Big Bad Ideas Running Amok …


Maurycy Gottlieb ‘Shylock and Daughter Jessica’ (from Shakespeare)

 

There are a number of big ideas circulating through our so-called culture, some of which intend to give some meaning to our otherwise pointless and aggravating consumer slumber party and others are the big ideas contained within the biggest of the big. Jump over to always insightful John Michael Greer’s look at ‘the Progress (or Lack of It) Narrative’. Another large idea wrapped around a prediction can be found at The Oil Drum and elsewhere from the estimable Chris Cook.

The Progress Narrative spewed endlessly from every television set across the land (world) insists that technology and ‘development’ have taken the human race from a short, brutish and nasty past to an endlessly new and improved present. A star-studded (product-laden, orgiastic) future is sure to come — at no money down! Greer insists the narrative is incorrect about the past and that the comic book future has already diverged from what promoters promised long ago. Greer suggests a more thoughtful alternative future derived from grimmer, Non-Disney fantasy fiction publishers. There will be no flying cars or robot farms, no Captains Kirk “beaming me up, Scotty” or make-out sessions with hot extraterrestrial babes, instead, Hunter Thompson-esque survivor-types will fight desperate rear-guard actions against the zombie-minions of decayed empires within their crumbling ruins.

Cook dissects the Brent crude futures’ trade and explains the bad behavior, then he sticks his neck out and suggests that fuel prices are on the decline. He has his (good) reasons for this, basically that the crude futures markets are crumbling ruins.

Genuinely bad ideas are commonplace right now, everyone has seen them in print or has heard them at one point or another (from a presidential candidate). Here are the big three:

– Bad Idea Number One is that our Main Street or physical or ‘nuts and bolts’ industrial economy is productive, that it pays for itself and everything else besides. According to this premise, our industries would thrive under ‘normal’ circumstances but for the devious bankers, corrupt politicians, excess credit (devious bankers and corrupt politicians), finance scoundrels, liberals, Keynesian Klowns, the central banker(s), ‘fiat money’ and fractional lending enthusiasts, ‘radical’ environmentalists, those absent of moral fiber (dissipated customers), etc.

Our factories are virtuous. We need more of them and more hard workers (slaves) and fewer Wall Street weasels! Finance is a diseased and corrupt ‘thing apart’ from the hard working industrial ‘innovators’ and ‘entrepreneurs’. We must chop off finance like a gangrenous limb and … let slip our blessed innovators to have their day(s) in the sun (and perhaps toss some crumbs our way while they are at it). We would do just this if it wasn’t for the hated ‘Big Government Socialists’ standing in the way!


– Bad Idea Number Two is that finance has taken on debts in unlimited amounts. We now suffer from an excess of debts-gone-wrong! Meanwhile, sovereign credit providers can produce unlimited credit and by doing so prop up the system and save the status quo.

Ignore that contradiction! If exceptional America does something it must be right: we can indeed borrow ourselves out of debt by way of unlimited central bank and government credit.


– Bad Idea Number Three is that petroleum prices (and by implication availability) have nothing to do with our current credit ‘situation’. Our problems are excess credit and excess credit alone.

Kill the hideous bankers if you must but keep your cotton-picking hands off my cars, my tract house, my vacation ‘home’, my luxury job marketing cars and tract homes, my flat-screen TVs, my gun(s), my bass boat, my ‘professional certifications’, my jet vacations to Orlando, my ‘investments’, my retirement, my Medicare, my childish prejudices and license to rage as long as I do so behind the wheel of my car …

 

 

It goes without saying that all three of these big ideas are not just wrong but calamitously wrong. That the great enterprises of the world are religiously adhering to these catastrophically wrong ideas practically guarantees system failure(s) which are already underway in IMPORTANT parts of the world, not just in the nether regions such as within the Arctic Circle (which has problems of its own).

– Idea number one is wrong because industry is simply not productive. It cannot pay for itself.

Credit is the sole product of all industries and all industrial activities.

Not only is credit the sole product of industry but it is the necessary condition from which industries arise: having credit and lacking other resources there will be industry (Japan). Having resources without credit and industry is not possible (Kenya). Credit access before industry and credit expansion afterward is the difference between the developed and ‘non-developed’ parts of the world.

Industrial economies destroy value, industrial products are nothing but fetish objects, instruments by which credit formation is rationalized and debt taken on.

The difference between industry and its decentralized non-industrial precursor is that the industrial form is quantitatively credit-worthy while the other form is not. Concentrating industries increase their credit-worthiness as they expand and engulf their competitors by way of ‘Ruinous Competition’. Credit availability at a favorable price is the instrument by which industries concentrate the economic enterprises of many hands toward the few. Industrial cartels generate credit at lower cost than can competitors which are then cannibalized. Credit cost differential by itself is the instrument of concentration and is integral to the cannibalizing function of all industries.

– Idea number two is is foundationally wrong. Debt being the product of industry it is hardly a problem for industry to produce or take on too much of it. An excess of debt is always and everywhere another’s problem, a surplus of credit is wealth for the industrialist! It can be stored and made use of later, to buy mansions, yachts, private aircraft, whores, cocaine and expensive artworks. Excess credit allows an industrialist to cannibalize another that lacks the same excess.

While there is a limit to indebtedness that exists for all enterprises taken together, limits effect some competitors before others. The economic limit lies outside the ordinary cannibalization process: a business needs only to discover the limit of the enterprise to be devoured.

For the sovereign, the debt limits take different forms. A sovereign can technically take on unlimited debt denominated in its own currency. The sovereign’s limit is reached when citizens realize the sovereign’s managers are insane. At that point, managers lose credibility and additional credit cannot be easily secured. Our ‘managers ‘Я’ insane’ moment has already been reached in the United States.

– Idea three is also completely wrong: credit excess cannot be the problem but diminished credit ACCESS is. There is not too much credit but too little! High fuel prices have the same effect upon industry as do high credit prices! Something has to give. Credit costs cannot be reduced (zero bound) and neither can fuel prices (high cost of new production). Credit cost differential is the instrument by which industries cannibalize each other: high fuel prices effect the ‘cannibalize’ function of industries whether they are credit worthy or not, whether credit is available or not, regardless of credit cost.

Credit-fuel cost equivalence is not part of any ‘economics’ curriculum but the real world cost of fuel hits industry in the same place (balls) as does the cost of credit.

 

 

Figure 1: Here is your real f**king interest rate, Baby! The price of oil is ‘altered’ so that it represents Federal Reserve funds rate instead of dollars per barrel. The price of crude has the same effect on our economies as does the funds rate. Current fuel price (WTI spot) is equivalent to 9.85% funds rate. It is hardly surprising that the eurozone, China, Japan, the US and other countries are in difficulty due to the high ‘interest-like rate’ implicit in crude oil price.

It is realistic to add real cost of credit and the oil price equivalent cost of credit together. The current fuel equivalent of 9.85% is added to the current funds rate of 0.10% = 9.95%. Even with world credit rates at the zero-bound the fuel equivalent cost is nearly 10%, horrors for ‘must waste or die’ industrial enterprises. In 2005 the funds rate was 5.5%. The fuel equivalent 6.5% + 5.5% equals a total interest-like cost to industry of 12%! Here is the reason why the US mortgage racket leapt into the toilet. Interest-like costs did not improve with the passage of time, either. The oil price equivalent of the funds rate in June of 2008 was over 13% even though the funds rate was near zero!

Credit worthiness increases the hazards to industry as expansion of credit tends to push fuel bids higher, increasing the credit-like costs to industries across the board.

Other Ideas on Industry and Credit.

Industrialization is the way by which we humans live beyond our means. Ours is the ‘Moderne’ world of waste: we live beyond our energy and resource means as well as beyond the all-important credit means. Industry and ‘progress’ represent the sanctification of the ‘living beyond’ concept, its rationalization as virtuous, as being necessary without possible alternatives. When a politician, economist or other big shot is in the media spouting about ‘growth’ of progress he or she is asserting a ‘natural right’ for listeners (and themselves) to live beyond present means … and that doing so is a very good thing.

We either waste prolifically or wind up living in caves.

The get rich or die trying approach: we waste prolifically, we multiply ourselves our machines our livestock like rabbits or else we have a mass die-off. (We multiply ourselves like rabbits along with the rest of our junk and we will have a mass die-off as a consequence.)

The delusion of numbers approach: we waste prolifically into the future until we are ‘wealthy enough’ when we can the undo all the waste and its consequences at the super low price! Undoing waste right now will cost a lot more than undoing the waste fifty years from now. How about fifty-thousand years from now? Will anyone care about today’s gum wrapper on the sidewalk in fifty thousand years? (Will anyone be around to care about anything?)

Fifty thousand years assumes that credit ‘wealth’ is going to expand continually over that period of time. Fifty thousand years allows industry to uncover the innovation that allows industry to catch up to its promises/debts, for industry to produce a real product!

What brings matters to public attention is that credit is not expanding but is actually shrinking. At the rate we are going, in five years we won’t have any credit at all.

The enterprises that make up industrialization are bits of stagecraft that rationalize the steady increase in credit, which in turn is the primary product of these enterprises. Outside of credit, industries’ ‘goods’ are imaginary, destructive or fetish- manifestations of waste.

The word itself ‘production’ is also false. Industry is not productive but reductive. It concentrates from the many to the few at the point of a pencil. There is no industrial output where it did not exist prior, instead there is the cannibalization of existing distributed output. The cloth factories of 18th century England did not create a product ‘out of thin air’ but concentrated the cloth output of the entire country into the hands of those few who had access to credit. Credit gave the favored industrialists the ability to fill factories with labor (skill) annihilating machines. Possession of the machines and the ‘production’ these represented gave owners access to still more credit in a so-called virtuous cycle.

The i-Pod did not create its own market from nothing but devoured the market that belonged to Sony’s Walkman and other music players that in turn digested the market segment that belonged to transistor- and portable radios. Before radios, the ‘market’ carried banjos and saxophones from house to house, the people made their own music on their own terms for their own pleasure and sense of creative necessity. What the iPod has done is contribute in the annihilation of music making as a vital community endeavor. Music has become a canned good. Where there were once Ernest Tubbs and John Coltranes and Woody Guthries across the country adding value to people’s lives from sea to shining sea there is now noise.

Industrial economies destroy value. This is their purpose, there is no other.

With the passage of time and access to credit, the machines of Merrie Old England and the American hinterland became irrelevant. Credit was able to multiply itself. The product of the credit factory was replacement debt pyramided onto legacy variety without the picayune concerns of output. The 21st economy has become a credit broker or ‘fixer’ with output put ‘under contract’ at (usurious) rates that benefit the broker.

From here it is a small step to economies being made up of criminal organizations.

Without the smoke-belching factories or child-slaves chained to machines in rows the banks, businesses, retail, real estate, educational and services follow the industrial model, that is they manifest economies of scale. This is what industry is and does: manifestation of economies of scale with the intention to access/generate increasing amounts of credit. All other claims on the part of industry are false.

Credit is looting from the future, our children cannot deny us loans. Because the future is worth more than the present (or it wouldn’t be borrowed from) the present is rendered ‘worth less’ by the exercise of the credit instrument. What this means is there is no economic justification for industrialization as its credit-product is ongoing- or present worthlessness.

The ‘Big Lie’ at the core of modern economics emerging from the mouths of practically every policy maker and economist is that industry is productive, but is constrained by defective and excessive debts. This premise is false: industry exists only for the purpose of generating defective and excessive debts. These are the sole means by which industry and industrialists profit. Debt = Wealth: without the endless expansion of universal credit there are no profits to be had. That industrial goods are worthless is self-evident: if they were worth something they would pay for themselves by way of their use!

Industrialization facilitates the substitution of credit-money ‘goods’ for value which is destroyed by way of the process of substitution.

Substitute value is where the idea of the thing has greater appeal than the thing itself. Substitute value requires users to crave goods that become tiresome the instant they are obtained, leading to an endless chase for a potential good that can actually provide the promised satisfaction.

Advertising is manufactured dissatisfaction, it’s the central activity of commerce. The ordinary condition for humans is to be content, to satisfy themselves on their own terms. Industries substitute the satisfying their own needs for those of the individual or the community: the customer is always wrong. As industrial worth ascends, individual and community values vanish. What measures these values is the credit instrument that is the mechanism by which the values are destroyed.

Industrial economies cannot survive unless people are constantly buying ‘goods’ they do not need. Right now industrial economies cannot survive repriced inputs that do not allow profits and diminish collateral values of companies.The way to unravel industrial economies is to ban advertising or permit freedom from it.

Industrial economies destroy value, in the process they monopolize the production of substitute values. Our crisis is taking place because our economies have run out of easy values to destroy, they have been too successful. Economies have turned on themselves leaving a vacuum. A good example of false value are the thousands of apartment and office buildings containing millions of apartments standing empty in China. These do not exist for any purpose other than to destroy prior claims on ancestral lands that would be visible if the original buildings were allowed to stand … and as instruments to steal money of ‘investors’.

Credit is the invention necessary to industrial development, not innovation nor comic-book ‘progress’. Chained to the expansion of credit as its sole good, industrial enterprises are as ‘innovative’ as Shakespeare’s usurious moneylender hunting relentlessly for his pound of flesh. Money-profits flow to the creditor while costs are shifted to the community in the form of lost purchasing power. This becomes the property of the enterprise and is rented back to community members in the form of purchase-money credit at Shylocking rates of return.

Credit that is independent of foreign exchange constraints is the pre-condition for ‘progress’ in developing countries rather than resources, cheap labor, innovations or physical infrastructure. Without natively available credit and robust credit transmission regimes, resources become the property of outside interests. In any event the workers in all of the countries become either slaves or are ‘dis-employed’.

Inputs are currently being repriced by markets to represent value rather than credit-driven worth. Even as fuel prices decline from bubble levels they are high and increasing relative to customers’ diminished ability to pay. (TFC Charts, click on for big):

 

 

Figure 2: Where is the credit? Prices are steadily declining even with saber rattling in the Middle East between Israel, Iran and the United States. The amount Iran earns from sale of its oil is diminishing relative to what it costs to bring the oil to the market.
 

Industrial credit supports higher crude prices. The ‘cash price’ for crude oil is much less than the current credit price. What is that cash price? Is it $20 per barrel or $10? We are soon to find out!

Peak oil means declining prices across the board. Not just for oil but for real estate, declining tax revenues for governments, declining immediate- and deferred wages, diminishing credit creation. Credit erodes because the marginally remunerative industrial enterprises become non-performing with higher fuel costs. Extension of credit to impaired firms cannot be justified.

Enterprises are no more productive with $120 oil than they are with the $20 variety. The ‘fuel tax’ falls directly on output which is credit. The outcome is onrushing insolvency which is underway everywhere fuel is consumed.

Insolvency prevents the enterprises from taking advantage of diminished fuel prices when they finally occur. Prices are low because fuel users are defunct, demand is collapsed. There is a price level for crude the economy cannot bear. In 2008 this price was $140 and above. In 2011 the ‘price too far’ was $128. What is the price too far today? Chances are it is $110. The world’s diminished ability to pay high prices is due to the onrushing bankruptcy of its wasting enterprises.

The trend of diminishing credit is impossible to miss. At some point there will be none. The price will be low because the world will be destitute. This is happening now

– There is an ongoing bear market in crude since 2008. There is a short-term bear market that is ongoing since the beginning of 2011. Markets including the ones for crude oil are manipulated but a trend is a trend.

– The secular bull trend that began in 1999 with crude selling for $20 per barrel is credit dependent. There are two factors in the crude market: the oil and what is exchanged for it. The high price of crude is supported by credit both in and out of asset markets. High crude prices undermine credit, this is observable.

– Here is a case of ‘too much of a ‘good’ thing’. Too much credit and not enough oil pushed the oil price too high starting in 2004. Reaction to the high price has damaged credit formation. Unsurprisingly, the world’s finance insolvents are also energy insolvents, unable to support their own consumption out of their own production (of fuel or otherwise).

– Oil prices are too low for producers but still too high for users to ‘grow’. The result is credit shrinkage. For industries NOT to produce credit means that something is seriously wrong: NOT just excess inventories or too-high interest rates.

– Agents have had FIVE YEARS since crisis began to corral inventories, real interest rates (inflation adjusted) in industrial economies are LOW to NEGATIVE.

– Too high crude price means ‘buyers’ strikes’ in tract housing, autos, commercial real estate, highway/infrastructure construction sectors along with general credit revulsion. Without new credit to service/monetize the old, deleveraging is underway. Diminishing credit means less support for high asset prices. Ability to afford is declining faster than prices. This is also observable: job losses, increases in poverty, food stamps usage, business failures. Fuel prices for the moment are stickier than discretionary income.

– Crude market prices are declining toward the cost of production which is increasing at the same time for various reasons including social expenses/inflation inside producers along with difficult drilling environments. As prices fall below production cost the outcome will be shortages. THESE SHORTAGES will further effect industrial output and SHRINK CREDIT rather than force prices higher. Remember, it is credit that supports high prices.

– Shutting in production — creating artificial scarcity — will fail to push prices because this does not create more credit… The only way to lift prices is to add credit to markets. The only way for producers to meet quantitative money income goals will be to pump into shrinking markets pushing prices even lower. This will likely have little effect as the credit transmission structures are destroyed. Should the EU break up for example — an outcome caused by high crude prices — lower crude prices will not put the EU back together.

– Currently, access to crude is ‘rationed’ by access to credit. When credit ceases to ration fuel it will be rationed by physical availability. Before there are super-low crude prices are more likely to be shortages.

– At some point there will be little available credit and oil prices will be very low. At the same time these low prices will be unaffordable to those who have no money, no job(s) no car or house or any other means to waste fuel.

– What is taking place right now in Europe is the road map for the rest of the world including China to follow: insolvent countries will see credit vanish and they de-industrialize. These countries — right now Greece, Portugal, Ireland and soon Spain and Italy — will become car-free. Fuel will only be available on black markets for $50 per gallon … cash only.

– Peak oil ONLY exists in the context of automobile use/waste. Get rid of the cars along with other oil-waste infrastructure and peak oil disappears. There is enough oil in the world right now for 1 million years of WD-40 consumption. Cars are a convenience/luxury not a necessity.

Fuel shortages are likely later this year. The cost/production dynamic is inflexible it relates to EROI and credit availability. Shortages caused by inability to afford crude will be permanent.

Fuel price declines will also accompany dollar preference, hyperinflation in producer countries, loss of currency autonomy and collapsing domestic fuel demand in producer countries. ‘Net Export’ will cease to be an issue as producers will not be able to afford the means of consumption.

42 thoughts on “Big Bad Ideas Running Amok …

  1. Reverse Engieer

    “These countries — right now Greece, Portugal, Ireland and soon Spain and Italy — will become car-free. Fuel will only be available on black markets for $50 per gallon … cash only. “-Steve

    Agreed, but how long before they are car-free? How long thereafter before the FSofA is Car-Free? How long after that before we are pulling plows with Oxen again instead of tractors? What percentage of people will we keep going in a World Made by Hand (ripping off Jimmy Kunstler 🙂

    RE

    1. steve from virginia Post author

      Sorry, RE, I cannot give you the exact time.

      I just realize that both Kunstler and Greer are wrong, they are both wrong in the same way and for the same reason …

      1. jb

        Ok, I’ll bite: why are they both wrong in the same way and for the same reason?

        Kunstler talks about oil and the credit markets; his timeframe is ‘sooner rather than later.’ Greer talks about decades of decline perhaps with a few nasty bumps on the way. Orlov (can’t leave him out) ridicules the gentle downhill slope of Hubbert’s Peak suggesting financial mayhem.

        What’s going on with Petroplus today reminds me of the events leading up to the collapse of the USSR. Going back to an earlier post:

        http://www.economic-undertow.com/2010/10/28/bits-and-pieces-5/

        Gaidar’s account is remarkable and a must (re)read. Steve, your old link is broken; here’s a new one: http://www.aei.org/issue/foreign-and-defense-policy/regional/europe/the-soviet-collapse/

        Gaidar says: “The money was suddenly gone.”

  2. Fourier2020

    The current fuel equivalent of 9.85% is added to the current funds rate of 0.10% = 9.95%.
    ———————————————————————————————–
    OK, but here is the part that I don’t get. Look at total world stock market capitalization (chart 2).
    http://rwer.wordpress.com/2010/11/30/world-stock-market-capitalization-4-graphs/
    The total is about $50 trillion now vs a high of $60 trillion in 2007. However, it was only $35 trillion in 2000 back when oil was much cheaper. Wouldn’t total stock market capitalization and credit availability be related? The core question is why do stocks continue to do relatively well if the crude-credit environment is so difficult?

    Also, what formula did you use to convert WTI into Fed Funds?

  3. James

    Steve,

    So growth is necessary for credit because the new growth establishes collateral for another round of growth. For more credit we need more buildings, more oil reserves, more everything. But when growth stops, the credit stops too and that’s the point we’ve reached. The Chinese are building skyscrapers just to maintain their momentum. What about all of the crap that end’s up in the landfill that was bought with credit? Can’t use it as collateral, although perhaps you could financialize the landfill and reap the rewards today of its future methane production. Anything with a potential future cash flow, like students, will be bundled and sold for the value of their future cash flows or salaries. Since one extra dollar in credit now equals zero new growth, we must create credit without any new collateral at all. I guess that’s like making student loans to suckers that will never find a decent job and then bundling and reselling the debt to an institutional sucker that doesn’t know any better. Eventually we end up with a game of musical chairs where the smallest credit players are squeezed out by the largest. The banks will have to offer collateral-free money to keep this game going guaranteed by credit default swaps. Seems like one little pin prick could pop a bubble like that.

  4. Eeyores Enigma

    Americans work jobs they hate
    in order to spend money they don’t have
    so they can buy things they don’t need
    to impress people they don’t like.

    There – now that we know this is true we can dump this insane system and reorganize ourselves right?

  5. steve from virginia Post author

    Fourier: “The core question is why do stocks continue to do relatively well if the crude-credit environment is so difficult?”

    The problem is nobody can tell what a market would do under a different set of circumstances.

    During the 2000-2004 period most short-term interest rates were very low and fuel prices were increasing but still modest. When rates started to rise the fuel prices continued to rise — some say manipulation and other say ‘peak oil’. Stocks rose too. Clarity? None. But … all three sectors, interest rates/credit, oil and stocks all corrected and all for the same reason.

    We had this discussion about oil price-interest rate equivalence before (and before FRED). It was easy to take zeros off the crude oil price and get interest rates. It even makes sense … upper and lower bounds where they would be in the interest rate market.

    RE: how long b/f we are car free? Sooner than you might think! Right now I think five years and all will be gone.

  6. Ross

    The symptom is the cure.

    This is the drawn out “purgatory,” our exponential economy has died. We’re purging all the excess expectations. Except that takes us to… H-E-L-L.

    This dog does not go to heaven.

    There is no cultural narrative that takes us past Peak Oil yet. No one is “doing” the primitive. No one is doing 1776 lifestyle, loading powder long guns.

    No cars!? Are you out of your fucking mind, man?

    That’s the 99%

  7. Reverse Engineer

    @Steve

    Sooner than I think? In case you haven’t noticed, I’m a Full Doomer 🙂 Fast Crash scenarios could shut the system down inside a few weeks.

    Still, 5 years for Carz Free in the FSofA seems unlikely. For the PIIGS, much more likely. We should get at least one more Crash on Oil Prices which gives a Dead Cat Bounce here in the FSofA, then follow that one up with a Full On War Economy with Rationing and Military theft of Oil Platforms which could keep the Carz Economy sputtering along here another decade depending on how the Chinese and Ruskies react to that.

    A 5 year “Crash” of the Carz economy here would strand easy 50% of the population and the social dislocation concomittant with that has Mad Max written all over it. I gotta figure on some sort of Fascist system being dropped down to ration and keep the core systems going for a while.

    @Ross

    Muskets? Short lived even if they do make a brief return. Go Long on Crossbows, Atlatls and Trebuchets.

    RE

  8. The Dork of Cork

    Its not just oil going into cars…………….. its fuel oil for heating which I believe is a very substantial energy input in New England.

    2010 Irish energy balance.
    Private cars : 1991 Ktoe
    Road freight : 733 Ktoe
    Public passenger (bus etc) : 187Ktoe
    Rail ; 44Ktoe
    Domestic aviation : 14 Ktoe

    Residential oil use : 1267 KTOE (cold winter)

    2007
    Private cars : 2183 Ktoe
    Road freight : 1186 Ktoe
    Public passenger :180 Ktoe
    Rail : : 47 Ktoe
    Domestic aviation :54 Ktoe

    residential oil use : 1172KTOE

    Notice the very dramatic reduction in road freight as commerce collapsed during the bust – it did not enter rail freight in Ireland as this is at its lowest point for a century (Ireland was never the best place for rail freight given the short distances on a island)
    domestic aviation has also collapsed as people either do not travel & switch to rail ,car pool for intercity travel.
    The slight drop in rail KTOE maybe because the final regional commuter trains were taken out of service to be replaced by more efficient DMUs and also perhaps another drop in rail freight.

    However people will spend money to keep warm until they cannot.
    Small investments in wood gas stoves would begin to pay off withen 3 to 5 years I imagine.

    In 1990 Irish oil use for private cars was roughly 1000 (half) Ktoe and oil use for heating was about 400 Ktoe……….

  9. Reverse Engineer

    Repost from Reverse Engineering

    RE
    ——
    Steve’s recent article “Big Bad Ideas Running Amok” showed a parity between Interest costs on Money and Oil costs, which when added together demonstrate clearly why the monetary system is failing. For any Gold Bug who thinks Money is based on the supply of Gold anybody has, this should provide a wake-up call, though it won’t for True Believers of Gold as Money.

    Quite early on, really from the very MOMENT that Standard Oil began extracting Oil from the ground under Pennsylvania, the folks running the Monetary system were quite aware of the relationship between Energy and Money, and the use of Credit as a means to ration out the usage of Resources. This has been in practice since Agriculture began and the Energy source was Food. In order to have working Money, you first have to be in control over the land required for Food Production. THEN you can start issuing out the Credits with which to buy that food.

    So again early on here, a Monopoly was established in control of the Oil resource, which really never disappeared despite the breakup of Standard Oil, which was merely Window Dressing. Through allt he Holding Companies, Hedge Funds and TBTF Banks, really all the same folks Own the world Oil supply as ever did. They periodically have to fight for their control in various regions of the world where the Black Gold comes a Bubblin’ Up, but since they ALSO own all the infrastructure of refineries and distribution methods, simply sitting on top of a vast reservoir of Oil does not make you Rich UNLESS you “Play Ball” with these folks.

    The Monopoly on Oil was what allowed for such a vast expansion of Credit over the last Century, along with the Interest such an expansion of credit demands. So those who were in control over the system became rich beyond measure, far moreso than the Pharoahs or anyone else through history who distributed Credit based on their ownership of land providing the Food resource.

    Its self-referential. In order for people to Buy the Oil that Standard Oil was extracting from the Earth, John D. Rockefeller had to issue CREDIT for them to do that with. The Dollar did not become a proxy for Oil during the Arab Oil Embargo, in fact it became a proxy for Oil at the very beginning of the tenure of the Federal Reserve, which is just a Bank beholden to the Oil interests.

    Issuance of this Credit to further expand the Oil based economy is the entire basis for the monetary system, and further explains all the Wars undertaken to capture all the Oil resource throughout the world over the last Century. You invest money to build War Machines to Capture more Oil. A “Virtuous Cycle” for so long as there is more Oil to capture into the system.

    Interest charges throughout the period centralize all the wealth generated into the hands of the folks who issue the credit to buy the Oil. Long as the system keeps expanding, those Interest charges can be paid off. Everybody on the inside of the system including J6P is “doing better” in the “Progress Narrative”, though everybody on the outside is doing worse and the people at the very top are doing AMAZINGLY well.

    I’m not a big fan of the idea of a “Progress Narrative” as driver here, although its a part of the game. The underlying “Game” is of Greed and Power Seeking, the “progress narrative” was simply a means by which the thermodynamic energy of fossil fuels was applied to gain further wealth and power. As long as the Peoples think their lives are beign “Improved” by accessing this energy, they are seduced into going into the Debt necessary to live that way. Then, through Interest charges the Wealth gets transferred into the the hands of those who issue the Credit. Interest is merely a Tax by those who Own and Control the resources on those who do not own and control them. Long as the system keeps Growing, the tax can be paid and the society as a whole also reaps the material rewards of “wasting” fossil fuel energy.

    For the average J6P in the FSofA, its not precisely correct to say the “Progress Narative” did not improve his life, because in many ways it did. 100 years ago J6P could NOT take a Vacation in Hawaii. 100 years ago J6P lived in a Cold Water flat if he even had Indoor Plumbing, he certainly did not live in a 10,000 sq ft McMansion. In the END GAME here, the further Technological Improvements of Iphones and Plasma TVs aren’t really improving his life anymore, they are merely keeping him distracted from how real life is deteriorating. However, at the BEGINNING, for J6P the “Progress Narrative” was VALID.

    As the ability to access further supplies of Oil at a high ratio of EROEI decreases, the Interest Charges cannot be supported and the Ponzi begins to fail. The monetary system based on the thermodynamic energy of Oil fails concomittant with that, they are inextricably tied together this way. “Money”, Gold or Fiat based cannot function to return any interest during the period of contraction off the Oil economy. So, all Bonds must Fail, all Stocks based on Industrial production of goods requiring Oil must also go to Zero. The Money only functions again when based on the control over the Food resources, which is a MUCH smaller total energy available economy. The population has to shrink to match that.

    The result of the “Progress Narrative” was the development of the Automobile Culture here in the FSofA and also in Europe, though not to quite the same extent there. However, you cannot simply remove the Carz from these cultures now and revert to even a Rail level of the Progress Narrative, because the Carz and the velocity of commerce they enabled is a part of the systems necessary to maintain the integrity of these cultures. You do not step back down off this ladder very easily. Folks who live in cultures which never became quite so dependent on the Carz will have a bit better time of it far as a readjusment goes, but not by much since those cultures also became dependent on food imports from the Carz Cuture locations. They are also poorer coutries who will be pillaged for resources by the richer ones. Neither one is going to be spared the pain of the dislocation here as a transition is made.

    The “Progress Narrative” is soon to be replaced by the “Survival Narrative”. In this narrative, you either figure out how to scavenge off the remnants of the Age of Oil and what your local resources will produce, or you will buy your Ticket to the Great beyond. Growth is finished, and the Monetary system seems likely to go through an extended period of Dieing on Life Support in the ICU, until finally the Code Blue gets called here on it. Coming Soon to a Theatre Near You.

    RE

    1. Reverse Engineer

      A few further thoughts after reading the “always insightful” John Michael Greer (who to be honest I find just a little bit Looney Tunes). JMGs main insight in this piece is that when the narrative guiding your civilization fails, this is when the Chicken Littles emerge from behind the refrigerator to start predicting Apocalypse. Which generally only makes sense because when things are really going good, very few people sense collapse on the horizon, and they are just wickedly pessimistic sorts of people.

      In the current go-round of the collapse dynamic, prior to around 9-11 you would have been hard pressed to find much in the way of collapse discussion on the net, despite the fact AOL was already past a decade in age with its Chat rooms and so forth.

      After 9-11 though, the Kollapsniks came out of the closet. Dmitri Orlov published his “Reinventing Collapse”, Jimmy Kunstler published the “Long Emergency”, and my own old Home on the Web of PeakOil.com got rolling in about 2004 or so I think, though I did not join up with the Kollapsniks there until 2007.

      Since 2007, IMHO you have to be pretty Brain Dead not to see all the signs of the Apocalypse droping down around you an a daily basis, the Sign for this weekend being the Sinking of the Italian Titanic off the Island of the Gigolos. About the only people left presenting a Positive Spin for the Future nowadays are either paid shills of the MSM or perpetual Pollyannas and Little Orphan Annies singing the Sun Will Come Out Tomorrow, it’s Only a Day Away.

      Much of the Blame for this oncoming collapse is laid here by JMG on the “Progress Narrative”, with that progress basically being defined as the standard of living achieved by a few cultures by acessing the thermodynamic energy of Oil. Thing is, at what point do you think the “Progress Narrative” should have stopped Narrating?

      Should we have stopped trying to progress in 1750 and forsaken the benefits accrued from acessing the Steam Engine? 1750 if you recall was pretty much a Pinnacle time for slavery in its explicit form. Slavery in itself was an outgrowth or “unintended consequence” of the development of Agriculture, so should Homo Sapiens have foresworn Ag as a method for developing its food supply? Sure, by running most Ag systems you are Borrowing from the Future and in a few centuries your great-great-great granchildren will be living in a Desert, but do you worry about that when you first plant your crops? On a cultural level, nobody ever did worry about that, and if you did not go down the Ag Highway a few thousand years ago, your particular culture has long since gone the way of the Dinosaur anywhere but the most marginal and remote areas of the world like Nunavut, the Kalahari or deep in the Amazon rainforest. Hunter-Gather societies just got rolled up here like Pee Wee Football teams playing in the NFL.

      So the “Progress Narrative” is really one which has existed for all the years since Homo Sapiens became sentient and dropped down from the trees of Africa to begin the process of learning to make tools and control fire. At what point in that long series of progressive improvements to the standard of living were people supposed to rise up and say “STOP! We don’t NEED this “improvement” of our lives.”? Was it when Henry Ford rolled the first Mode T of the production line? Was it when industrilization took away the jobs of Weavers in the looms of Europe? The Luddites DID revolt against that one, and then proceeded to join the Hunter-Gatherers with the Dinosaurs in the history of living things that didn’t join up with the “Progress Narative”.

      Progress led to further dominion over the earth by Homo Sapiens at first, and then led to dominion by some Home Sapiens over many others. Rewinding the clock here or REVERSE ENGINEERING it, you really have to predate Agriculture in the series of inventions that provided a better standard of living, albeit always by depleting the earth of resources. At first only gradually, but of course rapidly accelerating with the onset of the Age of Oil. Still, even without Oil and without its Carz, we would have run up against the same Limits to Growth that Malthus foresaw, probably a good deal earlier than we did here. Soon as you start reproducing at a faster rate than the earth can replenish the resources you use to live, you begin borrowing against the future. You don’t need Industrialization to do that, Agriculture alone does it. You have to keep breeding up the bigger populations to control the land you live on and defend against others also breeding up larger populations seeking to take that land for themselves. Every military Invention you come up with in this progress narrative helps to insure that YOURS will be the surviving population at the end of the next War. Without the “Progress Narrative” in the world of Warfare, you go Extinct before the next Homo Sapiens down the block. You do not want to be the civilization fighting with stone tipped Arrows against Muskets; you do not want to be the civilization on Horseback when the Tanks roll in; you do not want to be the land-bound ones with only Tanks when the Death from Above comes dropping from the sky either. Unless you stay at the leading edge of this “Progress Narrative”, YOU will go to the Great Beyond before the other guy does.

      The Progress Narrative as it was has to play itself out, until all is exhausted and you reach the Final Collapse, the Big One as it were. We appear to be on the Cusp of the Big One now, the Apocalypse to put all the prior ones to shame. It will make the fall of the Tower of Babel and the Collapse of the Roman Empire look like a Sunday Picnic. Weh all is said and done, it will take down ALL the “progress” wrought by mankind over lo these last 6 millenia or so since the Dawn of Agriculture.

      If any do make it through that Zero Point, they will be faced with the same problems in their Journey along the Progress Narrative. Will that iteration of Homo Sapiens be able to halt “progress” at the point where it is strictly Pay-As-You-Go without borrowing from the future? One can only hope the lessons will have been learned and they will so stop, but none of us will be around to see that. All we will see is the End Game of this last Progress Narrative, as the Fuk-U-shimas already built one by one melt down and go Super Critical. For now, you just get as far away from this as you can and Duck and Cover. Nothing is going to stop this collapse short of the Finger of God, and it seems unlikely he will step in here anytime too soon.

      See You on the Other Side.

      RE

      1. I. M. Nobody

        Since you bring up the Finger of God, a few days ago Gail Tverberg posted an essay by Dr. Gary Peters on her blog, ourfiniteworld.com. In it he summarized the religious history of the period in question as having progressed from pantheism to monotheism to worship of just part of a god, the Invisible Hand. Though still never actually seen, it can be deduced from the visible effects of its manipulations that the Hand is a mailed fist with an extended middle finger.

        I concur that we cannot just throw the progress train into reverse and step off at some mildly lower point of progress. When the Carz die so does most everything that we depend on.

        Up-thread you asked (probably rhetorically) if tractors would be supplanted by oxen. I suppose some survivors might get to enjoy bucolic scenes of oxen pulling plows and wagons. But again, going in reverse things don’t work the same. In the beginning, potential oxen roamed wild and were free. Now and into the foreseeable future steers have a cost and anyone capable of training them into oxenhood will likely charge a pretty stiff tariff. No money, no credit, no oxen. That invisible finger will probably dictate that those steers be eaten anyway.

      2. Reverse Engineer

        I doubt all the potential Breeding Stock for Oxen will be slaughtered for Food. Many more well fattened people are more readily available as a source of Animal Protein. Human Beings are also unable to feed themselves by eating Grass, whereas Oxen can so they are more valuable to breed up.

        Will there be a Price for buying a Draft animal? Certainly, as long as somebody is controlling the breeding of the livestock, the only ways you can get hold of it are by paying for it or stealing it. After a while though, the folks who control the breeding will themselves be killed off and the process of breeding up the animals becomes more decentralized.

        I certaily don’t imagine a smooth transition here back to an All-Amish society. You’ll likely go through a long and protracted period of vast Undershoot of the Human Population. The animal population though will recover faster than the Homo Sapiens will. Prey always recovers faster than the Predators in any ecosystem.

        RE

      3. steve from virginia Post author

        I disagree with the ‘rising standard of living’ argument because it cannot be proved.

        Because something exists, it does not mean it is qualitatively ‘superior’ only that it is more quantitatively efficient. Nothing is ‘better’ other than the ability of the boss man to crush all competition and own all assets.

        Basically, the entire concept of ‘rising standard of living’ is spam. Life isn’t better b/c of iPads and drive-throughs when we don’t understand what we traded for them.

        When you don’t have a soul, selling it to the devil looks like a ‘good deal’, particularly when you are selling the souls of others.

      4. Ross

        Our dialectic and standards has us defining the next phase of human history as the Apocalypse.

        We have a moral imperative to save the biosphere, or at least not destroy it.

        But it’s hard to talk about.

        Standard of living is another 20th century amorphous meme. Except, in reverse it represents the loss of significant capacities. Work, education, health care.

        That is tangible to people.

      5. Reverse Engineer

        The rising standard of living argument goes like this. If you are given a choice between living in an Igloo or in Manufactured Housing delivered to Nunavut by Ice Truckers, which would you choose? Virtually to the last one, the Inuit up there took the manufactured housing. Given a choice between living in a shack with no running water and an outhouse or living in a Mcmansion with a Hot Tub, which one does the vast majority of the population choose? Given the choice between a Horse and a Car, which one will most people choose? if people generally really felt their standard of living was better with Horse & Buggy, Henry Ford never would have been able to sell any Carz.

        The deal here is that its only in the late stages of all of this that the beneficiary cultures of Industrialization are suffering its negative consequences. Even the UE problem was “solved” for a brief time through the Social Welfare state.

        I personally do believe that people were happy and healthier living the Hunter Gatherer lifestyle with Stone Age technology. Industrialization just accelerated a process well underway since the Dawn of Agriculture. I don’t think the vast majority of people lived too well in the 18th Century, other than Elites such as our Founding Fathers. Most of the people who came over here came in Steerage as Indentured servants, most of the people who populated Australia were Criminals who were already economically shut out before Industrialization really took hold.

        So as a society, we took a one time ride on the load of easily accessible fossil fuels because it IS nicer to live in a heated manufactured house than it is in an Igloo. Besides all that, the Progress Narrative was always necessary for survival in Warfare, the side with the best Hardware always won. The real driver for the invention of the Automobile was of course as a weapon of war to replace quite vulnerable Horses.

        Of course, when the Oil runs out, the Cavalry will have its day again.

        RE

      6. dolph

        I agree more with RE here. The problem of overcomplexity and diminishing marginal returns does not negate the ideas of industry nor the products themselves. It’s not “either or” between 250 million cars and zero.

        Your commentary is more existential, Steve, and it’s a shame you aren’t recognizing that. Industry doesn’t solve the human question. Nothing does.

  10. JP

    I cannot square your statement that ‘Outside of credit, industries’ ‘goods’ are imaginary, destructive or fetish- manifestations of waste.’ with the fact that an 18th century labourer can have better and cheaper clothes so is less likely to get ill.

    The problem is that the productive industry is magnitudes times smaller than the consumerist based industry and consequently the world has massive industrial overcapacity.

    1. steve from virginia Post author

      There is a lot of modern hate for the past worker’s conditions.

      18th century laborer: there were less of them relative to the general population which itself was smaller.

      The skill level in communities was much higher then than now.

      18th century laborer wore better clothes than his 21st century counterpart. One of many reasons is because there was no plastic fibers. Except for childhood diseases the person of the past was likely healthier and was certainly much stronger than the contemporary (wo)man. A person who survived childhood was as likely to have a lifespan similar to today’s.

      There were no auto wrecks, firearms, toxic waste, hormones/sugars in food, no GM, no ‘junk food’. Nobody sat in cars or behind desks all day getting fat.

      Clothes-making was a distributed enterprise with many hands that produced quantity as necessary, of higher quality. The mechanized equivalent was cheaper with over-capacity and uniformly lower quality.

      An advantage of distributed model is there was little unemployment. Any hands could be turned to the tasks of clothes making … or wine making or grain milling, carpentry or cabinet making, silver smithing, agriculture and animal husbandry, fishery, soap/die making, saw milling, tinkering, shoe making, window glazing and glass making, wagon making, etc. All these and more needed many hands, were skill dependent and remunerative.

      These ‘old fashioned’ jobs do not exist, those that do are automated. Except for making art forgeries, the world has become de-skilled. People are uneducated boobs and numbskulls who don’t know how to do anything and lack the curiosity to learn.

      People in non-industrial societies had a lot of free time to enjoy themselves if they so chose.

      Industrialists destroyed distributed enterprises by way of ruinous competition. They used their leverage advantage. Industrial firms sold inferior goods below cost in order to bankrupt their competition. Chinese manufacturers do the same thing today.

      People in all stations dressed better, ate much better food, were healthier overall, lived in nicer houses in very much nicer towns, were cleaner, less stressed and better educated than currently.

      The 18th century elite dressed much better than the elites of today who generally look like hobos. Look online at portraits of the Founding Fathers and take note of their clothes.

      All done without sewing machines or child labor.

      Part of industry’s info war against civilization is that pre-factories life was savage and miserable.

      Americans are brainwashed. Life has gone downhill and now the industrial model is dying. Brainwashing is at all levels which is why the managers are all going in circles. Nobody has any answers, all roads lead back to square one, to ruin, all doors open onto door number one.

      The problem with John Michael Greer’s and James Kunstler’s versions of the present is they are profoundly pop art, Greer’s admittedly so: pulp fiction. Orlov saw imperial decline up close but his version of collapse is binary/identical to the Madison Avenue version: new car ever three years or the wheels come off!

      Without hegemonic modernity would die and be replaced by another civilization.

      However, modernity is basically anti-civilization, it destroys value(s). World, wars, depressions then mass media have destroyed the ideas and skills needed to make civilization work.

      1. Mr. Roboto

        My understanding is that the life expectancy of a working-class male at the turn of the Nineteenth and Twentieth Centuries was about age 46. Was it higher before that, and it plummeted because working people were forced to move to urban slum tenements where maintenance of public health was poor?

      2. Reverse Engineer

        You paint a very bucolic picture of 18th Century life, I’m just not certain how accurate that picture is.

        First off, while there may not have been child labor in sweatshops, children were most certainly put to work just as soon as they could take instruction. Spinning, weaving and such were done by girls probably from the time they were 5 years old. Boys same age out in the fields pulling weeds and picking the fruit. Apprenticeships in Trades like Smithing were begun often by the age of 8 and not all Apprentices had kindly Masters to learn from.

        Second, in addition to the child labor, the 18th Century was they heyday of Slave labor here in the FSofA, and the land-bound Peasantry of Europe. The peasants of Europe weren’t all that happy and headed for the Shities in search of a “better” life, and the European continent was Engulfed in a non-stop series of Land Wars for possession of that resource by the Elites. Impressment into Military Service was common. In coastal cities, you could be pressed into service on a British military ship of the time if you happenned to be walking down the street at the wrong time of day.

        Granted as true 18th century civilization wasn’t poisoning the environment with long lived radioisotopes, but their towns weren’t all that healthy places to live even if you did make it past childhood. Sewage systems were rudimentary at best, and you had all sorts of bacterial diseases like cholera, tuberculosis and whooping cough that could take you down at an early age. Vitamin deficiency diseases like Scurvy were common amongst seafarers. Smallpox ran rampant on a periodic basis.

        Over here in the FSofA, the Land Wars between Colonial powers continued, supplemented by the necessary genocide of the Native population still left after the smallpox ran over them. All culminating of course in the Revolutionary War, which after 8 years of misery in places like Valley Forge, our Founding Fathers implemented the same type of Property Ownership system they had over in Europe, handing over all rights to Male property Owners and hanging everybody else out to dry.

        If you are going to Reverse Engineer a simpler way of life, I would not choose the 18th Century as the Ideal Model. It had a LOT of negatives.

        RE

      3. dolph

        Utopian visions are dangerous, whether they take the form of nonsensical science fiction fantasies, or 18th century nostalgic fetishes.

        It’s human beings that need to change. Doesn’t matter if this happens with or without industry.

        We need to get rid of the narrative, not the stuff. The narrative of endless growth, of the horizon, of lands that need to be conquered, of infinity.

        The reason why we can’t get rid of this narrative is because it’s cultural, and thereby can only go away with massive dislocation.

        I have a feeling that up until even the mid 20th century, really, most people were comfortable with the idea of non growth. It’s only very recently that we have this idea of “grow or die” which is, incidentally, the idealogy of a cancer cell.

      4. steve from virginia Post author

        Read again: the issue is whether industries support themselves or require subsidies.

        They require subsidies which indicates there are productive enterprises elsewhere to provide them.

        What is taking place now in the ‘modern’ world is the drying up of ‘other’ productive enterprises to subsidize our waste.

      5. jb

        “People in all stations dressed better, ate much better food, were healthier overall, lived in nicer houses in very much nicer towns, were cleaner, less stressed and better educated than currently.”

        I suppose the French perfected the guillotine because they got bored with all that free time eating cake? At least they had the craftsmen to do a decent job of it. LOL.

      6. steve from virginia Post author

        So true.

        The modern world gave us nuclear weapons, poison gas, firestorms, toxic chemicals, gulags, the machine gun, debt slavery, acute radiation poisoning, ‘biofuels’, aquifer mining, fly ash dumps … making these kinds of comparisons is easy but beside the point.

        The contradiction is the claim that non-industry had nothing to offer, only poor starving peasants and snappy guillotines. What was and what is cannot be proved! We cannot go somewhere non-modern to make a comparison. We cannot even see what is taking place under our noses.

        We make assumptions about what happened in the past. The ‘current set’ insists that the past really sucked, that ‘we (Americans) are so much better off now, we are like kings.’ How do we know? What if the past didn’t really suck? How WOULD we know?

        Since the source of this assumption is American advertising industry it is almost certainly a lie if for no other reason other than its source.

        A rational reason to question ‘Spamville’ is that the same non-industry of loutish peasants was able to subsidize capital hungry industry and at the same time provide a market for it. Adam Smith’s pin factory made millions of pins. There were other pin factories: somebody bought all those pins with real funds (worth) and made use of them.

        The pin factories succeeded because the hundreds of silversmiths who made pins were put out of the pin business. What were these silversmiths besides chum for the pin bosses? Adam Smith says nothing about them. It is as if they did not exist, but for their business there would have been no pin market in the first place. Did these silversmiths not provide a service for anyone? Were they peasants dressed in rags watching for the guillotine out of the corners of their eyes, like the current crop of Greek business owners who have been swallowed up by their own bankers?

        Non-moderns had goods to offer, not necessary to all persons at all times, identical to today. Identical to today, there are crop failures and revolutions. Modernity offers no guarantees, it only has more gaudy promises.

        The less likely the promises are to be kept, the gaudier they are.

        Moderns offered little that was actually new, only larger amounts of lesser goods with the price distributed across communities. It was the aggregated debts of the capitalists falling on the communities in various ways that created the poverty, unemployment and displacement that accompanied expanding industry.

        This is happening right now under everyone’s noses. The little people get to pay the debts of the bigs in the name of ‘progress’ and a lie that never ends.

      7. rcg1950

        Seeing the beliefs upon which one’s very sense of reality is based is very difficult (like ‘trying to see the ground under your feet’ to paraphrase my mentor). I think that’s the problem in overcoming the prejudice we remnants of the modern era face in trying to see things truly. In fact, most cultures throughout history had quite a different notion of the future than the moderns. For the most part they saw themselves and their societies as degenerate forms descended from more potent or glorious eras. (Telemachas could not string his father’s bow.) The Aboriginal Alcheringa represented a time when magic could still work. The Middle Ages in Europe subscribed to a static Aristotelean world in which nothing could ever change and life took on the aspect of exaggerating the station one found oneself in while waiting for God to make things right in the world to come.

        In the great scheme of things I don’t think the Modern world view had any more truth or value than any other. And I don’t think the measure of happiness it endowed on its subscribers was by and large any greater than any other system (though the physical comforts it made possible for some have been extraordinary .. as has been the degradation and misery it has visited on so many).

        When the time is up for a belief system it’s time to move on. That’s human-kinds privilege / tragedy. What sets apart our pulling up stakes from other such spiritual migrations of the past is the enormous overshoot that the modern era made possible. So be it.

      8. Reverse Engieer

        “We make assumptions about what happened in the past. The ‘current set’ insists that the past really sucked, that ‘we (Americans) are so much better off now, we are like kings.’ How do we know? What if the past didn’t really suck? How WOULD we know?”-Steve

        I don’t think ALL of the past sucked, I just think the 18th Century wasn’t all that great.

        If you have a Time Machine, you might as well go back to a better period than that. How about Hawaii circa 1000AD, right after the first cat-rigged canoes made it there from the Marquesas? How about the Pacific Northwest anytime prior to around 1400 or so right back to 10,000 BC?

        The world of the 18th Century was one of non-stop Warfare as the military machine really got the hang of using Cannon. Besides the American Revolution you had the French one. How do we know things sucked? Because they were having freaking WARS all the time! If everybody is doing good, they don’t start killing each other.

        To find periods of time when things did NOT suck, you have to find places and times where there were not WARS going on.

        RE

  11. James

    I’ve been reading about “Dark Inventory” at The Oil Drum and Automatic Earth and I still don’t have a clear picture as to how this works. Would it be possible to overstate reserves, sell a futures contract of some sort to investors who expect appreciation in that below-ground oil, take the money and run and leave the investors holding the imaginary reserves? An oil reserves ponzi scheme of sorts. Oil reserves seem to magically grow every year and investors could be kept happy with interest paid from existing real oil sales? The losers will be those that invested in oil reserves that do not exist? Even nations could collateralize their borrowing with fake oil reserves. If this were structured as a ponzi, then we could suddenly have considerably less oil than we thought as soon as the ponzi collapses.

    1. steve from virginia Post author

      Read this: http://news.goldseek.com/GoldSeek/1326469500.php

      Excess inventories of ‘fake’ debt instruments.

      In any large scale enterprise, the managers never deal with actual goods but use numbers instead: numbers on a piece of paper, numbers on a screen, numbers given out over the phone. One set of numbers — a fake, ‘dark’, shadow, phony-baloney set — can be substituted for another and nobody will ever know which is which.

      Shadow house inventory is houses that need stay away from the market, to support high values for the debt written against those houses.

      ‘Dark’ fuel inventory is fuel that can make a 3d party into the swing producer, gaining him or her a nice premium.

      ‘Shadow’ banking gives lenders excess to sell to keep prices down.

      Just remember the emperor never wears clothes.

  12. Sandor

    While I agree with most of Steve’s analysis, his conjecture that life was better centuries ago is a bit suspect. Granted that we are arguing about history passed down to us from the opinions of people who knew how to read and write, and records that were less precise than today’s. The most obvious example is public health.

    Steve sez: “People in all stations dressed better, ate much better food, were healthier overall, lived in nicer houses in very much nicer towns, were cleaner, less stressed and better educated than currently.”

    Based on what source material? Healthier? Cleaner? Better educated? Perhaps you meant that the ones who survived had stronger immune systems, which is kind of a survivorship fallacy, or that even the unschooled illiterates were ‘handier’ by dint of necessity. My reading of history indicates that life was fairly dirty and messy for the vast majority of people throughout history. Modernity has vastly reduced infant/child mortality rates, which has helped lead to faster overpopulation. You can make an argument about ‘better lifestyles’ based on personal qualitative values, but there’s little to indicate most humans share Steve’s assessment. I don’t think modern society ‘works’ any more than Steve does, but my reading of history doesn’t lead me to believe most people were ‘happier’ way back when. Women especially. I have a sneaking suspicion that rape was much more prevalent in the ‘Golden Age’ than now.

    I do think it’s important to argue about values, especially the need for conservation, but I don’t think it’s necessary to insist that 18th century life was superior in order to de-legitimize the modern ‘progress narrative.’ I think Steve has blasted a giant hole in the narrative and I try to get anyone I can who I think might be receptive to read his work.

    1. steve from virginia Post author

      Sadly, I was a disappointment to my mother as well …

      she wanted me to be a priest.

      The point is that industrial enterprises do not pay for themselves and have always required subsidy in the form of markets-to-be-cannibalized and debt provision.

      Industrial economies overran/occupied pre-existent marketplaces. Poor peasants do not produce industrial revolutions (they produce the other kind).

      The fact of the industrial world’s monstrous debts speaks for itself. If industrialization is sustainable, show me where?

      1. dolph

        Even if this is true, to the best of my understanding it takes us back to the early 20th century, when industry hadn’t yet grown enough to require subsidy. Certainly not the 18th century.

        But again, like you admit, who can know for sure? What is lost cannot be regained.

  13. slackjawedyokel

    Aside from the end of the waste-based economy ( Buddha is said to have said four requistes – food, clothing, shelter, medicine – see Maslow for another take) I think Tepco should pour some mercury (Hg) into their broken BWRs. It turns into lead (Pb) when it captures neutrons. $130/kg. Boils at higher temp than water. Noxious when it leaks out although not as much as the c*** in there already. What do you think?

    1. steve from virginia Post author

      Hi,

      I presume this is a carryover from ENE and a bit off topic …

      – Tepco needs to find the cores and determine what condition they are in: ‘mapping the cores’.

      – Tepco needs to determine which approach to the cores is more effective, to the end of isolating them from the rest of the world until the material can be removed. Remember there is no strategy for dealing with any spent fuel whether it is casks, in so-called ‘reprocessing’ facilities or in the ground making ugly.

      – One element/compound would be superior to others or combination. Bentonite and mercury might be more effective at sealing the core than sand and iron, for instance. Tepco and the ROW nuclear science establishment should be working on this now.

      – Needed material pumped with water into reactors covering the cores.

      – Build a cofferdam around the reactors to control the water. If the reactors cannot be sealed with solids, they can be covered with still water. After ten years the core material will be ‘cold’ enough to attack with industrial tools.

      – All reactor fuel must be removed from spent fuel pools especially from pool #4.

      More on this later ….

      1. slackjawedyokel

        Thanks Steve,
        – mapping the cores – suggest lots of fibre optics – one endoscope is rather token (but are we surprised?)

        -isolate the cores – I think they probably went elephants foot ( as in Chenobyl ) but more like centipede feet or overcooked sphagetti melt thru various bottom / side holes ( TMI slumped to the bottom with slag on top – there are only these two comparisons available ) but what is under the secondary containment seems to be earth ( any hints? ) – so nibbling bits of radcrap and inserting them into casks might be the industrial answer (had a dream of many remote controlled toy railcars going in and out of Chenobyl – I read too much dooming)

        – Thorium burners / massive neutron flux gives you Cs137 instead of Pu 239 – is that better for the spent fuel problem? Or else Pb casks with Hg coolant and a tricky lil water pool for (60x Pyramids life so far) or else put them back into Olympic Dam / Roxby Downs underground (oh wait that’s being turned into an opencut isn’t it? Besides, Australia is nuclear free ahem)

        – I fear the cooling is accidentally happening and might accidentally stop (collapse of some slag over the wrong hole might lead to another overheating and “badbadbad”) and sealing the cores might do the same. I hope Tepco and ROW establishment are trying arrangements/compounds but CYA / peer review seem more important ( not to mention good ole hands in the air / SEP)

        – The cofferdam should be before the turbines but they seem to be frightened to go near their buildings / they dont tell us. They don’t have one yet? Surprise surprise. Incompetence is rife there.

        – I totally agree that spent rods need to be moved, non electronically. It seems the thinking goes electronics doesn’t survive the radioactive environment ==> only bareassed humans can do it ==> noone will do it. Both implications are false in my estimation. See Bruce Rules mechanical computer for the Hale telescope and nutjobs/suicidal/gloryseekers/dutifuls for the other.

        PS have enjoyed your wake up call inordinately. Continue, please.

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