been embracing ‘peak oil’ theory in increasing numbers. The idea – first put forward by American geophysicist MK Hubbert in 1949 – is that individual oil fields, oil-producing regions and world oil production will display a ‘bell curve’: a steep rise in available supplies, narrow peak and subsequent rapid fall.

Peak oil theory holds a static view of the world, and its models ignore price effects: lots of oil discoveries and high production mean that prices and profits wane, and incentives for further exploration decline. But ensuing oil shortages then restore these incentives. When incentives exist, the industry will continue to produce and is likely to produce even more.

 

Get thee to rehab Lin Shi and Yuhan Zhang: the dynamic this duo fails to observe is that while a shortage provides incentives to drill, the effect of the higher price is to annihilate demand … of entire countries! Countries need cheap oil, their infrastructure is built assuming it. Without the cheap stuff the infrastructure is underwater: the debts taken on to install it cannot be serviced.

At least these analysts acknowledge the primacy of price in the oil equation. Both high and low prices provide incentives: low prices to waste more, high prices to extract more. However, the high-price incentive does little to moderate waste: it’s inelastic. Instead, high prices stretch fuel dependent enterprises until something breaks. At the same time the high prices increase the demand for credit. Because the fuel use is simply waste there is insufficient return to service or retire debt. This in turn requires ongoing debt monetization. What isn’t smashed by high fuel costs is clobbered with ruinous debt costs … or both.

The primacy of price in the oil equation: In dollar terms peak oil took place in 1998. The dynamic of high costs and a ‘waste gap’ that must be filled with unaffordable debt is ongoing: while analysts look out another ten or twenty years the effects they look for started to be felt in 2004.

Other analysts focus on phantoms such as the increase in total liquids and other forms of non-oil oil. Phantom-focus is simply another form of denial.

Here’s denial from climate science! (Skeptical Science) Who would have guessed?

 

 

On his way to rehab, Professor Alley supposes that renewable energy generators can replace conventional, fossil fuel versions at a negligible cost. Happy days are here again! Nobody has to die!

Either renewables replace fossil fuel waste or they don’t.

– If they don’t there is no point to renewables as the fuel waste enterprises will carry on as before, wasting fuel and loading carbon into the atmosphere. Fossil fuel waste will take place alongside the renewables (and their own embedded fossil fuel waste). The demand for more energy to waste is insatiable.

– If renewables DO replace fossil fuel waste the losses to the wasting enterprises will far exceed the cost of the renewables themselves. The auto industry and its dependencies represent 60% + of GDP. As has been seen over the past five years, reducing funds to- or cutting one dependency has effects that ripple across the entire economy: the bloated SUV is worthless without fuel as is suburbia.

– Meanwhile, the current level of ‘cash flow’ (which is what GDP represents) is what both enables and services the economy’s debts. Renewables therefor cannot replace fossil fuel waste, instead they are another fuel waste dependency (by way of debt). This is the same way sales of electric- and hybrid cars is internally subsidized within the auto industry by the sales of SUVs and giant pickup trucks. No truck sales means no electric cars b/c they are otherwise too expensive.

Speak of: the only pollution solutions must include getting rid of the cars, all of them along with car-related dependencies. The market is already solving the ‘car problem’. Europe is right now in the process of becoming car-free … the hard way.

The GDP cost is Massive. Cutthroat fuel competition using credit as a weapon is happening now under everyone’s noses and few are paying attention.

What economists and others don’t wish to discuss is when nations fail due to fuel shortage there is no chance of recovery. The reason is because no other nation will voluntarily surrender petroleum so that another can waste it driving aimlessly in circles. Should France fall it will likewise never recover or become a ‘growth’ economy as other countries will have to export their own petroleum demand to France.

Past time to kick the bad habits and go to rehab.

55 thoughts on “Denial …

  1. Chartist Friend from Pittsburgh

    Denial – Or How I Learned To Chain Smoke Crack Cocaine
    “On 23 June 2008, Winehouse’s publicist corrected earlier misstatements by Mitch Winehouse that his daughter had early stage emphysema, instead claiming she had signs of what could lead to early-stage emphysema. Mitch Winehouse had also stated that his daughter’s lungs were operating at 70 percent capacity and that she had an irregular heartbeat. Mitch Winehouse said that these problems had been caused by her chain smoking crack cocaine. The singer’s father also reported that doctors had warned Winehouse that, if she continued smoking crack cocaine, she would have to wear an oxygen mask and would eventually die.”

  2. The Dork of Cork

    I think the expression taking the piss comes from taking Piss / chemical boats down the East coast of Britain back in the day although I could be wrong.

    I know Edinburgh pretty well – it narrowly escaped a 1970s road destruction scheme down its centre.
    However I gather Its Tram project has been a complete disaster…. I was there in 2007/8 & 9 and it was getting nowhere fast.
    Scotland is however a much better planned country then Ireland – however the ruling SNP have this Wind turbine thing going which will turn out to be a complete disaster of course.

    Again I am slightly less Maltusian then you Steve – stuff can be done but we have lost the concept of elegance during the mass concrete / oil era which makes planning more difficult for most.
    I still believe reactors are the most effiecent conservation method as they free up such large amounts of Nat gas & coal.
    Its just that Scotland like everywhere else in the western world has wasted all of its resourses in Grot production since the 60s monetarist era.
    en.wikipedia.org/wiki/Torness_Nuclear_Power_Station
    en.wikipedia.org/wiki/Hunterston_B_nuclear_power_station
    When the Brits shut down their PWR programme it was to increase Porshe 911 consumption. (or Fords if you are cheap)
    http://www.youtube.com/watch?v=SgUYUOGvVZM

    They were left with old AGR which were a flawed design that the French abandoned for the American PWR long before the Brits.

    1. p01

      The only Malthusians here are those who continue to waste at least 6 liters of highly refined petroleum products a day and insist they should make triple-headed-zombie cannibals of their children.

    2. steve from virginia Post author

      I doubt there is enough value left at the moment to support the infrastructure we have, a triage approach is called for.

      We make massive efforts to maintain the wrong bits and pieces, the outcome is the exhaustion of resources required to support the whole. This is along the lines of ‘good money after bad’.

      If we had a better idea of what civilization amounted to we would have an easier time of making choices and deciding what to give up: there would be less fear of the unknown. Today, the offer is ‘More of the Same, big business cartels, centralized decision making, more technology and fictitious comforts and conveniences’ or ‘living in caves’ which is a false choice. Without a compelling alternative idea the ‘caves’ concept takes root.

      The problem with most technologies is that these are always the camels’ noses within the tent. That puts us right back to increasing infrastructure that cannot be supported.

      1. The Dork of Cork

        I agree Steve , but the winding down of Nuclear Industrial expertise during the Lawson Boom & Bust period was a great waste of talent.
        Indeed It was a deliberate IMF stratergy to shut down the UKs boffin culture of the 60s via the Labour goverment using Euro freaks such as Roy Jenkins as useful fools.

        At the very least they should have kept their Sizewell B PWR system in continuous but low production rather then making a very expensive one off.

        You can clearly see the “Dash for Gas” from 1990ish on which was a physical manifesation of the privatisation drive during that period……. thats a hell of a lot of Gas wastage for a product (electricity) that can be made elsewhere.
        http://www.iea.org/stats/pdf_graphs/GBELEC.pdf

        The opportunity cost was not factored into the equations as countries moved from nation states to market state models.

    1. Sandor

      I added a comment to that article encouraging the author to read steve. It’s actually a relevant piece, in that worstall voices the mainstream cluelessness as to the ramifications of peak oil. Most people still don’t connect the credit crisis to peak oil yet. As if the euro zone depression has nothing to do with the high price of oil and is merely a structural problem of bloated public sectors and lazy southern workers. It’s business as usual for the drillers and burners.

  3. Kenneth Barrows

    These people who go to rehab are probably unaware that “growth,” as measured by GDP/total credit market debt, has been in recession for most of the past 40 years.

      1. steve from virginia Post author

        This chart is from the ‘you get what you pay for’ dept:

        That correlation is not easy to find in mainstream, people desire GDP growth to be something other than inflation.

        People have traded purchasing power for novelty.

        This is what happens when your society is designed by a pop artist.

    1. steve from virginia Post author

      Zelter wants to buy in when there is blood in the streets.

      Peeps don’t understand, the EU is ‘Saudi Arabia No 2′.

      1. jb

        “Peeps don’t understand, the EU is ‘Saudi Arabia No 2′.”

        Not sure I understand your reference. Do you mean the EU is like a kingdom that doesn’t tolerate dissent…. and has tanks?

      2. steve from virginia Post author

        I don’t want to get too far ahead of myself because this is the subject of the next article:

        A common remark is that for everyone to consume like Americans the world needs four more Saudi Arabias.

        Since there are no more mega-suppliers to be had the next best thing is for demand to be driven to zero in some consuming areas so it can be exported to others.

        Europe is ‘low hanging (demand) fruit’ because it is not federated: finance can bankrupt Europe simply by refusing to lend to it. Any fuel that isn’t consumed by Europe is available to be consumed elsewhere … in America or China. Since Europe consumes roughly 15 million barrels per day, cutting that to 5 million is the same as discovering a second Saudi Arabia … without having to take the time to drill any wells.

      3. gus

        Good point. We’re probably looking at the first stages of Europe’s return to being the backwater of Eurasia it was through most of world history, with China resuming its dominance as long as the nukes don’t fly. I suspect they won’t have global dominance for very long (if at all), but China has proven to be a very flexible society when it comes to recovering from regional collapses.

      4. iguanaisland

        Not quite the same!! Because if the Europeans aren’t getting a lot of oil, they won’t be buying US products, like cars and so forth. It is NOT quite like discovering another SA. It is taking from one hand to put in the other one.

  4. dolph

    It’s not just the cars.

    Petroleum enables mechanized agriculture which allowed the world population to grow to 7 billion.

    It also powers boats/ships/trucks and flight.

    To go “carless” is just austerity in another form, an austerity that cannot be forced. Are you going to tell working class people that they can’t drive a car a few miles to the grocery store, but that the jetset can fly around the world? Do not presume that they are just wasting it on NASCAR and trips to football games.

    There’s the rub, right. Petroleum is the foundation for almost all of the world’s agriculture and transportation.

    2 billion Chinese and Indians, not to mention all of the Arabs, will outbid anybody for oil, with the natural result being that the West will become “working class” starting from the bottom up.

    The cars will be there, they’ll just be old and will only take you so far. Look at the cities in America. How do you even build an alternative transportation scheme? It’s one vast wasteland of cement, completely paved over. You would literally have to bulldoze entire metropolitan areas and start over.

    Isn’t going to happen, I’m afraid.

    1. gus

      In most places, you’re probably right. The cities will simply be abandoned as they have been repeatedly in history and as Detroit started being a decade or so ago. That process takes time, and there will still be a small number of city folks in centuries even without oil, but the overall population will be much smaller.

  5. slackjawedyokel

    Here in the land of Oz, workers that had a week long strike at Pluto LNG avoided being fined over $5000 each, so their union bosses could claim a victory – but in exchange they were banned from striking for seven years due to the necessity for Aust. to be seen as a “reliable oil and gas supplier”. From a judge in the Federal Court. Most wealth pumped ala JM Greer. Unspeakable, invisible truth. “None so blind as those who do not want to see”.

      1. slackjawedyokel

        What, you’ve been to the Byron Bay hinterlands then? Most likely source for reports of giant malevolent rabbits … and escapism …

  6. The Dork of Cork

    @Dolph
    Don’t forget home heating (much of it is oil , even today)

    We will always need oil … but not that much.
    Before the Great War western cities were crossed by thousands of miles of Tram tracks – the French do a expensive form of heavy tram / light rail that forms a city backbone to a wider perpendicular bus network , but more convential no fuss late 19th century type trams could be laid much more cheaply when the bus becomes uncompetitive.

    1. steve from virginia Post author

      … in 25 words or less?

      Yr just trying to trick me into a climate change argument.

      :)

      1. steve from virginia Post author

        Thanks for clarifying for me.

        It’s clear that changes are underway in the climate. I think it’s best to assume (human, personal) responsibility and that outcomes will be severe. Some of that assumption is going a bit far but time will tell.

        If climate awareness has any effect it will be people deciding not to consume rather than consuming. That means less car sales to the point where manufacturers fail. Since that is already underway, it can be said that climate awareness is have some undetermined effect.

        The real bottom line is that the extremely wide-scale consumption of energy fuels is going to decline rapidly as the infrastructure that enables fuel waste is interdependent, overly complex and brittle. For instance, a coal power station might have an operating lifetime to 2080. However, the grid that distributes the plant’s power breaks down in 2015 rendering the plant is useless. Or, the mine that supplies the coal shuts for economic reasons in 2018. If a plant’s customers are broke, there is to all extents and purposes no plant: no industry can support itself for its own sake. Over the longer term there will be as many economic casualties in energy businesses as there are other businesses.

        In a way, it is likely we are also enduring ‘Peak carbon’. The big sources are industry use of fossil fuel, agriculture/forestry/deforestation, transport and housing. All of these are petroleum dependencies and all are subject to peak oil.

        We’ve outdone ourselves exhausting what we can get our hands on … right now there is little left but to come up with a good ‘Plan B’.

      2. cg

        When the grid goes down all those spent fuel pools go up. Ain’t no place to hide.

    1. steve from virginia Post author

      RE, clearly you’ve never been to Nawlins:

      da river in Egypt is da Nile.

  7. steve from virginia Post author

    Excellent article @ FT Alphaville that reflects on some of what has been discussed here @ the Undertow:

    http://ftalphaville.ft.com/blog/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/

    Two things of note: one is that the article does not appear in ‘the pink sheets’. The subject is clearly Not Important Enough to warrant troubling the exchequers and their silk-stockinged lairds.

    The other thing is to note the comments: Westexas (Jeffrey Brown), Chris Cook and Gregor Macdonald all in one place with a hat-tip to Chris Nelder.

    1. jb

      Excellent link; thanks.

      Chris Cook: “My view is that the market will shortly decline rapidly at best and melt down completely at worst until production cuts stabilise the price and it then gets pumped back up again. Rinse and repeat.”

      He goes on to describe using the post-rebalance surplus for “massive investment in energy savings and renewables, both of which are then ‘self funding’.”

      Uh-huh. Is that ‘hope’ I smell burning over at FT?

      Jb

      1. steve from virginia Post author

        Regarding Financial times: events speak strongly for themselves, leaving the ‘perceptive’ analysts in the dusts. The smart analysts reposition themselves to reflect realities on the ground. Yes, something over there is burning besides files.

        It think the (ongoing) price declines are going to be more lengthy this time as the dynamic is different from that of 2008-09. Countries are going bankrupt now, not firms. The effects on consumption are more profound and will certainly be longer lasting. At some point the ‘too-high price’ is $50/bbl, then $40 … then $30.

        Etc.

    2. Usman A.

      What exactly does it mean when the marginal cost is decreasing, as after 2008?

      1. steve from virginia Post author

        Marginal costs decreased along with price July-2008 to Mar-2009. This was more a reflection of less demand during the period (existing inventory could meet consumption requirements) rather than an increase in productivity or increase in low-cost supply.

        If costs are increasing 11% and 14% per year, there is a real problem b/c the customer have to meet those increases.

      2. Robert

        Steve,
        I really wish you would flesh out your point about oil prices coming down because people won’t be able to afford them while finding and lifting costs go up. I guess you imply this is self evident, but I’m not so sure. Take shale oil. The big costs are land leases, rigs and compression. All of those costs can (and have) come down in a deflationary environment. There is also a great deal of labor involved which becomes cheaper. I’m not sure that costs would go up at the same time the price of the actual commodity went down. The system adjusts and self corrects to some extent. Not saying you are wrong about peak oil and big picture, I just think that maybe you might want do a bit more research. The devil is in the details, you know.

        Personally, I think our economy / society can adjust just fine as long as the decline is slow enough. I see evidence that we are starting to adjust as far as less miles driven, more car pooling, etc. There is also the prospect that natural gas can take up at least some of the slack. We have quite a bit of shale gas that is economic to drill at say $5 / mcf. Even at that price, it is only 1/3 the price of oil on an energy “apples to apples” basis.

      3. steve from virginia Post author

        Prices will decline either because supply increases or demand declines. The conventional idea is that declines in production against increasing demand will bring higher prices. These prices will then allow oil producers to bring more expensive to produce crude (or substitutes) to market … that is, the supply will increase.

        Increases in price kill demand by adversely effecting credit which is the weak link in the fuel waste economy. Credit-dependent sectors of the economy cannot be financed (real estate for example): these sectors fail cutting both credit demand (revulsion) and supply (from zombies unable to lend).

        – Any price-driven increase in production will have to replace depletion as well as keep up with new demand. This means producing from new oil fields that are more productive than the fields they replace. The old, depleting fields are the reliable super-giants that have low associated costs. The new fields are more expensive: this is a matter of geology rather than economics.

        Real fuel production costs go one way while demand purchasing power goes in the other.

        Keep in mind that most of the ‘new’ oilfields that are touted today were discovered years ago. It was simply not economical to produce from them as they were either too small or too difficult for various reasons. An example is the Bakken play which has been known about for a long time. Average production from Bakken wells is 85 barrels per day. Production from the field is high because of the large number of expensive wells that have been drilled.

        – The quantity of fuel in the ground does not matter as much as the rate at which the new fuel can be brought to market. Newer fuel supplies have greater number of dependencies, such as the need for water and natural gas to produce bitumen from Alberta tar sands or specialized rigs to extract arctic and Brazilian fuels.

        – On the demand side, what supports a price (of anything) also supports the means to meet the price. The demand side is driven by credit; the higher the price (driven by credit) the more credit is required to meet the price. There is the emerging problem of debt service and repayment. Lenders are resisting making new loans as existing debt is monstrous and adding to it is risky. The market questions what sorts of activities can service and repay debts other than more borrowing. There is both a decline in available credit as well as willing borrowers. There are few activities on any scale — outside of gambling in finance markets — that offers meaningful returns. This means available credit of obtain fuels and other goods is shrinking. This is more clear in the Eurozone where finance is constrained to lend due to the existing burden of unserviceable loans. As credit shrinks so does the support for high fuel prices.

        – On both supply and demand sides there are real- as opposed to nominal costs. In real terms fuel costs will rise and at some point they will be unaffordable.

        This is a bit of a sketchy outline, there is a longer article to explain in more detail (if I can finish it before I die of old age …)

  8. enicar333

    The post-peak scavenger economy is here! And I have been invited to use my great credit rating and participate!

    “Dear Timothy XXXXX,

    I am pleased to be the bearer of great news—your Request for Consideration has been approved! As your Matco partner in this process, I’m excited to guide you through the next important step: filling out the non-committal Franchise Application.

    Why is it important? Once you complete the Franchise Application, you’ll meet with me one-on-one to work out your Personal Business Plan—a document that will set you on the path to creating your future success.

    I know that Matco’s proven business model works with our competitive advantages like:

    Low startup costs and no franchise fees of any kind that drive overhead down and profit margins up
    Flexible financing that allows you to work directly with the finance team at Matco Tools
    World class training and ongoing support that teaches you the skill set you need to become, and to remain, successful
    Alliance with a strong brand means you’re in business for yourself, not by yourself

    I’m pleased to say that you’re already a few steps down your own path to success, and I wish you all the best. I look forward to working with you to create your Personal Business Plan and seeing you take the next step toward creating your future.”

    … I simply filled out a form, provided my SSN, they checked my credit, and I’m IN!

    EXCEPT – I know the reality and the scam…. Searching around the Internet, I found this Great Site, where all the symptoms of peak oil and high crude prices were discussed, but no one was able to connect the dots. America is a failed business model that is headed for collapse – and nothing less, attended by millions of deaths – will rectify the situation.

    Spend some time, follow the links, read some of the THOUSANDS of comments.- Everyone is talking their book, pointing fingers, while fortunes are being lost, marriages destroyed, families broken, houses foreclosed, credit destroyed.

    It is now a CRIMINAL ENTERPRISE – because all are desperate to survive. There is money to be made in a successful Matco Tool Dealership – yet there may be MORE money in an unsuccessful dealership – as long as you can keep the suckers coming in and on the treadmill. THIS is the America of the 21st. Century – reduced to a scavenger economy, bickering, and fighting to survive… Major bloodshed is coming.

    1. steve from virginia Post author

      The only tool franchises that are worth pursuing are Snap-on and Mac. Used to be Sears/Craftsman were good and SK at auto parts houses. Now? Made-in-China Husky …

      You would probably do as well buying and sell 2d hand off Craigslist.

      Auto repair will be a good business to be in as time passes, particularly altering (dead) electronic- to mechanical systems and simplifying the overly complex. For instance, converting cars into taxis or cargo haulers/trucks. Converting all-wheel drive into two wheel drive. Converting 8 cylinder engines to 4 cylinders, gas-to-diesel or gas-to-butane, etc. Converting electronic ignition to mechanical ignition, etc. Converting bicycles into motor assist. Etc.

      1. Reverse Engineer

        2WD Carz are a waste of time in the snow, particularly when the Plows stop pushing the snow off the roads. When the 4WD Carz can’t be fixed, it’s time to pull out the Dogsled.

        RE

      2. Ellen Anderson

        Slightly off-topic but you have struck a nerve!
        I have two recumbents converted to motor assist. One is an old Bike E with front and rear shocks. I think they marketed it as mountain bike E. I bought it used. That was a great company – went out of business, of course. I found I could not ride it up the steep hills in my areas (well I did once but never thought of trying it again.) So I searched the web – this was 2001 – and found a bike guy who was willing to try to put on a motor. We couldn’t find a separate motor so we bought a Currie electric and removed the motor. (I am spending real money starting now.) We put on SLA batteries and I rode pretty happily for a year. Then those batteries died and my bike guy had pulled a disappearing act. I found a student who was building those electric planes. I bought Nickel Metal Hydride batteries from Valence (I don’t think they are out of business yet but not looking good for them.) It took awhile to get them because they were working on a big order to power a submarine. The student put them onto the bike and I rode happily for another year. Of course I am considered the very weirdest person in town. The batteries die. Now there is a pretty big online presence for batteries for small electric vehicles but suppliers are all in China. American companies don’t want to bother with bicycles. So I pay the big bucks and soon a package arrives from the People’s Republic of China. Simultaneously Pay Pal empties out my bank account. (Do not use Pay Pal to buy stuff from China! I got the money back from them but it was pretty scary.) Anyway, the battery is Lithium Ion and it is great. Of course the cables are junk and connections are always coming apart but when it works it is great.
        This comment is getting two long so I won’t tell other stories about my three wheeled recumbent trike and the electric car/bike we tried to build. But I guess my point is that the supplies to put together these one-offs are difficult to find, expensive and nobody knows how to do it. Plus, it is not profitable. No one will pay. I had thought that if we started ten years ago we would be farther along by now. Nope. It is only marginally easier to find someone who knows or cares about motorizing small vehicles. Honestly, I love my bikes and I use them. But I think when the cars and airplanes go down the bikes will too. The infrastructure for cars is also needed for bikes. I am betting on the draft horse at this point and I would have been shocked ten years ago to think I would be saying this now.

      3. Mr. Roboto

        I think a major reason why things are working well less and less all the time is because we are addicted to Complexity For Its Own Sake. That’s why we just keep adding on more layers of complexity long past the point where we cease getting any substantial returns on such investments. I shudder to imagine what it will take to force people and the systems upon which they rely to start simplifying. A lot of people are probably going to have to die before that can really happen. :-(

  9. The Dork of Cork

    @Steve
    NIR scraped their functional & reliable Irish gauge Y1985 -87 DMUs in April.

    en.wikipedia.org/wiki/NIR_Class_450
    http://www.youtube.com/watch?v=XqBjaMZ2sik
    News for NIR trains scrapped BBC

    I asked that Irish rail store these in the event of a monetary event but we have no money to pay people for maintenance and storage……….

  10. Chartist Friend from Pittsburgh

    From Wikipedia:

    A key idea, introduced in Technics and Civilization (1934) was that technology was twofold:
    Polytechnic, which enlists many different modes of technology, providing a complex framework to solve human problems.
    Monotechnic which is technology only for its own sake, which oppresses humanity as it moves along its own trajectory.

    Mumford commonly criticized modern America’s transportation networks as being ‘monotechnic’ in their reliance on cars. Automobiles become obstacles for other modes of transportation, such as walking, bicycle and public transit, because the roads they use consume so much space and are such a danger to people. Mumford explains that the thousands of maimed and dead each year as a result of automobile accidents are a “ritual sacrifice” the American society makes because of its extreme reliance on highway transport.

    1. Sandor

      The road to hell is paved with ‘efficiency’. Until overwhelming blowback comes from Nature, the prevailing paradigm of institutional arrogance, bred from basic (male) insecurity w/r/t extinction, will refuse to concede an inch of its blessed progress mandate. Difficult to forecast the turning point. BP gulf oil spill, then Fukushima are clear warning signals dismissed as ‘accidents’.

      It’s not technology that’s the ‘problem’. It’s the attitude with which it is wielded in order to palliate our anxieties and indulge our illusions. It’s overkill, which is another name for waste. The ‘meta-issue’ is psychological, mythological, and genetic. It doesn’t seem that humans are engineered to respond pro-actively to resource constraints on a species-wide level. We don’t have enough genetic memory of overcapacity to recognize the condition and instinctively downshift…

      This is all relatively new ground, so I am unwilling to throw in the towel here based on the last few decades of rapid industrialization. I suspect that human adaptability is being sold a bit short on this board. Perhaps once the ‘pinch’ takes hold in the West and refuses to abate after 7 years, we move into the ‘acceptance’ phase and migrate towards conservation/care. That’s a radical turnabout from a production/consumption based economy! But it’s possible we can begin ‘down-cycling’ politically around 2020. That may be fast enough to avert the more drastic scenarios revolving around ‘collapse’ themes.

      1. Ellen Anderson

        As for down cycling, I think it is a case of “who goes first?” or “after you sir!” If you give up your wasteful living (and your job that requires a car) before everyone else does, when the music finally stops you will be at a disadvantage. The same is true for governments. Everyone remembers what happened to Jimmy Carter when he tried to start the process. So it is hard to see how change can come voluntarily either from the bottom up or the top down until the system just plain stops working.

      2. Sandor

        Debt deflation and the demographic burdens, once they take hold, will encourage ‘bottom up’ conservation. People find ways to get by without burning as much fuel. I don’t expect widespread pre-emptive strategies. But as real costs of energy, and thus transportation and food, rise to painfully high levels, the majority of consumers will phase shift. Consumption will fall. I reckon it will take a good long depression for waste to become a luxury most will give up chasing. Only after the pinch has set in will expectations change, which will then catalyze preemptive conservation.

        The debatable conclusion is whether ‘the system just plain stops working.’ I contend that we can reach a tipping point of pain (awareness) that occurs before the trucks stop driving and the shelves go empty. To play on the ‘rehab’ theme: with an addiction this severe it usually requires a ‘brush with death’ in order to enforce renunciation – ‘scared straight’. The sooner this event occurs, the better the chances for successful downcycling.

      3. rcg1950

        Sandor said: “It’s not technology that’s the ‘problem’. It’s the attitude with which it is wielded in order to palliate our anxieties and indulge our illusions.”

        There’s a very ancient concept for the ‘attitude’ you describe. It’s called “idolatry.”

  11. The Dork of Cork

    IRISH PRIVATE CARS LICENSED.
    Decrease of 16.0% in new private cars licensed in April
    There were 9,388 new private cars licensed in April 2012, compared with 11,171 in April 2011, a decrease of 16.0%.
    The number of new goods vehicles licensed in April 2012 was 1,047 compared with 1,219 in the corresponding month last year – a decrease of 14.1%

    A new trend has emerged in the new private car market….

    Band A is now the dominant Band….for Y2012.

    Y2011 M1 : Band A : 5182 Band B : 6,916
    Y2011 M2 : Band A : 5,580 B : 6,716
    Y2011 M3 : Band A : 5,236 B : 5,978
    Y2011 M4 : Band A : 5,005 B : 5,170

    So band B still remained the most popular Brand during the first third of the 2011 season.
    Not Anymore……..

    Y2012 M1 : Band A : 7,489 Band B : 5,860
    Y2012 M2 : Band A : 5,613 B : 4,381
    Y2012 M3 : A : 5,467 B : 4,375
    Y2012 M4 : A : 5,045 B : 3,626

    How much is this due to new technology or car manufacturers simply gaming the co2 figures as the fiat 500 900c was claimed to have done by some people in Utube land ?
    Or is it simply people trying to save money.
    There is now clearly a demand for a new Band A+ class with perhaps a sub 100g / km or 90g / km emission.

  12. The Dork of Cork

    This divergence can also be clearly see in Total car private sales from M1 2012

    Class A vehicles – both new & second hand from Y2011 M1 to Y2012M4
    5,514 / 6,033 / 5,690 / 5,490 / 4,788 / 4,582 / 3,552 / 1,966 / 1,623 / 1,392 1,089 / 663 / 7,817 /6,118 / 5,951 / 5,483

    Class B vehicles – both new & second hand from Y2011 M1 to Y2012M4
    7,570 / 7,635 / 6,929 / 6,176 / 5,139 / 5,472 / 4,390 / 2,918 / 2,579 / 2,164 / 1,772 / 1,332 / 6,732 / 5,519 / 5,631 / 4,688

  13. The Dork of Cork

    The Irish CSO publish monthly vehicle licensing
    Look to the top right at latest releases….
    http://www.cso.ie

    After 2009 there was a divergence of the A & B bands from the more wastfull classes such as C , D, E etc.
    A,& B forming 90% + of the car market for 2011

    Now the A is moving away from the B during 2012…..
    Its quite something to see really.

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