It's been the topic of media speculation for some time now, but it occurred to me that every industry appears to be asking the same question: "How will our industry survive peak oil?".
Airline, car, entertainment, clothing, food, all will be affected by peak oil, so each needs a contingency plan. I understand the obvious answer is "Well of course they would, and according to your (my) blog, they need to!". This is true of course, but there is a burning question...
Why?
I understand the paradigm in which we exist, namely the "global economy", and the desire, when things look likely to change, to continue that paradigm, but a serious understanding of peak oil will beg the question, "Why bother to look?"
Peak oil means that unless every aspect of our entire global economy can make the transition to an alternative fuel at the same time (almost on the same day), then the global infrastructure crumbles in days. Once the food chain grinds to a halt due to lack of transportation, so the supermarkets don't get restocked, so populations go hungry and riot very quickly. In this instance, who wants to board a plane for "pleasure"?
Who would even be thinking about buying a new car, choosing a new TV, going to the theatre, browsing that new outfit?
The basic premise of peak oil is that very very quickly, food stops being moved around, stock markets fail, and the desire to seek alternative fuel stops. Even if we had a hydrogen economy, I have yet to find a factory that runs on hydrogen or electricity that makes new parts for cars, planes or hard drives for instance.
Plastics can only be made from oil. Oil affects every single aspect of our lives as I have said many times in the blog. So the finding of a new fuel, unless we can make spare parts for all the wonderful electric or hydrogen vehicles we will be looking forward to out of hydrogen (we can't, they all depend on oil) then it's a waste of time.
Solar Panels for example.
I see the clamour for solar panels by people within the Peak Oil community, and yet this is so short sighted for those who allegedly have a deep understanding of the situation. The search for alternative fuels is an attempt to continue the paradigm that we have today, or a semblance of it. Even in the short term, the desire is not to help save humanity, but merely a perpetuation of what we are used to.
These people don;t even consider the human or natural resurces cost in the desire for these items. And I'm not just talking about solar panels here. The natural resources needed such as copper, iron, coal, silicon, lithium, these all come from poorer nations, who employ people right at the bottom of the employment chain.
There may be a pious upturned chin at the rest of the population for shopping at Tesco, or wearing Nike trainers, but without realising it, the "transition townies" are exactly the same. But they will never see it.
They will never see that their desire to install solar panels and wind turbines is exploiting the very same poor people that sew sequins on t-shirts for a well known chain store they refuse to shop in for "ethical reasons".
They will never understand that the stock of food in the cupboard pending global collapse consists of tins of fruit that has been picked by the poorest people in the world, arguably the most exploited people in the world.
So the question is... should we not accept that until we have a balance of sustainability, we should be allowing such systems (like the food chain for instance) to collapse?
Humanity of course says that no we mustn't, because that will inevitably lead to a mass die-off of people. But that's where humanity as we know it, has it wrong. That die-off is EXACTLY what's needed. An extinction of people that, if they cannot survive without the luxury of a solar panel, deserve not to be here. If, between themselves and others they cannot form a coalition or community that is determined to live free of exploitation of others, then they deserve not to be here.
So the search for alternative energy, and the dependence on technology to "fix" the paradigm we are facing is an anomaly. The fact is that even if we found the miracle fuel, our First World and its contents is built on oil and petroleum products, so even if we could run a car on water, we certainly couldn't make the spare tyres it needs to run on out of hydrogen or solar energy.
Unfortunately, this is where 90% of the Peak Oil community fails at the first hurdle. The non-lateral thinking that is needed for the transition is not a perpetuation of business as usual (such as oodles of wind turbines or solar panels), it's an understanding that alongside science, there needs to be a humanitarian balance that says, if we cannot sustain the human population at these levels, we need to instigate a cull. The cruel thing is (or perhaps for the better), the First World won't make it. But there are a billion people that do not depend on oil at all. They have never depended on electricity or oil, so they will know no difference. They are the poorest in the world (or the richest if we look at it correctly) and yet they will make it.
So let's learn one thing from this struggle for a new energy; it won;t make any difference, and my advice would be to get used to living in the dark, or learn to make candles.
Wednesday 25 August 2010
Monday 9 August 2010
Can we avoid "The Corporation"?
A recent discussion on a forum board I like to visit, raised questions regarding "Corporatocracy"; i.e the Corporation being more powerful than any government. After asking a few friends privately, just in conversation, I realised the reaction invariably was "Oh, I never use Tesco's", "I wouldn't DREAM of venturing into Primark!", " I buy all my vegetables and meat from a local farm shop".
Very laudable, and I truly believe that their hearts and minds are in the right place, however I asked the question...
"Can we avoid The Corporation?"
Firstly, let's establish a definition for a "Corporation", in the context of a global business. There are many I've found but I believe this best sums up what is perceived by most people as "The Corporation".
'A corporation is an institution that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business.'
So gong back to my friends, there are a number of Corporations we avoid, and we may have all number of reasons for doing so. I personally avoid ASDA because it is a part of the Wal*Mart Group which has been fined for a number of issues including child labour, and abuses of employees such as forcing people to work overtime, discrimination the list goes on. To quote Wal-Mart Watch executive director David Nassar who issued the following statement in response to the U.S. Department of Labor’s announcement that Wal-Mart is required to pay over $33 million in unpaid wages to current and former employees:
“Today’s announcement is just the latest in a disturbing pattern of Wal-Mart’s disregard for the law. It’s yet another example of how Wal-Mart fails to live up to its legal and moral responsibilities as the world’s largest private employer."
But can any of us avoid any corporation that doesn't have a dubious history of some sort? Before I give a few examples which I believe none of us can avoid no matter how hard we try, or how ethical we feel we are behaving, let me just say one thing.
This is not a criticism of anyone who is trying their best to make ethical decisions regarding where they spend their money. The reason I am posting this on my blog is purely as a way of perhaps assisting us all in thinking a little more laterally. I firmly believe that there is no way, if you reside and work in the Western world, or the First World (however you like to put it) you can avoid the Corporation. However by thinking a little differently, we can at least be aware of our decisions, and constantly improve on them.
The message here is simple:
Do your very best, for the situation you are in, on the money you have, for as long as you can.
That being said, I wondered how ethical I am, and I like to think I avoid what I perceive to be various Corporations that do not behave fairly, or with the best interests of the world as a whole. But there are those which I cannot avoid all of the time.
One was only today, I bought petrol from a Shell garage. I avoid Shell because for various reasons; most can be found here at Corporate Watch. Try as I might,I used Shell for the first time today in over a year. I could not avoid the Corporation.
I avoid Coca-Cola, mostly because of the Mark Thomas Report and the links to the Nazi regime during World War Two. Yes, I've seen Snopes that says this is nonsense, but if it's incorrect, then why doesn't Coca Cola take action?
I don't have anything to do with Nestlé either.
I'm not going to go on with more examples, but I realised that despite me not patronising all of these Corporations, I in fact am a bit of a hypocrite. Even this Blog is hosted by Google, who are possibly being prosecuted by the Australian Government over Privacy violations. I don;t agree with Google's policy on digitising the global book library, nor do I advocate their streetmap.
I switch on a tap in my house and gratefully drink fresh water, however I abhor the various policies of global water companies that supply my house. (See Blue Gold - World Water Wars)
I switch on a light, I'm using electricity generated by Eon who were fined for "Anti-Competitive behaviour" I may not actually pay Eon personally, but just by being connected to the National Grid, I will at some point be using electricity generated by them, albeit unknowingly.
I take medicines, I drive on roads built by construction companies, I shop at a local farm shop that probably uses Shell fuel and fertilisers to grow the vegetables I eat....
I can hear you screaming "STOP! that's taking things way too far!"
And I agree of course, but it does beg the question. Despite our best efforts, are we able to avoid the Corporations that aren't as ethical and responsible as we would like?
The answer of course is no, we can't; however we can do one thing, and that's make conscious decisions and do our very best. I firmly believe that is enough.
Very laudable, and I truly believe that their hearts and minds are in the right place, however I asked the question...
"Can we avoid The Corporation?"
Firstly, let's establish a definition for a "Corporation", in the context of a global business. There are many I've found but I believe this best sums up what is perceived by most people as "The Corporation".
'A corporation is an institution that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business.'
So gong back to my friends, there are a number of Corporations we avoid, and we may have all number of reasons for doing so. I personally avoid ASDA because it is a part of the Wal*Mart Group which has been fined for a number of issues including child labour, and abuses of employees such as forcing people to work overtime, discrimination the list goes on. To quote Wal-Mart Watch executive director David Nassar who issued the following statement in response to the U.S. Department of Labor’s announcement that Wal-Mart is required to pay over $33 million in unpaid wages to current and former employees:
“Today’s announcement is just the latest in a disturbing pattern of Wal-Mart’s disregard for the law. It’s yet another example of how Wal-Mart fails to live up to its legal and moral responsibilities as the world’s largest private employer."
But can any of us avoid any corporation that doesn't have a dubious history of some sort? Before I give a few examples which I believe none of us can avoid no matter how hard we try, or how ethical we feel we are behaving, let me just say one thing.
This is not a criticism of anyone who is trying their best to make ethical decisions regarding where they spend their money. The reason I am posting this on my blog is purely as a way of perhaps assisting us all in thinking a little more laterally. I firmly believe that there is no way, if you reside and work in the Western world, or the First World (however you like to put it) you can avoid the Corporation. However by thinking a little differently, we can at least be aware of our decisions, and constantly improve on them.
The message here is simple:
Do your very best, for the situation you are in, on the money you have, for as long as you can.
That being said, I wondered how ethical I am, and I like to think I avoid what I perceive to be various Corporations that do not behave fairly, or with the best interests of the world as a whole. But there are those which I cannot avoid all of the time.
One was only today, I bought petrol from a Shell garage. I avoid Shell because for various reasons; most can be found here at Corporate Watch. Try as I might,I used Shell for the first time today in over a year. I could not avoid the Corporation.
I avoid Coca-Cola, mostly because of the Mark Thomas Report and the links to the Nazi regime during World War Two. Yes, I've seen Snopes that says this is nonsense, but if it's incorrect, then why doesn't Coca Cola take action?
I don't have anything to do with Nestlé either.
I'm not going to go on with more examples, but I realised that despite me not patronising all of these Corporations, I in fact am a bit of a hypocrite. Even this Blog is hosted by Google, who are possibly being prosecuted by the Australian Government over Privacy violations. I don;t agree with Google's policy on digitising the global book library, nor do I advocate their streetmap.
I switch on a tap in my house and gratefully drink fresh water, however I abhor the various policies of global water companies that supply my house. (See Blue Gold - World Water Wars)
I switch on a light, I'm using electricity generated by Eon who were fined for "Anti-Competitive behaviour" I may not actually pay Eon personally, but just by being connected to the National Grid, I will at some point be using electricity generated by them, albeit unknowingly.
I take medicines, I drive on roads built by construction companies, I shop at a local farm shop that probably uses Shell fuel and fertilisers to grow the vegetables I eat....
I can hear you screaming "STOP! that's taking things way too far!"
And I agree of course, but it does beg the question. Despite our best efforts, are we able to avoid the Corporations that aren't as ethical and responsible as we would like?
The answer of course is no, we can't; however we can do one thing, and that's make conscious decisions and do our very best. I firmly believe that is enough.
Current reading...
For those that are interested, (and no I am not linking to Amazon with these to earn money) I recommend:
Just finished
Tescopoly - by Andrew Simms.
Not just a "Tesco Bashing Fest" although that's not such a bad thing, this is about the corporate food chain, the alleged abuses of planning rules, and touches on the effects of Peak Oil and Climate Change on the distribution of food and goods and the creation of CO2 for some pointless plastic that we all seem to "need". (We don't, we're just told we do). Great book, but if you are already well versed on corporate affairs and plutocracy, then it's probably only useful as a reference when seeking out stats for articles etc. One criticism, which is a personal opinion; I think there could have been more criticism of us, the public, because we demand this stuff. A direction to the reader to understand there are no "rights to choice", and to reject 20 different brands of tomato soup. As a sidenote, I haven't shopped at Tesco's since October 2006, although I do go to Sainsbury's once per month. However after reading this book, Tesco is certainly the bad boy on the block in my opinion.
8/10
Current reading:
The Secret History of the Amercan Empire - John Perkins.
So far so good, up to page 60 and this is very engaging. Perkins is (by his own definition) an Economic Hit-Man (EHM). He was employed by the US Government to meet with foreign government officials to "encourage" them to assist US corporations to extract natural resources amongst other things, including oil, copper, minerals etc. Countries would be encouraged to take huge loans from the IMF and World Bank at interest which could be used to build infrastructure such as hospitals, schools, transport systems etc. However, most of this money, according to Perkins, ends up in corrupt officials pockets, who in return allow various corporations access to the wealth of resources, including cheap labour.
Will do an update of this when I've finished the book.
Next reading:
The Ascent of Money: A Financial History of the World - Niall Ferguson.
Saw Professor Fergusons wonderful series on Channel 4, looking forward to reading this book soon.
Just finished
Tescopoly - by Andrew Simms.
Not just a "Tesco Bashing Fest" although that's not such a bad thing, this is about the corporate food chain, the alleged abuses of planning rules, and touches on the effects of Peak Oil and Climate Change on the distribution of food and goods and the creation of CO2 for some pointless plastic that we all seem to "need". (We don't, we're just told we do). Great book, but if you are already well versed on corporate affairs and plutocracy, then it's probably only useful as a reference when seeking out stats for articles etc. One criticism, which is a personal opinion; I think there could have been more criticism of us, the public, because we demand this stuff. A direction to the reader to understand there are no "rights to choice", and to reject 20 different brands of tomato soup. As a sidenote, I haven't shopped at Tesco's since October 2006, although I do go to Sainsbury's once per month. However after reading this book, Tesco is certainly the bad boy on the block in my opinion.
8/10
Current reading:
The Secret History of the Amercan Empire - John Perkins.
So far so good, up to page 60 and this is very engaging. Perkins is (by his own definition) an Economic Hit-Man (EHM). He was employed by the US Government to meet with foreign government officials to "encourage" them to assist US corporations to extract natural resources amongst other things, including oil, copper, minerals etc. Countries would be encouraged to take huge loans from the IMF and World Bank at interest which could be used to build infrastructure such as hospitals, schools, transport systems etc. However, most of this money, according to Perkins, ends up in corrupt officials pockets, who in return allow various corporations access to the wealth of resources, including cheap labour.
Will do an update of this when I've finished the book.
Next reading:
The Ascent of Money: A Financial History of the World - Niall Ferguson.
Saw Professor Fergusons wonderful series on Channel 4, looking forward to reading this book soon.
Sunday 8 August 2010
The elephant on the farm? Wheat prices.
I'm an advocate of the problems facing farming over the coming years, in particular, the depletion of fossil fuels which will cause severe disruptions to supply, mainly because of natural gas being essential for fertilisers, and the drying of corn prior to milling. There is also the problem with distribution being more expensive because of higher fuel costs, as well as climate change, GM crops (Monsanto patenting seeds), and of course expensive labour.
However, the elephant on the farm so to speak, is the current price of wheat which has almost doubled in one month. This may be due to speculation, or possibly the decision by Russia to halt all wheat exports, but whatever the cause, we are facing a very real problem within the next few months. Corn touches practically all foodstuffs, in the same way fossil fuels do. Pick up almost any food and it will contain corn, or a corn derived product. Including beer and lager of all things!!
Wheat prices: 26/6/2010 CLOSED: $456 then reaching a high of almost $800 on August 5th.
This could be the rank outsider (or should I say Rank Hovis outsider!) coming from the rear of the pack to challenge oil as the main problem facing us in the short term. Linked? Yes possibly, in fact certainly, but oil and wheat have always been connected, but only recently we've seen wheat absolutely stride ahead.
Not sure what to do for the best, but my guess will be that prices will fall back a bit, but that doesn't change the fact that these prices are "futures", so the damage has already been done, we will see higher food prices very soon which will then hopefully fall again when this episode is over.
However, the elephant on the farm so to speak, is the current price of wheat which has almost doubled in one month. This may be due to speculation, or possibly the decision by Russia to halt all wheat exports, but whatever the cause, we are facing a very real problem within the next few months. Corn touches practically all foodstuffs, in the same way fossil fuels do. Pick up almost any food and it will contain corn, or a corn derived product. Including beer and lager of all things!!
Wheat prices: 26/6/2010 CLOSED: $456 then reaching a high of almost $800 on August 5th.
This could be the rank outsider (or should I say Rank Hovis outsider!) coming from the rear of the pack to challenge oil as the main problem facing us in the short term. Linked? Yes possibly, in fact certainly, but oil and wheat have always been connected, but only recently we've seen wheat absolutely stride ahead.
Not sure what to do for the best, but my guess will be that prices will fall back a bit, but that doesn't change the fact that these prices are "futures", so the damage has already been done, we will see higher food prices very soon which will then hopefully fall again when this episode is over.
Saturday 7 August 2010
Don't panic Mr. Mainwaring!
Recent Gold Price Falls.
I had an email from a concerned reader of my blog whether the recent fall in gold prices is the "sell-off" that I have predicted recently. I can assure you that it's not. The sell-off to manipulate the gold price will be fast and of cliff-edge proportions.
It has to be said that this reader was in the UK, so that explains why the recent fall has occurred. It's not the price of gold that has fallen (although it has very slightly) it's the UK pound strengthening against the dollar.
Let's do some simplistic figures. These are not indicative of current trends, purely easy to understand examples.
First thing to remember, is like almost all commodities on the global markets, gold is traded in US Dollars. (USD).
Let's assume on 1st August 2010 the USD and GBP exchange rate is: 1 GBP = 1.5USD
Also, on this date, 1 ounce of gold equals US$1000
Therefore, on the UK market, 1 ounce of gold is UK£750
Now let's go forward one week.
On 8th August 2010, the exchange rate has changed and it is now 1 GBP = 2 USD (i.e the pound has strengthened against the dollar).
On this date, i ounce of gold, is still US$1000
However, because of the different exchange rate, the cost of 1 ounce in the UK is now only £500.
The perception is that the gold price has fallen (in the UK), however it has remained the same price on the open market. Of course if you hold gold, then it looks a lot worse, but do remember:
The actual gold is still exactly the same, but it is being compared to a fiat currency, so do remember this when you see prices quoted in currencies other than USD, to look deeper.
I hope that gives you an alternative insight into holding gold.
Kieran.
I had an email from a concerned reader of my blog whether the recent fall in gold prices is the "sell-off" that I have predicted recently. I can assure you that it's not. The sell-off to manipulate the gold price will be fast and of cliff-edge proportions.
It has to be said that this reader was in the UK, so that explains why the recent fall has occurred. It's not the price of gold that has fallen (although it has very slightly) it's the UK pound strengthening against the dollar.
Let's do some simplistic figures. These are not indicative of current trends, purely easy to understand examples.
First thing to remember, is like almost all commodities on the global markets, gold is traded in US Dollars. (USD).
Let's assume on 1st August 2010 the USD and GBP exchange rate is: 1 GBP = 1.5USD
Also, on this date, 1 ounce of gold equals US$1000
Therefore, on the UK market, 1 ounce of gold is UK£750
Now let's go forward one week.
On 8th August 2010, the exchange rate has changed and it is now 1 GBP = 2 USD (i.e the pound has strengthened against the dollar).
On this date, i ounce of gold, is still US$1000
However, because of the different exchange rate, the cost of 1 ounce in the UK is now only £500.
The perception is that the gold price has fallen (in the UK), however it has remained the same price on the open market. Of course if you hold gold, then it looks a lot worse, but do remember:
The actual gold is still exactly the same, but it is being compared to a fiat currency, so do remember this when you see prices quoted in currencies other than USD, to look deeper.
I hope that gives you an alternative insight into holding gold.
Kieran.
Friday 6 August 2010
Spun out of control.
I have mentioned many times before in both forum posts, articles and this blog, that there was definitely a consensus between the media, government and financial circles to deliver good news, even when the bad news is so dire, they search for a shred of positivity to deflect the heat. I quote from a previous post of mine here on 23rd July:
"...whilst this is conjecture and my promise is to give fair warning of such, have you noticed how there is no "bad news"? When we had the collapse of 2008, Michael Howard MP complained to the BBC that Robert Peston (Bongo Bob - the drum of the city as I call him), shouldn't have reported so quickly causing the markets to suffer even more.
Even now, when reading the BBC and Bloomberg sites, they're scattered with good news, and yet, when I read further away from the mainstream, I still see some very worrying trends, especially in the US housing market."
So why this post?
Well, today it has been announced that the US has shed 131,000 jobs. No glossing over the facts from BusinessInsider.com, MarketWatch.com, EuroInvestor.com, even the BBC tells it like it is (well, it's not the UK directly is it now).
However, let's look at Bloomberg. The headline and first few sentences say:
Come on Bloomberg... you need to do better than that. Your core audience is investor driven and they'll soon see through the spin and move elsewhere. To everyone else that watches the financial news closely, it shows we need to diversify our news, and distill the truth from as much information as possible.
"...whilst this is conjecture and my promise is to give fair warning of such, have you noticed how there is no "bad news"? When we had the collapse of 2008, Michael Howard MP complained to the BBC that Robert Peston (Bongo Bob - the drum of the city as I call him), shouldn't have reported so quickly causing the markets to suffer even more.
Even now, when reading the BBC and Bloomberg sites, they're scattered with good news, and yet, when I read further away from the mainstream, I still see some very worrying trends, especially in the US housing market."
So why this post?
Well, today it has been announced that the US has shed 131,000 jobs. No glossing over the facts from BusinessInsider.com, MarketWatch.com, EuroInvestor.com, even the BBC tells it like it is (well, it's not the UK directly is it now).
However, let's look at Bloomberg. The headline and first few sentences say:
U.S. Companies Add 71,000 Jobs; Unemployment at 9.5%
Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.
Private payrolls that exclude government agencies rose by 71,000 after a June gain of 31,000 that was smaller than previously reported, Labor Department figures in Washington showed today. Economists projected a 90,000 July increase, according to the median estimate in a Bloomberg News survey.Come on Bloomberg... you need to do better than that. Your core audience is investor driven and they'll soon see through the spin and move elsewhere. To everyone else that watches the financial news closely, it shows we need to diversify our news, and distill the truth from as much information as possible.
Monday 26 July 2010
Clash of the Titans.
Opinion
Whether you subscribe to conspiracy theories or not, it has to be said that the current financial crisis is certainly gearing up to be a Clash of the Titans. Could it be possible that all this was predicted by those in power in Europe many years ago, and so they decided to create a Super State to be in contention?
Peak oil, climate change, water and food shortages aside, the Bilderberg group met for the first time in 1954, and a European State was conceived. Ever since then it has slowly been crafted and we have today a group of Nations acting as one.
Is it possible that all those years ago, those that conceived the Euro Zone could predict that the USA and China were destined to be the world's financial super-powers, and that Europe needed to go forward as one in order to compete?
I believe it was, and we now see a Clash of the Titans as never before. If one takes a look at each crisis that occurs, it's like a world war. Each State, Europe, China and the US, is playing politics and driving the others into potential depression almost on a weekly basis. The Chinese with their pontifications of not letting the Yuan show it's true value, the Europeans with "Stress tests", and of course the US with the Federal Reserve constantly printing money and asserting it's muscle around the globe for resources. None of these are exclusive to any one State, in fact, they are all doing it in one way or another, but it has to be said, week by week, we get new data which put's one ahead of the other.
Of course, peak oil, water, food, climate, is a great leveller.
Those that have been left behind and having to play catch-up are catching up fast. The other BRIC countries especially, are speeding up the inside with the velocity of a bullet, determined not to be left behind thanks to the influence of the Chinese in their ranks. And of course, Russia supplies gas, so they have, in my opinion, the ultimate upper hand. Regardless of who uses the energy, the ripple effect means that even the US who don't get gas from Russia are dependent on their gas.
So we see a constant sprint race between these countries, and it's gearing up to be an economic war. Not a single shell will be fired but there will be one winner. And like corporations, they amalgamate in order to be stronger, so the smaller countries are siding up to those that they believe will be the winner in the end.
The losers of course are the people, no one can deny that without the worker termites keeping the mound running, the whole thing collapses. Only time will tell when that will be, but rest assured, it IS coming.
Kieran.
Whether you subscribe to conspiracy theories or not, it has to be said that the current financial crisis is certainly gearing up to be a Clash of the Titans. Could it be possible that all this was predicted by those in power in Europe many years ago, and so they decided to create a Super State to be in contention?
Peak oil, climate change, water and food shortages aside, the Bilderberg group met for the first time in 1954, and a European State was conceived. Ever since then it has slowly been crafted and we have today a group of Nations acting as one.
Is it possible that all those years ago, those that conceived the Euro Zone could predict that the USA and China were destined to be the world's financial super-powers, and that Europe needed to go forward as one in order to compete?
I believe it was, and we now see a Clash of the Titans as never before. If one takes a look at each crisis that occurs, it's like a world war. Each State, Europe, China and the US, is playing politics and driving the others into potential depression almost on a weekly basis. The Chinese with their pontifications of not letting the Yuan show it's true value, the Europeans with "Stress tests", and of course the US with the Federal Reserve constantly printing money and asserting it's muscle around the globe for resources. None of these are exclusive to any one State, in fact, they are all doing it in one way or another, but it has to be said, week by week, we get new data which put's one ahead of the other.
Of course, peak oil, water, food, climate, is a great leveller.
Those that have been left behind and having to play catch-up are catching up fast. The other BRIC countries especially, are speeding up the inside with the velocity of a bullet, determined not to be left behind thanks to the influence of the Chinese in their ranks. And of course, Russia supplies gas, so they have, in my opinion, the ultimate upper hand. Regardless of who uses the energy, the ripple effect means that even the US who don't get gas from Russia are dependent on their gas.
So we see a constant sprint race between these countries, and it's gearing up to be an economic war. Not a single shell will be fired but there will be one winner. And like corporations, they amalgamate in order to be stronger, so the smaller countries are siding up to those that they believe will be the winner in the end.
The losers of course are the people, no one can deny that without the worker termites keeping the mound running, the whole thing collapses. Only time will tell when that will be, but rest assured, it IS coming.
Kieran.
Friday 23 July 2010
EU banks stress test? Shock surprise? Not on your Nelly!
A very brief post today, we are awaiting the results of a "European Banks Stress Test".
Even before the results are released (and it's 8:30 am UK time), I am doubtful about their authenticity. Let's not forget they are two weeks overdue. The tests were completed a while ago, but there were "delays", in releasing the results. It has to be said that no matter what the tests said about the banks, there is absolutely no room for manoevre for the EU to say anything other than "everything is fine". I've no doubt there has to be a few minor Spanish "Caja's" that will be facing intense scrutiny, but anything other than that (i.e a major financial institution in trouble) and that could trigger a complete collapse.
So in anticipation of the results, and the fact that there has been plenty of time to "sex-up" the report, leaves me in little doubt that there will be no surprises today. Overall, it is my gut feeling that the banks are still struggling for clean air, and so those that are aware of how figures are now being massaged to tell share holders and investors what they want to hear, will still be advised to exercise caution. Only today I read that Dell, the computer manufacturer (and I quote from the BBC): "Dell has agreed to pay $100m to settle charges that the computer maker used accounting fraud to make it appear it was meeting analysts' profit forecasts."
There is no way any report is going to say anything other than "all is wonderful". I have a gut feeling that Ben Bernanke was a test run for market confidence recently when he said that the US economy was "unusually uncertain". This sent markets tumbling, so on that basis, the EU now knows that any market confidence is quickly eradicated with bad news.
So no bad news today... and if I'm wrong, I'll leave this here anyway.
Of course, there may really be no bad news, but going by what I'm reading, and how various banks are still conducting themselves, I don't believe that for a moment, sorry. I predict confidently that barring another huge "quantitative easing" program, and more bail-outs, we will be in yet another recession very soon.
Finally, whilst this is conjecture and my promise is to give fair warning of such, have you noticed how there is no "bad news"? When we had the collapse of 2008, Michael Howard MP complained to the BBC that Robert Peston (Bongo Bob - the drum of the city as I call him), shouldn't have reported so quickly causing the markets to suffer even more.
Even now, when reading the BBC and Bloomberg sites, it's scattered with good news, and yet, when I read further away from the mainstream, I still see some very worrying trends, especially in the US housing market.
Here is the Baltic Dry Index which is an indicator of good travelling around the world by sea. Reading this would you take comfort in the global economic recovery?
Baltic Dry Index
And this from JP Morgan is sobering.
It seems the phrase "No news is good news" has taken a new twist if it's not even being reported.
UPDATE Saturday 24th July 2010
Well we have the results and they have certainly been massaged as far as possible to show positivity, but, it has to be said, even with all that manipulation, they still don't look good.
I'm amazed how investors put up with even the most basic manipulation, the release of this data, after markets close on Friday afternoons. I know it's obvious, but that gives everyone the weekend to forget about the data and by Monday, they're chomping at the bit to buy up those cheap stocks.
As for the actual manipulation, it's appalling that we just can't seem to get any straight answers. Let's not forget, these ministers, politicians, civil servants are paid by us the general tax payers, and yet even now, after all what has happened, they are still messing around with the numbers. The most obvious is only accounting for sovereign debt.
I'm not going to critique in depth because The Daily Telegraph does a much better job here.
About the only decent thing to come out of these tests is that they were actually completed in some harmony by all 27 states. However, the opaqueness of the outcome doesn't inspire confidence at all, and my gut feeling is this was purely a way of all banks getting a gauge on each other.
So to summarise, these tests were only for the current sovereign debt held by the banks and not for the debt being held until maturity. The only conclusion is that this debt is so toxic, it doesn't bear contemplation... otherwise, why not include it?
Even before the results are released (and it's 8:30 am UK time), I am doubtful about their authenticity. Let's not forget they are two weeks overdue. The tests were completed a while ago, but there were "delays", in releasing the results. It has to be said that no matter what the tests said about the banks, there is absolutely no room for manoevre for the EU to say anything other than "everything is fine". I've no doubt there has to be a few minor Spanish "Caja's" that will be facing intense scrutiny, but anything other than that (i.e a major financial institution in trouble) and that could trigger a complete collapse.
So in anticipation of the results, and the fact that there has been plenty of time to "sex-up" the report, leaves me in little doubt that there will be no surprises today. Overall, it is my gut feeling that the banks are still struggling for clean air, and so those that are aware of how figures are now being massaged to tell share holders and investors what they want to hear, will still be advised to exercise caution. Only today I read that Dell, the computer manufacturer (and I quote from the BBC): "Dell has agreed to pay $100m to settle charges that the computer maker used accounting fraud to make it appear it was meeting analysts' profit forecasts."
There is no way any report is going to say anything other than "all is wonderful". I have a gut feeling that Ben Bernanke was a test run for market confidence recently when he said that the US economy was "unusually uncertain". This sent markets tumbling, so on that basis, the EU now knows that any market confidence is quickly eradicated with bad news.
So no bad news today... and if I'm wrong, I'll leave this here anyway.
Of course, there may really be no bad news, but going by what I'm reading, and how various banks are still conducting themselves, I don't believe that for a moment, sorry. I predict confidently that barring another huge "quantitative easing" program, and more bail-outs, we will be in yet another recession very soon.
Finally, whilst this is conjecture and my promise is to give fair warning of such, have you noticed how there is no "bad news"? When we had the collapse of 2008, Michael Howard MP complained to the BBC that Robert Peston (Bongo Bob - the drum of the city as I call him), shouldn't have reported so quickly causing the markets to suffer even more.
Even now, when reading the BBC and Bloomberg sites, it's scattered with good news, and yet, when I read further away from the mainstream, I still see some very worrying trends, especially in the US housing market.
Here is the Baltic Dry Index which is an indicator of good travelling around the world by sea. Reading this would you take comfort in the global economic recovery?
Baltic Dry Index
And this from JP Morgan is sobering.
It seems the phrase "No news is good news" has taken a new twist if it's not even being reported.
UPDATE Saturday 24th July 2010
Well we have the results and they have certainly been massaged as far as possible to show positivity, but, it has to be said, even with all that manipulation, they still don't look good.
I'm amazed how investors put up with even the most basic manipulation, the release of this data, after markets close on Friday afternoons. I know it's obvious, but that gives everyone the weekend to forget about the data and by Monday, they're chomping at the bit to buy up those cheap stocks.
As for the actual manipulation, it's appalling that we just can't seem to get any straight answers. Let's not forget, these ministers, politicians, civil servants are paid by us the general tax payers, and yet even now, after all what has happened, they are still messing around with the numbers. The most obvious is only accounting for sovereign debt.
I'm not going to critique in depth because The Daily Telegraph does a much better job here.
About the only decent thing to come out of these tests is that they were actually completed in some harmony by all 27 states. However, the opaqueness of the outcome doesn't inspire confidence at all, and my gut feeling is this was purely a way of all banks getting a gauge on each other.
So to summarise, these tests were only for the current sovereign debt held by the banks and not for the debt being held until maturity. The only conclusion is that this debt is so toxic, it doesn't bear contemplation... otherwise, why not include it?
Wednesday 14 July 2010
Mass confusion
I read an article recently where the writer was insisting that "peak oil" was pure fantasy and that peak oil theorists (such as me) were only casting doubt and confusion which is hindering a potential economic recovery.
Whilst I do believe that public perception of pretty much anything, from climate change to water shortages has a huge influence, it has to be said, that questioning any theory is imperative. Not only to gain more knowledge and the truth as it were, but also to continue the debate and keep it at the top of the agenda when it comes to potential policy making at Government level.
However, we have to beware of confusion.
Confusion within the peak oil theory is wide ranging, but the most obvious is that of "oil running out". No peak oil proponent worth their salt would ever say that oil is "running out" that would be complete nonsense. Aside from anything else, oil we use today was created millions of years ago, and it is still being created somewhere deep underground as we speak, so it will always be around. We could never extract every single drop that would be impossible. It would be like trying to get that very last drop of cola from the bottom of a cup; no matter how much you suck, there will always be a bit left.
Confusion also exists when some people think of oil. The majority of us if asked about how we use oil, we would say for our cars. This is understandable as it's our most direct contact with oil, and it's how most people think, however let's get this into perspective.
Oil is involved in every single aspect of our everyday lives if you live in the "developed, "first" or "Western" world. The shirt on your back, to the paint on your walls, to the food in your belly, if you look around as you read this, you will not see a single thing that at some point hasn't been processed in some way or created by oil.
Even the water from the tap gets there via pumps run on electricity, created at coal power stations, with coal mined, processed and delivered by oil. The floor beneath your feet whether wood, concrete, tiles etc has been processed by oil.
So, to get back to our journalist friend, there is a confusion that oil affects us directly, only if we put it in our cars, when the truth is, that oil is involved in every aspect of everything.
The end of oil age is not the end of oil, but the end of "cheap oil". If oil becomes rare, and more expensive to extract, then the cost of it will rise. By how much no-one really knows, but as a simple example, think back to those Christmas shopping days when rare toys that every child wants are being sold at extortionate prices. When any supplier has a product that everyone wants, the price goes up. The thing with oil is that unlike the child's toy, we cannot survive without it. With expensive oil, comes expensive lorry trips, which means that costs have to be borne by the food on the supermarket shelf. How far away is the day when the loaf you buy costs more to ship to the store, than the loaf itself?
Well actually the answer to this is even more painful. Not only would it be more expensive to ship to the supermarket, but it would also be more expensive to grow, process and then ship. In fact, let's take a loaf of bread, and see how much it depends on oil before we finally have it in our belly.
For the purpose of simplicity, we'll avoid the other ingredients such as yeast, water, salt etc, and concentrate on the basics; the corn.
We plough the field > oil based tractor
We plant the corn > oil based tractor
We water the seed> oil based or electricity powered pumps
We fertilise the corn > oil based tractor/natural gas based fertiliser
We reap the corn > oil based combine
We transport the corn to silo's > oil based lorry
We dry the corn in silo's > Oil/gas based heaters
We ship the corn to a mill > oil based lorries
We turn corn into flour > oil/electric mill
We bag the flour, then ship it to bakery > oil based lorry
We bake the bread > oil/gas/electric machinery/ovens
We package the bread > oil based plastic bags
We load onto pallets, then onto lorries > oil/electric based forklifts
We ship to wholesaler > oil based lorry OR
We ship to straight to supermarket > oil based lorry
Unloaded by hand and stacked on the shelves > no oil energy, just human energy.
Consumer arrives at store > oil based vehicle (usually car/bus/train)
Bread purchased, packed in plastic bag (usually) > oil based plastic bags
Consumer journey's home > oil based vehicle (usually car/bus/train)
Consumer eats bread.
Is that the end? Unfortunately not.
Customer throws away plastic bag
Refuse vehicle collects bag > oil based vehicle
Tips refuse into landfill
Landfill vehicles move refuse around > oil based vehicle
Landfill finally full, covered in topsoil > oil based vehicle
Remove cheap oil out of that process and you have an extremely expensive loaf of bread. Take oil out of ALL of the process and that bread is almost priceless. The reason for this is because the processes still need to be completed, so the job will have to be done by human energy and that is more expensive than any other energy we have at our disposal.
To make this point, we only have to look at the initial step in the process, the ploughing and sowing of the seed. To grow the acreage of corn that we need today would take thousands of human beings using animals, and all that would take wages; billions of dollars worth!
As a statistic, a single barrel of oil (approx. $70 @ 14/7/10) contains the equivalent of 21,000 man hours of energy. That means that for human energy to compete with oil energy, human beings would need to work for $0.003 per hour. That's a third of a cent per hour!
I do hope you begin to understand the value of cheap oil and how we have no chance of ever matching it.
The problem of course, when cheap oil is in the past, is twofold. Firstly, if you have a barrel of expensive, hard to get oil, do you grow corn for food, or make plastic pumpkins for hallow e'en?
Secondly, how do you allocate that cheap oil? Is it right that some will starve because of higher food prices, and yet a celebrity can still buy a $30,000 handbag which has been made and shipped from China?
Any sensible reader will understand that the only losers will be those at the bottom end of the social spectrum, this will never change, despite all the will of the world. The people at the bottom will suffer more and more as the value of food increases. In fact, as time goes on, those with generous middle incomes will also join the poor in the struggle for food, there can be no doubt about that. The higher the cost, the more people will be in food poverty.
So the journalist I mentioned at the beginning of this article needs to think very carefully about what they are saying. Even a very slight decrease in the amount of oil we extract have will affect the prices of the most basic of goods, not just the fuel at the forecourt. This is a very short sighted view and despite being popular (because the writer is telling people what they want to hear; that everything is fine and the sky isn't falling), it is also patronising.
The question you need to ask is always the same:
Are we producing enough oil to meet demand?
At the moment, it is possible that we are, but there are a number of official institutions that are beginning to publish data suggesting we aren't or we won't in the very near future:
Joint Operating Environment (US Military review on energy security)
OPEC: Peak Oil Is Near.
Peak Oil will hinder world's development
International Energy Agency (IEA) Supplies are running out fast.
UK Official Parliamentary Panel on Peak Oil
I hope that gives a good perspective on how important cheap oil is to our Western way of life. It has to be said that over 1 billion people on the planet live as they did before the age of oil, so oil to them has never been and probably won't be an issue. Estimates on world population also suggest that there has been 115 billion people on Earth in it's entire history. This is an amazing statistic because if correct, that means that 6% of the entire human population of the planet is still alive today!
Of course as population increases, the need for our bread increases too, so we will need more and more cheap oil in the future.
Best regards.
Kieran.
Whilst I do believe that public perception of pretty much anything, from climate change to water shortages has a huge influence, it has to be said, that questioning any theory is imperative. Not only to gain more knowledge and the truth as it were, but also to continue the debate and keep it at the top of the agenda when it comes to potential policy making at Government level.
However, we have to beware of confusion.
Confusion within the peak oil theory is wide ranging, but the most obvious is that of "oil running out". No peak oil proponent worth their salt would ever say that oil is "running out" that would be complete nonsense. Aside from anything else, oil we use today was created millions of years ago, and it is still being created somewhere deep underground as we speak, so it will always be around. We could never extract every single drop that would be impossible. It would be like trying to get that very last drop of cola from the bottom of a cup; no matter how much you suck, there will always be a bit left.
Confusion also exists when some people think of oil. The majority of us if asked about how we use oil, we would say for our cars. This is understandable as it's our most direct contact with oil, and it's how most people think, however let's get this into perspective.
Oil is involved in every single aspect of our everyday lives if you live in the "developed, "first" or "Western" world. The shirt on your back, to the paint on your walls, to the food in your belly, if you look around as you read this, you will not see a single thing that at some point hasn't been processed in some way or created by oil.
Even the water from the tap gets there via pumps run on electricity, created at coal power stations, with coal mined, processed and delivered by oil. The floor beneath your feet whether wood, concrete, tiles etc has been processed by oil.
So, to get back to our journalist friend, there is a confusion that oil affects us directly, only if we put it in our cars, when the truth is, that oil is involved in every aspect of everything.
The end of oil age is not the end of oil, but the end of "cheap oil". If oil becomes rare, and more expensive to extract, then the cost of it will rise. By how much no-one really knows, but as a simple example, think back to those Christmas shopping days when rare toys that every child wants are being sold at extortionate prices. When any supplier has a product that everyone wants, the price goes up. The thing with oil is that unlike the child's toy, we cannot survive without it. With expensive oil, comes expensive lorry trips, which means that costs have to be borne by the food on the supermarket shelf. How far away is the day when the loaf you buy costs more to ship to the store, than the loaf itself?
Well actually the answer to this is even more painful. Not only would it be more expensive to ship to the supermarket, but it would also be more expensive to grow, process and then ship. In fact, let's take a loaf of bread, and see how much it depends on oil before we finally have it in our belly.
For the purpose of simplicity, we'll avoid the other ingredients such as yeast, water, salt etc, and concentrate on the basics; the corn.
We plough the field > oil based tractor
We plant the corn > oil based tractor
We water the seed> oil based or electricity powered pumps
We fertilise the corn > oil based tractor/natural gas based fertiliser
We reap the corn > oil based combine
We transport the corn to silo's > oil based lorry
We dry the corn in silo's > Oil/gas based heaters
We ship the corn to a mill > oil based lorries
We turn corn into flour > oil/electric mill
We bag the flour, then ship it to bakery > oil based lorry
We bake the bread > oil/gas/electric machinery/ovens
We package the bread > oil based plastic bags
We load onto pallets, then onto lorries > oil/electric based forklifts
We ship to wholesaler > oil based lorry OR
We ship to straight to supermarket > oil based lorry
Unloaded by hand and stacked on the shelves > no oil energy, just human energy.
Consumer arrives at store > oil based vehicle (usually car/bus/train)
Bread purchased, packed in plastic bag (usually) > oil based plastic bags
Consumer journey's home > oil based vehicle (usually car/bus/train)
Consumer eats bread.
Is that the end? Unfortunately not.
Customer throws away plastic bag
Refuse vehicle collects bag > oil based vehicle
Tips refuse into landfill
Landfill vehicles move refuse around > oil based vehicle
Landfill finally full, covered in topsoil > oil based vehicle
Remove cheap oil out of that process and you have an extremely expensive loaf of bread. Take oil out of ALL of the process and that bread is almost priceless. The reason for this is because the processes still need to be completed, so the job will have to be done by human energy and that is more expensive than any other energy we have at our disposal.
To make this point, we only have to look at the initial step in the process, the ploughing and sowing of the seed. To grow the acreage of corn that we need today would take thousands of human beings using animals, and all that would take wages; billions of dollars worth!
As a statistic, a single barrel of oil (approx. $70 @ 14/7/10) contains the equivalent of 21,000 man hours of energy. That means that for human energy to compete with oil energy, human beings would need to work for $0.003 per hour. That's a third of a cent per hour!
I do hope you begin to understand the value of cheap oil and how we have no chance of ever matching it.
The problem of course, when cheap oil is in the past, is twofold. Firstly, if you have a barrel of expensive, hard to get oil, do you grow corn for food, or make plastic pumpkins for hallow e'en?
Secondly, how do you allocate that cheap oil? Is it right that some will starve because of higher food prices, and yet a celebrity can still buy a $30,000 handbag which has been made and shipped from China?
Any sensible reader will understand that the only losers will be those at the bottom end of the social spectrum, this will never change, despite all the will of the world. The people at the bottom will suffer more and more as the value of food increases. In fact, as time goes on, those with generous middle incomes will also join the poor in the struggle for food, there can be no doubt about that. The higher the cost, the more people will be in food poverty.
So the journalist I mentioned at the beginning of this article needs to think very carefully about what they are saying. Even a very slight decrease in the amount of oil we extract have will affect the prices of the most basic of goods, not just the fuel at the forecourt. This is a very short sighted view and despite being popular (because the writer is telling people what they want to hear; that everything is fine and the sky isn't falling), it is also patronising.
The question you need to ask is always the same:
Are we producing enough oil to meet demand?
At the moment, it is possible that we are, but there are a number of official institutions that are beginning to publish data suggesting we aren't or we won't in the very near future:
Joint Operating Environment (US Military review on energy security)
OPEC: Peak Oil Is Near.
Peak Oil will hinder world's development
International Energy Agency (IEA) Supplies are running out fast.
UK Official Parliamentary Panel on Peak Oil
I hope that gives a good perspective on how important cheap oil is to our Western way of life. It has to be said that over 1 billion people on the planet live as they did before the age of oil, so oil to them has never been and probably won't be an issue. Estimates on world population also suggest that there has been 115 billion people on Earth in it's entire history. This is an amazing statistic because if correct, that means that 6% of the entire human population of the planet is still alive today!
Of course as population increases, the need for our bread increases too, so we will need more and more cheap oil in the future.
Best regards.
Kieran.
Wednesday 7 July 2010
Exponential growth.
"Exponential Growth"; a concept human beings will never appreciate nor fully understand. It is the process of accumulating very rapid growth in a short period of time, for instance:
2 x 2 = 4
However a simple calculation such as 2 x 2 x 2 x 2 x 2 x 2 = 64
We can see how by multiplying such small numbers together, we soon rack up some very big numbers indeed.
Here's another example. Just supposing we have a bank account that pays 5% interest per year.
We invest £100.
At the end of year one we have our original £100 + £5 interest giving us a balance of £105
Year two we take the £105 balance then add 5% interest (£5.25) which gives us £110.25. We continue the process as follows.
Year 3 £110.25 @ 5% interest = £115.76
Year 4 £115.76 @ 5% interest = £121.54
Year 5 £121.54 @ 5% interest = £127.62
Year 6 £127.63 @ 5% interest = £134.00
Year 7 £134.00 @5% interest = £140.70
Year 8 £140.70 @5% interest = £ 147.74
Year 9 £147.74 @ 5% interest = £155.13
Year 10 £155.13 @5% interest = £162.90
Year 11 £162.90 @5% interest = £171.05
Year 12 £171.05 @ 5% interest = £179.60
Year 13 £179.60 @5% interest = £188.58
Year 14 £188.85 @5% interest = £198.01
Year 15 £198.01 @5% interest = £207.91
So we can see that after 15 years of a modest 5% interest per year, our initial sum has doubled. This is called "compound interest" and it shows exponential growth by increasing a number by a percentage, then increasing the sum of the original number plus that percentage by another percentage and so on.
A 7% increase per year will mean the initial sum will double in 10 years.
If we take a 10% increase then the initial sum will double in roughly 7 years.
And, whether the timespan is years or days or centuries, the doubling will be the same pro rata.
So we can see that exponential growth has the potential to cause huge problems. Here are another couple of examples.
A headline saying a prison population will grow by 7% per year doesn't mean much, but saying a prison population will double in 10 years really hits home; and yet they mean the same thing.
The world economy doubles roughly every 28 years (about 3% per year), so exponential growth on a finite planet is impossible. Consequently, we will struggle to meet demands for raw materials very soon.
So when a politician talks about "economic growth at 3%" we feel this isn't a huge amount, but after 30 years it has the potential to double in size.
Another good example of exponential growth.
A bacteria sitting in a bottle doubles every minute and by 12 O'Clock the bottle is full. At what point is the bottle half full? 11:59 of course. The bacteria realise there is a problem at 11:57, when the bottle is just an eighth full and find a further three empty bottles. All that new space they breathe a sigh of relief, but at what point will all four bottles be full? 12:00 bottle one is full, 12:01 bottle 2 is now full and by 12:02 all four bottles are now full.
So how does this apply to us today?
Well, quite simply, we can see that in a short space of time with today's use of resources, exponential growth is a serious problem. Whatever sector you choose, the increases are dramatic. Population is a great example. The world population hit 1 billion in 1804. From the beginning of time until 1804, we only had an increase to 1 billion. Then in a mere 123 years to 1927 we hit 2 billion. Then it took just 33 years to hit 3 billion in 1960, then a mere 40 years to double from 3 billion to 6 billion people in 1999.
That is an exceptional statistic, and should make anyone pay attention to exponential growth.
But why did the population hit so high so quickly?
Some argue that it's advances in medical technology; some that it's the "green revolution" which was the use of mechanization and fertilisers in agriculture, but either way, this all has a common factor. The abundance of cheap fossil fuel energy.
We began to use coal in the 18th century as a fuel, which then gave rise to steam engines and hydraulics. The amount of energy packed in a sack of coal is phenominal, and inventions utilising this energy came thick and fast. Up until this point, we used animals to assist us with agriculture, but of course they are of limited use; the main problen being they get tired and can become ill.
Fossil fuels meant a machine could run indefinitely, and obediently. Even today we have steam engines still running that were built almost150 years ago.
When mechanization in agriculture increased the amount of food we could grow, consume and move around, and medicines based on petroleum products improved our healthcare, we had created the perfect storm for rapid population expansion.
Medicines dependent on oil? Yes indeed:
2 x 2 = 4
However a simple calculation such as 2 x 2 x 2 x 2 x 2 x 2 = 64
We can see how by multiplying such small numbers together, we soon rack up some very big numbers indeed.
Here's another example. Just supposing we have a bank account that pays 5% interest per year.
We invest £100.
At the end of year one we have our original £100 + £5 interest giving us a balance of £105
Year two we take the £105 balance then add 5% interest (£5.25) which gives us £110.25. We continue the process as follows.
Year 3 £110.25 @ 5% interest = £115.76
Year 4 £115.76 @ 5% interest = £121.54
Year 5 £121.54 @ 5% interest = £127.62
Year 6 £127.63 @ 5% interest = £134.00
Year 7 £134.00 @5% interest = £140.70
Year 8 £140.70 @5% interest = £ 147.74
Year 9 £147.74 @ 5% interest = £155.13
Year 10 £155.13 @5% interest = £162.90
Year 11 £162.90 @5% interest = £171.05
Year 12 £171.05 @ 5% interest = £179.60
Year 13 £179.60 @5% interest = £188.58
Year 14 £188.85 @5% interest = £198.01
Year 15 £198.01 @5% interest = £207.91
So we can see that after 15 years of a modest 5% interest per year, our initial sum has doubled. This is called "compound interest" and it shows exponential growth by increasing a number by a percentage, then increasing the sum of the original number plus that percentage by another percentage and so on.
A 7% increase per year will mean the initial sum will double in 10 years.
If we take a 10% increase then the initial sum will double in roughly 7 years.
And, whether the timespan is years or days or centuries, the doubling will be the same pro rata.
So we can see that exponential growth has the potential to cause huge problems. Here are another couple of examples.
A headline saying a prison population will grow by 7% per year doesn't mean much, but saying a prison population will double in 10 years really hits home; and yet they mean the same thing.
The world economy doubles roughly every 28 years (about 3% per year), so exponential growth on a finite planet is impossible. Consequently, we will struggle to meet demands for raw materials very soon.
So when a politician talks about "economic growth at 3%" we feel this isn't a huge amount, but after 30 years it has the potential to double in size.
Another good example of exponential growth.
A bacteria sitting in a bottle doubles every minute and by 12 O'Clock the bottle is full. At what point is the bottle half full? 11:59 of course. The bacteria realise there is a problem at 11:57, when the bottle is just an eighth full and find a further three empty bottles. All that new space they breathe a sigh of relief, but at what point will all four bottles be full? 12:00 bottle one is full, 12:01 bottle 2 is now full and by 12:02 all four bottles are now full.
So how does this apply to us today?
Well, quite simply, we can see that in a short space of time with today's use of resources, exponential growth is a serious problem. Whatever sector you choose, the increases are dramatic. Population is a great example. The world population hit 1 billion in 1804. From the beginning of time until 1804, we only had an increase to 1 billion. Then in a mere 123 years to 1927 we hit 2 billion. Then it took just 33 years to hit 3 billion in 1960, then a mere 40 years to double from 3 billion to 6 billion people in 1999.
That is an exceptional statistic, and should make anyone pay attention to exponential growth.
But why did the population hit so high so quickly?
Some argue that it's advances in medical technology; some that it's the "green revolution" which was the use of mechanization and fertilisers in agriculture, but either way, this all has a common factor. The abundance of cheap fossil fuel energy.
We began to use coal in the 18th century as a fuel, which then gave rise to steam engines and hydraulics. The amount of energy packed in a sack of coal is phenominal, and inventions utilising this energy came thick and fast. Up until this point, we used animals to assist us with agriculture, but of course they are of limited use; the main problen being they get tired and can become ill.
Fossil fuels meant a machine could run indefinitely, and obediently. Even today we have steam engines still running that were built almost150 years ago.
When mechanization in agriculture increased the amount of food we could grow, consume and move around, and medicines based on petroleum products improved our healthcare, we had created the perfect storm for rapid population expansion.
Medicines dependent on oil? Yes indeed:
"Petrochemicals are used to manufacture analgesics, antihistamines, antibiotics, antibacterials, rectal suppositories, cough syrups, lubricants, creams, ointments, salves, and many gels. Processed plastics made with oil are used in heart valves and other esoteric medical equipment.
Petrochemicals are used in radiological dyes and films, intravenous tubing, syringes, and oxygen masks. In all but rare instances, fossil fuels heat and cool buildings and supply electricity. Ambulances and helicopter "life flights" depend on petroleum, as do personnel who travel to and from medical workplaces in motor vehicles. Supplies and equipment are shipped -- often from overseas -- in petroleum-powered carriers. In addition there are the subtle consequences of fossil fuel reliance."
http://www.alternet.org/health/57525
So it is safe to come to the conclusion, that thanks to fossil fuels, we live longer, multiply faster and eat more. And the more we increase the population, the more need for more "stuff" and the more need for jobs, houses, money etc etc etc.
So applying common sense to this scenario, what is the only thing that could halt this exponential existence?
Expensive fossil fuels. A decrease in the amount of fossil fuel available will increase the price which will put it out of reach for many people and many production systems. And oil is involved in everything that makes our world economy tick. Reduce the use of oil through either lack of it, rationing, price increases, in fact any way at all, and the world will begin a decline.
How does exponential growth apply to all this?
What goes up, must come down or so the saying goes. And as well as exponential growth, we also have exponential decline. If we double our economy by using 5% more fossil fuels every year, then the same occurs in reverse. If we lose 5% of our oil availabilty per year, then in just 15 years our oil supply has halved. Halving the oil supply means halving the economy, the abundance of food and probably sacariest of all, half the world population.
We currently increase our demand for oil by 2% per year, a tiny amount you may say, but remember those exponential growth figures? That means that in 35 years, we will have doubled the demand for oil at todays rate. If we cannot meet demand and the amount of oil we take out of the ground begins to decline, then the combination of 2% demand and 2% decline means that in a mere 17 years we will only be able to meet half the demand. This is potentially the most dangerous scenario human kind has ever faced.
Alternative energy - moving from fossil fuels.Many people would argue that the increase in clean energy negates the increase in demand for fossil fuels. In simple terms, if we increase alternative energy sources by 2% per year then that will counteract the increase in demand for oil. Is it that simple?
Unfortunately not and for a number of reasons.
Firstly, that will only keep us at todays current consumption of approximately 85 million barrels per day or 40,000 gallons per second. In order to eat into that figure, we need to increase the alternative energy figure dramatically, however we have another problem.
Whilst wind turbines, solar arrays, hydro etc are wonderful concepts, our infrastructure depends on oil. There are no mass produced solar tractors, no electric sawmills; you get the idea. In fact, even if there were, we still need oil to make all the components that create wind turbines, solar arrays and electric cars. As an example, a single rubber car tyre takes 40 litres of oil to make and we haven't included the oil used to ship it, fit it or even repair it if we get a puncture.
Clean energy is unfortunately a folly in the current paradigm of the 21st century.
The answer?
There isn't one unfortunately. We can be sure of two things. 1) because of history, we know that the earth can sustain a human population of 1 billion and 2) oil is a finite resource. It may never "run out" but it will shift from a cheap energy to a very expensive energy, the questions are when, and how quickly?
My advice would be to prepare yourself as best you can. Get used to cheaper food, demand less "stuff" and start to learn basic skills.
As I have mentioned earlier, even if we could introduce alternative energy immediately, almost every product demands the use of oil, especially platics. So that new wind turbine needs a factory to create spare parts, and that requires a workforce, which require food and housing, which requires mechanized agriculture. I think we can see the problem is very clear.
So beware of exponential growth, because it creeps up like the tide on the beach and will catch us all by surprise very soon indeed.
Best regards to you and those you love.
Kieran.
Thursday 1 July 2010
Public sector jobs declining, Government bonds up, what does this mean for us the public?
Firstly, let's just establish a couple of definitions. And please don't be embarrassed that perhaps you didn't understand what these mean or how the work, you are among many that don't, or many that pretend they know, but haven't got a clue and bluff their knowledge to try and prove they are aware of what's going on.
Public Sector Employment.
Anyone that relies on the state to pay their wages. However it also has to be remembered that many private sector employment relies heavily on the public sector. For instance, if a company supplies a local council with goods or services, then they too will be affected by cuts.
Should there be cuts? Well this is the big question, after all, if the jobs weren't needed in the first place, then why were they created? Governments sometimes increase the size of the public sector to hide poor employment. There is no evidence of this in the UK or US, it's merely an observation generally. It's easy for a Government to instruct local councils etc. to employ and create new tiers of employment because it does two (of many) important things. Firstly, it keeps the unemployment figure down, secondly, the public feel more confident in Government if they see more police, firefighters, better libraries etc.
Finally, please remember the basic, common sense figures for public sector wages. If, for example and for the sake of simplicity, you work in the private sector, earn £10,000 per annum, and pay £2,500 in taxation from that wage, then there needs to be at least three more like you to cover one public sector wage earner also earning £10,000. All public sector wages come from taxation. This is very simplistic, but the principle is sound. Governments also take money from other taxation such as VAT, Capital Gains, Inheritance etc. but this shows that you need a lot of private secor wage earners to cover the public sector. Therefore, with 8 million public sector wage earners, we need at least 36 million private sector workers to cover their wage bill in taxation.
But there aren't so where does all this come from?
Government debt, gilts and treasury bonds.
So how does government make up the shortfall in this public sector expense? And, public sector wages make up a relatively small amount of Government spending, what about roads, libraries, new ambulances... the list is endless.
Some money will come from the private sector investment. A private company may invest in an airport for instance, and get a return on their investment at a later date through exploitation of the site. This helps the Government by them not having to find public money from taxation, and also the company assumes (in most cases) responsibility for running the site.
Other money will come from Government Treasury Bonds (or gilts as they are sometimes called). A government will issue a Bond and promise to pay the bearer of the Bond their original investment plus interest.
So, as an example and with simplistic figures, a Government issues a bond for £100 with a 5 year term and promises a 5% return. That means that at the end of the term, the investor can cash in the bond and receive £105, a profit of £5. The Government takes the original £100 and invests it in the country (better trains for instance), this hopefully improves the economy, and allows the payment of £105 at the end of the 5 year term.
The Government is basically saying that although they haven't got the £100 today to pay for the new trains, they believe that they can increase the countries profits within the 5 years to pay that bit extra to the investor.
Bonds are a loan like any other. Government borrows and pays back the original sum with interest at a later date.
So governments use this money to make up for the shortfall in money they need to run the country, and the money they take in taxation.
Why don't they just take more in taxation, rather than pay more at a later date?
Here's the rub. Governments are not popular when they increase taxes, so they don't. They borrow and pay back later. Investors have confidence that no matter what happens, the Government will find the money to pay them back as promised when the bonds are cashed in at the end of the term.
If a Government doesn't, or can't pay back the money, then they "default". Much like you or I, when we fail to pay back a loan, our credit rating goes down and we find it more difficult to borrow in future. We are considered a higher risk because we have shown we don't pay when we must, therefore, with increased risk comes increased interest. You may find fewer lenders willing to offer you credit at reasonable rates if you have a poor credit history. You will probably get a loan, but at a much higher rate than someone who has never defaulted.
The same goes for countries. Investors will stop buying their bonds (or government debt as it is sometimes called), if they can't pay back when the bonds are due for redemption.
So, in prder for Governments to reduce their debt, and have the money to pay for the bonds that come due, they decrease public spending (usually public sector jobs and services) and increase taxation from the population.
This is where many countries are today, including the UK. It doesn't take a genius to work out that if one were to pay back a credit card using another credit card, there will be a point where it cannot continue. Governments such as Greece are doing just this, which is why they are needing "Bail-outs", or to put it another way, another financial institution promises to cover their debt, in the case of Greece, the European Central Bank and the IMF (amongst others).
What does that mean for the population?
It means that the Government needs the population to work harder, for less, to pay more in taxation to cover the debt. Investors know that the Government won't default unless it really has to, so they demand ever higher returns. 5%, 8%, in some cases such as Greece, 13%+ !
The population is taxed more, public sector jobs and services are cut, all to keep up with the debt. So for a worker within the UK, it is now up to you to pay back all that debt. You may have to get two jobs to pay your bills as they rise, take pay cuts or shorter hours (or both!) because credit is in short supply, and worst of all, you may borrow more to continue a lifestyle you are accustomed to.
All of this is bad news for an economy and for the citizen.
Inflation.
Inflation is simple. As time goes on, the money within a country increases. This is called "the money supply". The more fiat (or paper) money within an economic system, they less value it has. For instance, if grass was used for money, very soon, you would need mountains of it to pay for goods and services. This is because it's everywhere and if you need more, you grow some!
So grass would never work.
However if banknotes are very difficult to counterfeit, and everyone accepts them as money then that's fine. So we use paper money.
Over time, more and more paper money comes into circulation, not just through printing, but through the fractional reserve system. This means that a bank can lend money it doesn't have, by "creating" it from thin air.
Yes, it's absolutely true. They literally "print" new money and it's perfectly legal.
When you borrow from a bank for a car, house, boat, credit card, in fact anything, the bank opens a new loan account for you on a computer, and types in the amount you have borrowed. Then, you must pay that back over time plus interest.
This is why, over time, things get more expensive through inflation. If there's lots of new money getting into the system, the value of that money decreases, because iit's everywhere! Your £100 this year may buy 100 loaves of bread, but by next year, because of 5% inflation, those loaves now cost £1.05, so you will only get 95. If inflation stays at 5% the following year, then with your £100, you'll only get 91 (because they are now £1.10) and so on. This again is simplistic figures for easy reference, but the principle is correct.
Of course for Governments with bonds this is wonderful. High inflation is a tempting way to pay back bonds. Afer all, if the bond you issued for £100 is now worth £105, but your inflation is 10%, you actually win! However it doesn't work like that. As inflation increases, governments need to increase the return on the bonds because investors can see they won't make any money. The trick for an investor is to guess the right term length, with the state of the country, and if they have any doubt, then they turn to a new country to spend their money. Inflation kills investment leaving the taxpayer to cover the money not raised in selling bonds.
The upshot is....
As inflation and public debt rises, the population is forced to work harder, and some will lose their jobs. They are almost enslaved because at some point, the amount they are working doesn't give them the luxuries they work for such as holidays, nice clothes etc. they are literally working to eat, live and pay taxes.
This has happened many times in history, most recently in Zimbabwe where people saw their savings in banks worthless due to inflation. Don't forget, if you have £100 in the bank, unless the bank has a good interest rate to cover inflation, then you are losing money. Plus, if inflation is so high that very quickly you need that £100 to buy a loaf of bread, your savings have evaporated. This is why people buy assets such as houses, wine, gold, paintings, jewellry etc. As inflation goes up, so does the value of your investment, therefore protecting your wealth.
How many times have you heard someone say that "I bought this house in 1990 for £50,000 and now it's worth £150,000. I've made a £100,000 profit!" This is just nonsense. If that same person had've bought £50,000 of coal and stored them in a shed, today they would be worth £150,000. The house's value has not increased at all, the perception of increase is all that has happened. However, if you had put the £50,000 in the bank at poor interest, it would now perhaps be worth just £75,000. This is because inflation has taken it's toll on it. It is after all just pieces of paper, given a vlue because someone is willing to exchange something tangible for it such as goods or services.
Do not be fooled by this illusion. This is why when you put £100 in a pension pot today, when you retire in say, 40 years time, it will barely buy you a beer. So when you retire, you need a LOT of £100, and they rely on the markets to increase their value through investment in tangible assets and companies. This was one of the big pension scams of the 20th Century, which today is beginning to unravel at an alarming rate.
We are moving into a world of unemployment, no money, more debt and the workforce having to work harder for longer (yes that's why the retirement age has increased). There is no quick fix, so it's up to you as an individual how you deal with it. As I've said many times before, this is not difficult to understand, but if you make the effort you are many steps ahead of everyone else and will fair much better in the years ahead.
Good luck.
Kieran.
Public Sector Employment.
Anyone that relies on the state to pay their wages. However it also has to be remembered that many private sector employment relies heavily on the public sector. For instance, if a company supplies a local council with goods or services, then they too will be affected by cuts.
Should there be cuts? Well this is the big question, after all, if the jobs weren't needed in the first place, then why were they created? Governments sometimes increase the size of the public sector to hide poor employment. There is no evidence of this in the UK or US, it's merely an observation generally. It's easy for a Government to instruct local councils etc. to employ and create new tiers of employment because it does two (of many) important things. Firstly, it keeps the unemployment figure down, secondly, the public feel more confident in Government if they see more police, firefighters, better libraries etc.
Finally, please remember the basic, common sense figures for public sector wages. If, for example and for the sake of simplicity, you work in the private sector, earn £10,000 per annum, and pay £2,500 in taxation from that wage, then there needs to be at least three more like you to cover one public sector wage earner also earning £10,000. All public sector wages come from taxation. This is very simplistic, but the principle is sound. Governments also take money from other taxation such as VAT, Capital Gains, Inheritance etc. but this shows that you need a lot of private secor wage earners to cover the public sector. Therefore, with 8 million public sector wage earners, we need at least 36 million private sector workers to cover their wage bill in taxation.
But there aren't so where does all this come from?
Government debt, gilts and treasury bonds.
So how does government make up the shortfall in this public sector expense? And, public sector wages make up a relatively small amount of Government spending, what about roads, libraries, new ambulances... the list is endless.
Some money will come from the private sector investment. A private company may invest in an airport for instance, and get a return on their investment at a later date through exploitation of the site. This helps the Government by them not having to find public money from taxation, and also the company assumes (in most cases) responsibility for running the site.
Other money will come from Government Treasury Bonds (or gilts as they are sometimes called). A government will issue a Bond and promise to pay the bearer of the Bond their original investment plus interest.
So, as an example and with simplistic figures, a Government issues a bond for £100 with a 5 year term and promises a 5% return. That means that at the end of the term, the investor can cash in the bond and receive £105, a profit of £5. The Government takes the original £100 and invests it in the country (better trains for instance), this hopefully improves the economy, and allows the payment of £105 at the end of the 5 year term.
The Government is basically saying that although they haven't got the £100 today to pay for the new trains, they believe that they can increase the countries profits within the 5 years to pay that bit extra to the investor.
Bonds are a loan like any other. Government borrows and pays back the original sum with interest at a later date.
So governments use this money to make up for the shortfall in money they need to run the country, and the money they take in taxation.
Why don't they just take more in taxation, rather than pay more at a later date?
Here's the rub. Governments are not popular when they increase taxes, so they don't. They borrow and pay back later. Investors have confidence that no matter what happens, the Government will find the money to pay them back as promised when the bonds are cashed in at the end of the term.
If a Government doesn't, or can't pay back the money, then they "default". Much like you or I, when we fail to pay back a loan, our credit rating goes down and we find it more difficult to borrow in future. We are considered a higher risk because we have shown we don't pay when we must, therefore, with increased risk comes increased interest. You may find fewer lenders willing to offer you credit at reasonable rates if you have a poor credit history. You will probably get a loan, but at a much higher rate than someone who has never defaulted.
The same goes for countries. Investors will stop buying their bonds (or government debt as it is sometimes called), if they can't pay back when the bonds are due for redemption.
So, in prder for Governments to reduce their debt, and have the money to pay for the bonds that come due, they decrease public spending (usually public sector jobs and services) and increase taxation from the population.
This is where many countries are today, including the UK. It doesn't take a genius to work out that if one were to pay back a credit card using another credit card, there will be a point where it cannot continue. Governments such as Greece are doing just this, which is why they are needing "Bail-outs", or to put it another way, another financial institution promises to cover their debt, in the case of Greece, the European Central Bank and the IMF (amongst others).
What does that mean for the population?
It means that the Government needs the population to work harder, for less, to pay more in taxation to cover the debt. Investors know that the Government won't default unless it really has to, so they demand ever higher returns. 5%, 8%, in some cases such as Greece, 13%+ !
The population is taxed more, public sector jobs and services are cut, all to keep up with the debt. So for a worker within the UK, it is now up to you to pay back all that debt. You may have to get two jobs to pay your bills as they rise, take pay cuts or shorter hours (or both!) because credit is in short supply, and worst of all, you may borrow more to continue a lifestyle you are accustomed to.
All of this is bad news for an economy and for the citizen.
Inflation.
Inflation is simple. As time goes on, the money within a country increases. This is called "the money supply". The more fiat (or paper) money within an economic system, they less value it has. For instance, if grass was used for money, very soon, you would need mountains of it to pay for goods and services. This is because it's everywhere and if you need more, you grow some!
So grass would never work.
However if banknotes are very difficult to counterfeit, and everyone accepts them as money then that's fine. So we use paper money.
Over time, more and more paper money comes into circulation, not just through printing, but through the fractional reserve system. This means that a bank can lend money it doesn't have, by "creating" it from thin air.
Yes, it's absolutely true. They literally "print" new money and it's perfectly legal.
When you borrow from a bank for a car, house, boat, credit card, in fact anything, the bank opens a new loan account for you on a computer, and types in the amount you have borrowed. Then, you must pay that back over time plus interest.
This is why, over time, things get more expensive through inflation. If there's lots of new money getting into the system, the value of that money decreases, because iit's everywhere! Your £100 this year may buy 100 loaves of bread, but by next year, because of 5% inflation, those loaves now cost £1.05, so you will only get 95. If inflation stays at 5% the following year, then with your £100, you'll only get 91 (because they are now £1.10) and so on. This again is simplistic figures for easy reference, but the principle is correct.
Of course for Governments with bonds this is wonderful. High inflation is a tempting way to pay back bonds. Afer all, if the bond you issued for £100 is now worth £105, but your inflation is 10%, you actually win! However it doesn't work like that. As inflation increases, governments need to increase the return on the bonds because investors can see they won't make any money. The trick for an investor is to guess the right term length, with the state of the country, and if they have any doubt, then they turn to a new country to spend their money. Inflation kills investment leaving the taxpayer to cover the money not raised in selling bonds.
The upshot is....
As inflation and public debt rises, the population is forced to work harder, and some will lose their jobs. They are almost enslaved because at some point, the amount they are working doesn't give them the luxuries they work for such as holidays, nice clothes etc. they are literally working to eat, live and pay taxes.
This has happened many times in history, most recently in Zimbabwe where people saw their savings in banks worthless due to inflation. Don't forget, if you have £100 in the bank, unless the bank has a good interest rate to cover inflation, then you are losing money. Plus, if inflation is so high that very quickly you need that £100 to buy a loaf of bread, your savings have evaporated. This is why people buy assets such as houses, wine, gold, paintings, jewellry etc. As inflation goes up, so does the value of your investment, therefore protecting your wealth.
How many times have you heard someone say that "I bought this house in 1990 for £50,000 and now it's worth £150,000. I've made a £100,000 profit!" This is just nonsense. If that same person had've bought £50,000 of coal and stored them in a shed, today they would be worth £150,000. The house's value has not increased at all, the perception of increase is all that has happened. However, if you had put the £50,000 in the bank at poor interest, it would now perhaps be worth just £75,000. This is because inflation has taken it's toll on it. It is after all just pieces of paper, given a vlue because someone is willing to exchange something tangible for it such as goods or services.
Do not be fooled by this illusion. This is why when you put £100 in a pension pot today, when you retire in say, 40 years time, it will barely buy you a beer. So when you retire, you need a LOT of £100, and they rely on the markets to increase their value through investment in tangible assets and companies. This was one of the big pension scams of the 20th Century, which today is beginning to unravel at an alarming rate.
We are moving into a world of unemployment, no money, more debt and the workforce having to work harder for longer (yes that's why the retirement age has increased). There is no quick fix, so it's up to you as an individual how you deal with it. As I've said many times before, this is not difficult to understand, but if you make the effort you are many steps ahead of everyone else and will fair much better in the years ahead.
Good luck.
Kieran.
Thursday 24 June 2010
Work until you're 70, it's your right!
Opinion
Normally, this blog wouldn't get embroiled in such a subject of pensions, however just recently, the damage to them has been appalling.
BP contributes £1 in £6 so in just a few months, British pensions have lost 1/6th of their value. Another couple of hits like that and they'll be worthless.
Secondly, the British Government, both previous and current, has an agenda to keep people working for as long as possible. This is wrapped up in the notion that it is "your right" to work until you drop, but don't applaud the rhetoric. This is being packaged as you losing your rights to do what you please and to work if you want to, so you feel compelled to agree to it. Any message that contains a "loss of rights" will always be contentious.
This is purely a way to keep you working so that you are less of a burden to the State and continue to pay tax. If it had been packaged the other way and the Government had said "you will have to work until you are 70" then the reaction would have been very different. People don't like being told what to do, but being told they are losing their right to do anything will raise objections.
Normally, this blog wouldn't get embroiled in such a subject of pensions, however just recently, the damage to them has been appalling.
BP contributes £1 in £6 so in just a few months, British pensions have lost 1/6th of their value. Another couple of hits like that and they'll be worthless.
Secondly, the British Government, both previous and current, has an agenda to keep people working for as long as possible. This is wrapped up in the notion that it is "your right" to work until you drop, but don't applaud the rhetoric. This is being packaged as you losing your rights to do what you please and to work if you want to, so you feel compelled to agree to it. Any message that contains a "loss of rights" will always be contentious.
This is purely a way to keep you working so that you are less of a burden to the State and continue to pay tax. If it had been packaged the other way and the Government had said "you will have to work until you are 70" then the reaction would have been very different. People don't like being told what to do, but being told they are losing their right to do anything will raise objections.
Wednesday 16 June 2010
The Starkest Warning
Whilst governments around the world are starting to wake up to the threat of increased oil prices, US President Obama grasps the nettle and gives his starkest warning from the Oval Office. It must be noted that addresses from the Oval Office are reserved for the most serious events; this is President Obama's first.
"So one of the lessons we've learned from this spill is that we need better regulations, better safety standards, and better enforcement when it comes to offshore drilling. But a larger lesson is that no matter how much we improve our regulation of the industry, drilling for oil these days entails greater risk. After all, oil is a finite resource. We consume more than 20 percent of the world's oil, but have less than 2 percent of the world's oil reserves. And that's part of the reason oil companies are drilling a mile beneath the surface of the ocean -- because we're running out of places to drill on land and in shallow water.
And do remember; the difference between cheap oil and expensive oil is simple. You and I, in our daily lives, depend on cheap oil to live, however our taxes will be paying for expensive oil to keep the fossil fuel paradigm moving. Armies, emergency services, government, public transport all depend on oil (not cheap oil), because these will be needed until the final barrel is removed from the ground. That final barrel will be worth billions of dollars, and it's the transition in price from now to then that we need to be concrened about as tax-paying citizens.
Technology
Probably one of the most important message given by the US President is the limits to technology. The skeptics of Peak Oil will constantly push the theory that technology is our saviour and that we (peak oil proponents), forget to note that as time moves forward, technology and science does too. We will continually find new ways to search, find, extract and process oil in the future, so there is no peak oil theory. However, the US President has noted, and I quote "This is not some distant vision for America. The transition away from fossil fuels is going to take some time", so the reality is:
Can technology keep pace with the time of transition?
This is the key factor, because whether is searching for oil, or finding replacements for oil such as algae, bio-fuels, wind farms, solar arrays etc, these need to be in place when that last barrel of cheap oil is extracted. If they are not, then we transition from cheap oil to expensive oil very quickly. How quickly? Well let's take a look at the past.
Fuel Transitions
The first fuel was probably wood. I don't think we could doubt very much that early mankind used wood to keep warm, cook and ward off predators. Ancient religions worshipped fire because it was essential to life. Further from that, we used water mills, wind mills, horses, donkeys, all these contributed to our need for energy. Coal is known to have been used for fuel as far back as 200BC, and accelerated dramaticallyduring the Industrial Revolution in the 19th Century. This transition was fast because coal was (and still is) so plentiful. It is reported that there are still a couple of centuries worth of coal yet to be mined. So the transition from wood to coal was easy, and we can see the benefits of that in a couple of easy points.
1) World population from the beginning of man to 1804 - 0 to 1 billion, then from 1804 - 1927 2 billion, then on to 3 billion in 1960, but the figure most startling is 3 billion to 6 billion by 1999. That's less than 40 years, 3 billion people added. This is due to fossil fuels in agriculture, albeit machinery and easy, cheap movement (including refrigeration) of food which allowed our cities to expand dramatically. We could build on the various "market gardens" in London (Covent Garden, Moor Fields, Bethnal Green etc) because we could move food into towns quickly using fast vehicles before it had the chance to go rotten on th back of a cart.
2) Economically we have found new wealth thanks to cheap energy. If you had to push a truck 100 miles, full of food physically using human beings, how many would it take, how long would it take and how much would you have to pay them? This is extreme because we would probably use horses, but only because they require cheap food and no money. If we had to feed horses in Beluga Caviar we wouldn;t be using them! We can assume that it would take weeks to pull the truck along the road using hundreds of people, all wanting payment of some kind and food. And yet cheap oil allowed us to do it in hours, for about 100 dollars (fuel $30, driver $70). So the potato you sell at the end of the journey only has to include a tiny percentage of the fuel it has cost to get it there.
There is no fuel today that can make the transition from oil painless. That is the reality of the situation we are in. We consume 85 million barrels worldwide every... single... day. Imagine the bio fuel rapeseed crop we would need, and the amount of wind turbines, solar arrays, algae...
And it's not just production. Just supposing we do find that all the clean energy we need, we need to move it around. The mining of copper that makes the wires that feeds our technology such as computers, overhead cabling etc has to be dug out of the ground, and those machines that dig and process need oil. There are no electric bulldozers, nor are there any companies with plans to make any. When the coal for the power stations is mined, it needs to be shipped... in fact everything needs to be shipped. We're only just looking at electric cars, never mind electric trucks that we need to move all that food around.
Transition is not a "wake up on Monday and everything works thanks to alternative fuels", it's a slow painful process which the vast majority of people will find very difficult. There will always be food at the supermarket, but will you have a job to get the money to be able to afford it? Remember the potato on our truck pulled 100 miles?
The change will be very quick. How many times has a phone rung and the split second before it's answered your world is at peace, then within a moment you are confronted with devastating news that at best ruins your day, at worst changes the rest of your life. Phone ring, knock at the door, news report. Change can happen quickly, and whilst many things we cannot prepare for, some things we can mitigate the initial shock which will make us think clearly.
Opinion
It is my opinion that we are being given a very clear warning. However, it must be noted (and I can hear some of you reading this thinkin it), that this is not the first time a US President has warned about a shortage of oil. Jimmy Carter first made a simlar speech (text version) in 1979 after the oil crisis which crippled the US fuel supplies. However the difference here was that many OPEC oil fields not been online for very long and there were new "elephant fields" being discovered all the time. When a news report mentions the discovery of a new oil field remember a couple of things:
1) An oil field, from time of discovery until time of actually taking oil out of the ground for refining, takes a minimum of 3 years.
2) We use 85 million barrels per day so a field containing an estimated 1 billion barrels will last approximately 11 days. So why do oil companies bother to look and extract such a short supply of oil? Because they know, by the time that field is online, the price ber barrel will be much higher than today. Remember cheap oil and expensive oil? When a field has trillions of barrels, it's still worthwhile taking out of the ground at a much cheaper price because there's so much to extract.
3) Oil companies continue to trumpet "huge" finds because if they don't investors will move their money elsewhere. Therefore, if an oil company is quoting "proven reserves" do remember it's in their interest to show how successful they are. I take these figures with a pinch of salt.
4) The BP disaster has shown us that we are now needing to drill in difficult places. If there is so much oil still around, why are they bothering? In fact, Royal Dutch Shell plc and Exxon Mobil have just reopened an old field in Holland (Reuters).
Do not have any doubt. If over the next few months you see oil constantly on your television screens, especially if it has little to do directly with the BP disaster in the Gulf of Mexico, you need to take serious notice. US Presidents do not make these speeches unless there is a serious need to do so. It is their duty in public office to inform the US public if there is a threat to their way of life.
Tin Foil Hat
This comment is purely conjecture and a personal opinion. I have labelled it Tin Foil Hat because it has no evidnce or basis of truth, however I feel it is worthy of note.
I mentioned on a previous blog elsewhere about two weeks ago that the BP event in the Gulf was "the new 9/11". The US President thinks so too. We all know that 9/11 changed the world forever. It has been quoted as the "New Pearl Harbor" event which changed American foreign policy as well as the world at large. This is beyond doubt. Some may be of the opinion that this event focussed the US public to accept the threat of terrorism, and allow legislation ("The US Patriot Act") to be implemented to protect them. It is well documented elsewhere in the web that civil liberties have possibly been eroded thanks to this Act, I'll leave that up to you to decide.
So bearing in mind that huge events can change public opinion is it possible that:
1) This pipeline was sabotaged to implement a new acceptance of restricted oil use.
2) The era of cheap oil is now over, and the Gulf spill was necessary to introduce a new Clean Energy Act in the near future? An Act where oil products will be restricted, rationed or taxed to pay for new energy projects ( "A Transition")
Thank you for reading, I will post again when I have time or events dictate.
Kieran (UK). June 16th 2010
"So one of the lessons we've learned from this spill is that we need better regulations, better safety standards, and better enforcement when it comes to offshore drilling. But a larger lesson is that no matter how much we improve our regulation of the industry, drilling for oil these days entails greater risk. After all, oil is a finite resource. We consume more than 20 percent of the world's oil, but have less than 2 percent of the world's oil reserves. And that's part of the reason oil companies are drilling a mile beneath the surface of the ocean -- because we're running out of places to drill on land and in shallow water.
For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we've talked and talked about the need to end America's century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires. Time and again, the path forward has been blocked -- not only by oil industry lobbyists, but also by a lack of political courage and candor.
The consequences of our inaction are now in plain sight. Countries like China are investing in clean energy jobs and industries that should be right here in America. Each day, we send nearly $1 billion of our wealth to foreign countries for their oil. And today, as we look to the Gulf, we see an entire way of life being threatened by a menacing cloud of black crude.
We cannot consign our children to this future. The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now. Now is the moment for this generation to embark on a national mission to unleash America's innovation and seize control of our own destiny.
This is not some distant vision for America. The transition away from fossil fuels is going to take some time, but over the last year and a half, we've already taken unprecedented action to jumpstart the clean energy industry. As we speak, old factories are reopening to produce wind turbines, people are going back to work installing energy-efficient windows, and small businesses are making solar panels. Consumers are buying more efficient cars and trucks, and families are making their homes more energy-efficient. Scientists and researchers are discovering clean energy technologies that someday will lead to entire new industries.
Each of us has a part to play in a new future that will benefit all of us. As we recover from this recession, the transition to clean energy has the potential to grow our economy and create millions of jobs -- but only if we accelerate that transition. Only if we seize the moment. And only if we rally together and act as one nation -- workers and entrepreneurs; scientists and citizens; the public and private sectors.
When I was a candidate for this office, I laid out a set of principles that would move our country towards energy independence. Last year, the House of Representatives acted on these principles by passing a strong and comprehensive energy and climate bill -- a bill that finally makes clean energy the profitable kind of energy for America's businesses."
There is no doubt that the world's public are being groomed to accept a very near future without cheap oil. I will come to the choices you, as an individual, may have in a moment, but for the time being, we need to examine the urgency of this message. Whilst the president hasn't said explicitly we are at "Peak Oil", the inference is clear. We would not be risking the envirnoment, or stretching technology to its limit, unless we were running short of cheap oil.And do remember; the difference between cheap oil and expensive oil is simple. You and I, in our daily lives, depend on cheap oil to live, however our taxes will be paying for expensive oil to keep the fossil fuel paradigm moving. Armies, emergency services, government, public transport all depend on oil (not cheap oil), because these will be needed until the final barrel is removed from the ground. That final barrel will be worth billions of dollars, and it's the transition in price from now to then that we need to be concrened about as tax-paying citizens.
Technology
Probably one of the most important message given by the US President is the limits to technology. The skeptics of Peak Oil will constantly push the theory that technology is our saviour and that we (peak oil proponents), forget to note that as time moves forward, technology and science does too. We will continually find new ways to search, find, extract and process oil in the future, so there is no peak oil theory. However, the US President has noted, and I quote "This is not some distant vision for America. The transition away from fossil fuels is going to take some time", so the reality is:
Can technology keep pace with the time of transition?
This is the key factor, because whether is searching for oil, or finding replacements for oil such as algae, bio-fuels, wind farms, solar arrays etc, these need to be in place when that last barrel of cheap oil is extracted. If they are not, then we transition from cheap oil to expensive oil very quickly. How quickly? Well let's take a look at the past.
Fuel Transitions
The first fuel was probably wood. I don't think we could doubt very much that early mankind used wood to keep warm, cook and ward off predators. Ancient religions worshipped fire because it was essential to life. Further from that, we used water mills, wind mills, horses, donkeys, all these contributed to our need for energy. Coal is known to have been used for fuel as far back as 200BC, and accelerated dramaticallyduring the Industrial Revolution in the 19th Century. This transition was fast because coal was (and still is) so plentiful. It is reported that there are still a couple of centuries worth of coal yet to be mined. So the transition from wood to coal was easy, and we can see the benefits of that in a couple of easy points.
1) World population from the beginning of man to 1804 - 0 to 1 billion, then from 1804 - 1927 2 billion, then on to 3 billion in 1960, but the figure most startling is 3 billion to 6 billion by 1999. That's less than 40 years, 3 billion people added. This is due to fossil fuels in agriculture, albeit machinery and easy, cheap movement (including refrigeration) of food which allowed our cities to expand dramatically. We could build on the various "market gardens" in London (Covent Garden, Moor Fields, Bethnal Green etc) because we could move food into towns quickly using fast vehicles before it had the chance to go rotten on th back of a cart.
2) Economically we have found new wealth thanks to cheap energy. If you had to push a truck 100 miles, full of food physically using human beings, how many would it take, how long would it take and how much would you have to pay them? This is extreme because we would probably use horses, but only because they require cheap food and no money. If we had to feed horses in Beluga Caviar we wouldn;t be using them! We can assume that it would take weeks to pull the truck along the road using hundreds of people, all wanting payment of some kind and food. And yet cheap oil allowed us to do it in hours, for about 100 dollars (fuel $30, driver $70). So the potato you sell at the end of the journey only has to include a tiny percentage of the fuel it has cost to get it there.
There is no fuel today that can make the transition from oil painless. That is the reality of the situation we are in. We consume 85 million barrels worldwide every... single... day. Imagine the bio fuel rapeseed crop we would need, and the amount of wind turbines, solar arrays, algae...
And it's not just production. Just supposing we do find that all the clean energy we need, we need to move it around. The mining of copper that makes the wires that feeds our technology such as computers, overhead cabling etc has to be dug out of the ground, and those machines that dig and process need oil. There are no electric bulldozers, nor are there any companies with plans to make any. When the coal for the power stations is mined, it needs to be shipped... in fact everything needs to be shipped. We're only just looking at electric cars, never mind electric trucks that we need to move all that food around.
Transition is not a "wake up on Monday and everything works thanks to alternative fuels", it's a slow painful process which the vast majority of people will find very difficult. There will always be food at the supermarket, but will you have a job to get the money to be able to afford it? Remember the potato on our truck pulled 100 miles?
The change will be very quick. How many times has a phone rung and the split second before it's answered your world is at peace, then within a moment you are confronted with devastating news that at best ruins your day, at worst changes the rest of your life. Phone ring, knock at the door, news report. Change can happen quickly, and whilst many things we cannot prepare for, some things we can mitigate the initial shock which will make us think clearly.
Opinion
It is my opinion that we are being given a very clear warning. However, it must be noted (and I can hear some of you reading this thinkin it), that this is not the first time a US President has warned about a shortage of oil. Jimmy Carter first made a simlar speech (text version) in 1979 after the oil crisis which crippled the US fuel supplies. However the difference here was that many OPEC oil fields not been online for very long and there were new "elephant fields" being discovered all the time. When a news report mentions the discovery of a new oil field remember a couple of things:
1) An oil field, from time of discovery until time of actually taking oil out of the ground for refining, takes a minimum of 3 years.
2) We use 85 million barrels per day so a field containing an estimated 1 billion barrels will last approximately 11 days. So why do oil companies bother to look and extract such a short supply of oil? Because they know, by the time that field is online, the price ber barrel will be much higher than today. Remember cheap oil and expensive oil? When a field has trillions of barrels, it's still worthwhile taking out of the ground at a much cheaper price because there's so much to extract.
3) Oil companies continue to trumpet "huge" finds because if they don't investors will move their money elsewhere. Therefore, if an oil company is quoting "proven reserves" do remember it's in their interest to show how successful they are. I take these figures with a pinch of salt.
4) The BP disaster has shown us that we are now needing to drill in difficult places. If there is so much oil still around, why are they bothering? In fact, Royal Dutch Shell plc and Exxon Mobil have just reopened an old field in Holland (Reuters).
Do not have any doubt. If over the next few months you see oil constantly on your television screens, especially if it has little to do directly with the BP disaster in the Gulf of Mexico, you need to take serious notice. US Presidents do not make these speeches unless there is a serious need to do so. It is their duty in public office to inform the US public if there is a threat to their way of life.
Tin Foil Hat
This comment is purely conjecture and a personal opinion. I have labelled it Tin Foil Hat because it has no evidnce or basis of truth, however I feel it is worthy of note.
I mentioned on a previous blog elsewhere about two weeks ago that the BP event in the Gulf was "the new 9/11". The US President thinks so too. We all know that 9/11 changed the world forever. It has been quoted as the "New Pearl Harbor" event which changed American foreign policy as well as the world at large. This is beyond doubt. Some may be of the opinion that this event focussed the US public to accept the threat of terrorism, and allow legislation ("The US Patriot Act") to be implemented to protect them. It is well documented elsewhere in the web that civil liberties have possibly been eroded thanks to this Act, I'll leave that up to you to decide.
So bearing in mind that huge events can change public opinion is it possible that:
1) This pipeline was sabotaged to implement a new acceptance of restricted oil use.
2) The era of cheap oil is now over, and the Gulf spill was necessary to introduce a new Clean Energy Act in the near future? An Act where oil products will be restricted, rationed or taxed to pay for new energy projects ( "A Transition")
Thank you for reading, I will post again when I have time or events dictate.
Kieran (UK). June 16th 2010
Wednesday 9 June 2010
Welcome to Troubled Times...
The situation is now critical.
This is not here to convince you, coerce you or to carry you, but the information is here. Whether you listen carefully to understand, and whether you choose to implement it, is entirely up to you.
You need to spend time reading and watching. This is your investment. There are no short cuts, no magic potions or quick fixes, you must spend time examining all the evidence. Then hopefully, at the end, you will understand and the information will change you for the rest of your life. If you don't accept the information, then that's absolutely your choice, no one will spend any time trying to convince you, they will just walk by.
There is an acceleration of decline that 99% of the people will not, choose not, or can not see. You have limited time. You can grasp it. You can help yourself and in turn, help those you love.
There are those that say "Oh... there's always a crank somewhere predicting the end of civilisation as we know it!". Well, let me enlighten those people... they're right! And, the people they were talking about were right too. Here is a short list of great civilisations that met their demise: Romans, Greeks, Minoans, The Maya, Ottomans, Aztecs, Egyptians... We are but another of those great civilisations, and the "end game" is upon us.
I hope you can lift yourself above the distractions that surround you and understand what the "end game" is. Stay focussed, accept change and begin a new journey. Here is the information you need to begin with, and you will go on from here to discover and learn by yourself. You're not alone, nor will you be alone, but you will not be carried.
You are intelligent, you are resourceful, you have an instinct to survive which is a legacy from your ancestors. Do not let anyone stifle that instinct, and do not digress from what you know you have to do. You'll make it.
I recommend that you watch a documentary called "Collapse". This is an interview with a great man of our time called Michael Ruppert, and I urge you to listen to what he has to say.
I will post here when I have the time, but please be aware. I do not use conjecture or opinion, only facts. If I do have a personal opinion it will be clearly marked.
Your first step is very simple. You need to clear your mind of distractions, and there are many. On your travels, when researching the issues raised in this blog, you will come across a number of subjects which although relevant, are not critical to your survival. Here are a few:
New World Order
There may or may not be an elité who are determined to stifle your liberty and control you. However, this is a distraction. When collapse occurs, if there is such a thing as an elité conspiracy, there will be no-one to implement their policies. The people they will be relying on will be people like you, and they will be too bothered with their own survival to be working for someone else.
9/11
9/11 was a tragedy. Whether you are convinced there is/was a conspiracy is irrelevent. There are many people consumed by 9/11, but it is in the past, and will not benefit you in any way by watching or getting involved. Your time is better spent. The only conclusion you must take with you from 9/11 if you do believe there was a conspiracy, is that your Government is not there to help you. Your Government does not care about you as an individual, it is up to you, to look after yourself, and your loved ones.
Secret Societies
Again, whilst interesting, these issues will not have any impact on your survival.
Overall, you must understand that distractions will jeopardise your survival. Oil spills, economy issues, world politics have a place on your periphery vision, but they serve merely as indicators to how you prepare. Your central focus must be on your own survival. As Mr. Ruppert said in a recent speech; "start at the top and work your way down the list... what matters most for your survival?"
Clean Air
Water
Food
Family
Shelter
Warmth
Localisation
and so on....
As you can see, 9/11 and the New World Order will be way down your list.
I will place links here that I feel may be of interest, and comment where necessary. But please do remember, most links are for your perusal, and must not distract you from your goal of understanding.
To recap on a couple of links I advise you to explore:
The movie "Collapse"
A recent speech by Mike Ruppert in Vermont USA (May2010)
A good resource for information on Peak Oil "The Dynamic List on Peak Oil"
Please do remember. The premise of this blog is not to debate issues per se. Second guessing what will happen is just another distraction, debating whether collapse will occur is irrelevant, however debate regarding the options we can implement to help ourselves and each other is extremely valuable.. If you have a good idea for inclusion here, then do contact us at Troubled Times.
Best regards, and I wish you well.
Kieran (UK).
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