Watch the Banks …


Surreality is when the top story in the New York Times is about King Cakes but the idea is to not scare the horses. Informing the readership in plain English of our ongoing unraveling might provoke uncertainty … then panic … leading to questions about why we endure so many stupid managers everywhere in the world. At the very least, the stock market — which is now near all-time highs — might decline. People might then in theory put off buying a new car or a bigger house or not take on bigger loans. Best to roll out the pastries and downplay the Israeli air strike in Syria and the widening war there or the bank nationalization in Netherlands (Washington Post):


Dutch state nationalizes bank and insurer SNS Reaal NV, injects 2 billion euros in capital

(Associated Press)

AMSTERDAM — The Netherlands nationalized its fourth-largest bank on Friday, injecting €2 billion ($2.7 billion) to recapitalize SNS Reaal NV and head off any chance of a messy collapse that would threaten the country’s already fragile economy and financial system.

The total cost to the Dutch government will be at least €3.7 billion, Finance Minister Jeroen Dijsselbloem told a press conference. That’s almost certainly enough to ensure that the Netherlands’ budget deficit in 2013 will be higher than the 3 percent allowed under EU rules, unless the Dutch Cabinet — which has already taken a series of unpopular tax hikes and spending cuts — comes up with further austerity measures.

“This isn’t what we wanted,” Dijsselbloem said. But he added that, without the nationalization, SNS “would have gone irrevocably bankrupt,” with potentially dire consequences.


Ah yes, dire consequences: secured (large) lenders to the bank would have lost some money. Much better for the ordinary citizens of Netherlands to take the billions in losses. The citizens haven’t even earned the money yet, they will never know what it is they have lost! Here is the latest innovative technology in action: the finance cost-morphing time machine. The establishment endlessly promises a high-tech utopia tomorrow. What it actually delivers is invisible public bankruptcy: money that is not earned tomorrow because it was diverted to a tycoon … yesterday.

King Cake 2

High-tech time machine in operation, Pableaux Johnson (NYTimes)


Depositors and senior creditors (of SNS) won’t lose any money in the nationalization, the Finance Ministry said.


The closest the Dutch get to actual restructuring …


SNS shareholders will be wiped out, along with some junior creditors, including the state itself. SNS owed the government €800 million, including interest, left over from a 2008 bailout. Other junior creditors will lose around €1 billion, the ministry said. The three biggest Dutch banks, ING Groep NV, ABN Amro, and Rabobank will contribute a combined €1 billion to help save SNS — they are required to do so as under the same law by which the state guarantees their retail deposits.

The nationalization shows the damage the crisis has wrought on the oversize Dutch financial sector and means that three of the five biggest banks in the country have now come under state control since the start of the crisis: ABN Amro was merged with the former Fortis and both were nationalized back in 2008. In addition, ING received several bailouts which have still not been fully repaid. Only Rabobank, a banking cooperative, has not yet needed state aid.


Big-bank shutdowns are historical indicators of greater finance system failures-to-come. This dynamic has been in force as recently as 2007 with the collapse of el cheap-o mortgage origination firms and two of Bear-Stearns’ hedge funds. The entire mortgage industry, shadow-banking and then Bear-Stearns itself all fell into the pit shortly thereafter. During the entire period there was a soaring stock market and soothing bromides from the establishment …

Attention must be paid to stumbling banks while the happy talk about ‘growth’ and ‘recovery’ is ignored.

The propping up of key-men works for modest periods only. Cures or resolutions must be put in the place of the props … since 1980 or so nothing has been done other than to entrench the status quo, expand credit and inflate serial asset price ‘bubbles’. Finance has not evolved, it has become an unchanging dead weight, a gigantic millstone around the corpse of modernity … ossified finance has become the final manifestation of ‘progress’. To support banks and the industrial welfare queens there are cheap loans offered by central banks, the laundering of assets, bailouts of businesses belonging to ‘special friends’ (owners) of corrupt government officials. All of this is accompanied by loud public proclamations of better times that are sure to come, tomorrow.

It is always tomorrow … when the positive outcomes are certain to emerge! As a fair exchange businessmen will poison the atmosphere and the ocean so that progress can take place. Meanwhile the key-men multiply like rabbits while the props diminish or crack under the strain.

There are banks and bank-like entities faltering in China, in Spain, as well as Italy, where the Banca Monte dei Paschi di Siena SpA is underwater due to self-dealing and looks ripe for failure. All of these situations have the potential to upend the economic applecart. Of course, there are the parallel political scandals in all of these countries including China. One must not overlook the Greek and Cyprus problems … or the foreign exchange ‘war’ that is underway between the US, the eurozone, China, Japan and Korea.

The term ‘Dutch’ can be replaced with the name of just about any country …


‘France is totally bankrupt’: French jobs minister Michel Sapin embarrasses Francois Hollande with shocking statement on state of the country’s economy …


Sapin is shocked … shocked! The economy of France is a Ponzi scheme where the funds/capital of other countries is taken in exchange for empty promises … gambling and fashion have bankrupted the country, there is nothing left for France but to become Greece.

Car Sales 012713

Figure 1: Charts of car sales here and there from the New York Times: sales nose-dive in Europe. Sales are dependent upon the constant addition of credit-plus central bank moral hazard … as these offer diminished returns there is nothing to support sales


Industrial production figures exclude construction, and reflect the change in each month from the average of 2006 figures. Car sales figures exclude light trucks, and are based on sales volumes in the United States and on registrations of new cars in Europe and Japan. They reflect the total for each 12-month period compared with the 2006 total.

(Sources: Bloomberg, Haver Analytics, Ward’s Automotive, European Automobile Manufacturers’ Association)


Autos and other capital-extinguishing goods are collateral for our money, they are the tangible ‘products’ for- and by which we devour our pitiful remnants of real capital … We can continue to destroy capital only if we lie to ourselves about its nature. Currently, we insist that capital is money instead of resources. This is false: money is loans and nothing more. When capital is loans, there are insignificant consequences to its destruction. Old loans are easily replaced with new ones. Only when capital is something that must be dug out of the ground with great effort … does its fleeting existence within our state of affairs become an economic embarrassment … then an indictment.

Meanwhile, finance is losing its ability to paint capital destruction as ‘productive-appearing’ and to thereby prop it up. Here is the greatest key-man failure! The more effort expended to keep the current regime of capital destruction ‘growing’ the faster the costs accumulate … capital is extinguished with one hand while greater claims against the same capital are made with the other.

Productivity of Debt 020113

Figure 2: What sort of un-balanced sheet is this? Here are diminished returns made graphic … the declining productivity of US debt, as $300+ billion borrowed dollars ‘buys’ a $5 billion dollar decline in GDP (by Zero Hedge). This decline can be ignored as long as … the stock market keeps rising! (click on the image to see it in its entirety)

Meanwhile, from the ‘Let The Eat King Cake’ department … in China, (Patrick Chovanek):


What Causes Revolutions?

A surprising number of people in China have been writing and talking about “revolution”. First came word, in November, that China’s new leaders have been advising their colleagues to read Alexis de Tocqueville’s classic book on the French Revolution, L’Ancien Régime et la Révolution (The Old Regime and the Revolution), which subsequently has shot to the top of China’s best seller lists. Just this past week, Chinese scholar Zhao Dinxing, a sociology professor at the University of Chicago, felt the need to publish an article (in Chinese) laying out the reasons China won’t have a revolution (you can read an English summary here). Minxin Pei, on the other hand, thinks it will.


This is like the German high command during the Barbarossa winter of 1941 re-reading Armand De Caulaincourt’s classic account of Napoleon’s doomed 1812 Russian campaign. Sentries that have frozen to death tend to focus the mind: so do the endless rounds of Chinese outrages and miscalculations. Doubts about China’s enterprise are growing … in China, where such doubts matter most.

What would a China revolution look like? Pundits offer a political story about the Communist Party but the problems are economic: the failure of Chinese business ‘success’. Any revolution would certainly take some form of public rejection of automobiles … otherwise there would be no real revolution at all. Such a radical change is unlikely at the moment … The Chinese love their cars … the passage of time and the ongoing bankruptcy of China will do the heavy lifting. The Revolution will come after China becomes Greece.

What must be watched are the banks which are saddled with US$ trillions of bad loans, mostly for ‘capital investment’ which in this case means redundant factories, showy-but-useless public infrastructure and property developments. None of these things can or do pay for themselves, they require endless rounds of new loans … the result being pyramiding debts. Amazingly, it has taken the Chinese only 20 years to reach the profound level of insolvency that has taken the West 400 years to achieve. It is hard to see the Chinese expanding their particular form of capital investment Ponzi scheme … and the accompanying smog … for another 20 years.

The Chinese are not the only folks struggling with air quality: the smog is worse in India … for many of the same reasons as China. The smog is also bad in Athens … Greeks are putting heating oil into their cars and heating their houses with stolen wood.

Another finance debacle in the making is Japan’s desire to ‘Whip Deflation Now’ and depreciate the yen all at once, (Bruce Krasting):


Figure 3: The chart looks like the Yen has weakened in lockstep with both the Euro and the Dollar. But when you look at the scale, you see that the Yen has lost 22% against the Euro, while it has only given up 13% versus the dollar. From this you might conclude that the logical next step is for the USDYEN to “catch up” to to what has happened with the EURYEN. This thinking takes you in the direction of USDYEN 100.

But … the FX markets don’t work like that. If USDYEN moved to 100 while the EURYEN remained “stable” around 122, then the EURUSD rate HAS to fall to 1.22 (-9%).

Sorry, that’s not in the cards.


Depreciation from ¥80 to the dollar to ¥100 means a ‘Great Leap Upward’ in Japanese fuel prices because the country has no native sources of petroleum or other fuels. Japan beggars itself instead of its neighbors: whatever the country hopes to earn by exports is offset by the increased cost of the fuel it must import. At the same time, dollar-fuel prices are increasing because of ‘growth’ propaganda, moral hazard for petroleum ‘investors’ as well as threats of war in petroleum producing regions. With depreciation and higher producer costs the Japanese driver can look forward to paying a deflationary 30% or greater premium for fuel compared to the rest of the world. Certainly, here is conservation by other means!

The foregoing omits systemic risk to Japanese banking and finance which cannot be easily measured. The smallest error can have shattering consequences. For example, the Bank of Japan central bank can be perceived by the marketplace to be making unsecured loans … that is, loans in excess of collateral that it takes on as security. If this is so, the central bank is instantly insolvent … as are other Japanese banks and for the same reason: bad loans and excess leverage! Keep in mind, the only reason why a central bank would think of offering unsecured loans is if the country’s commercial banks are insolvent and unable to lend. The outcome is no effective lender of last resort to guarantee bank liabilities: a run occurs as depositors hustle to remove funds from a defunct system. In this light the recent months’ acquisitions of overseas companies by Japanese businesses is ominous.

There is also the issue whether Middle Eastern suppliers will accept a strongly depreciated yen or if they will demand another form or payment (dollars). The Japanese are playing with fire, looking for an easy, conventional approach that cannot possibly work as intended. Whatever the country attempts there are unintended consequences … which often cannot be discerned until after the attempts are made and it is too late to change course.

What the establishment in Japan fails to understand is the effort to accelerate consumption — either within the country or by trading partners — offers sharply diminished returns. This is because irretrievable capital is consumed instead of rapidly multiplying ‘money’. Because of consumption over the course of decades real capital has become more costly relative to the amounts that can be lent against the consumption process. When returns become negative … the country in question instantly enjoys a Greek-like national bankruptcy.

The bankruptcy is permanent, by the way … the only way for a Greece to become prosperous again is for another country to become more bankrupt than Greece is now.

This net-negative process may indeed be underway in Japan as what it exports must be imported first then subjected to entropy-creating industrial-commercial processes. Every process exacts a thermodynamic levy or ‘tax’, certainly export goods cost Japan more in energy losses than what Japan imports.

A country can make water flow uphill by pushing costs onto unwitting trading partners by way of foreign exchange and leverage against that partner’s account. Japan’s trade surplus — which has subsidized Japan for decades — is nothing more than faulty bookkeeping and overseas loans. Japan has pushed its energy costs onto its customers: the attempt at depreciation is an effort to restart the pushing process.

Meanwhile, all the other consuming countries in the world desire to depreciate their own currencies as well! More of Japan’s customers are broke, they cannot afford to subsidize Japan’s waste any more … or their own.

Certainly, there must be intelligent, perceptive analysts in France, America, China and Japan … however the power of habit and wishful thinking is very strong and the current lesson of Greece being played out on the public stage in real time … is ignored.

While countries beggar their trading partners, many of the same countries are bent on outright theft. War intensifies in the Middle East, in Africa, it stirs off the coast of revolutionary China … every place there is oil or oil consumption that can be ‘exported’ to countries such as the United States. The outcome is increased war premium (Bloomberg):


Commodity Units Price Change % Change Contract Time(ET)
Crude Oil (WTI) USD/bbl. 97.97 +0.48 +0.49% Mar 13 11:45:10
Crude Oil (Brent) USD/bbl. 116.96 +1.42 +1.23% Mar 13 11:45:16
RBOB Gasoline USd/gal. 302.58 +2.21 +0.73% Mar 13 17:15:00


Crude prices increase until the customers cannot borrow any more … from here it looks that $120 Brent will be where customers are shut out of the market. Ugly noises from the banks are the indicator.

King Cake 1

King cake is a New Orleans tradition served on Fat Tuesday before Mardi Gras. King cake by Sara, who clearly knows how to bake a good one! Any recipe will do as long as it includes sugar. A small plastic doll stuck into the cake after removal from the oven. Note: there are no such things as ‘clashing colors’ in New Orleans …

The survivors of the current state of affairs are those small businesses that do not require credit and can obtain organic returns. As for the others, let them eat king cake.

73 thoughts on “Watch the Banks …

  1. The Dork of Cork.

    Here is a strange one from a strange lecture in Ireland yesterday

    “1. Currency Innovation
    In 1992-3, the EMS crises almost destroyed the path to the Euro, but the crisis was resolved by instituting greater flexibility: through wider (15 percent) margins in the exchange rate bands. The modern equivalent to the band widening of 1993 would be keeping the Euro for all members of the Eurozone but also allowing some of them (in principle all of them) to issue – if they needed it – national currencies. The countries that did that would find that their new currencies immediately trading at what would probably be a heavy discount. California adopted a similar approach at the height of the recent financial crisis, issuing IOUs when faced by the impossibility of access to funding. The success of stabilization efforts could then be read off from the price of the new currency. If the objectives were met, and fiscal stabilization occurred and growth resumed, the discount would disappear. In the same way, after 1993, in a good policy setting, the French franc initially diverged from its old level the band but then converged back within the band. Such a course would not require the redenomination of bank assets or liabilities, and hence would not be subject to the multiple legal challenges that a more radical alternative would encounter. There would also be the possibility that the convergence did not occur. The two parallel currencies could then coexist for a very much longer time period. This is not a novel thought. It was one of the possibilities that was raised in the discussions on monetary union in the early 1990s, that there might be a common currency but not necessarily a single currency.”

    Dork :
    If people get paid in devalued state money how can bank “assets” be kept inflated in Euros ?

    I don’t think 1993 is a good example as French banks assets were in denominated in Francs back then.

    The above just illustrates the divorce of banks from the state in Europe.

    The only bank asset that I can see inflating is possibly Gold as it is useless and has zero input costs other then storage unlike houses and other good stuff.

    But the transfer of remaining purchasing power to gold holders will not be politically sustainable.

    1. steve from virginia Post author

      @ Dork:

      “If people get paid in devalued state money how can bank “assets” be kept inflated in Euros?

      I don’t think 1993 is a good example as French banks assets were in denominated in Francs back then.”

      That is the argument euro-promoters like Barry Eichengreen make, that euro-denominated assets cannot be properly (re)priced should the euro be removed (rejected). Of course, during the period when arguing/dithering over worth take place, the assets are deflated (by way of arbitrage) all the way to zero.

      The market, like rust, never sleeps. At the zero point, assets are all equally easy to price!

      Finance will be re(capitalized) most likely against the national mortgage worth of real estate (see ‘rentenmark’) … at what level is the real question. Mortgage worth is also an industrial dependency. What are various land ‘uses’ worth? What are towns and cities worth? How about forests and watersheds? Car-dependent suburbia is worthless, is there any underlying worth that can be captured cost-effectively? Post-industrial price of industrial/consumption assets is likely to be very low.

      Distill the world’s great problems to essentials and assets are over-priced … that’s the problem! Outside of (obvious) liabilities the collateral for assets is waste and the wasting process … bankruptcy is ‘baked into the (King) cake’.

      1. The Dork of Cork.

        Page 33
        4.4.3. Increase in Artificial Surfaces
        There was almost a 15% increase in artificial surfaces between 2000 and 2006. Most of this increase is explained by the increases in the following (Table 18):

        Infrastructure (roads and railways); increase of 23.5 km² or +126.43%

        Industrial and Commercial; increase of 17.5 km² or + 21.91%

        Mineral extraction sites (quarries and dumps); increase of 12.52 km² or +16.5%

        Discontinuous urban (sub-urban housing); increase of 140.45 km² or +14.95%

        The above discontinuous urban (140.5 km²) did the most damage to good agricultural land and also subtracted from the tourist potential of many areas as few people with wealth & taste will spend money in a sub-rural sub standard landscape.

        Ireland has now lost much of it tourism to Scotland as a result of the above development

        Also much of the state forests will be sold off but they are of poor quality in general with the majority Sitka spruce plantations which are dark dark evil looking industrial places and do long term damage to the albeit limited agricultural land they are planted on.

        Pre Cromellian cattle transhumance activites were far more sustainable

      2. OpenThePodBayDoorsHAL

        Interesting that you talk about repricing of “real” assets like houses and forests. Maybe that demonstrates gold’s value: it’s very concentrated. Much easier than lugging around a real asset like a house to complete a transaction. The un-reality of paper promises (called “promissory notes”, after all) seems destined to come in for a landing…

  2. p01

    The only “business” with “organic return” I can think of is (increased and monopolized) food production, which is what got us in this terrible mess in the first place. Not that this will change in any way, of course, but I’m curious if any exists any other type of non-Pharaonic “business” (i.e. not individual food production) with organic returns?

    1. Jb

      It would help if we could define what we mean by ‘organic return.’

      Using Steve’s “small businesses that do not require credit and can obtain organic returns” idea, I take this to mean any small business that has modest start-up costs in terms of skills and equipment (brain surgery is out) and generates perennial income in excess of operating expenses.

      A few ideas come to mind. The obvious is small organic, perma-culture hobby farm with a diverse income stream. For example, you could mix berry varieties and heirloom tomatoes, with bees (for honey and wax) and goats (for milk and cheese), and chickens (for eggs and meat). Find a neighbor that still works in town who can deliver your product or make one trip a week.

      Most of us are in urban areas so the best we can do is a kitchen garden. That means we need to do some small scale manufacturing. Examples include sewing, electronics, shoe repair, jewelry making, small engine repair, etc. Unfortunately, you may have to depend on resources from outside your area such as sewing machine needles, Velcro, solder, etc. Other home based ideas might be elder care, delivery, specialty foods, nano-brewing, legal aid, book-keeping, architecture/engineering, grant writing, graphic design, etc. My great grandmother took in a foster child during the Depression for the income.

      The problem is, few of these are going to generate much income. So if you are laden with debt, it’s not going to help much. Developing an online presence can help generate a large, dispersed customer base. We have done this and it works.

      Thoughts anyone?

      1. dolph

        I’m not sure there’s a way out of this. There are ways to prepare, sure, but what does that amount to in the end?

        Think about it this way…it is the nature of every business to expand. That’s what they do. This is driven by natural human instinct.

        We suffer from too much of everything. Even as we try to do more! Only cultural collapse can take care of this.

        Even if you are a small business…does any business operator think…”this is the size of my business, and I never want to expand it ever again.”

        That is what we need yet we seem incapable of it.

      2. Jb

        “this is the size of my business, and I never want to expand it ever again.”

        Actually, dolph, that is exactly what we are doing with our two home businesses. My wife has outsourced the production of a small portion of her product line which is carried by several catalog distributors. The rest is all custom work made by hand.

        During the boom, I had an office downtown with employees, workstations and a server, office furniture, etc. Once the boom was over, I got rid of all of it and went back to the home office. I have almost no overhead and have zero business debt. This has allowed me to cut my hourly rate and beat out the competition. I have no desire to take on more work than I can personally handle and oversee. It just isn’t worth it.

        My mother, who never went to college, has been self employed for over 30 years. At 67, she is turning away new clients, preferring to only work for her repeat clients. She spends the rest of her free time on the beach.

      3. steve from virginia Post author

        Big businesses borrow their profits, the bigger the business the larger the loans.

        This is the nature of lending: larger loans have less interest costs than do smaller ones. This is the way lending is used as a tool to manage diminished returns … to manage the economic First Law (the engulfing costs of expanded surpluses). The big business tycoon borrows his fortune leaving repayment to his workers/customers.

        Right now our economy is made up of daisy-chains of loans, even smallest firms earn by borrowing against the accounts of their customers. What is happening is loans of every kind are becoming harder to come by, the chains are breaking. What comes after is hard to tell because nobody now can say which chains will break, how fast or what the outcome will be. Some kinds of lending will be more durable than other kinds. People will always need food clothing and shelter … not necessarily a gigantic ‘investment house’. There will be credit support for some of these things. OUtcomes will depend on the relationships of individuals as well as the nature of the communities … it is a cliche but there is no real way to find out except by experience.

        I think if a business is flexible and can keep costs under control … and prices at the same time … any small business can earn without having to borrow. That is going to be the key.

        High prices by themselves are a problems. Prices are elevated by borrowing and credit. With less credit there is less support for high prices of all goods which will make life easier for a lot of people w/ smaller incomes and less borrowing power. The difficulty is that loan balances will still be high … and unpaid.

      4. Jb

        “less support for high prices of all goods which will make life easier for a lot of people w/ smaller incomes ”

        Foss describes how a decrease in prices won’t matter because you have decreased income too. As my great aunt-in law (who is still alive at 101) says about life during the Great Depression: “A dress might cost $4 but it didn’t matter because nobody had any money.”

        Or do I misunderstand you?

      5. steve from virginia Post author

        Hmmm …

        – There are perfect markets where every seller finds a buyer at some price, no good goes unsold. In general, the distribution of prices is a curve with the highest prices finding the fewest customers and the lowest commanding the attention of the greatest numbers of customers. The real price — whatever it may be nominally — is affordable.

        – At the same time there are non-markets where a $4 dress may as well cost $4 billion because any real price is too high.

        moebius strip

        Which side is up?


      6. Jb

        From a practical perspective, Lange took plenty of photos of dresses that were $4 or less.

        Nicole Foss linked an article this morning about Greece:

        ““The worst part is not the lack of money,” Mr. Topalis said of his life today. “The worst part today is the mood that people are in.””

        ““There is anger, bitterness between neighbors who can afford oil and those that cannot,” Mr. Bekkas said. “That is what Greece is like now.” ”

        Conservation by other means is getting ugly.

      7. steve from virginia Post author

        If Greece converts to drachma they won’t have any fuel at all. Greece does mine some lignite which it burns for electrical generation, I think it sells some of this electricity outside of Greece for euros.

        There is no overall plan in Greece that starts with acknowledging energy insufficiency. Everything seems to be, “how do we get back to where we were before all this bad stuff started happening to us?” The burning wood in fireplaces is a stop-gap measure until Santa arrives and the money starts rolling in again.

        Unfortunately, the same Greeks burning wood are too poor to build tile stoves which require much less fuel and emit much less smoke.

        Why green tiles? Why? Why? Why? A: Romanian …

        A bigger one that heats water, too!

      8. Jb

        Steve said: “Unfortunately, the same Greeks burning wood are too poor…”

        Yes, even the former middle class ones. Let this be a lesson to us all: it’s time to convert fiat currency into tangible assets before it’s too late.

        My preference for masonry stoves are one’s you can cook in:

    2. Reverse Engineer

      I don’t think any “small bizness” earns any “organic returns”, at least not while all biznesses operate under a failing currency structure.

      Small Biz is essentially Parasitical off of Big Biz. If Big Biz borrows Capital to put up say a GM Auto Plant in Janesville, doctors, dentists, property sellers, retailers and restauranteurs all open up small biz that sieve off the central source of money.

      When the Big Factory shuts down, all the small bizmen go Broke too, even if they took out no Loans to grow the Biz. Customers with MONEY are no longer in the neighborhood buying their goods or bidding up the price of housing. Just the monthly overhead of the restaurant makes them insolvent.

      Without Large Public Works feeding money at great scale out into the economy, the ancillary small biz all goes broke too. I wrote about this on the Diner in the Large Public Works Project series.

      For the recent Generation in the Age of Oil, the BIG LPWP was the Interstate, and then the Shopping Malls and McMansions that built up around the Ring Roads.

      Without such LPWPs, there is no way to distribute out centrally created “money” which has any value. There is nothing for Small Biz to sieve off.

      It is unlikely we will create any new LPWP to replace the one built courtesy of the thermodynamic energy of fossil fuels over the last 3 centuries or so. In the absence, Money on the Grand Scale of international Finance will irretrievably FAIL.

      Whether any more Local forms of Money can be substituted remains an Open Question.


      1. steve from virginia Post author

        Before large centralized firms and system credit there were decentralized firms, sometimes large numbers of them. Each might employ a few workers, even only one … but there might be thousands of individual producers. It could be said that production of goods was distributed.

        Credit allowed industrialists to harvest markets that belonged to distributed producers. Because credit is a substitute for earnings an industrialist could lose money long enough to put the distributed producers out of business … by way of ‘ruinous competition’. The productive efforts of an entire community were concentrated into a single factory … the ex-producers were reduced to poverty except for a few who gained employment at the factory … at reduced wages. The credit provider and the industrialist thereby gained the entire community’s returns. The process was bankable in that the industrialist could always borrow greater amounts … until a competitor with a better narrative and newer machines could borrow greater amounts still .. and put the first industrialist out of business or buy him out.

        Now, the credit providers are failing, credit is being stripped from the economy, a bit here … a bit there … incrementally. What is left? A scorched earth … or something else?

        Only way to know is to leap into the fire.

      2. Reverse Engineer

        “Before large centralized firms and system credit there were decentralized firms, sometimes large numbers of them.”-Steve

        No, before large centralized firms and system credit there was…Feudalism! The two Big Biz were Ag and War, both essentially monopolies of the Feudal Lord. Land bound peasants had little if any money, trade was mostly barter.

        The rebirth of Banking with the Medici followed by the large companies like the British & Dutch East India Companies created the system wide credit we work with now, and it preceeds the small biz which feeds off the credit system run by the large banking houses.

        You don’t have functioning money cross border without these banking houses and trade collapses. A large part of the reason for the Dark Ages between the fall of the Roman Empire and the beginning of the Enlightenment.


      3. steve from virginia Post author

        RE, there is a big information gap before industrialization.

        The Middle Ages were as prosperous as Roman period and succeeding modern periods, not for all at all times but the same can be said of the present. Americans live better than Kenyans, Venetians lived better than Saxons in England after William arrived. What mattered most in Europe was tide of war.

        Post-Constantine, the wealth of the Western Roman Empire was directed toward the church and away from government and the private sector: this was a big reason for the decline then collapse of the empire. The church made itself the beneficiary of all estates without heirs or issue, over centuries it absorbed vast amounts of property from extinct estates. It became property recorder and mediator of disputes great and small, which gained it fees. The Western Roman government became unable to compete with the church as a business enterprise.

        The militaristic Franks eventually absorbed and reorganzed Roman activities in Western Europe, trade was continuous from Asia to Spain, trade centers such as Genoa, Siena, Venice, Constantinople became rich.

        The traders in the 8th century were wealthy and successful … as any number of ‘entrepreneurs’ today. They borrowed their fortunes and hived to costs onto their trading partners!

        The Romans understood steam power but not plate glass or railroads. Franks understood printing but not moveable type or firearms. The Chinese understood rocketry but not airfoils. Information was hard to come by, in the West the church had a monopoly on education as well as on books. It took moveable type — and a series of bloody wars — to break the church’s information cartel.

        The war periods inform the public imagination of European life, up until the rise of publicly available information in 15th century.

        This is also when looted gold from the Western Hemisphere began to arrive on European shores by the shipload:

        – It financed the renaissance,

        – it triggered the largest, longest-duration bout of hyperinflation in history, over 100 years, over America, Europe and Asia,

        – it financed the industrial revolution,

        – it financed the rise of Netherlands and UK as naval powers to rival Spain,

        – it also financed the 13 British colonies,

        – it financed 2 centuries of religious wars in Europe which ended with the collapse of the papacy’s temporal power.

        Spain ended up bankrupt, Portugal and Netherlands were severed from Spain, both France and Italy expelled entrenched foreign influences to become powerful nation-states, the Holy Roman Empire dissipated to reformulate itself over time as modern Germany … Ireland became a slave state of England, which itself endured a violent revolution and civil war to become a military power … the English civil war extended overseas to North America ending with the American Revolution, then a revolution against the French monarchy. Afterwards came Bonaparte. All of this and much more besides was paid for with Peruvian and Mexican gold (some Eastern European silver, too).

        Between wars and recoveries there was a lot of room for enterprise. Both Europe, China and South Asia were wealthy, during the Middle Ages there was strong demand for consumer goods such as sumptuous clothing, carriages, villas and town houses, exotic foods, private botanical gardens and arboretums, paintings and sculpture, illuminated books, lavish public entertainments, theater productions, permanent installations such as public parks, fountains, bridges, stone-paved roads, elaborate structures such as enclosed markets and forums for public gatherings, gigantic cathedrals (filled in places with Roman articles), private galleys, teams of horses, livestock, etc. A common complaint was that people could not determine who was wealthy or a noble and who was not because the commoners wore the same or better clothing. All of these things were made by more or less small-scale craft level workshops, lots of them.

        Any town would have stone-and brick masons, a quarry, a brick maker, a foundry, a tannery, a carpenter, a blacksmith, a tinker (make pots and pans), silver- and gold smiths, embroidery shops, tapestry weavers, yarn spinners, shoe-and boot makers, stable hands, street pavers, armorers, arborists, vintners and brewers, gardeners, window makers, musical instrument makers, cabinet makers, roofers, livestock tenders, butchers, barbers, etc. Regardless of ones’ station there was always something to do. Most did not have to toil incessantly, there were many holidays and feasts. The grim peasants in rags … Monty Python or Lord of the Rings.

        Most towns in America or Europe do not have any of these things at all: we are dependent upon welfare and television … the poorest medieval town was more prosperous than any of our towns today!

      4. Reverse Engineer

        “Any town would have stone-and brick masons, a quarry, a brick maker, a foundry, a tannery, a carpenter, a blacksmith, a tinker (make pots and pans), silver- and gold smiths, embroidery shops, tapestry weavers, yarn spinners, shoe-and boot makers, stable hands, street pavers, armorers, arborists, vintners and brewers, gardeners, window makers, musical instrument makers, cabinet makers, roofers, livestock tenders, butchers, barbers, etc”-Steve

        Steve, you won’t get an argument from me that Medieval Towns were more self-sufficient than modern cities, of course they were. From an economic standpoint though, all those Craftsmen you revere so much STILL were parasites off the Big Biz of the era, which was mainly Ag and Warfare.

        First off, the fact most goods and services were produced locally meant that commoners used little money at all, they bartered. If you needed the services of the local Quack to Bleed you due to contacting Plague, you paid him 2 chickens. If you Tanned nice skins, you traded them for a bushel of potatoes. etc.

        The main way money got into the economy was from Soldiering and Plundering. The local Lord would conscript up promising to Pay in Silver, after they got back from stealing the silver from the next county over. Eventually of course they consolidated up to Kingships and incipient Nation-States of course, then went about ripping off Gold wholesale from the New World, leading to the inflationary period you spoke of. VERY Big Bizness there!

        The other way money got distributed out was through the Holy Roman Catholic Chuch (the Mega-Corp of the Era) in the building of Cathedrals, the Large Public Works Projects of the era. This of course provided lots of work for Stone Masons, Carpenters, Stain Glass Window artists, etc. If your Community could get the HRCC to build a Cathedral in your nabe, it was a thriving little Metropolis. No Cathedral, you were a dirt poor backwater town.

        As it further evolved, the Big Biz of Plundering via Tall Ships equipped with Cannon led to those next Massive Corps, the Brit and Dutch East India Companies. Said Big Biz of course provided tons of work for Shipwrights, Carpenters, Sail Makers, yadda yadda not to mention the guys forging the 20 pounder Cannon, which was NOT done in a small Blacksmith’s shop.

        In the background of all of this of course were the Financiers, floating Stock Issues in Amsterdam and London, and in fact in 1692 when the BoE was chartered, they were pretty much Fresh Out of Gold, as the Spanish had nailed down the best Gold Theft locations and they got stuck with North America, which until the Railoads got built into the interior did not offer up much gold. They got their money for financing up their colonial adventures courtesy of Master of the Mint Sir Isaac Newton, and began to do well providing Letters of Marque to Pirates who would hit on the Spanish Cargo ships on the High Seas. Their Big Biz controlling the Sea Lanes with the Brit Navy brought in the money that all those local craftsmen used fo commerce.

        In all cases going right back to Ancient Egypt and Mesopotamia, It was the Big Biz of Ag centrally controlled which got the Money going, and the Big Biz of Warfare which brought in the PMs to use for coinage. Large Public Works projects such as the Great Wall(s) of China, the Pyramids, Cathedrals et al were symbols of successful cultures running the Ag-War Economy. All the small craftsmen and small biz expanded to sieve off this economy. They don’t exist independent of it.


      5. steve from virginia Post author

        Various non-industrial employments in the 18th century:,+it+is+the%22&source=gbs_quotes_r&cad=6#v=onepage&q=resources%20for%20the%20employment%20of%20males&f=false

        A Treatise On Indigence: Exhibiting A General View Of The National Resources …
        By Patrick Colquhoun

        Professional soldiery was a tremendous burden to the state prior to Spanish gold which meant most militaries fielded militias, irregulars or mercenaries. Governments offered letters of marque to privateers to augment their navies.

        Another list of medieval (pre-industrial) employments which saves me the effort of making one:

        There was another list over on Guy McPherson’s web site but I can’t find it …

        Globe Town

        To the east of Bethnal Green (London) lies Globe Town, established from 1800 to provide for the expanding population of weavers around Bethnal Green attracted by improving prospects in silk weaving. The population of Bethnal Green trebled between 1801 and 1831, operating 20,000 looms in their own homes. By 1824, with restrictions on importation of French silks relaxed, up to half these looms became idle and prices were driven down. With many importing warehouses already established in the district, the abundance of cheap labor was turned to boot, furniture and clothing manufacture. Globe Town continued its expansion into the 1860s, long after the decline of the silk industry.

        The 20,000 looms supported 20,000 households and employed at least that many along with suppliers to the trade, the makers of looms and the houses, the merchants and peddlers of silk goods. This was during periods when population in England was relatively small. Beside Bethnal Green there were other districts in London and in other cities and countries weaving all kinds of cloths … this took place over long periods of time … the citizens always require things to wear. The customers of a country’s goods were often overseas and there was a money trade in even the old Byzantine, Frankish and Roman issues. Before 1520 funds flowed from the East as the Venetians and other Italians traded with the Chinese, the Caliphates, the Turks and Mongols. Afterward the flow was from the West and there was no outbound trade: there was quickly too much money and nothing flowing out to balance it.

        The customers of distributed production were pilfered by manufacturers with credit and steam-driven machines, ‘low prices’ and uniformity, the distributed producers working in their houses became little more than serfs.

      6. Reverse Engineer

        “Professional soldiery was a tremendous burden to the state prior to Spanish gold which meant most militaries fielded militias, irregulars or mercenaries. Governments offered letters of marque to privateers to augment their navies. “-Steve

        The great expense of the non-stop warfare in Europe didn’t prevent it from occurring and driving big bizness. It certainly bankrupted a few treasuries and indebted these Kings to the Banksters also.

        The Medieval towns you talk about all grew up around Feudal Estates owned by the Nobility, the Pigmen of their time. Ag was the Energy Driver of this economy, and was Big Monopolized Bizness. War was the other Big Bizness, and there is a good reason those medieval castles had 5 foot thick stone walls around them with Moats, Drawbridges and Porticullises. The townees hadda run there every time some neighboring warlord needed to replenish the Treasury. They didn’t build those castles just for show.

        “To the east of Bethnal Green (London) lies Globe Town, established from 1800 to provide for the expanding population of weavers around Bethnal Green attracted by improving prospects in silk weaving. The population of Bethnal Green trebled between 1801 and 1831, operating 20,000 looms in their own homes. ”

        Steve,from 1803-1815 the Brits were fighting the Frogs in the Napoleonic Wars!! I’m sure the women were doing fine at home on the loom, but a whole lotta poor limeys were being Bayonetted in the French countryside.

        If they weren’t conscripted to fight on French soil, they were being Press Ganged to serve as Gunners on the Frigates of Her Majesty’s Royal Navy, consisting mainly of Privateers aka Pirates, a VERY Big Bizness indeed.

        Anyhow, I am all for distributed production over Industrial production, but said societies STILL were Central Control Ag-War societies, and the individual craftsmen sieved off of the surplus created by that society.

        Anyhow, more tonight, I am just about done with a response article “Small Bizness in the Sea of Irredeemable Debt ” I’ll publish later tonight.


  3. rcg1950

    re “What causes revolutions”

    Seems like both Dinxing and Pei believe revolutions arise when some level of abuse by the state finally elicits a response from the people. A common misunderstanding. Revolutions are generated by a hyper-active public imagination. What is sought is not so much a redress of abuse as the realization of a new world inspired by aforesaid imagination. Revolutions are a product of young and vital people in the ascendant — naive and inexperienced enough to maintain the illusion that their dreams and concepts can overcome traditions and brute realities. As long as the Chinese lust after cars and compete in international bragging contests like the Olympics one can only conclude that the failure of imagination there is just as radical and pervasive as it is here. There may be endless and escalating rebellions and unrest in China, as there has been in the middle east and likely will be in Europe and America, but there will be no revolutions.

    1. dolph

      We are getting closer to a global population peak. Birth rates have declined (though they have further to fall) and death rates will rise as the ability of industry to keep people alive forever fails. Watch death rates (while you’re still alive!), that’s the key.

      We are probably a few decades away…it will happen sometime between 2030 and 2050. That is when the wheels truly begin to fall off and the world will be open to revolution.

  4. Ken Barrows

    Why not DOW 20,000 and official unemployment above 10% in the USA? Why not DOW 20,000 and negative net energy? I cannot wrap my head around how the stock (and bond) market would collapse.

    I think maybe the price of oil will do it. But say Brent exceeds the $120 per barrel threshold. It may affect the profitability of big corporations on the exchanges, true enough. But Amazon makes new stock price highs and isn’t a very profitable company. Perhaps the S & P 500 can achieve P/E ratios never before seen. After all, buying $85 billion per month in UST and MBS hasn’t been seen before, either.

    1. steve from virginia Post author

      Exactly how our unraveling occurs is not as important as the fact that it is occurring right now regardless of best efforts of the establishment to prevent it.

      The reason why this crisis sneaks up rapidly can be seen here:

      Keep in mind at all times:

      – our economy is hamstrung due to the long-term productivity of consumption … return on consumption (ROC) as opposed to the diminishing productivity of supply or return on energy invested (EROI).

      There are no returns on consumption! Energy is simply wasted for the sake of business ‘activity’. Returns on the use of the fuel must be borrowed, the wasting infrastructure and processes rather than fuel extraction is collateral for these loans. GDP measures the extent of consumption infrastructure not the productivity of energy extraction … or its absence.

      – we buy energy with credit rather than energy, this makes it difficult to calculate energy-return, EROI.

      Instead of gaining energy with energy we do so with infinitely replicable money. However, there is a very real, human limit, the replicable money is borrowed. At the end of the day, the consumer has no money — because he’s handed it over to the energy supplier! At the same time, he has an obligation to the lender he obtained his money from. He also does not have any energy because he’s burned it up, he has no way to repay his loan. His only option is to get a second loan … so that he can retire the first and obtain more energy to waste. After that energy is gone he needs a third loan … then a fourth, etc. At some point he cannot borrow and the government is borrowing in his place. The step after is bankruptcy as no entity remains that is able to borrow.

      Can you see how this leads? You say, “This is nonsense, nobody will lend to someone who needs to borrow later … to repay prior loans!”

      What else would the lender(s) do? The alternative is for lenders not lend at all! NONE of the enterprises in the world can repay and all must borrow infinitely … and exponentially. If there is no borrowing there is no business! This is why the banks and finance are bailed out … exponential growth of credit is why the finance system is inundated with debts and debt-related costs.

      The bond- and stock markets measure the extent of the wasting enterprise, nothing else. Remember that the enterprise is collateral for new loans.


      1. James


        Why would the lenders give credit for housing and credit card related consumption? Didn’t they realize that it was non-productive lending? Was it because productive lending opportunities had all but dried up and all that remained was to fleece the remaining wealth from the previously solvent and employed middle-class. As the jobs and factories were being packaged and sent to China, didn’t they figure this would be detrimental to Americans ability to repay consumption loans?

      2. steve from virginia Post author


        “Why would the lenders give credit for housing and credit card related consumption?”

        Why wouldn’t they?

        – Adding credit adds demand for more housing and consumption, which in turn becomes more collateral for more lending.

        – Other lenders are extending credit for consumption, if you don’t extend others will take your place.

        – The entire establishment — including government — endorses the project, in fact insists upon it.

        – There are no productive alternatives because such things are impossible. Lending for consumption is a form of Gresham’s Law where bad (malinvestments) drive out ‘better’ (malinvestments).

        – Repayment has been a problem for the future … at some point the future becomes the present (now). This is because of aggregated costs/exponential growth of both credit and credit costs.

        – Chinese/Korean/Mexican/Somaiian factories are no more productive (able to pay for themselves) than factories in the US. Outsourcing is a way to ‘insource’ more credit: it is a trendy narrative that allows finance to float trillions in loans to enterprises … to which it has loaned trillions in the past!

        Our problem is not so much with finance by itself but with the so-called ‘productive’ economy which is simply not productive. It requires loans to exist, this in turn makes finance indispensable, allowing financiers to blackmail everyone.

        Don’t let the gross output of businesses fool you, the (generally un-accounted) costs of the output exceed the worth of the output itself. Only credit allows businesses to meet the shortfall and remain in business … more subsidy of consumption.

      3. Reverse Engineer

        The motivator for making the loans when you control the resources and they are plentiful is that you get Richer than God by getting more people to waste them.

        Game is UP when the resources run out.


  5. steve from virginia Post author

    Number One Peak Oil Denier — who happens to run the US Department of Energy — has announced his resignation:

    More bank teetering from Wolf Richter:

    Banks fail = economic nausea = indicator of too costly petroleum. We don’t have a problem w/ petroleum do we Secy Chu … right?

    Noan Chomsky examines American Exceptionalism … nothing really new but it fits into the general discussion over here:

    Another top of the market call from Barron’s (courtesy of Mish):

    Just when it looks like the party will go on forever … it ends all of a sudden!

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  7. The Dork of Cork.

    * German car market fell 8.5 pct in January – VDIK

    “French registrations dropped by 15 percent to their lowest January level since 1997 while Italian sales tumbled by 17.6 percent. Spain escaped with only a 9.6 percent contraction thanks to subsidies, according to data published on Feb. 1”

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  10. The Dork of Cork.

    Doomstead does have a point.

    Small scale industrial activities were going on in the 15th and early 16 th centuries in England.

    As seen in the channel 4 time team series.

    Lizzie needed a secure domestic source of copper (nation state beginnings ?) for her bronze cannons
    Before this time England mainly imported copper.

    A small scale hydro powered stamp mill was used in this then remote lake district site.
    German workers with modern mining skills were imported also.

    1. steve from virginia Post author

      Of course there was industry, there weren’t any Boeing Aircrafts, AEGs or Exxon-Mobils. There were no super-states, either. The Romans don’t qualify because they never could figure out the idea of ‘nation’ … actual earning activity existed at the bottom of the food chain, instead of borrowing at the top as it is now.

      1. The Dork of Cork.


        They still needed to drive Ireland into extreme surplus to subsidize their industrial activity.

        The white slave trade out of Ireland in the 17th century was big business (nearly 200 years before the great famine thingy)

        Its hard to tell the numbers but by some accounts half a million Irish slaves was exported / worked in the sugar plantations of the west Indies and elsewhere.

        Notice the accents !!!

        Kinsale is now covered in 10 feet of volcanic pumice

  11. Sandor

    The entire discussion hinges on energy, its rate of extraction, and the population levels which determine this rate. Credit/banking is the symptom of the energy consumption disease. Either population dwindles, everyone gets poorer, or we get over fossil fuels via cold fusion/LENR through better chemistry.

    The investment banks/insurance cos are caught ‘over their skis’ with excessive credit expansion, which is a recurring feature of finance capitalism. The system dynamics hinge on collateral chains, whose relationships are far too intertwined and complex for any entity to model accurately. The idea is to push the costs out to the ‘periphery’ (read: the peasants) as long as possible. The central banks expand their balance sheets (eg LTRO, OMT, QE) at a ‘stable’ rate to extend the duration of the collateral chain. The only problem arises when the collateral on the central banks’ sheets goes ‘bad’. Up until this point the system is ‘stable’; after this point, a currency crisis/bank run ensues.

    For the status quo to persist, everything must be done to prevent that collateral from going bad. The losses cannot be recognized, for this would impair the collateral chain. If the chain is broken and the central banks go over their skis, all hell breaks loose. Then you have overnight depreciation to make the loans nominally affordable. Of course, this collateral repair is bought at the price of affordability. Everything becomes 25-50% more expensive. At the outer bounds of growth, there is no solution other than to push costs out to as many poor people as possible, bankrupt the competition, extend collateral duration, and devalue currency.

    Can all this be managed in an ‘orderly’ fashion going forward by USA, China, Japan, Europe/UK? Probably not. I am still trying to figure out what will trigger the ‘breaking point’ as far as the central bank offering an unsecured loan in effect by having bad collateral on their balance sheet? So far, this has not happened. Any ideas?

  12. enicar666

    Top Dog Hot Dogs closes Downtown store

    RACINE — Top Dog Hot Dogs owner Caleb Robinson has closed his store on Monument Square, but the head of Downtown Racine Corp. hopes to eventually get him another storefront.

    Top Dog’s last day at 520 Main St. on Monument Square was Friday. Without elaborating, Robinson said he had loans and tax obligations that required him to slash overhead.

    “It seemed like for every step I took forward, I was taking two steps back,” he said Monday.

  13. steve from virginia Post author

    Another kick to the groin(s) of the petroleum cornucopians:

    The market is not laying the foundations for an era of unending oil-based prosperity. The market is pushing inexorably toward investment in expensive technologies to extract the last drop of profit through faster depletion of a resource that’s guaranteed to run out. If we’re going to invest in expensive energy technologies, it would be better to pick long-term winners rather than guaranteed losers.

  14. p01

    A small example of individual and community food production is here:

    Please note that when the “business” with “organic returns” was still in place in the cities and the Empire du Jour was running “business” relying on these people as a source of food and cannon fodder, their numbers were much greater, their diet was mostly whole grains and water, and they were regularly lassoed to die in different wars they did not care for.
    99.9% chances are if one was born at that time they would have been a slave or serf with 0.001% to nil the chances one would have been able to improve their condition at birth. If they would have managed to climb the feudal stair, they would have had to do the exact things we blame today’s psychopaths for.
    But hey, there was art and good clothes in the cities.

  15. The Dork of Cork.

    UK end of year trade data out.

    Balance of trade in oil
    £ millions
    Y2010 : – 4,719
    Y2011 : – 11,509
    Y2012 : – 14,382

    Total goods
    Y2010 : – 98,509
    Y2011 : – 100,228
    Y2012 : – 106,614

    Notice the dramatic graph ( figure 5)

    UK imports from the BRIC countries.

    China is out there man…………but showing recent signs of weakness in 2012.

  16. James

    Most people believe that civilization is God’s great gift to the earth, that which sets man apart from the rest of creation, but from a systematic standpoint we are nothing more than a cancer consuming everything in its path, fully metastasized with malignancies growing within every tissue of the planet. From inside this cancer life is good, we eat and grow with reckless abandon, congratulate ourselves for our specialness and historically, if we run short of resources, we mutate on the run to overcome any obstacle to our voracious appetites and growth. With a lethal combination of hands, cerebral cortex and a limbic system that cannot be sated, we move forward on a path of eternal progress and happiness, metastasizing into new territories with road and rail until the ecosystem’s death rattle echo’s in our ears. And like a highly aggressive malignancy we call out for more growth, unaware that our short-lived success in breaking away from the body will result in our own demise.

    Can humans call a spade a spade? Can humans call civilization a cancer? I don’t think so. Can human think of the cancers that infest their own bodies as just a bunch of fun-loving cells that want to grow and have a good time even if it kills them? Unfortunately we have evolved to become cancerous by utilizing novel tools with rapid mutation to eat the rest of the body. It’s built into us, our utilization of information and organization to achieve a “short-term” success, but cancers rarely leave descendants (unless you’re a HeLa cell). Is this the way ecosystems end, when they get cancer? I’m beginning to believe so, that ape cancer in the pursuit of eternal growth and eternal life will consume and undermine the delicately balanced homeostasis of the ecosystem and that will be the end.

    Why do we spend billions of dollars per year studying and treating human cancer and at the same time cannot find grant money to study the cancerous relationship between human civilization and the ecosystem? Is it because we’re afraid of what we may find? That our entire civilization is only a short term positive for one species and a long-term lethal set of mutations for all?

    1. Sandor

      The cure for cancer will be found in genetic engineering. This is the only way to effectively change the dynamic of the human species, short of spontaneous mutations to the gene pool. The organism is beginning to self-critique and consider re-scripting. It’s happening on the internet in very small pools of thought. The kind of change we talk about on this board will come about not from technocratic dismissal of the status quo, but as a series of necessary adjustments to changing environmental conditions.

      Steve has often mentioned the failure of imagination to alter the economic policy status quo. This also applies to visions of possible futures. I continue to think that this board sells chemistry and physics short. The probability for radical reformulations in the ‘ground rules’ remains quite high from my perspective.

      Also, I’m not as pessimistic as you are regarding the rest of the species on this planet. The next ice age will reshuffle the deck either way.

      1. steve from virginia Post author

        The organism is beginning to self-critique and consider re-scripting. It’s happening on the internet in very small pools of thought. The kind of change we talk about on this board will come about not from technocratic dismissal of the status quo, but as a series of necessary adjustments to changing environmental conditions.

        … with some surviving … others not. Fairly much a blunt instrument, but it does work.

        Steve has often mentioned the failure of imagination to alter the economic policy status quo. This also applies to visions of possible futures. I continue to think that this board sells chemistry and physics short. The probability for radical reformulations in the ‘ground rules’ remains quite high from my perspective.

        By the time we have enough information to satisfy our ‘need to be certain, first’ it is very difficult to reformulate.

        Also, I’m not as pessimistic as you are regarding the rest of the species on this planet. The next ice age will reshuffle the deck either way.

        We’ve had a series of them, all were ‘extinction events’, the result of which has been explosions of new species afterward.

    2. steve from virginia Post author

      Because of industrial ‘leverage’ and wide-open spaces easy to expand into there has been little of a need to make hard choices about population, ownership of ‘goods’ and managing (rationing) demand. Since we haven’t done it we don’t know how. The process appears scary and difficult … while the arithmetic of resource depletion is laboring in the background making our choices for us.

      One reason I beat up on automobiles is because each car uses the resources of 20 or so humans. With 800 million cars on Planet Terra (16 billion extra humans) added to the 7 billion flesh-and-blood versions the world has the population equivalent of 23 billion people … more or less.

      The current population has latent, unsatisfied demand for another 1 billion motor vehicles which, if built, would bring the quasi-human population to + 40 billion. Admittedly, our machine population’s resource needs dwarf those of the additional 2 billion humans predicted to be added to the 7 billion already here … however, these added billions would require another billion motor vehicles … a quasi-human population of some 70 billions on the smallest area of the habitable surface of a small planet in a modest star system in a very ordinary galaxy.

      This is how ‘Civilization 2.0’ adds up, there is no way these numbers ever come close to working. We are choking on the smog, toxic- and plastic waste now, we’re burning our fuel supply as fast as possible … forget adding another 2 billion cars. But … just that is what our civilization requires.

      1. Ellen anderson

        Two feet of snow and no cars on the road. Massachusetts guv has banned them! They are coming for the guns and the pickups!
        Meanwhile, the contra flow masonry stove with oven heats the house. I cashed in my IRA to build it in 2007 when I believed the world would end in a year. It has been an investment I don’t regret.

      2. steve from virginia Post author

        Ooh! Stove porn! More stove porn! Give us details! We want MORE! Post your photo links if you have them and I will make them visible.

        I noticed about Massachusetts and the cars, if only the rest of the states would ban them permanently. Start with a day-per-state then work up from there to a week, a month then whole years.

  17. enicar666

    The true cost of Obamacare is becoming evident! Is the future – good health will be *PRICELESS*!

    Virginia leads the way: Virginia, for example, is about to limit part-time employees to 29 hours per week in order to avoid triggering Obamacare’s requirement that employers provide health insurance to those working 30 hours per week or more. The state cannot afford the $110 million annual cost of insurance.

    In Ohio, Youngstown State University recently announced a 29-hour-per-week part-time limit, and placed employees on notice that they would be fired if they worked more than the maximum.

    There will be conservation of population numbers by other means.

    1. Usman

      This makes perfect sense. Millions of unemployed? Make hiring full-time workers more costly than having multiple part-time workers. Voila! Millions of (part-time) “employed”!

      1. enicar666

        I agree. I posted something along a similar vein on a local Racine blog. The City could reduce everyone to 29 hours or less and hire from our large number of unemployed. It makes sense. We all share in the pain, and all learn to live with less – but everyone works!

        More from YSU:

        According to an email sent to English department employees, which was obtained by The Huffington Post, anyone who violates the new hourly limit will be fired:

        It’s crucial that you be vigilant about this cap as you consider additional teaching or tutoring assignments. If you exceed the maximum hours, YSU will not employ you the following year. We will have no recourse.

        If you teach or work in another department part-time, it will be the TOTAL number of hours. If you teach in American Studies for six hours, you can teach a maximum of twelve semester-hours here over a year. If you work as a tutor, those hours are also important. Same issue: you cannot go beyond twenty-nine work hours a week.”

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