The Brutal Economics of Less …


‘Please sir, I want some less’

Look across the water to the Continent(s) and see the collision between the obsolete ‘Politics of More’ and the natural economics of less. Remember, the idea behind modern politics is that the various publics (and their bosses) are entitled to live beyond their means. It is the responsibility of government to provide or else … a new collection of big-business lackeys government is installed.

Up until the turn of the millennium, the job of all governments has been to make resources available at lowest cost to giant business cartels and to lightly manage the prosperity that resulted; making certain that those at the bottom of the economic food chain were not over-supplied. The expression of this idea can be found in every kind of government including the dictatorships, republics and monarchies, constitutional and otherwise: all of these are prosperity governments. The various politics functioned more or less because there were always more resources to exploit: apparent resource growth and accompanying gross domestic product was able to race ahead of populations and their TV-driven expectations. Indeed, the only governments today suited to the hard school of less would be those of North Korea and Myanmar, not exactly the sorts of regimes we free citizens of the modern world would prefer to live under.

In 2012, resource availability has stopped increasing. That this is so is evidenced by the ongoing failure of prosperity governments to solve their economic problems: Japan is in as much difficulty as Belarus as is Argentina. What the economists choose not to understand is that attempts to amplify growth accelerate depletion of the resources needed to support the growth at the same time: one such resource is credit. The establishment is not content to dig its own grave but frantically digs countless graves all over the place. The outcome of the process is to undermine legitimacy and the idea of ‘effective management’ itself. In place of Myanmar there is Somalia or Yemen, failed shadow-states hovering at the edge of utter ruin. This alternative is likewise not exactly representative of the sort of regime we would embrace if given a choice. Because of denial and refusal to accept the reality of resource depletion and act accordingly the effect is that we have no choice.

So begins not so much an age of revolution but of Revolving Futile Governments, each more pathetic/insane than the last, all promising what cannot be delivered. Like Oliver Twist in Dickens’ comedy, the beggar nations of the world line up at the empty soup kitchen looking for a ‘more’ that has vanished.

Here is Basket Case Number One:

 

 

Figure 1: it’s hard not to look at this chart from Jonathan Callahan’s Energy Export Databrowser and feel the pain of ordinary Egyptians. After all, none of them asked to be born. The huddled masses of Egypt yearning to breathe auto-induced smog are running up against the hard realities of fossil fuel depletion and voracious demand from well-positioned (ruthless) competitors. What emerges is a non-government-by-happenstance approach that leads to economic collapse and social upheaval then war. It is hard to imagine a better representation of peak oil on a chart than this. While Egyptian consumption is steadily increasing, Egyptian ability to pay for this consumption is steadily decreasing. At some point Egypt is unable to finance itself, then what?

Egypt must import food: the choice becomes what to feed, hungry mouths or empty gas tanks? Knowing the human race, the default answer is the gas tanks. Government after government will be thrown into the fire in search of one that can make the car manufacturers happy. Meanwhile, food can be had from international relief agencies by showing a few starving Egyptian children on television. More likely is for Egypt to be forced to trade both its petroleum supply and discretionary consumption to others for sustenance. A destitute Egypt will exist on international beggary, a handful of curious tourists and diminishing tolls from the Suez Canal. Why diminished? Because international shipping is another fossil fuel dependency, that is certain to shrink.

One way or the other, Egypt will live within its means. It will do so by choice, otherwise Egypt’s population- and fuel problems will solve themselves. Not something to look forward to.

 

 

Figure 2: Neither Mazama Science nor BP have data on Syrian petroleum consumption but it probably doesn’t matter. Looking at this chart it is easy to see why there is an all-out war underway. By destroying Syria’s consumption infrastructure and impoverishing its citizens all of its 375,000 barrels per day of production can be exported to the United States (Israel).

There are already rumors of NATO commando operations in Syria. Like Egypt, Syria is a place that has little to offer the rest of the world besides petroleum. It can gain food for its huddled, bombed-out masses by selling its reserves cheaply to Western bidders. Having its auto fleet crushed by tanks and blasted by artillery makes it easy. If the food trade comes up short, more can be had from international relief agencies by showing a few starving Syrian children on television.

 

 

Figure 3: Greece had new elections over the weekend to little effect. Both fuel consumption and imports are declining sharply, there are more declines to come. What fuel Greece can ultimately afford is what it can gain by way of its own non-petroleum output. The amount of fuel consumption a tourist and agrarian economy can afford is likely to be tiny, similar to the level of the 1960s.

At the beginning of the industrial period, there were few countries capable of living beyond their own countries’ resource limitations. Now all countries feel entitled to do so, restive populations demand it. This is a poisonous and self-destructive dynamic. Huddled masses look to America and the great European powers and demand an equal place/moment in the Sun. There are millions of young people willing to face machine gun bullets for the right to a flat screen television or a Toyota. This is a contest that is outside the collective imagination of the West. What pulls on Greece are the needs of the greater powers to continue to live beyond their means and the violent ambitions of the lesser nations to do so.

Physics says nothing, depletion accelerates place under the pressure of expanded demand. If fuel cannot be had from native ground it will be stolen from others. This is the brutal economics of less. Consider Greece: it cannot borrow because of the weight of its current indebtedness and the futility/stupidity of its leadership. It cannot borrow, therefor it cannot industrialize or ‘become competitive’. Destroy the Greek economy and its fuel demand is exportable.

Here is the ‘Niewe Colonialism’: there are no conquistadors or eccentric explorers with ZZ Top beards, pith helmets and leggings, instead there are suave Frankfurt bankers saying, “Nein” behind Bauhaus desks in fashionable offices, strings pulled by shark counterparts on Wall Street. As Greece unravels, its future is Somalia … or Syria. Meanwhile, food can always be had from international relief agencies by showing a few starving Greek children on television.

 

 

Figure 4: Spain has little in the way of petroleum resources, it has massive demand and declining means to meet it. Its one-and-a-half million barrel per day petroleum consumption is a great prize. If consumption in Spain can be crushed, those barrels can be exported to the United States. Unlike the US, Spain cannot borrow in its own currency but must use ‘euros’ that are foreign to all users. Spain can be put into bankruptcy by its finance lenders refusing to lend. Without funds, Spain’s quasi-industrial economy falls apart … and is.

Spain has a new-ish government that flails, certain there are more governments to come through the revolving door. The endgame here is a country free of automobiles, unable to afford fuel. If the hungry inhabitants want fuel they will have to steal some from other European countries. Meanwhile, Chinese will drive using Spain’s fuel.

 

 

Figure 5: from here, France looks like the Bakken with less snow and better restaurants. Cutting French consumption to zero will send two million barrels of Russian and Saudi crude to the US. Now that France has a Red Socialist boss there is good excuse to cut off the credit spigot and bankrupt the entire country. In a year or so the frustrated French will be happy to trade their gasoline allotments to Wall Street — discretely, of course — for the means to bail out their own banking executives.

Keep in mind, if nothing changes in France, the outcome is French bankruptcy and a car-free France. Chances are, this is going to happen rather sooner than later as the ability of France to finance living large beyond its energy means evaporates. Of all the European energy deadbeats, France is the most vulnerable. Not only are its debts largest, its banks more exposed to bad loans, it is after Germany the most leveraged to the automobile. France needs no help to fail.

 

 

Figure 6: like the other countries, Italy’s consumption of petroleum has been shrinking. The cause is not conservation but national bankruptcy. Italy, Spain and France are the low-hanging fruit in the contest to steal fossil fuel demand from other nations. While Italy has some fuel production, there is not enough to support its bloated debt- and auto dependence. When push comes to shove there is little the Italians can do but wring their hands as their domestic demand for fuel sails away.

Keep in mind, if policy remains unchanged there will be more business- and national failures. The outcome is fuel prices that drop below what it costs to bring the fuel to market. There are more shortages, diminished demand and falling credit availability in a vicious cycle: this is resource deflation.

Here is Financial Times Alphaville blog:

 

Marginal oil production costs are heading towards $100/barrel

Kate Mackenzie (FTalphaville)

Bernstein’s energy analysts have looked at the upstream costs for the 50 biggest listed oil producers and found that — surprise, surprise — “the era of cheap oil is over”:

Tracking data from the 50 largest listed oil and gas producing companies globally (ex FSU) indicates that cash, production and unit costs in 2011 grew at a rate significantly faster than the 10 year average. Last year production costs increased 26% y-o-y, while the unit cost of production increased by 21% y-o-y to US$35.88/bbl. This is significantly higher than the longer term cost growth rates, highlighting continued cost pressures faced by the E&P industry as the incremental barrel continues to become more expensive to produce. The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. Assuming another double digit increase this year, marginal costs for the 50 largest oil and gas producers could reach close to US$100/bbl.

While we see near term downside to oil prices on weaker demand growth, the longer term outlook for higher oil prices continues to be supported by the rising costs of production.

This is important because, as Bernstein analyst Neil Beveridge and colleagues note, the cost of producing marginal barrels of oil plays a big role in determining oil prices.

 

Analysts fail to notice what happens when the buying public is broke and cannot afford the high price of $120. What about too broke to afford $50? The same thing as if the price to bring new oil to market is $5,000! The oil stays in the ground until someone can pony up the cash. Without oil, the economy falters due to shortages and the price becomes even less affordable.

If the price is lowered from $5,000 to $3 per barrel, there is oil only if it costs less than $3 to get that barrel out of the ground. With oil harder to get in out of the way places, the cost is likely to be $3.01 … or much more. That leaves the crude where it sleeps until someone can offer equal worth for it. With returns on its use non-existent, real worth becomes more difficult to obtain. Stealing demand from others becomes more appealing than prospecting for unaffordable crude: the stolen demand represents oil in hand.

From the same article:

 

Gregor Macdonald

A wonderful post showing again that the price of oil is driven not be novel and arcane factors, such as speculation and financialization, but by geology, supply and demand, and the economics of extraction. The cost to deliver the marginal barrel in the post 2005 era, when global oil production stalled out, is crucially important. At bottom, the global market for oil does quite a good job at price discovery, taking in all of the various important factors. The market is quite aware of the decline in spare capacity, and these marginal costs. How much production does the world lose now, should oil fall to $75 a barrel? I can’t quantify, but it would surely lose a large chunk of future production at those levels as myriad projects would be shelved.

I note also the anger expressed in the comment section to Kate’s previous post about Peak Oil. The end of cheap oil, and the ceiling it creates on global supply of oil through a confluence of geology and economics, is a complex picture to digest and over the years I’ve come to understand that emotions run highest when people realize its very difficult to understand. However, let’s recall this was all predicted years ago: the limits on supply, the decline in flow rates, the terminal stage of Big Oil companies as they could no longer replace reserves, the explosion in finding and development costs, and the pressure on profit margins to the extraction industry. And finally, the problem of affordability.

My colleague Chris Nelder has called the tightening range between the high cost to develop the marginal barrel and the affordability of that barrel to society as the “Narrow Ledge.” That’s where we are right now. And based on the research cited in this post, the ledge is getting tighter still.

 

When fuel supplies are constrained, the only source of new fuel supply is the demand of other countries. That narrow ledge is sure to become a very contentious place as the cruel economies of less are played out.

46 thoughts on “The Brutal Economics of Less …

  1. dolph

    Yes I do agree with this post. It makes all too much sense.

    First, steal from the future. Then, steal from others. Keep on stealing until there’s nothing left. That’s all we know how to do.

    1. steve from virginia Post author

      One thing to keep in mind is that any ‘truth’ coming out that the US is manipulating crisis in the EU for American benefit (greed) it could lead to another major European-American war. Will Americans go to war for their cars? Yes, they have.

      Will Europeans go to war for their cars? Yes … they will. People will do anything include murder their children for the cars … yes, they are.

  2. Robert

    Hi Steve,

    I think your main point about energy demand destruction going on in places like France (and you could easily have added Japan) is quite valid. However, the emerging markets are also candidates for this … look how much energy China wastes building cities that nobody lives in. Of course, you also left out the military, which is a HUGE user of fuel all across the world. Wouldn’t it be nice if the thing that got squeezed out was military waste.

    Still wish you would talk about natural gas. In the energy biz, they figure 600 mcf of gas has the same energy as a bbl of oil. With NG at just over $2 mcf, the boe cost is $12 vs about $100 for oil. The all-in cost of finding/lifting shale gas is somewhere in the $5 – $6 range, which means that the long term cost of a boe of gas is probably $36. Still, not too bad at all. A transition to NG makes sense for fleet vehicles like buses, even though a bus that burns NG costs maybe 15% more, because these vehicles always come back to the same place to refuel. We have found a bunch of shale gas in the US, and there is more in other countries waiting to be proved out. Of course, NG won’t be practical for private cars, but it could soften the blow from peak oil and buy humanity more time to restructure its energy consumption. Also, there is tech out there that allows us to get more work out of each drop of oil; better pistons, for example.

    1. Ross

      “Wouldn’t it be nice if the thing that got squeezed out was military waste.”

      Careful what you wish for. The only thing holding together the “Pax Americana” is the USMil and their ability to project force from Tripoli to Napoli to Taipei.

      Without the ability to project Carrier Battle Groups and loads of Marines, the world would be a multipolar nightmare for an alleged Superpower Empire.

      1. Reverse Engineer

        A Nightmare Coming Soon to a Theatre Near You once the first real battle is fought between Carrier Groups and somebody armed to the teeth with Chinese and Ruskie Cruise Missiles. If it turns out as I suspect that the Carrier Groups are extremely vulnerable to attack from these much cheaper weapons systems, the ability of the Big Ass Military to Steal Oil will be very seriously compromised.

        Just remains to be seen in which tub of water the first of these battles will be fought. Will it be the Straights of Hormuz? The Gulf of Suez? The Mediterranean Sea? The Sea of Japan? The Bering Sea? The North Sea? The Arctic Ocean? Where will the first of the big Hardware go to the Bottom of Davey Jones Locker? How long will it take to Sink them all?

        RE
        http://www.doomsteaddiner.com

    2. jb

      Well, for starters:

      “Light duty natural gas vehicles can cost $5,000 to $7,000 more than conventional vehicles.”

      “…heavy-duty vehicles can carry an incremental cost of $30,000 to $50,000 more than their conventionally-fueled counterparts.”

      – Lack of processing refineries / filling stations
      – Lower energy content = 16-27% lower driving range
      – LNG must be stored between -260dF and -117dF (more fossil fuels…)

      Source: http://www.volpe.dot.gov/coi/ppoa/publiclands/projects/docs/altfuelstudy.pdf

      The demand destruction cycle of ‘rinse and repeat’ means that natural gas suffers from the same disease as solar and wind.The build-out of alternates to convert would require massive subsidies that have to come from somewhere.

      1. Robert

        First, thanks for the link. Good stuff. I shared it with a friend.

        The fuel savings of $0.71 sounds low to me, but that may just be a function of limited distribution. From a raw energy perspective, the savings are potentially much greater. But its a chicken and egg kind of thing. Limited range wouldn’t be that big of a deal for delivery trucks or buses, while it would be for long haul trucking. Making LNG is a pain, but I seem to remember examples of vehicles running on just compressed NG, not LNG. http://www.youtube.com/watch?v=JA9XxqP7PJw

  3. RobM

    Do you mean to imply that countries like the US are executing an explicit plan to steal fuel from the likes of Greece? Or do you mean to imply that it just looks that way due to the current configuration of global wealth? If the former I think you may be wrong. I can’t imagine our leaders are smart or evil enough to pull off such a plan.

    1. Ellen Anderson

      I don’t think there needs to be an explicit plan. It is baked into the financial system where money/debt is backed by energy resources. Every nation and every individual is hoping to be the “last man standing.”

      1. Ellen Anderson

        You must mean that you believe I mean that I don’t believe……
        That’s right! I do! Kind of la-de-da for a Chartist though I think, I believe:)

  4. enicar333

    The Brutal Economics of Less – put into practice…

    ” RACINE – Breanna Gering, on at least one level, knew she was pregnant on Aug. 16.

    She brought a change of clothes with her to Perkins, 4915 Washington Ave. She asked a coworker for garbage bags and towels after she went into labor in the bathroom. She placed her newborn daughter, the soiled towels and clothes inside the bags, then walked them out to a trash bin in the back.

    Gering had a 3-year-old daughter at home. She worked at the restaurant to support herself and her daughter. She had been an honor student, a varsity athlete. This was her first brush with the law. She didn’t do drugs, had never been drunk, never smoked a cigarette.”

    Read more: http://www.journaltimes.com/news/local/crime-and-courts/article_532a93bc-66d5-11e0-8dfa-001cc4c03286.html#ixzz1uNOs4a5R

    1. dolph

      One of the key points of the story being the cold heartedness of the district attorney, likely a gentleman still relatively privileged in the upside down world in which we live. “Why didn’t she do this or that” is his response.

      Why indeed.

      This doesn’t have to do with politics, people. America has actually turned into a society where we point fingers and say “that’s the bad guy” as Scarface would put it. Or “bad girl” if you will.

      Americans imprison more people per capita than any other country on Earth. The tragic outcome of a Puritanical streak which runs deep in American culture.

      We aren’t going to become genuinely totalitarian, but it isn’t going to matter. Don’t fear the faceless federal bureaucrat. Fear the lawyers and policitians in your own town who will bring everybody to poverty and put the rest in prison to feel good about themselves.

      1. Mr. Roboto

        Much of that expansive prison-population is due to the war on drugs. I think that if they legalized marijuana, that would lessen the appetite for addictive street-drugs, which I believe so many poor people favor because the consequences of altering your states with booze are so immediate and brutal.

      2. Ellen Anderson

        That is so well put and so true. All backed up by vicious TV (non-reality based) shows sponsored by big corporations who benefit from the military/industrial/prison based economy. On the local level, the politician’s relatives still have a shot at employment through the punishment industry. Another example of waste based economy. We replace people with machines then punish the people who have become obsolete by locking them up. We invent crimes and criminalize mental illness so that we can control and terrify even more people. And if anyone dares to complain they are accused of being in favor of whatever crime has been committed – like baby killing in this case.

  5. RobM

    Your link makes the case that some bankers are evil. I have no doubt this is true. I am asking if you think the US government is orchestrating the collapse of Greece, Spain, Egypt, Syria and Italy so that the US can access the fuel they used to import.

    1. enicar333

      Bankers ARE evil – but people have choices. It opened my EYES to live in Southern Italy – in Mercogliano, Italy – where families acted as an economic unit also. Very poor – the children weren’t thrown to the Banksters like in America. Children lived with parents until they got married – when they got married, they already had a home, many times condo style, but a home – and NO mortgage. Shopowners lived upstairs from their shops. At the time there was no property tax. They had little in the way of material posssessions, but they were spiritually and culturally rich. No more big families – my Italian friends there weren’t planning on having families – it was already crowded, and they recognized that. People walked, took public transport, and lived a simple life. My friends were in their 30’s – most had never had a job, (none to be had), lived at home, went to the University in Naples, had no debt, no car, and received a small governemnt stipend plus support from home. NO DEBT. On the weekeds, the streets were full of people – visiting, talking, seeing and greeting one another. Hundreds, perhaps thousands, in Downtown Avellino. Perhaps a drink – ONE – a Gelada – when you went out for Dinner – you would spend hours at the table talking. When I took my friends to the American Bar on base – they couldn’t believe it. Mass consupmtion of alcoholic drinks – drunkeness – they had never seen it – it was foreign to them. When my friend got married – they already had a condo-style home waiting – the grandparents had owned a home – and when they died, the parents paid to have it remodeled into 3 condos – one for each child – NO DEBT. My friend said – NO children, as did his wife. They lived simply, owned little, and it was one of the greatest experiences I ever had. There are alternatives to the Banksters = but Americans don’t think that way – and they are trained to throw their children to the gods of interest and keep them debt-slaves for life. Americans HATE their children.

      I got there via the USAF – I met my Italian friends when I was drunk, walking out of Franco’s Pizzeria (he always said we were CIA, and had planes and missiles hidden in the mountain) – heading back to the American Bar at Base Housing. I was fortunate enough to get the opportunity to return when I worked there for CONTEL for 6 months in 1989. I lived in Mercoligano, on the local economy and spent very little time with the Americans. I also spent 6 months for CONTEL in Greece – lived outside Athens – in a Palatial House built by a Greek who ran “Bills Oil Valves” in Houston, Texas. When Summer vacation would come, Bill and his family lived there in Greece. The House had the main unit – for Bill and his family, 3 apartments (1 for each son, which he rented to US military and Civilian defense contractor) and an apartment for the grandparents. It was in a suburb outside Athens, approx. 1 mile from the Agean Sea, by the German Embassy Consulates home – it was always flying the German Flag… What a time!!

      http://www.panoramio.com/photo/6453283

      From the site we could see Mt. Vesuvius and the Bay of Naples. Used to see the American warships come in – hundreds of condoms would litter the alley by the base at Aviano. I walked the Monks Trail on Mt. Vergine many times – up and down.

      1. Mr. Roboto

        Another contrast your story of living in Italy points out is what a very socially-atomized society the United States has become, perhaps always has been. That’s probably a major reason why we drink so much. Sad. 🙁

    2. steve from virginia Post author

      If you are asking for a smoking gun: Obama getting on TV and telling the stupified Europeans:

      “All of your gas station are belong to us’ (in French)

      … not likely. Nobody would come right out and say that sort of thing, anyway. Maybe Donald Trump.

      If there were a smoking gun it would be on the front page of the New York Times, not on my blog. Keep in mind, I was the first to hypothesize that China had effectively privatized its foreign exchange to press the dollar/yuan rate lower than the official rate. (it had and still does so today.) This was pure analysis on my part, not the repeating of (obscure) reports. The conditions in Europe are very suggestive: facts on the ground speak for themselves. The decrease in EU fuel consumption means two things: a) there is less oil available, and b) the oil balance is flowing from European hands to others’. Accompanying the EU fuel consumption decrease is EU insolvency/failure. If high fuel costs and credit breakdown are causing conservation, someone else with better credit is the beneficiary. Sometimes 2+2=4.

      One thing for sure is that none of the oil in question is going to remain in the ground … until it becomes unaffordable for all.

      Keep in mind the US invaded Iraq to steal its oil (we failed). This does not mean we’ve given up on the ‘stealing oil’ business, just adapted. The ‘no fly zone’ and related in Libya was also attempt by US and others to steal that country’s oil. It’s too soon the see the outcome but likely is completely unstable Libya with increased crude extraction. Even if a country does not produce crude, it uses oil products. Destroying a country’s consumption is the same as producing new oil from a well. Every little bit adds up.

      The idea came from Jeffrey Brown’s observation that developing countries are ‘outbidding the West’ for crude. The West isn’t a monolith: it’s more like dogs battling over scraps. Unfortunately for the Europeans, the US dog has a structural credit advantage over the European dogs. Another Jeffrey Brown idea is the ‘Net Export Model’ which has oil exporters gobbling up more and more of their own oil production. What is underway in Iran (currency attack by US) says that this is not fixed in stone. If Iran is bankrupted, its domestic consumption craters: if it cannot sell at world prices due to currency constraints it will be force to sell at a discount all of its oil to meet fundamental needs such as food. This ‘policy’ is overt.

      The policy effort in Iran can then be compared to events on the ground in Egypt and that country can be thence compared to Greece … Spain, then France. After all, European bankruptcy is a given (and self-inflicted, right?). Somebody is going to have access to all the crude, why not us?

      Over time, all will see the results. European economies will unravel and US gas prices will go down. Most will coo, “We lucky!” Others will know …

      1. Robert

        How much oil did we waste invading Iraq? I don’t think Iraq was ever about oil, it was about the ego of a few evil men. And the opportunity for some more evil men to make $$$ off of government contracts.

        As far as aiding demand destruction goes, once fuel prices go down, consumption from the “damned” countries goes back up. The cars and the infrastructure will still be there. If that’s “The Man’s” plan, its a bad one.

        It seems to me that the US has always worked to control the oil supply routes. That is a much more permanent solution than engineering credit events. That’s what all the ships and planes are about, getting a good deal on crude from a bunch of tent dwellers.

      2. RobM

        Thanks. Was not seeking a smoking gun. Just the opinion from someone I respect.

        I am trending to a view that we are in control of much less than we think. For example, those that waste fossil fuels are not intentionally causing climate change. And those that want to stop climate change probably could not do so even if they were given absolute authority.

        The US is strong and Greece is weak not because one is better than the other but rather because of geography, ecology, history and luck.

  6. The Dork of Cork

    I don’t suppose you read the text to the ESM (european stability mechanism)

    This board can seize the Fiat of entire countries , is not elected , unaccountable , immune from legal prosecution , non taxable.
    They send out their bag men polticans to tax for them.
    Its a perfect Orwellian nightmare.

  7. Sandor

    A documentary that illustrates the kind of ‘spreadsheet evil’ that is bemoaned consistently on the progressive fringes of internet blogs is Errol Morris’s ‘The Fog of War’ which is an interview/biography of Robert McNamara with a special emphasis on the his role as USA Secretary of Defense during the Vietnam War. The questions: was McNamara and/or his calculations of human lives evil? Or is war itself inherently evil? Is there a way out of the trap which demands violence in order to secure prosperity when the (male) species is its own predator?

    The word ‘evil’ is thrown around quite a bit. I tend to avoid using the word, as it betrays a judgement that pretends to a moral knowledge I do not have access to. It is also a dangerous word, insofar at it encourages one to close the doors and windows of perception. By thinking ‘evil’, it brings one closer to the actions one condemns. An approximate definition might be: ‘any behaviour or character that willingly seeks to profit from the suffering of others or willingly attempts to make others suffer’. The problem is that most people participate in systems whose ancillary consequences merge with this definition, especially in situations of resource/territory competition. Moving beyond conceptions of good and evil challenges one to engage in more a robust and fruitful forensic analysis of human systems.

    Curious that only humans are capable of being ‘evil’. It is an isolationist construct that simultaneously obscures and invalidates its own thesis: humans alone are capable of free will and thus choosing ‘malice’. This puts us outside of the natural universe. We are alien to ourselves. It is a metaphysics of shame, and all that follows is an attempt to escape this contradiction. Recognizing and venerating compassion, care, and creative conservation is not contingent on Go(o)d and D(evil). Bankers (or any other leitmotif of cartel power) are evil if you choose to perceive them as such. But this label changes nothing. It does not advance the dialogue. Instead, it ends it. One is complicit by participation. This does not mean one cannot differentiate preferred behaviours and social structures. But it does mean that one drops the pretense to any kind of moral superiority and its attendant diseases.

  8. Reverse Engineer

    “We make money the old fashioned way. We STEAL it.”

    Steve, I recall when I first started commenting here on the Undertow that the Economics would devolve to outright theft and this was the purpose of the Big Ass Military, you poo-pooed this in favor of Economic arguments. So now you turn around and say we will steal the Oil from Egyptians, Greeks, Syrians, et al.

    I can go back to arguments I made 4 years ago on Peak Oil that the whole game was about Stealing Oil and always has been, right back to John D. Rockefeller and Standard Oil and Lawrence of Arabia also.

    This is a good post Steve, but it is not news.

    RE
    http://www.doomsteaddiner.org

    1. steve from virginia Post author

      Problem with the ‘big military’ approach is that it is uncertain. It failed in Iraq, where it is semi-public knowledge that the US invaded to Bogart that country’s crude. The ‘small military’ approach seems to work better — see Libya.

      Paying Saddam a couple of billion in gold would have given the US access to whatever crude we wanted without a shot being fired. He was the CIAs ‘man in Baghdad’ for decades. He would have taken the money. That is one economic approach.

      Cutting off credit and reaping the harvest is another economic approach. The blame can be fixed first on ‘corrupt governments’ and ‘lazy Greeks/Spaniards/Irish’. It can then be fixed on bankers who are already blamed regardless. If OPEC compensates for declining demand the blame can be then fixed on ‘greedy Arabs’.

      The bottom line is that the tactics are futile in the face of ongoing depletion. At some point the ship of waste sinks, those clinging to the tallest mast go with it.

      The dudes to snipe at are the media apologists such as Tom Friedman and Dan Yergin who keep insisting that everything is fine … whatever.

      1. Reverse Engineer

        Agreed, in the end the Military Theft option is futile because the energy expended to run the War is greater than the return you get afterward, negative EROEI of course.

        However, I don’t think Bribery would have worked, the problem is they are past the stage where Bribery works. particularly with the Iranian Mullahs I do not think bribery is a very effective tactic.

        It’s like with the Israelis trying to keep Egyptian NG flowing. They could bribe the Hoser for decades but the current bunch running the Egyptian Junta know if they take Bribes from Israel they will come down with Bullet Meets Brain Disease from somebody else inside their OWN power structure. So if the Israelis want the NG, they’ll have to Roll Tanks to get it. They get even worse Gas Mileage than SUVs!

        It will be quite interesting when Vlad the Impaler decides to stop supplying Berlin with NG. Fuhgeddaboud driving the Autobahn in your Mercedes, they’ll be lucky to keep the Lights On. Germany will be Greece in NO TIME!

        RE

      2. steve from virginia Post author

        RE, in Iraq in 2005-2006 the bribery was the only thing that worked. The ‘Surge’ was a failure on its own but paying hundreds of million$$ in Saudi cash to Sunni Awakening militants ‘encouraged’ them to hive off the al-Qaeda wannabes and stick them up where the Americans could kill them.

        http://en.wikipedia.org/wiki/Sons_of_Iraq

        The Iranians were bribing the Shiites … the culture in Iraq is the ‘baksheesh’ culture. You pay to play.

        Bribery worked for both sides in Afghanistan during the period from the appearance of the Taliban (paying Saudi money to the warlords) the Americans after 2002 (paying taxpayer money to the same warlords). Bales of cash were flown in on transport aircraft. Bribery worked where an offensive was unlikely (not enough US manpower).

        Iran is at the top of at least one corruption list:

        http://blogs.wsj.com/corruption-currents/2012/05/07/new-aml-rankings-index-puts-iran-at-top-of-risk-list/

        The mullahs may feign disinterest but a few bucks in the right hands go a long way. Right now the US Treasury is trying to find out of it can bankrupt Iran the same way the banking cabal has ruined Greece. If it works, ‘all of your oil well are belong to us’.

      3. Reverse Engineer

        I think the problem here is that the Bribers are running out of Bribe Money that actually WORKS to do the Bribing. Just about anybody can be bought for the right price including Mullahs, a corollary of my Dad the Pigman’s notion that “There is no problem you cnnot solve if you throw enough Money at it”.

        Obviously however, either the Bribees are asking for too much money or the Bribers are running out, because the Bribing isn’t working too good here these days.

        If the Illuminati could gain control over Iran simply by throwing Money at them, they would do that. The issue here is that they haven’t GOT the money to throw at them, not money which holds real value anyhow. When the Money Fails to buy the Control you need, then you have to go by the more Direct Method of Sticking a Gun to the head of whoever you are trying to steal resources from.

        How many populations and their “leaders” can the Illuminati BUY these days? Obviously fewer all the time here since they cannot afford to buy off Greece anymore, or Egypt, or Syria. Soon they will run out of Money that works to buy off Spanish and Italian Pols as well.

        When you run OUT of money that works to Bribe a cadre of leadership in a Banana Republic, you bring on the Big Ass Military. You will only run into problems after that when you run out of Money that Works to buy the Loyalty of the folks in charge of that Military. That stage is a while down the line of course, but it will eventually arrive as well.

        RE

  9. iguanaisland

    Exporting demand of crude seems like a competitive game. The losers like Greece and Egypt are the first to go. I live in Japan, however, so I am interested in when its number will come up (I suppose when the credit markets start giving it the cold shoulder). After the Eurozone collapse? Before? Simultaneously?!I am not planning emigration or anything like that. I just think it would be interesting to know. Just a rough guess would be enough even. I think I would look forward to the end of the cars on the road more than I would miss the food in the shops. Ha! That is easy for me to say now, isn’t it, now that I have just eaten dinner.

    1. Sandor

      It is difficult to retrain one’s attention to carefully monitor diction. The remedy is that most elusive of mental action – attention. The purpose of meditation is to unfold one’s perception. For quite a while, it seems a pointless painful waste of time. It makes one squirm. One wants to run away, anywhere, for some kind of stimulus. It is boring. Confronted with one’s mental inventory, one encounters an abyss of an agitated boredom. Few are willing to persist in the face of emptiness to emerge within fullness. Careful thought (language) is an offspring of sharp focus, which arises from stillness. Meditation is the steadicam for the motion picture of one’s perception.

      ‘I don’t think; I am’

      1. steve from virginia Post author

        I think I have the best comment section on the Internet …

  10. The Dork of Cork

    OECD Europe has reduced its oil consumption by 1+ ~ million B/D since Jan 2009 so that the Germans could keep selling BMWs to China.
    What a way to run a continent ?

    Irish ,Greek & OECD Europe consumption.

    omrpublic.iea.org/demand/ir_tp_ov.pdf

    omrpublic.iea.org/demand/gr_tp_ov.pdf

    omrpublic.iea.org/demand/eu_tp_ov.pdf

  11. Ellen Anderson

    Steve – agreed about the comments. Interesting. You know though, I miss The Automatic Earth. First they make the website and related comments slow and complicated so I visit less frequently. Now it seems to have disappeared completely. What is going on? Anybody know? I would have thought that Stoneleigh might have weighed in again by now.

    1. steve from virginia Post author

      AE comment section is more of a forum now, like the Fender Guitar forum. The commentariat can edit their entries which is an improvement (since I live to edit).

      Not so many discussions, probably some more from Stoneleigh as the Aussie trip is done. Ashvin carries the burden of writing lots of articles. How long this will last is hard to say: writers on blogs get burned out writing the same article over and over. How many different ways can you say, “the world is going broke”?

      Another prob is nobody gets paid. People who write articles are retired or students (or those with outside income). The more successful (skilled writers) write books: publication dramatically expands the audience so the book sales increase in a virtuous cycle.

      The comments anywhere tend to get stale after awhile. When ZeroHedge first emerged there were a lot of discussions about the markets and how they functioned mostly from insiders/traders’ perspectives. Now, the traders are long gone and it’s batshit crazy teenagers’ flame wars and invective. Who cares about ‘Silver Bitchez’ anymore? It’s not informative to look over there: nuttin’ but Fed bashing and pitches for gold and hyperinflation which all seems kinda dumb.

      The Oil Drum also changed over a year or so ago and a lot of long-time readers and commentariat left. The old site put up ten or more articles per week and the staff was getting burned out. The new TOD is more focused and there is a new cast of characters to some degree. Of course, Gail Tverberg’s own site is excellent.

      There is good stuff online, there is so little elsewhere in the media outside of Hollywood productions (Hunger Games). Ours is an invisible crisis. Online only the smallest fraction of one percent is directly engaged with mapping the extent of the situation at hand. The most popular sites are those relating to singers and celebrities, sports and goods’ sales. A few thousand people a day read economics or sustainability sites like this one. The vast bulk of economic sites are those of academicians who publish for their students. Most of what is seen is conventional. Out of billions, this audience is microscopic … which is an indication of how much trouble we are in.

      1. Ellen Anderson

        There were a couple of characters/commenters over at AE whose opinions were interesting and quirky. I miss them. At the moment the site seems to be completely gone. I always like a refresher from Stoneleigh. I met her a couple of years ago when she gave a speech in Western Massachusetts. Hardly anyone was there. I was so surprised because I couldn’t think of anyone I would rather meet. A couple of weeks ago I attended a public talk, well advertised, by Michael Klare. Actually, it was a book signing for his new book. Again – very sparse attendance. Here we have an opportunity to be at ringside for a watershed event and all the seats are empty!

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