By Tad Patzek: On the Green Queen’s Race

When James Kunstler occasionally steers clear of politics and gender issues, and instead focuses on oil, he is an excellent read, as for example today’s piece.

I would add to Kunstler’s observations that I don’t think Trump (and many other people) realize how dependent we have become on China for almost everything we need to maintain our lifestyles. That would include one of the foundations of our civilization, the parts necessary to build Caterpillar machines.

China knows how to live with extreme poverty. We don’t.

https://kunstler.com/clusterfuck-nation/the-g-7-blues/

What’s at stake in all these international confabs like the G-7 are the tenuous supply lines that keep the global game going. The critical ones deliver oil around the world. China imports about 10 million barrels a day to keep its operations going. It produces less than 4 million barrels a day. Only about 15 percent of its imports come from next door in Russia. The rest comes from the Middle East, Africa, and South America. Think: long lines of tanker ships traveling vast distances across the seas, navigating through narrow straits. The Chinese formula is simple: oil in, exports out. It has worked nicely for them in recent decades. Things go on until they don’t.

That game is lubricated by a fabulous stream of debt generated by Chinese banks that ultimately answer to the Communist Party. The party is the Chinese buffer between banking and reality. If the party doesn’t like the distress signals that the banks give off, it just pretends the signals are not coming through, while it does the hokey-pokey with its digital accounting, and things appear sound a while longer.

The US produces just over 12 million barrels of oil a day. About 6.5 million of our production is shale oil. We use nearly 20 million a day. (We’re not “energy independent.”) The shale oil industry is wobbling under the onerous debt load that it has racked up since 2005. About 90 percent of the companies involved in shale oil lose money. The capital costs for drilling, hauling a gazillion truckloads of water and fracking sand to the rig pads, and sucking the oil out, exceed the profit from doing all that. It’s simply all we can do to keep the game going in our corner of the planet, but it’s not a good business model. After you’ve proved conclusively that you can’t make a buck at this using borrowed money, the lenders will quit lending you more money. That’s about where we are now.

Europe is near the end of its North Sea oil bonanza and there’s nothing in the on-deck circle for them. Germany tried to prove that they could run the country on “renewables” and that experiment has flopped. They have no idea what they’re going to do to keep the game going in their patch of nations. They must be freaking out in their charming capital cities.

The next economic bust is going to amount to the crack-up of the oil age, and the “global economy” that emerged in its late stage. It was all about moving fantastic quantities of things around the planet. The movements were exquisitely tuned, along with the money flows that circulated freely, like blood carrying oxygen to each organ. All of that is coming to an end. The nations of the world must be feeling desperate, despite the appearance of good manners at meetings like the G-7. What’s at stake for everybody in the dark background is the ability to maintain high standards of living only recently attained. And the fear behind that is not knowing just how far backward these high standards of living may have to slide.

A lot of people still alive in China must remember a daily existence on par with the 12th century. In the USA, where democracy is mostly represented by low-order thinking skills, the memory of life before electricity and running water is long gone. We’ve been living in Futurama since the end of the last world war. That war, by the way, is not entirely forgotten in Europe, despite all the charm currently on display and the tourists swarming with their selfie sticks. The place was a charnel house for centuries and the Euro folk will do about anything to suppress conflict. Lately, it looks like they’re willing to give up on Western Civilization itself to keep the peace.

Lord knows what Mr. Trump’s strategy is with these so-called “trade talks.” He has explicitly enough pushed for the re-industrialization of America, and that implies — among other things — decoupling from the China’s torrential merchandise supply lines, cutting off its revenues. Closing off China’s access to US markets itself might be enough to finally blow up China’s deeply fraudulent banking system. Maybe the aim is to just disable China, derail it from its seeming aim of becoming the next world hegemon. Does Mr. Trump think he can do that without blowing up the rest of the world’s financial arrangements? The stock markets haven’t been digesting that story very well lately. Could the US government be collectively dumb enough to think that shale oil will permit this country to re-industrialize while the rest of the world stumbles back into a dark age?

More likely, all the advanced nations will make that downward journey together. The US is well on its way, despite all the MAGA bravado. The country is reeling in bad faith, delusion, official corruption, porno-pharmaceutical vice, and ethnic rancor. The people who live in FlyoverLand style themselves like Visigoths, all tatted up and armed to the teeth, moiling angrily at the edge of the Rome-like coastal enclaves. The elites want to stuff themselves inside their phones and live there. Guess what: that won’t be a “safe space.”

Tad Patzek in part 6 of his series explains that oil will begin to decline at about 7% per year any day now which means no one except the military will be flying in about 10 years and cars will stop shortly thereafter.

Oh, and there’s also a heatwave in the Arctic and Greenland is melting much faster than the experts predicted.

Where are the adults?

http://patzek-lifeitself.blogspot.com/2019/08/green-new-deal-vi-urgency-and-oil.html

Another side effect of renewable energy. In this case our denial genes can take a break because it’s out of sight and out of mind.

Imagine giant robots— like combine harvesters on steroids— scouring the bottom, hoovering up minerals from manganese to molybdenum and shitting out everything else, pulverized, in its wake. Although you don’t really have to, because they’re already building the fuckers.

The mind-blowing irony is that all this imminent deep-sea devastation is being driven by our appetite for renewable energy. That’s what’s finally driven deep-sea mining out of the realm of wide-eyed speculation into red-hot profitability. Rare-earth metals are an essential part of the batteries required for energy storage in solar and wind-energy systems, not to mention the burgeoning population of electric cars. They’re scattered like doubloons across places like Clipperton, just waiting to be scooped up. This grand new vista of environmental destruction has been incentivized by the environmental movement.

But hey, I’m an optimist. I can end on an upbeat note. It’s all going down at the bottom of the ocean, after all.

At least none of us will have to see the damage.

https://www.rifters.com/crawl/?p=8904

Tim Watkins elaborates on the link between energy and the economy.

http://consciousnessofsheep.co.uk/2019/07/24/the-art-of-painting-lipstick-on-a-pig/

On this side of the Atlantic, the trick has been to frame every item of bad economic news through the lens of Brexit. On the other side of the pond, Donald Trump must be held to blame for bad economic news. This is plausible enough simply because both Brexit and Trump have had a negative impact on trade; and thus can be held partially responsible for increasingly stormy economic headwinds. Behind the political froth, however, is a structural economic crisis that is simply not going to go away. This is the crisis of falling net energy (or rising energy cost of energy – ECoE) which means that no matter how the high priests of central banking manipulate the financial sector of the economy, we have now (in the absence of some energy miracle) reached the apex of human industrial growth.

I have argued before that the interaction between the real and the financial economy is like a game of musical chairs. The slowdown that we are witnessing in the real economy is akin to the chairs being removed. But the hints at rate cuts and stimulus – and their eventual appearance – are the sound of the central bankers’ keeping the music playing. After all, none of the bankers, or the politicians and economists, or even the financial media wants the music to stop playing on their watch. And so each will play their allotted part in painting lipstick on what is looking increasingly like a big fat and ugly economic pig; in the hope that when the bubble finally bursts, someone else will be in charge.

The Stock-Buyback Swindle
https://www.theatlantic.com/magazine/archive/2019/08/the-stock-buyback-swindle/592774/

This article has 2 traits common to almost everything written by “experts” today.

First, it observes some interesting fact:

“Before the 1980s, corporations rarely repurchased shares of their own stock. When they started to, it was typically a defensive move intended to fend off raiders, who were drawn to cash piles on a company’s balance sheet. By contrast, according to Federal Reserve data compiled by Goldman Sachs, over the past nine years, corporations have put more money into their own stocks—an astonishing $3.8 trillion—than every other type of investor (individuals, mutual funds, pension funds, foreign investors) combined.”

Second, the explanation offered by the experts demonstrates a total ignorance of the underlying cause. They never see the obvious:

Q: Why do companies buy their own stocks?
A: Because there isn’t an alternate investment that offers a better return.
Q: Why isn’t there a better alternative?
A: Because we’ve hit limits to growth caused by depletion of low cost energy.
Q: Why don’t experts understand this?
A: Humans evolved to deny unpleasant realities. In addition, some experts, like economists, are idiots.

Mac10 had a triple espresso today…

http://ponziworld.blogspot.com/2019/07/disney-world-end-game.html

“This is the first society in human history that is borrowing its way out of a debt crisis.”

“Something” happened after 2008 whereby this society – monkey hammered by two asset bubbles in a row – decided to turn its back entirely on reality.”

“Five of the top ten grossing movies of all time are comic book movies from the past decade. In other words, fifty years ago, the U.S. was launching 6 million pound rockets to the moon and back, at the beyond Earth’s orbit speed of 25,000 miles per hour, 15x speed of a bullet. Now we have record numbers of Disney comic book movies for adult audiences. The Saturn V remains the most powerful rocket ever launched into space. Do the words “what the fuck happened” ever come to mind?”

“As it was in 2007, lenders are Ponzi lending to their own clients to paper over the erosion of solvency. Neither side wants to admit the party is over. Remember the ratings agencies that lied in 2007 and said all of that subprime alchemy was ‘AAA’? Well, they are lying again, because they have a conflict of interest in keeping this party going as long as possible.”

“The amount of leverage, or debt to GDP, is up less dramatically, from 208 percent in June 2008 to 231 percent in June 2018.”

Tim Watkins elaborates on the same issue…

http://consciousnessofsheep.co.uk/2019/07/18/why-do-you-hate-renewables/

Put simply, there is not enough Planet Earth left for us to grow our way to sustainability. The only option open to us is to rapidly shrink our activities and our population back to something that can be sustained without further depleting the planet we depend upon. Continue with business as usual and Mother Nature is going to do to us what we did to the dodo and the passenger pigeon. Begin taking some radical action – which still allows the use of some resources and fossil fuels – to switch from an economy of desires to one of needs and at least a few humans might survive what is coming.

The final problem, though, is that very few people – including many of those who protest government inaction on the environment – are prepared to make the sacrifices required. Nor are our corporations and institutions prepared to forego their power and profits for the greater good. And that leaves us with political structures that will inevitably favour business as usual.

So no, I don’t hate “renewables” – I just regard those who blithely claim that we can deploy and use them to replace fossil fuels without breaking a sweat to be as morally bankrupt as any climate change denying politician you care to mention. There is a crash on the horizon, the likes of which we haven’t seen since the fourteenth century. When the energy cost of securing energy – whether fossil fuel, nuclear or renewable – exceeds the energy cost of sustaining the system; our ability to take mitigating action will be over. Exactly when this is going to happen is a matter of speculation (we should avoid mistaking inevitability for imminence). Nevertheless, the window for taking action is closing fast; and promising Bright Green utopias as we slide over the cliff edge is not helping anybody.

Another domino falls. Latin America now imports more oil than it exports.

http://crashoil.blogspot.com/2019/07/energia-en-latinoamerica-momento.html