Archive for Julho, 2015
It’s been a watershed week here in the world of collapse, watching both the European economy and the Chinese economy circle the toilet bowl. Oil also is back on its downward trend line, and Pigmen everywhere remain perplexed, blaming the problems variously on Socialist Goobermints, Unions or Keynesian Economists, but none of those are in the least bit correct.
The problem is really a very simple one, which is that there are too many people chasing too few resources, particularly the energy resource necessary to live the Industrial lifestyle those of us who have enjoyed that in the west have been pursuing for the last 200 years or so. Here is how we looked diagramatically 200 years ago at the beginning of the Industrial Revolution:
As this trip began, there were just tons of Fossil Fuels in the ground, Coal, Oil and Natural Gas, and they weren’t too hard to find or extract either. In fact in the early years, the Oil just squirted out of the ground under its own pressure, as soon as you popped a hole in the container. It has become progressively harder to extract though, and nowadays to get the last of the extractable stuff up, the Frackers have to pump millions of gallons of water and chemicals to coax the stuff up out of the rocks it is embedded in. Similar with NG, it takes real sweet high tech equipment that can drill horizontal wells to get to the remaining supplies of this stuff. Its not cheap to get this out of the ground anymore.
You also had a relatively low population that was mostly agrarian at the beginning of this trip. Both the North & South American continents were relatively empty of people, with most of the indigenous population wiped out by the Smallpox, Tuberculosis, Scarlet Fever and other diseases brought over to the continent in the early years of colonialization.
There was little pollution in those years, you could pretty much drink out of any stream or even lake without treating the water in any way. Long as you disposed of your own waste downstream from wherever you were, you were OK long as there was nobody else immediately upstream from you.
Most of the CO2 in the atmosphere up at that point was what occurred naturally from forest fires, vulcanism and so forth. There was some addition from Homo Saps burning stuff to smelt metal for Ag Equipment and War Tools, but since the population overall was not that large, it was not overwhelming the capacity of the earth to absorb this waste, or the sun to provide enough energy to replace what was wasted. Overall, it was a fairly Balanced system to this point, although Ag was defintely desertifiying many portions of the planet where it had been practiced for 1000s of years. Over time, even without Industrialization, Ag as practiced in most places would have done the same job as industrialization, though probably not quite as fast.
Fast Forward now here to the situation 200 years later in this game:
All the main resources are shrinking in size, quite rapidly in many areas.
In Fossil Fuel Energy Resource, the real easy sources of Coal, Oil and NG are gone, and just extracting what is left takes more energy and more technology all the time. Accessing Debt Money to do that extraction becomes more difficult as well, and credit to the end consumer to buy that energy also becomes more scarce. All together, this reults in fewer people able to afford to waste this energy, and so little by little, country by country, some folks are triaged off of the credit necessary to participate in this economy. It is most obvious in Greece right now, but it is occurring just about everywhere, even in the Core economies of Industrialized Nations of the FSoA, Germany, the UK and China. In these places you have an increasingly large underclass of people receiving Food Stamps and supplements to stay alive, but they aren’t commuting to work and aren’t buying tankloads of gasoline for their SUVs every week. Currently, out of the 320M people living in the Fascist States of America, 45M of them are on Food Stamps.
While the energy resource continues to deplete, as the second diagram shows the total Global Population continues to increase, which will continue until there is a major fracture in the total system, which seems more imminent all the time. More people all the time need the water, energy and food that the planet can provide on a daily basis. No amount of Debt Issuance can resolve a food deficit problem, in a given year the food to support the population is either there or it is not. A certain amount can be held in reserve, food storage techniques are pretty good these days, but overall the margin here is pretty small. Currently, if there were to be a major falloff in any major food producing region, within one year there would be a major deficit in available calories for the population as a whole. We are already looking at a major falloff in food production from Sunny Califonia, where the ongoing and accelerating Drought situation is likely to make produce a good deal more expensive right here in the FSoA pretty soon. This problem of drought is mirrored in many areas of Ag production of the globe right now, from India to China to South America. It is unlikely to improve anytime too soon.
While you have the problem of steadily increasing human population and steadily decreasing sources of energy, water and arable land, you ALSO have steadily increasing CO2 content in the atmosphere (exacerbating Climate Change issues) and steadily increasing areas of Desertification turning formerly productive food growing regions into deserts. There is no absolute quantification for this I am aware of, however anecdotally it is possible to track it from Syria to São Paulo, from China to India and beyond. Pretty clearly, the Earth is maxed out in converting solar energy to food, and the Human Population can only survive at current levels with close to the current levels of food available to them.
In the end, this is a very simple and straightforward Thermodynamic Problem of how much energy it takes to run the Human Population Engine. In order to survive, each Homo Sap consumes X number of calories each day in food. Because of distribution problems and diet issues with types of food consumed, you have some fat people in some places and some emaciated people in others, but in aggregate you need X calories to keep all the Homo Saps currently walking the Earth ambulatory.
The Industrial Revolution enabled Homo Sap to produce more Food Calories than he ever had before in history, by several orders of magnitude. In the aftermath of WWII, we learned how to create Ag Fertilizer directly from Oil, through the Haber process The Ammonia produced is used to make Ammonium Nitrate, useful in bombs but also useful as an Ag Fertilizer. The very same plants that made the Bombs dropped in the Fire-Bombing of Dresden were converted into making the fertilizer that spawned the “Green Revolution”.
Cheap food was produced by the truckload, and the population of Homo Saps EXPLODED over the last 70 years, from around 2.5B in 1940 to around 7B now. All those people compete for the same resources of water and food, and nearly all of them are dependent on the same monetary sytem that distributes that water and food. It’s a GLOBAL SYSTEM at this point. Few places are completely independent, even food exporting nations like the FSoA are not independent, since in order to export so much food, it imports a lot of Oil.
It’s not just the fertilizer here that enables this, it is also all the farm machinery from tractors to combines, and the whole transportation system from trucks to rail to container ships that moves all this food all over the globe, and often puts outta biz any local production of food as well. It comes in cheaper even with all the transportation than local food production, and each year thousands of small farmers commit suicide because they cannot make a living selling the food they grow.
The MSM, and even the Blogosphere on websites like Zero Hedge often paint the problems we face as simple Monetary Problems and Political Problems, Socialism vs Capitalism, Keynesiasm vs Misesanism, Gold vs. Fiat, Democracy vs Dictatorship, etc. It is none of those things. It’s a straight resource and energy problem which nobody in control will acknowledge, because there is no palatable economic solution to it. It’s not that the only solution entails giving up the Carz and the Happy Motoring lifestyle we have come to expect as a God Given right (the Amerikan lifestyle is NON-NEGOTIABLE according to Dick Cheney), it’s that the only solution is a lot of DEAD PEOPLE.
“I see Dead People”
There is no way whatsoever to engineer the death of billions of people in an equitable manner, there IS no equitable manner for such a catastrophe. Occassionally you hear talk on the internet in the collapse blogosphere of reducing population through birth control, but first off the Chinese tried that with the One Child policy over the last 30 years and it really did not work, and second even such a policy can only be implemented by the most powerful of governments. To be really effective, it requires such onerous proceedures as FORCED STERILIZATION and MANDATORY BIRTH CONTROL, and both of those are wicked difficult to implement on the grand scale in any case.
On the upside to this, the Birth Rate in many developed nations is falling, as more people who realize they simply can’t afford to have children stop having them, but that is more than made up for as people in the 3rd World countries reproduce as fast as they still are able to do so, long as they have enough food to do that anyhow. That supply of food looks like it will run short or be unaffordable for them (or both), so high birth rates and high survival rates for infants in these locations seems unlikely moving forward into the future.
The total population will diminish at some rate, from a decreasing birth rate, and increasing child mortality rate and an increasing death rate in the adult population as well. That will all come from the usual vectors, the 4 Horsemen of the Apocalypse, Famine,Pestilence, War and DEATH.
The only real questions left now are how fast this will occur, where the best & worst locations will be to be trying to keep living, what are the best strategies for surving this catastrophe, and whether anybody at all can make it through the Zero Point. Is this Extinction, or a Knockdown Event?
For the individual who realizes this is coming down the pipe, I don’t think it matters which way it actually ends up, because either way, if you want to LIVE, you are going to operate in the same way. You pick the best strategies for survival you can think up and also implement in some fashion, given the resources you personally have. You absolutely cannot depend on you Goobermint to save you in the end, since your Goobermint is quite likely to collapse even before you do, at least if you are fairly young anyhow. Either way its a sorry end, because if everybody dies, its the end of Sentience on Earth. If you or your progeny survive it, it is still a sorry end, because you are left with Survivor Guilt. It is a sure thing that if you are to survive this, somebody else must die in your place. There are just too many people on board the Spaceship Earth now, as a species we are in serious Overshoot, probably 3X to 4X minimum as of now, maybe more than that.
The Greek situation remains an important one to keep track of, because they are the first of the European Nations being kicked off the Titanic of industrial Civilization without a Lifeboat. How quickly will the situation deteriorate there, how long before they deteriorate to Civil War, how long before Contagion brings their problems to the rest of Europe?
These are questions we do not have answers for today, but they will be coming down the pipe in the not too distant future. Of one thing you can be certain here, we are NOT exceptional. This is a very straightforward problem of Thermodynamics, and it will engulf the entire population of Homo Saps currently walking the Earth. It has little to do with the political systems or economic systems we run to manage the resources. None of them can work anymore. There are too many people, too much pollution and waste and not enough resource left for this planet to bear.
Michael Snyder, June 5, 2015
Are they expecting something to happen? As you will read about below, the European Union says that any nation within the EU that does not enact “bail-in” legislation within the next two months will face legal action. The countries that are being threatened in this manner include Italy and France. If you fast forward two months from this moment, that puts us in early August. So clearly the European Union wants everything to be squared away by the end of the summer. Is there a reason for this? Are they anticipating that something really bad will happen in September or thereafter? Why such a rush?
We all remember what happened when major banks were “bailed out” during the last financial crisis. A tremendous amount of taxpayer money was given to the big banks to help prop them up so they wouldn’t fail. This greatly upset a lot of people.
Well, when the next great financial crisis hits Europe, banks are not going to get “bailed out” this time. Instead, we are going to see “bail-ins”.
So precisely what is a “bail-in”? Essentially, what happens is that wealth is transferred from the “stakeholders” in the bank to the bank itself in order to keep it solvent. That means that creditors and shareholders could potentially lose everything if a major bank in Europe fails. And if their “contributions” are not enough to save the bank, those holding private bank accounts will have to take “haircuts” just like we saw in Cyprus. In fact, the travesty that we witnessed in Cyprus is being used as a “template” for much of the new legislation that is being enacted all over Europe.
The bottom line is that not a single bank account in the European Union will ever be truly safe again.
By this time, everyone in the EU was already supposed to have enacted “bail-in” legislation, but some countries in Europe have been dragging their feet. So now the European Commission (the executive body of the European Union) is giving them a hard deadline. According to Reuters, any nation that has not passed “bail-in” legislation within two months will be subject to legal action…
The European Commission on Thursday gave France, Italy and nine other EU countries two months to adopt new EU rules on propping up failed banks or face legal action.
The rules, known as the bank recovery and resolution directive (BRRD), seek to shield taxpayers from having to bail out troubled lenders, forcing creditors and shareholders to contribute to the rescue in a process known as “bail-in”.
So which countries are being threatened?
It turns out that there are 11 of them. The following comes from Mark O’Byrne…
The article “EU regulators tell 11 countries to adopt bank bail-in rules” reported how 11 countries are under pressure from the EC and had yet “to fall in line”. The countries were Bulgaria, the Czech Republic, Lithuania, Malta, Poland, Romania, Sweden, Luxembourg, the Netherlands, France and Italy.
France and Italy are two countries who are regarded as having particularly fragile banking systems.
But why only two months to get this done?
When I was in law school, I took an entire course on European Union law. Normally, things in Europe take a very long time to get done. It is out of character for the European Commission to rush to get something like this done so quickly.
Could they be anticipating that this legislation will need to be put into use very soon?
And we also know that there has been a sustained bank run in Greece. In fact, it is being reported that 700 million euros were pulled out of Greek banks on Friday alone. Personally, I think that anyone that still has any money in Greek banks is absolutely insane. Some day in the not too distant future, Greek bank account holders are going to be in for a “haircut” just like we saw in Cyprus. The following comes from Zero Hedge…
While the Greek government believes it may have won the battle, if not the war with Europe, the reality is that every additional day in which Athens does not have a funding backstop, be it the ECB (or the BRIC bank), is a day which brings the local banking system to total collapse.
As a reminder, Greek banks already depends on the ECB for some €80.7 billion in Emergency Liquidity Assistance which was about 60% of total deposits in the Greek financial system as of April 30. In other words, they are woefully insolvent and only the day to day generosity of the ECB prevents a roughly 40% forced “bail in” deposit haircut a la Cyprus.
But of course Greece will only be just the beginning. In the end, I expect major banks to fail all over Europe as we head into the greatest financial crisis that Europe has ever seen. Bank account holders all over the continent could end up having to take “haircuts”, and that would just make the coming deflationary cycle in Europe a lot worse.
And I actually expect events in Europe to start accelerating greatly by the end of this calendar year. Apparently the top dogs in the European Union are also concerned about the immediate future, because they are rushing to get “bail-in” legislation passed in every nation in the EU by the end of the summer.
Fortunately, the United States has not moved in a similar direction – at least not yet. It is always possible that during an “emergency situation” anything can happen. We saw that in Cyprus. But for the moment, European bank accounts appear to be more vulnerable than U.S. bank accounts.
Not that any of us should have much confidence in the major banks in the United States either. Since the end of the last financial crisis they have become more reckless than ever. At this point, the six largest banks in this country collectively have 278 trillion dollars of exposure to derivatives. A day is coming when the “too big to fail” banks will actually start failing, and that will absolutely cripple our economy.
We are moving into a time of great financial instability. During such a time, one of the keys will be to not have all of your eggs in one basket. That way it will be more difficult for your wealth to be wiped out by a single event.
So what other advice would you give to people that are wondering how to deal with the coming global banking crisis?
There is even one more problem. As Neil Young famously noted, “Rust never sleeps.” Anything we build must have more energy and material constantly fed into it for as long as we wish to maintain it. That’s the Red Queen’s race. It’s the place that Tim Garrett of Utah thinks most of the energy we use goes – not to build new stuff, but just to keep the old stuff from falling apart. I’d be willing to bet that a similar proportion of the material we generate goes for the same purpose. So our conceit of “creating structure” comes with an additional hidden ecological price tag, a bill that must be paid in perpetuity. It’s the Gillette principle: buy the razor once, buy new blades forever.
The thermodynamic foundation of this enterprise is tightly connected to human social behavior by way of our evolved psychology. That linkage completes the coupling of the whole physical/genetic/psychological/behavioral/cultural edifice into a solid, persistent dissipative structure.
Over the last million or so years, the human brain appears to have evolved some qualities that are now working against us. Here are some of those qualities that are crucial to understanding how climate change and Fukushima (and by inference the rest of the Global Clusterfuck) have happened.
- We place far more importance on finding and using energy (food, thermal fuel and electricity) than on what happens to the waste products.
- We pay far more attention to concrete, immediate threats than to distant, abstract risks.
- We act immediately on threats that affect our daily lives, but spend very little energy addressing complex future risks.
- As our primary evolutionary advantage, the human brain functions mainly as a limit-removal mechanism. As a result we pay far more attention to opportunities than to consequences.
All of those behaviors had their origins in adaptations to problems we faced repeatedly over long periods of time earlier in our species’ history. According to evolutionary psychologists, these behaviors became encoded into special-purpose problem solving mental circuitry – i.e. the mechanisms that generate these behaviors are physically encoded in our brains. This physical encoding happens because it’s far more efficient and faster to have a piece of special-purpose “hardware” to solve a class of recurrent problems than to arrive at behavioral solutions from fresh algorithmic analysis every time. This worked very well through many tens of thousands of years of slowly-changing history. The difficulty it poses in a fast-changing modern environment is obvious.
It’s very hard to override this solution-generating circuitry using conscious logic. Most people tend go with the generated solution because it works most of the time – and that tendency is itself an evolutionary adaptation. Because most of the time the presented solution will be close enough for horseshoes means that conscious double-checking is generally a waste of time. Even doing the analysis to determine that the “solution” may be wrong is too hard or energy intensive for most people. So we tend not to do it. If it feels right, we usually assume it is right. Oops…
The examples of nuclear power and fossil fuels make the operation of these mechanisms very clear once you know to look for them:
- We place far more importance on finding and using the energy itself than on what happens to the waste products of CO2 and spent nuclear fuel.
- We pay far more attention to concrete, immediate threats like the loss of jobs or declining standards of living than to distant, abstract risks like climate change or the possibility of a nuclear meltdown.
- We act on threats that affect our daily lives. Only once a reactor has melted down or droughts and floods threaten our food supply does society at large pay attention and begin to act.
- Our brains function mainly as a limit-removal mechanism. As a result we pay far more attention to opportunities (“We can power civilization the modern way, by splitting atoms!”) than to consequences (“Oh, we can deal with the spent fuel later, there’s lots of time for that.”)
Humans also tend to assume that our intellect is strong enough that it can control our actions, govern the direction of our development and deal with the risks. Unfortunately, the forces that shape our behavior have a very strong genetic or “hardware” component that is difficult to recognize, let alone overcome through reason.
Adding to the dilemma is the fact that we have evolved similar special-purpose mechanisms to promote social group cohesion. These mechanisms entrain our personal behavior to conform with that of people around us, so that the group can present a united front. Objectors, malcontents and whistle-blowers are subjected to enormous social pressure to get back in the fold or risk ostracism. So people who say things like, “Perhaps we shouldn’t use every last source of energy we can, and maybe we should apply the Precautionary Principle once in a while,” are about as welcome in broader society as skunks at a picnic. They are ignored, derided, harassed, or even sanctioned through job loss or imprisonment.
I do not think that humans are generally stupid or exceptionally greedy – at least not exactly. We are living with psychological influences that are very old, and are embedded in the physical structure of our brains. The way we have evolved makes it much easier for us to go along with each other and continue expanding the human experiment than to go against social norms and practice restraint.
Does this mean that our behavior is deterministic? Perhaps not, philosophically speaking. What it does mean is that our behavior is constrained and shaped by so many physical and biological mechanisms that are outside our awareness and beyond our control, that it might as well be deterministic. If we assume that human behavior is in fact deterministic, we won’t ever go too far wrong