30 11 2018

Over the years, I’ve written a fair bit about debt and how the only way out is a Jubilee…. well, Michael Hudson, someone whose podcasts I now listen to religiously, has written a whole book about this subject. Here’s a review of the book I must buy myself……

A Review of Michael Hudson’s new book
…. and Forgive Them Their Debts

As published on Naked Capitalism

by John Siman

To say that Michael Hudson’s new book And Forgive Them Their Debts: Lending, Foreclosure, and Redemption from Bronze Age Finance to the Jubilee Year (ISLET 2018) is profound is an understatement on the order of saying that the Mariana Trench is deep. To grasp his central argument is so alien to our modern way of thinking about civilization and barbarism that Hudson quite matter-of-factly agreed with me that the book is, to the extent that it will be understood, “earth-shattering” in both intent and effect. Over the past three decades, gleaned (under the auspices of H


arvard’s Peabody Museum) and then synthesized the scholarship of American and British and French and German and Soviet assyriologists (spelled with a lower-case a to denote collectively all who study the various civilizations of ancient Mesopotamia, which include Sumer, the Akkadian Empire, Ebla, Babylonia, et al., as well as Assyria with a capital A). Hudson demonstrates that we, twenty-first century globalists, have been morally blinded by a dark legacy of some twenty-eight centuries of decontextualized history. This has left us, for all practical purposes, utterly ignorant of the corrective civilizational model that is needed to save ourselves from tottering into bleak neo-feudal barbarism.

This corrective model actually existed and flourished in the economic functioning of Mesopotamian societies during the third and second millennia B.C. It can be termed Clean Slate amnesty, a term Hudson uses to embrace the essential function of what was called amargi and níg-si-sá in Sumerian, andurārum and mīšarum in Akkadian (the language of Babylonia), šudūtu and kirenzi in Hurrian, para tarnumar in Hittite, and deror (דְּרוֹר) in Hebrew: It is the necessary and periodic erasure of the debts of small farmers — necessary because such farmers are, in any society in which interest on loans is calculated, inevitably subject to being impoverished, then stripped of their property, and finally reduced to servitude (including the sexual servitude of daughters and wives) by their creditors, creditors. The latter inevitably seek to effect the terminal polarization of society into an oligarchy of predatory creditors cannibalizing a sinking underclass mired in irreversible debt peonage. Hudson writes: “That is what creditors really wanted: Not merely the interest as such, but the collateral — whatever economic assets debtors possessed, from their labor to their property, ending up with their lives” (p. 50).

And such polarization is, by Hudson’s definition, barbarism. For what is the most basic condition of civilization, Hudson asks, other than societal organization that effects lasting “balance” by keeping “everybody above the break-even level”?

“Mesopotamian societies were not interested in equality,” he told me, “but they were civilized. And they possessed the financial sophistication to understand that, since interest on loans increases exponentially, while economic growth at best follows an S-curve. This means that debtors will, if not protected by a central authority, end up becoming permanent bondservants to their creditors. So Mesopotamian kings regularly rescued debtors who were getting crushed by their debts. They knew that they needed to do this. Again and again, century after century, they proclaimed Clean Slate Amnesties.”

Hudson also writes:

“By liberating distressed individuals who had fallen into debt bondage, and returning to cultivators the lands they had forfeited for debt or sold under economic duress, these royal acts maintained a free peasantry willing to fight for its land and work on public building projects and canals…. By clearing away the buildup of personal debts, rulers saved society from the social chaos that would have resulted from personal insolvency, debt bondage, and military defection” (p. 3).

Marx and Engels never made such an argument (nor did Adam Smith for that matter). Hudson points out that they knew nothing of these ancient Mesopotamian societies. No one did back then. Almost all of the various kinds of assyriologists completed their archaeological excavations and philological analyses during the twentieth century. In other words, this book could not have been written until someone digested the relevant parts of the vast body of this recent scholarship. And this someone is Michael Hudson.

So let us reconsider Hudson’s fundamental insight in more vivid terms. In ancient Mesopotamian societies it was understood that freedom was preserved by protecting debtors. In what we call Western Civilization, that is, in the plethora of societies that have followed the flowering of the Greek poleis beginning in the eighth century B.C., just the opposite, with only one major exception (Hudson describes the tenth-century A.D. Byzantine Empire of Romanos Lecapenus), has been the case: For us freedom has been understood to sanction the ability of creditors to demand payment from debtors without restraint or oversight. This is the freedom to cannibalize society. This is the freedom to enslave. This is, in the end, the freedom proclaimed by the Chicago School and the mainstream of American economists. And so Hudson emphasizes that our Western notion of freedom has been, for some twenty-eight centuries now, Orwellian in the most literal sense of the word: War is Peace • Freedom is Slavery • Ignorance is Strength. He writes:

“A constant dynamic of history has been the drive by financial elites to centralize control in their own hands and manage the economy in predatory, extractive ways. Their ostensible freedom is at the expense of the governing authority and the economy at large. As such, it is the opposite of liberty as conceived in Sumerian times” (p. 266).

And our Orwellian, our neoliberal notion of unrestricted freedom for the creditor dooms us at the very outset of any quest we undertake for a just economic order. Any and every revolution that we wage, no matter how righteous in its conception, is destined to fail.

And we are so doomed, Hudson says, because we have been morally blinded by twenty-eight centuries of deracinated, or as he says, decontextualized history. The true roots of Western Civilization lie not in the Greek poleis that lacked royal oversight to cancel debts, but in the Bronze Age Mesopotamian societies that understood how life, liberty and land would be cyclically restored to debtors again and again. But, in the eighth century B.C., along with the alphabet coming from the Near East to the Greeks, so came the concept of calculating interest on loans. This concept of exponentially-increasing interest was adopted by the Greeks — and subsequently by the Romans — without the balancing concept of Clean Slate amnesty.

So it was inevitable that, over the centuries of Greek and Roman history, increasing numbers of small farmers became irredeemably indebted and lost their land. It likewise was inevitable that their creditors amassed huge land holdings and established themselves in parasitic oligarchies. This innate tendency to social polarization arising from debt unforgiveness is the original and incurable curse on our post-eighth-century-B.C. Western Civilization, the lurid birthmark that cannot be washed away or excised. In this context Hudson quotes the classicist Moses Finley to great effect: “…. debt was a deliberate device on the part of the creditor to obtain more dependent labor rather than a device for enrichment through interest.” Likewise he quotes Tim Cornell: “The purpose of the ‘loan,’ which was secured on the person of the debtor, was precisely to create a state of bondage” (p. 52 — Hudson earlier made this point in two colloquium volumes he edited as part of his Harvard project: Debt and Economic Renewal in the Ancient Near East, and Labor in the Ancient World).

Hudson is able to explain that the long decline and fall of Rome begins not, as Gibbon had it, with the death of Marcus Aurelius, the last of the five good emperors, in A.D. 180, but four centuries earlier, following Hannibal’s devastation of the Italian countryside during the Second Punic War (218-201 B.C.). After that war the small farmers of Italy never recovered their land, which was systematically swallowed up by the prædia (note the etymological connection with predatory), the latifundia, the great oligarchic estates: latifundia perdidere Italiam (“the great estates destroyed Italy”), as Pliny the Elder observed. But among modern scholars, as Hudson points out, “Arnold Toynbee is almost alone in emphasizing the role of debt in concentrating Roman wealth and property ownership” (p. xviii) — and thus in explaining the decline of the Roman Empire.

“Arnold Toynbee,” Hudson writes, “described Rome’s patrician idea of ‘freedom’ or ‘liberty’ as limited to oligarchic freedom from kings or civic bodies powerful enough to check creditor power to indebt and impoverish the citizenry at large. ‘The patrician  aristocracy’s monopoly of office after the eclipse of the monarchy [Hudson quotes from Toynbee’s book Hannibal’s Legacy] had been used by the patricians as a weapon for maintaining their hold on the lion’s share of the country’s economic assets; and the plebeian majority of the Roman citizen-body had striven to gain access to public office as a means to securing more equitable distribution of property and a restraint on the oppression of debtors by creditors.’ The latter attempt failed,” Hudson observes, “and European and Western civilization is still living with the aftermath” (p. 262).

Because Hudson brings into focus the big picture, the pulsing sweep of Western history over millennia, he is able to describe the economic chasm between ancient Mesopotamian civilization and the later Western societies that begins with Greece and Rome: “Early in this century [i.e. the scholarly consensus until the 1970s] Mesopotamia’s debt cancellations were understood to be like Solon’s seisachtheia of 594 B.C. freeing the Athenian citizens from debt bondage. But Near Eastern royal proclamations were grounded in a different social-philosophical context from Greek reforms aiming to replace landed creditor aristocracies with democracy. The demands of the Greek and Roman populace for debt cancellation can rightly be called revolutionary [italics mine], but Sumerian and Babylonian demands were based on a conservative tradition grounded in rituals of renewing the calendrical cosmos and its periodicities in good order. The Mesopotamian idea of reform had ‘no notion [Hudson is quoting Dominique Charpin’s book Hammurabi of Babylon here] of what we would call social progress. Instead, the measures the king instituted under his mīšarum were measures to bring back the original order [italics mine]. The rules of the game had not been changed, but everyone had been dealt a new hand of cards’” (p. 133).

Contrast the Greeks and Romans: “Classical Antiquity,” Hudson writes, “replaced the cyclical idea of time and social renewal with that of linear time. Economic polarization became irreversible, not merely temporary” (p. xxv). In other words: “The idea of linear progress, in the form of irreversible debt and property transfers, has replaced the Bronze Age tradition of cyclical renewal” (p. 7).

After all these centuries, we remain ignorant of the fact that deep in the roots of our civilization is contained the corrective model of cyclical return – what Dominique Charpin calls the “restoration of order” (p. xix). We continue to inundate ourselves with a billion variations of the sales pitch to borrow and borrow, the exhortation to put more and more on credit, because, you know, the future’s so bright I gotta wear shades.

Nowhere, Hudson shows, is it more evident that we are blinded by a deracinated, by a decontextualized understanding of our history than in our ignorance of the career of Jesus. Hence the title of the book: And Forgive Them Their Debts and the cover illustration of Jesus flogging the moneylenders — the creditors who do not forgive debts — in the Temple. For centuries English-speakers have recited the Lord’s Prayer with the assumption that they were merely asking for the forgiveness of their trespasses, their theological sins: “… and forgive us our trespasses, as we forgive those who trespass against us….” is the translation presented in the Revised Standard Version of the Bible. What is lost in translation is the fact that Jesus came “to preach the gospel to the poor … to preach the acceptable Year of the Lord”: He came, that is, to proclaim a Jubilee Year, a restoration of deror for debtors: He came to institute a Clean Slate Amnesty (which is what Hebrew דְּרוֹר connotes in this context).

So consider the passage from the Lord’s Prayer literally: … καὶ ἄφες ἡμῖν τὰ ὀφειλήματα ἡμῶν: “… and send away (ἄφες) for us our debts (ὀφειλήματα).” The Latin translation is not only grammatically identical to the Greek, but also shows the Greek word ὀφειλήματα revealingly translated as debita: … et dimitte nobis debita nostra: “… and discharge (dimitte) for us our debts (debita).” There was consequently, on the part of the creditor class, a most pressing and practical reason to have Jesus put to death: He was demanding that they restore the property they had rapaciously taken from their debtors. And after His death there was likewise a most pressing and practical reason to have His Jubilee proclamation of a Clean Slate Amnesty made toothless, that is to say, made merely theological: So the rich could continue to oppress the poor, forever and ever. Amen.

Just as this is a profound book, it is so densely written that it is profoundly difficult to read. I took six days, which included six or so hours of delightful and enlightening conversation with the author himself, to get through it. I often availed myself of David Graeber’s book Debt: The First 5,000 Years when I struggled to follow some of Hudson’s arguments. (Graeber and Hudson have been friends, Hudson told me, for ten years, and Graeber, when writing Debt; The First 5,000 Years, relied on Hudson’s scholarship for his account of ancient Mesopotamian economics, cf. p. xxiii). I have written this review as synopsis of the book in order to provide some help to other readers: I cannot emphasize too much that this book is indeed earth-shattering, but much intellectual labor is required to digest it.

ADDENDUM: Moral Hazard
When I sent a draft of my review to a friend last night, he emailed me back with this question:
— Wouldn’t debt cancellations just take away any incentive for people to pay back loans and, thus, take away the incentive to give loans? People who haven’t heard the argument before and then read your review will probably be skeptical at first.

Here is Michael Hudson’s response:
— Creditors argue that if you forgive debts for a class of debtors – say, student loans – that there will be some “free riders,” and that people will expect to have bad loans written off. This is called a “moral hazard,” as if debt writedowns are a hazard to the economy, and hence, immoral.

This is a typical example of Orwellian doublespeak engineered by public relations factotums for bondholders and banks. The real hazard to every economy is the tendency for debts to grow beyond the ability of debtors to pay. The first defaulters are victims of junk mortgages and student debtors, but by far the largest victims are countries borrowing from the IMF in currency “stabilization” (that is economic destabilization) programs.

It is moral for creditors to have to bear the risk (“hazard”) of making bad loans, defined as those that the debtor cannot pay without losing property, status or becoming insolvent. A bad international loan to a government is one that the government cannot pay except by imposing austerity on the economy to a degree that output falls, labor is obliged to emigrate to find employment, capital investment declines, and governments are forced to pay creditors by privatizing and selling off the public domain to monopolists.

The analogy in Bronze Age Babylonia was a flight of debtors from the land. Today from Greece to Ukraine, it is a flight of skilled labor and young labor to find work abroad.

No debtor – whether a class of debtors such as students or victims of predatory junk mortgages, or an entire government and national economy – should be obliged to go on the road to and economic suicide and self-destruction in order to pay creditors. The definition of statehood – and hence, international law – should be to put one’s national solvency and self-determination above foreign financial attacks. Ceding financial control should be viewed as a form of warfare, which countries have a legal right to resist as “odious debt” under moral international law.

The basic moral financial principal should be that creditors should bear the hazard for making bad loans that the debtor couldn’t pay — like the IMF loans to Argentina and Greece. The moral hazard is their putting creditor demands over the economy’s survival.


The shape of things to come…..?

30 11 2018

Consciousness of Sheep keeps coming up with magnificent articles, like this one…..  

I know I keep saying this too, but the Matrix can’t continue lurching about for too much longer….


Despite a series of stock market scares, see-sawing oil prices and central banks jacking up interest rates, it seems likely that we are going to get through 2018 without experiencing the economic crash that many expected at the start of the year.  But while we may breathe a sigh of relief to have got to the festive season without a complete meltdown, the odds of another crash are still high.

Understanding what might go wrong is a particular problem according to Helen Thompson at the New Statesman.  Not least because 10 years on, we still cannot agree on what caused the last one:

“In July 2008 the then president of the European Central Bank (ECB), Jean-Claude Trichet, declared while announcing an increase in interest rates that the Eurozone’s fundamentals were sound. In fact, a recession had begun in the first quarter of that year.

“The causes of recessions are also sometimes wrongly diagnosed – even in retrospect. For instance, the impact of exceptionally high oil prices and the response of central banks to those prices are still routinely ignored as causes of the US and European recessions in the aftermath of the 2008 crash.”

Thompson’s article sets out a range of weaknesses across the global economy where a new economic meltdown could begin.  China, the (albeit anaemic) growth engine of the global economy for the last decade, has developed debt problems not dissimilar to those in the west in 2008:

“Economic growth in China has been slowing since the second half of 2017, and even the growth of the first half of that year was an interruption of a downward slope that began in 2013. Predictions of a Chinese financial crisis, owing to the country’s huge accumulation of debt since 2008, are made too readily. But China is now caught between a policy shift towards deleveraging to try to avoid such a debt-induced financial crisis, and another debt-financed push for higher growth amid an economic slowdown and a fierce trade war with the US. The Chinese government is struggling under these conflicting imperatives as the country’s dollar reserves fall.”

The Eurozone is also in trouble:

“Growth in the third quarter was the weakest since the second quarter of 2014. Germany’s economy contracted and Italy’s experienced no growth. If the Eurozone’s troubles were confined to Italy, there would be less cause for concern. But even Germany’s powerhouse economy is weakening: retail sales and exports have fallen for several successive months.”

Canada – like the UK – is a basket case just waiting the central bank to add that last interest rate hike to push it over the edge.  Things are more complicated across the border in the USA:

“The official US unemployment rate stands at 3.7 per cent, the lowest since 1969. But this masks a notably low participation rate (62.9 per cent), as significant numbers of people have withdrawn from the labour market. Ever-fewer jobs sustain middle-class lifestyles, especially in cities where housing costs have risen over the past decade.”

Of course, a “black swan” event beyond the areas that Thompson points to might also prove to be the trigger for the next meltdown.  A collapse in the Australian property market, renewed conflict in one of the successor states of the Soviet Union or an oil shock in the Middle East are not beyond the bounds of possibility in 2019.

What is clear, however, is that we are in uncharted territory when it comes to understanding and having any chance of fixing the next meltdown.  As Thompson points out:

“Central banks cannot fix what they set in motion after 2008. There appears to be no way forward that would let this economic cycle play out without risking much more disruption than the typical recession would bring. What is at stake is compounded by the problem of oil: shale production must be sustained by one or more of the following: high prices, extremely cheap credit or investors’ indifference to profitability.

“When a recession does come, central banks are unlikely to be able to respond without wading even further into uncharted monetary and political waters. And major economies will have significantly higher levels of debt than in 2008, interest rates will already be low and central banks will have enormous balance sheets. As a consequence, a policy response comparable to that of 2008 is likely to be more dangerous and insufficient to restore sustained growth. In times of fear, high debt ensures that, beyond a certain point, consumers simply cannot be incentivised to spend more. Even if they were to be tempted with ‘helicopter money’ from central banks – new money distributed freely to citizens – there is no guarantee at all that the money would do much for aggregate demand.”

Unusually for a mainstream academic Thompson – who is a professor of political economy at Cambridge University – grasps the impact of energy on the economy; particularly the hard choices that face politicians and central bankers as we transition from energy growth to energy decline:

“It has become impossible to confront the economic predicaments in the global economy without contemplating sacrifice, whether that be politicians and central bankers choosing where the heavy costs of the next policy response will fall, or recognising the role that energy sustainability has in maintaining material living standards and a liberal international politics…”

Tighter energy, coupled to the central bank policies that have kept business as usual limping along since the last meltdown, has given rise to a populist revolt that has thus far focused on the democratic pathways in liberal democracies, but has also favoured an emboldened nationalist right that has successfully targeted immigration as the cause of people’s woes.  Worse still, via social media, contrarian economists like Steve Keen, campaign groups like Positive Money and even central bank economists themselves, far more people understand that zero percent interest rates and quantitative easing were designed to favour the already wealthy at the expense of the majority of the population.  It would be lunacy for politicians and central bankers to attempt to do the same thing again this time around:

“The 2007-09 recessions exposed the political discontent that had grown in Western democracies over the previous decade. The next recession will begin with that discontent already bringing about substantial political disruption – from Brexit to Trump’s election to the Lega-Five Star coalition in Italy – which in itself has become a source of economic fear. The economic dangers that lurk are only likely to increase political fragmentation, especially when there is little understanding of the structural economic forces that serve to divide people.”

Unfortunately, the political left are like so many rabbits caught in the headlights in relation to the crisis that is coming.  Rather than the right wing economic and social policies of Trump or the European nationalist parties, the left is most opposed to the populism that these movements harness.  The opposite of populism, of course, is elitism… and that puts the political left on the same platform that Marie Antoinette found herself on in October 1793.

There is no written law that says that the political left or even benign liberals have to win in the end – that storyline only works in Hollywood movies.  In the crisis that we are about to face – whether it be 2019 or 2020 – responding with more policies that favour the wealthy while driving the faces of the poor into the dirt can only end one way, as Thompson reminds us:

“History is full of grisly episodes, usually in eras of revolution, when the politics of sacrifice have come to the fore. Indeed, in many ways, the whole ideal of Western liberal democracies in the postwar world has been about the importance of avoiding such a politics, even as the policies governments pursued unavoidably created winners and losers.

“But the conditions for politics have now become much harder, and the collective and individual question of our times has become how we can confront the inescapable political conflict generated by deep economic dysfunctionality without losing the democratic and liberal foundations of political order as we know it?”

The answer to this question might be the same as the answer to the two other existential crises facing us – How can we prevent runaway climate change without undermining our civilisation? And how can we prevent resource depletion and energy decline undermining it?  The answer is very likely to be that we can’t.


30 11 2018

dr_susan_krumdieckAn interesting narrative by Susan Krumdieck…….

Let’s explore a thought puzzle: Can you change the future?

You are transported onto the deck of the RMS Titanic, the largest ship ever built and designed to be unsinkable. It is midnight 13 April 1912. There are 2,224 people on the ship, which is under full steam on the fastest ever crossing of the Atlantic. You know what will happen, what will you do?



“You know that at 11:39pm on 14 April the lookout will spot an iceberg, and by 2:20am the ship and 1,517 people will be gone. Can you change the future?”

You know that at 11:39pm on 14 April the lookout will spot an iceberg, and by 2:20am the ship and 1,517 people will be gone. The ship was launched with lifeboats for less than half the number of people on board. You could take a self-sufficiency strategy and make sure you are near a lifeboat, but you know they will be allocated according to class and you might not get a spot.

Clearly, the best solution is to slow down, change course and not hit the iceberg. You know that the wireless operator will receive numerous warnings from other ships about large icebergs in the direct path. You could seek out the operator and help him communicate the danger to the captain. But the captain has hit icebergs with other ships, and the Titanic is unsinkable, so he may not think caution is warranted. Neither will the captain and senior officers want to contradict the owners. You could try to convince the first-class passengers to ask the captain to slow down. But they are not convinced of danger in such a comfortable and luxurious ship, and they don’t want to hear about problems when they have parties to attend. You could go below decks and organize the lower-class passengers to occupy the bridge and demand action to slow the ship and change the course. But the passengers don’t want to worry, they believe in the technology of the ship and that if there was a problem, the captain or the owners would do something.

You are running out of time. How can you slow down the ship, enabling the captain to avoid the iceberg? You could go to the engine room and explain to the men shovelling coal into the boilers that they need to reduce the use of coal by 80%, providing the chance to change course in time and safeguard the journey. They would probably be afraid for their jobs. Could you convince them to change the future?

Transition engineering, an approach to wicked problems

Transition engineering is the work of innovating and delivering the redevelopment of energy-consuming systems, which we must do to accomplish the 80% step down in greenhouse gas production required to avoid runaway climate change. Ingenuity, resourcefulness and creativity are the best resources for achieving change.  However, innovative thinking is stifled if we focus on catastrophic failure.

For example, modern buildings, cities, and the entire economy would fail if coal, oil and gas supplies suddenly dropped by 80%. A rapid reduction in energy supply would be a disaster — but rapid reduction in energy use is the only way to mitigate climate risk. The risks of unsustainable fossil energy use are exacerbated without immediate change, but imminent collapse due to energy shortage is unlikely. This dissonance between the problem and the possible actions can be referred to as a “wicked problem”.

Transition engineering is an approach to wicked problems. The approach starts with defining a specific system, learning the history and knowing the future. Energy use and emissions have grown beyond sustainable levels because the utility, energy return on energy invested, and net surplus to the economy from coal, oil and gas are colossal. Engineering and technology provided access to these benefits at bargain prices. We now refer to this unsustainable activity as business-as-usual (BAU), and it is difficult to imagine changing course or slowing down. Society and its leaders expect that technology will provide new sources of green energy, and keep the economy growing with minimal inconvenience. The transition approach includes honest assessment of green technologies and whether they actually can change or slow the BAU course.

The economics of short-term perceived risk

The innovation phase of the approach is an interdisciplinary discovery of the future, 100 years from now, where the wicked problem has been resolved and the energy system is managed sustainably. For example, when we explored Christchurch 100 years from now, we discovered a city with redevelopment of much of the paved land into productive uses, several electric trams and all buildings incorporating passive design and very low energy use. There was some reorganization of the land use, and the dominant travel mode was bicycles and electrified cargo cycles.

The back-casting phase uses this 100-year discovery model to interrogate the present and identify the key players in changing course. In all instances, the technology used in the 100-year discovery is known today, but projects to bring about the necessary change are few. The problem is the economics of short-term perceived risk. For example, the design tools and materials for near-zero passive buildings are already known, but the business of low-energy redevelopment is not growing fast enough.

Creating projects that shift energy use by 80%

The next phase is to develop shift projects and new business opportunities that improve energy performance through holistic measures. These shift projects must be beneficial and profitable. For example, From the Ground Up is a new social enterprise in Christchurch that forms partnerships between electric tram manufacturer Alstom, the city council, retailers along a main avenue, student volunteers, the local community and property developers. The aim is to redevelop an area of old, substandard low-density suburb near the university into higher density, transit-oriented development along a tram corridor into the central business district. The enterprise has developed the base data and business case for the redevelopments.

Another example is the redevelopment of old buildings in old areas of cities. Many are in locations that could become vibrant, walkable and transit-oriented urban eco-villages, but the projects must be done one at a time in each city. The shift project will develop a new renovation business that invests in old buildings in the right locations, becoming the owner of the improvements, taking over the energy, utility and waste contracts and charging clients rents. The return on the investments is in both capital gains and in improved rents and lower energy costs. The shift project includes an insurance product that de-risks investment in redevelopment by guaranteeing a minimum energy savings return for fully modelled and reviewed renovation designs.

The transition engineering approach is about creating projects that shift energy use to 80% less fossil fuel while realizing social benefits and making profits. The Global Association for Transition Engineering can provide consultation and training for companies, councils and organizations to take on their wicked problems and change course.

Susan Krumdieck is professor of mechanical engineering at the University of Canterbury, New Zealand, and founder of the Global Association for Transition Engineering

Interesting times ahead…..

29 11 2018

Very few people join all the dots, and as usual, Gail Tverberg does her best to do so here again…. There are so many signals on the web now pointing to a major reset it’s not funny.

Low Oil Prices: An Indication of Major Problems Ahead?

Many people, including most Peak Oilers, expect that oil prices will rise endlessly. They expect rising oil prices because, over time, companies find it necessary to access more difficult-to-extract oil. Accessing such oil tends to be increasingly expensive because it tends to require the use of greater quantities of resources and more advanced technology. This issue is sometimes referred to as diminishing returns. Figure 1 shows how oil prices might be expected to rise, if the higher costs encountered as a result of diminishing returns can be fully recovered from the ultimate customers of this oil.

In my view, this analysis suggesting ever-rising prices is incomplete. After a point, prices can’t really keep up with rising costs because the wages of many workers lag behind the growing cost of extraction.

The economy is a networked system facing many pressures, including a growing level of debt and the rising use of technology. When these pressures are considered, my analysis indicates that oil prices may fall too low for producers, rather than rise too high for consumers. Oil companies may close down if prices remain too low. Because of this, low oil prices should be of just as much concern as high oil prices.

In recent years, we have heard a great deal about the possibility of Peak Oil, including high oil prices. If the issue we are facing is really prices that are too low for producers, then there seems to be the possibility of a different limits issue, called Collapse. Many early economies seem to have collapsed as they reached resource limits. Collapse seems to be characterized by growing wealth disparity, inadequate wages for non-elite workers, failing governments, debt defaults, resource wars, and epidemics. Eventually, population associated with collapsed economies may fall very low or completely disappear. As Collapse approaches, commodity prices seem to be low, rather than high.

The low oil prices we have been seeing recently fit in disturbingly well with the hypothesis that the world economy is reaching affordability limits for a wide range of commodities, nearly all of which are subject to diminishing returns. This is a different problem than most researchers have been concerned about. In this article, I explain this situation further.

One thing that is a little confusing is the relative roles of diminishing returns and efficiency. I see diminishing returns as being more or less the opposite of growing efficiency.

The fact that inflation-adjusted oil prices are now much higher than they were in the 1940s to 1960s is a sign that for oil, the contest between diminishing returns and efficiency has basically been won by diminishing returns for over 40 years.

Oil Prices Cannot Rise Endlessly

It makes no sense for oil prices to rise endlessly, for what is inherently growing inefficiency. Endlessly rising prices for oil would be similar to paying a human laborer more and more for building widgets, during a time that that laborer becomes increasingly disabled. If the number of widgets that the worker can produce in one hour decreases by 50%, logically that worker’s wages should fall by 50%, not rise to make up for his/her growing inefficiency.

The problem with paying higher prices for what is equivalent to growing inefficiency can be hidden for a while, if the economy is growing rapidly enough. The way that the growing inefficiency is hidden is by adding Debt and Complexity (Figure 4).

Growing complexity is very closely related to “Technology will save us.” Growing complexity involves the use of more advanced machinery and ever-more specialized workers. Businesses become larger and more hierarchical. International trade becomes increasingly important. Financial products such as derivatives become common.

Growing debt goes hand in hand with growing complexity. Businesses need growing debt to support capital expenditures for their new technology. Consumers find growing debt helpful in affording major purchases, such as homes and vehicles. Governments make debt-like promises of pensions to citizen. Thanks to these promised pensions, families can have fewer children and devote fewer years to child care at home.

The problem with adding complexity and adding debt is that they, too, reach diminishing returns. The easiest (and cheapest) fixes tend to be added first. For example, irrigating a field in a dry area may be an easy and cheap way to fix a problem with inadequate food supply. There may be other approaches that could be used as well, such as breeding crops that do well with little rainfall, but the payback on this investment may be smaller and later.

A major drawback of adding complexity is that doing so tends to increase wage and wealth disparity. When an employer pays high wages to supervisory workers and highly skilled workers, this leaves fewer funds with which to pay less skilled workers. Furthermore, the huge amount of capital goods required in this more complex economy tends to disproportionately benefit workers who are already highly paid. This happens because the owners of shares of stock in companies tend to overlap with employees who are already highly paid. Low paid employees can’t afford such purchases.

The net result of greater wage and wealth disparity is that it becomes increasingly difficult to keep prices high enough for oil producers. The many workers with low wages find it difficult to afford homes and families of their own. Their low purchasing power tends to hold down prices of commodities of all kinds. The higher wages of the highly trained and supervisory staff don’t make up for the shortfall in commodity demand because these highly paid workers spend their wages differently. They tend to spend proportionately more on services rather than on commodity-intensive goods. For example, they may send their children to elite colleges and pay for tax avoidance services. These services use relatively little in the way of commodities.

Once the Economy Slows Too Much, the Whole System Tends to Implode

A growing economy can hide a multitude of problems. Paying back debt with interest is easy, if a worker finds his wages growing. In fact, it doesn’t matter if the growth that supports his growing wages comes from inflationary growth or “real” growth, since debt repayment is typically not adjusted for inflation.

Both real growth and inflationary growth help workers have enough funds left at the end of the period for other goods they need, despite repaying debt with interest.

Once the economy stops growing, the whole system tends to implode. Wage disparity becomes a huge problem. It becomes impossible to repay debt with interest. Young people find that their standards of living are lower than those of their parents. Investments do not appear to be worthwhile without government subsidies. Businesses find that economies of scale no longer work to their advantage. Pension promises become overwhelming, compared to the wages of young people.

The Real Situation with Oil Prices

The real situation with oil prices–and in fact with respect to commodity prices in general–is approximately like that shown in Figure 6.

What tends to happen is that oil prices tend to fall farther and farther behind what producers require, if they are truly to make adequate reinvestment in new fields and also pay high taxes to their governments. This should not be too surprising because oil prices represent a compromise between what citizens can afford and what producers require.

In the years before diminishing returns became too much of a problem (back before 2005, for example), it was possible to find prices that were within an acceptable range for both sellers and buyers. As diminishing returns has become an increasing problem, the price that consumers can afford has tended to fall increasingly far below the price that producers require. This is why oil prices at first fall a little too low for producers, and eventually seem likely to fall far below what producers need to stay in business. The problem is that no price works for both producers and consumers.

Affordability Issues Affect All Commodity Prices, Not Just Oil

We are dealing with a situation in which a growing share of workers (and would be workers) find it difficult to afford a home and family, because of wage disparity issues. Some workers have been displaced from their jobs by robots or by globalization. Some spend many years in advanced schooling and are left with large amounts of debt, making it difficult to afford a home, a family, and other things that many in the older generation were able to take for granted. Many of today’s workers are in low-wage countries; they cannot afford very much of the output of the world economy.

At the same time, diminishing returns affect nearly all commodities, just as they affect oil. Mineral ores are affected by diminishing returns because the highest grade ores tend to be extracted first. Food production is also subject to diminishing returns because population keeps rising, but arable land does not. As a result, each year it is necessary to grow more food per arable acre, leading to a need for more complexity (more irrigation or more fertilizer, or better hybrid seed), often at higher cost.

When the problem of growing wage disparity is matched up with the problem of diminishing returns for the many different types of commodity production, the same problem occurs that occurs with oil. Prices of a wide range of commodities tend to fall below the cost of production–first by a little and, if the debt bubble pops, by a whole lot.

We hear people say, “Of course oil prices will rise. Oil is a necessity.” The thing that they don’t realize is that the problem affects a much bigger “package” of commodities than just oil prices. In fact, finished goods and services of all kinds made with these commodities are also affected, including new homes and vehicles. Thus, the pattern we see of low oil prices, relative to what is required for true profitability, is really an extremely widespread problem.

Interest Rate Policies Affect Affordability

Commodity prices bear surprisingly little relationship to the cost of production. Instead, they seem to depend more on interest rate policies of government agencies. If interest rates rise or fall, this tends to have a big impact on household budgets, because monthly auto payments and home payments depend on interest rates. For example, US interest rates spiked in 1981.

This spike in interest rates led to a major cutback in energy consumption and in GDP growth.

Oil prices began to slide, with the higher interest rates.

Figure 11 indicates that the popping of a debt bubble (mostly relating to US sub-prime housing) sent oil prices down in 2008. Once interest rates were lowered through the US adoption of Quantitative Easing (QE), oil prices rose again. They fell again, when the US discontinued QE.

While these charts show oil prices, there is a tendency for a broad range of commodity prices to move more or less together. This happens because the commodity price issue seems to be driven to a significant extent by the affordability of finished goods and services, including homes, automobiles, and restaurant food.

If the collapse of a major debt bubble occurs again, the world seems likely to experience impacts somewhat similar to those in 2008, depending, of course, on the location(s) and size(s) of the debt bubble(s). A wide variety of commodity prices are likely to fall very low; asset prices may also be affected. This time, however, government organizations seem to have fewer tools for pulling the world economy out of a prolonged slump because interest rates are already very low. Thus, the issues are likely to look more like a widespread economic problem (including far too low commodity prices) than an oil problem.

Lack of Growth in Energy Consumption Per Capita Seems to Lead to Collapse Scenarios

When we look back, the good times from an economic viewpoint occurred when energy consumption per capita (top red parts on Figure 12) were rising rapidly.

The bad times for the economy were the valleys in Figure 12. Separate labels for these valleys have been added in Figure 13. If energy consumption is not growing relative to the rising world population, collapse in at least a part of the world economy tends to occur.

The laws of physics tell us that energy consumption is required for movement and for heat. These are the basic processes involved in GDP generation, and in electricity transmission. Thus, it is logical to believe that energy consumption is required for GDP growth. We can see in Figure 9 that growth in energy consumption tends to come before GDP growth, strongly suggesting that it is the cause of GDP growth. This further confirms what the laws of physics tell us.

The fact that partial collapses tend to occur when the growth in energy consumption per capita falls too low is further confirmation of the way the economics system really operates. The Panic of 1857occurred when the asset price bubble enabled by the California Gold Rush collapsed. Home, farm, and commodity prices fell very low. The problems ultimately were finally resolved in the US Civil War (1861 to 1865).

Similarly, the Depression of the 1930s was preceded by a stock market crash in 1929. During the Great Depression, wage disparity was a major problem. Commodity prices fell very low, as did farm prices. The issues of the Depression were not fully resolved until World War II.

At this point, world growth in energy consumption per capita seems to be falling again. We are also starting to see evidence of some of the same problems associated with earlier collapses: growing wage disparity, growing debt bubbles, and increasingly war-like behavior by world leaders. We should be aware that today’s low oil prices, together with these other symptoms of economic distress, may be pointing to yet another collapse scenario on the horizon.

Oil’s Role in the Economy Is Different From What Many Have Assumed

We have heard for a long time that the world is running out of oil, and we need to find substitutes. The story should have been, “Affordability of all commodities is falling too low, because of diminishing returns and growing wage disparity. We need to find rapidly rising quantities of very, very cheap energy products. We need a cheap substitute for oil. We cannot afford to substitute high-cost energy products for low-cost energy products. High-cost energy products affect the economy too adversely.”

In fact, the whole “Peak Oil” story is not really right. Neither is the “Renewables will save us” story, especially if the renewables require subsidies and are not very scalable. Energy prices can never be expected to rise high enough for renewables to become economic.

The issues we should truly be concerned about are Collapse, as encountered by many economies previously. If Collapse occurs, it seems likely to cut off production of many commodities, including oil and much of the food supply, indirectly because of low prices.

Low oil prices and low prices of other commodities are signs that we truly should be concerned about. Too many people have missed this point. They have been taken in by the false models of economists and by the confusion of Peak Oilers. At this point, we should start considering the very real possibility that our next world problem is likely to be Collapse of at least a portion of the world economy.

Interesting times seem to be ahead.

Heavy Oil Shock……

25 11 2018

paris fuel riots 2.jpg.jpg

As the French government increases taxes on petrol and diesel to encourage people to switch to ‘cleaner’ transport, as if they can afford to just dump the cars they now own to buy something really expensive…..  this is what collapse looks like, no doubt about it. And it’s spreading to Belgium…

paris fuel riots.jpg

How long before Alice’s “When Trucks Stop” scenario comes to realisation..?

For all the talk about electric cars and renewable electricity, global oil production rose above 100 million barrels a day last month.  For all the policy pronouncements to the contrary, the stark reality remains that our insatiable demand for oil, the products of oil, and all of the stuff that we transport with oil continues to drive up demand.

From Consciousness of Sheep…..

There is, however, a big problem with that 100mbb/d figure that has yet to make it to the forefront of media and political debate.  This is that not all oil is equal.  This ought to be obvious enough to anyone living in my part of the world; where our economic history was shaped by the difference between the low-quality bituminous coal at the east of the South Wales coalfield and the high-quality anthracite coal in the west.  The same issues are true for oil.  On the one hand there is the sweet crude from fields in Texas, Libya, Saudi Arabia and the Gulf States; on the other there are the ultra-light condensates fracked out of the shale plays, the bitumen boiled out of Canadian tar sands and the high-sulphur toxic stew being extracted in Kazakhstan.  The former powered the unprecedented burst of global industrial expansion between 1953 and 1973.  The latter are the dregs that humanity will have to get by on in the future.

Not, of course, that this has been a problem so far.  Those older oil fields are still producing – although many are past their peak – and with a little tweaking of the set-up, refineries can manage blends of heavy and light oils that approximate the sweet crude they were designed for.  But there are limits to the tweaking.  And as the world comes to depend increasingly on blends of too light and too heavy oils, refineries will not be able to supply enough of the fuels that we have built the global economy upon.

Refining uses a combination of heat and chemistry to “crack” the molecule chains in the crude oil into various lengths according to the fuel being produced – butane and petrol (gasoline) are the lightest, kerosene and diesel in the middle and the heaviest are fuel oils used in shipping and building heating.  And while you and I might value the lighter fuels for sparking up a barbecue or powering a car, for the global transportation system it is the middle and heavier fuels that are the most important.  Most important of all, of course, is the diesel oil that powers all of the heavy machinery and trucks that are essential to the extractive processes that convert naturally occurring materials into the resources used to manufacture all of the stuff – including our food – which we consume.

Simply looking at total global oil production, then, is only part of the story.  What we also need to know is what fuel products those 100 mbb/d are being converted into.  This is where a recent post on The Oil Crash blog should ring alarm bells.  Drawing on data from the JODI database, they show that:

“Since 2007 (and therefore before the official start of the economic crisis) the production of other [heavy] fuel oils is in decline and also seems perfectly consolidated…

“The fact is that if you have made changes in the refineries to crack more oil molecules and get other lighter products (and that is why less heavy fuel oil is produced), those molecules that used to go to heavy fuel oil should now go to other products. It follows, taking into account the added value of fuels with longer molecules, that these heavy fuel oils are being cracked especially to generate diesel and possibly more kerosene for airplanes and eventually more gasoline.”

Heavy oil production
Heavy fuel production

Concern about peak oil was always, ultimately a concern about peak diesel because of its central role in the global economy.  However, producing ever less heavy oils to maintain the output of diesel and kerosene (and eventually petrol) can only be a temporary solution.   Indeed, the JODI data shows an alarming decline in diesel fuel production since 2015:

Diesel fuel production

“That is why, dear reader, when you are told that the taxes on your diesel car will be raised in a brutal way, now you will know why.  Because they prefer to adjust these imbalances with a mechanism that seems to be a market (although this is actually less free and more intervened) to explain the truth. The fact is that from now on what can be expected is a real persecution against cars with internal combustion engines (gasoline will continue for a few years longer than diesel).”

To add to our woes, the decline in heavy oil production is compounded by new regulations that will dramatically increase demand for diesel just as the industry’s ability to produce it is in decline.  As Nick Cunningham at Business Insider reported back in July:

“A research paper from economist and oil market watcher Philip K. Verleger predicts there could be a shortage of low-sulfur diesel fuel in 2020 as a result of regulations from the International Maritime Organization (IMO) aimed at cutting sulfur emissions…

“Up until now, the maritime industry has been burning the residual fuel oil left over after the refining process. Fuel oil is the bottom of the barrel – it’s the cheapest, most viscous and dirtiest part of the barrel.”

The choice facing the shipping industry is whether to invest in expensive scrubbers and filters designed to capture sulphur that would otherwise escape into the atmosphere or whether to make much cheaper engine alterations in order to run ships on diesel.  It is difficult to argue with Cunningham assessment:

“By 2020, diesel production will need to rise by at least seven percent, according to Philip K. Verleger, on top of the three percent increase needed for road transport and other uses. All of it will need to be low-sulfur.”

If ship owners switch fuels, we are looking at a global oil price above $200 per barrel; with diesel fuel being priced well above anything ordinary working people can afford for powering cars; and other fuels following close behind.  This will impact British and American motorists far harder than those in Europe because of our systematic neglect of public transport and our insistence in building out into the suburbs.  The broader question, however, is whether the current strategy of relying on a combination of fuel taxes and higher prices is a sensible approach to diesel shortages.

Prices and taxes most often result in the misallocation of resources.  This is most obvious when we contrast the suffering of millions of people in poorer countries against the frivolous consumption of the fortunate top ten percent of the global population living in the G7 states.  However, because the growth in global energy consumption has allowed billions of people to experience an increase in their standard of living in the years since World War Two, the misallocation has appeared to be less urgent (to those in the developed states).  In the event that strategic fuel production falls – as it appears to be doing – continued misallocation will accelerate the process of collapse.

For example, most farmers depend upon diesel-powered machinery to maintain yields.  Unfortunately, many of those same farmers are already struggling to remain in business despite already receiving subsidies from the state.  And while there are some alternative power sources (batteries, biogas, hydrogen) for light vehicles, there is no means by which heavy diesel machinery and haulage vehicles can be substituted.  Thus, if diesel prices rise, either food prices rise accordingly or (and most likely both) farmers go out of business.  At the same time, however, the very richest one percent of the population is likely to regard the rise in diesel prices as a good thing since it will remove much of the road congestion they experience without preventing them from driving and flying.

The alternative would be to develop and implement a rationing scheme based on the need to maintain critical infrastructure (including food production) even if this comes at the expense of limiting private vehicle use and severely restricting commercial air travel.  In practice, unfortunately, our response to this looming fuel crisis is more likely to follow the pattern of our response to climate change; with powerful lobbies paying to distract our attention, large numbers denying the crisis exists, and most of those who acknowledge the crisis grasping at techno-utopian pseudo-solutions like electric cars and windmills.

All I can say is hold onto your hats because when oil prices spike above $200 and our ability to consume collapses, we are going to witness economic and social dislocation on a scale that will make Brexit and the policies of Donald Trump that everyone seems so exercised about look trivial.

As an aside, I currently have three French wwoofers, and you better believe they are right on top of collapse and planning all sorts of things to get ready, not least coming here to learna trick or two. I’m so proud of being able to teach them stuff…..

If the embedded video doesn’t show English subtitles, they are available at youtube….

Peak Oil & Drastic Oil Shortages Imminent: IEA

24 11 2018

While the IEA got a lot of coverage for its World Energy Outlook 2018 (WEO 18), there might be a little snippet that got way underappreciated. (from Cleantechnica)

On page 159 of its Outlook, accessible only behind a payment barrier, the following graph can be found:


It is clear to see that Peak Oil will be hit well before 2020, while demand keeps on rising, unless the world’s Oil Majors and State Owned Oil Companies would massively invest in new exploration, according to the IEA.

However, the Oil Majors did already heavily spend on new oil exploration in the years after 2000, where a fossil fuel hype with an accompanying coal boom lead up to an oil price of over $150 in 2008. While this oil price proved unsustainable for a crashing world economy, this oil exploration boom lead to very little new findings in the big scheme of things:

So what does that mean?

It means that a collapse of oil supply to half of its current size within only six years simply cannot be compensated by new oil findings and certainly not by unconventional oil sources like oil sands and fracking. That the Oil Majors did not pick up with new oil exploration after the oil price rose again to $100 per barrel in the years after 2008 is another sign that the world is already “overexplored,” as geologists put it. Instead the Oil Majors concentrated on a stock buyback, knowing full well that further exploration would be a waste of money while they are sitting on oil that will become very valuable even though the amount of oil they will extract will decline significantly.

In summary, the Oil Majors and State Owned Oil Companies (in this field notably the Initial Public Offering (IPO) of Saudi-Aramco, the world’s biggest oil company, has been scrubbed) are waiting for an oil price bonanza to happen, while the IEA is very concerned about future oil supply.

While the IEA has no credibility left when it comes to renewables (see following graph), because its forecasts historically have all been absurdly wrong, the IEA should possess some knowledge in the oil business and especially concerning the decline rates of existing conventional fields, which have been studied in depths for decades.

Notably the Peak Oil graph from the IEA (first graph in this article) has been unearthed by the Association of Study of Peak Oil and Gas (ASPO), which as an organization has itself published multiple studies on Peak Oil. While ASPO has put Peak Oil sooner than the IEA, in its latest study already at 2011 for conventional crude, it is remarkable that the IEA refuted this claim back then with the statement that Peak Oil would not be reached before 2020. Well, it surely looks like they corrected that statement for themselves now.

So what does that mean for investors in oil and the world economy?

Surely there could a handsome profit be made by riding the coming oil shortages, but one has to keep in mind that while the oil price may go through the roof, the barrels that can be sold also shrink fast and drastically. So there remains the question of how high the profits of the Oil Majors will rise and how much will this be appreciated by the stock price for these clearly dying companies. Furthermore, with these rapid stock swings, you compete with banking supercomputers that act in a millisecond timeframe, so you would have to be alert night and day for the point when the crash will come because of the world economy not being able to take the oil price anymore. As a conservative long term investor, this can only mean to get out of these stocks as soon as possible, while risk-loving investors can try to make a quick buck on the coming stock volatility, with the world economy crashing a couple of times due to ongoing undersupply in oil.

For the climate, this is excellent news, because the adoption of electric vehicles and clean transport in general will get a major boost and surely blow all current predictions out of the water. As an investor this is imho, where your money should be.

About the author: Dr. Harry Brinkmann got a Ph. D. in Physics in the working group “Applied Physics” from the Justus-Liebig-University in Gießen. In his free time he is contributing to working groups of Bündnis90/Die Grünen such as Bundesarbeitsgemeinschaft Energie (Federal working group energy) and likes arguing with people online over energy solutions and a sustainable future. Based in Berlin, he also writes and publishes German novels. 

Musings on motoring……

21 11 2018

It’s been pouring rain here in the last 24 hours, and the quagmire is making it rather difficult to do much around the place, especially grass cutting, which I have been doing almost non stop for two weeks now…. I need a day off, and so I’m writing…

The trip down in Glenda’s Little Suzi had me thinking about just how much cars have improved since I was a boy. My first memory of any car in the family was when my father got a job as a rep selling something or other, and his ‘company car’ was a Renault 4CV. I just cannot imagine anyone today being given anything remotely as small as that as a ‘company car’!

4CVI remember my dad raving about how good this car was with petrol and how enthusiastically he used to drive it around, even rolling it on its side once on icy roads in Haute Savoie…..  it was so light, he and his companion simply lifted it back on its wheels and drove off, with hardly any damage. No one got hurt either, even though seat belts hadn’t even been thought of back in ~1957, let alone air bags……..

To cut to the chase, when I was 16, my grandmother bought me one of these cars – I was too young to even get a learner’s permit, but back then you could get away with murder!

It cost the grand sum of $90. I learned to drive in this car, covering untold miles before eventually getting my licence.

My only memories of this little car was just how crude it was. Three speed gearbox, no heater, terrible handling, no power whatsoever, with a top speed that doesn’t allow it to even get a nought to sixty time! By today’s motoring standards, it was a total piece of crap, especially compared to the Suzuki Alto.

So out of interest, I thought I’d look up just how well this car did regarding fuel consumption, and to my amazement, they average 5.7L/100km. There was only one other car that could better that back then, Citroen’s 2CV which was even smaller and cruder, sporting a 360cc air cooled flat twin engine. They had a top speed of 80km/h (down a mine shaft) and returned 4.6L/100km…… The Suzi easily returns 4 to 4.5, even with a full load! I remember the Renault was so light (650kg), I could stand in front of it, grab the bumper with both hands, and lift the front wheels right off the ground!  Of course, the engine’s in the back, but still….

Compare with the Suzi, which weighs 800kg, has a bigger engine (1000cc vs 750) way more power (67BHP vs 19~21 depending on model) a top speed of 150km/h vs 98km/h, aircon, airbags, really comfortable seats you can sit in all day long without compromise, etc etc……. the Suzi would go faster in its third gear, with two more to go.

The Renault engine is OHV with a carburettor, the Suzi is DOHC with 4 valves per cylinder and fuel injected…… none of those things were remotely on the drawing boards of Renault car designers of course.

ALL these technological improvements, sadly, have gone into building bigger and heavier cars that, for their size, are of course much more economical than say a 1960’s Holden that would consume more fuel than a ot too big SUV.

Imagine if everyone drove Little Suzis instead…..