The Greening of The West Leaves Other Countries a Devastated, Toxic Mess

8 07 2019

While the West receives shiny new products with the promise of saving the planet, places like Mongolia and Chile are suffering greatly. From ACH News.

I was driving yesterday and found myself amazed at how many hybrid cars there are now, remembering the “wait list” when the Prius first came out. It’s a booming business just getting started. Solar technology is everywhere. There are “solar farms” to enable entire cities to run off of solar panels. Wind turbines dot landscapes across the country. As climate change is a hot topic now (no pun intended), the West is doing its part by “greening” its energy usage and converting to alternative energy sources, like solar or wind power. Cars are traded in for the newest hybrid. It’s all being done because it’s “renewable” and “carbon neutral”.

As a culture, we are myopic. We only see what we want to see. We only see what the culture wants us to see and in this case, the culture wants us to see how amazing it is to buy a solar panel/hybrid car/wind turbine and do our part to curb global warming. We do it and feel great giving the culture our money, knowing, when we go to bed, we did this incredible, Earth-saving venture.

But what if we were really informed? What if we were given all the information on the creation of this “green” product? What if our “greening” was really, at the core, just more destruction?

Let’s visit a couple of places where minerals are mined for the production of our “alternative, save-the-Earth, green technology”.

Baotou, China, Inner Mongolia
Baotou, China: A toxic lake of mine and refinery tailings stretches for over 3.5 miles from Baogang Iron and Steel Corporation. One ton of rare earth produces 75 ton of acidic waste water, a cocktail of acids, heavy metals, carcinogens and radioactive material at three times background radiation. Photo: Toby Smith/Unknown Fields

Most people have never heard of Baotou, China. The same people probably could not (or would not) want to imagine life without it.

Baotou is one of the world’s largest suppliers of “rare earth” minerals. These are elements that are used in the manufacturing of tech gadgets (smart phones) and also our “green alternative energy”: magnets for wind turbines and parts for electric car motors. China produced 95% of the entire world’s supply of rare earth elements. Minerals are mined at the Bayan Obo Mine, just north of Baotou and processed at Baogang Steel and Rare Earth Complex. The rare earth minerals which come from this plant, primarily neodymium and cerium, are actually not so rare and can be found dispersed all over the planet. The problem lies in the extraction. In an article from BBC Future reporter, Tim Maughan (led by the group, Unknown Fields) says so eloquently,

Rare earth discharge, Baotou, China

The intriguing thing about both neodymium and cerium is that while they’re called rare earth minerals, they’re actually fairly common. Neodymium is no rarer than copper or nickel and quite evenly distributed throughout the world’s crust. While China produces 90% of the global market’s neodymium, only 30% of the world’s deposits are located there. Arguably, what makes it, and cerium, scarce enough to be profitable are the hugely hazardous and toxic process needed to extract them from ore and to refine them into usable products. For example, cerium is extracted by crushing mineral mixtures and dissolving them in sulphuric and nitric acid, and this has to be done on a huge industrial scale, resulting in a vast amount of poisonous waste as a byproduct. It could be argued that China’s dominance of the rare earth market is less about geology and far more about the country’s willingness to take an environmental hit that other nations shy away from.

Google Earth shows us the size of this lake that supports no life.

In a place that was once filled with farms as far as the eye could see, now lies a lake (which are called “tailing ponds), visible from Google Earth, filled with radioactive toxic sludge. The water is so contaminated that not even algae will grow. Maughan describes the chill he felt when he saw the lake: “It’s a truly alien environment, dystopian and horrifying”. Because the reservoir was not properly lined when it was built, waste leaked into the groundwater, killing off livestock, making residents sick and destroyed any chance of farming. In reality, though, farmers have long been displaced by factories. The people that remain are experiencing diabetes, osteoporosis and chest problems. Residents of what is now known as the “rare-earth capital of the world” are inhaling solvent vapors, particularly sulphuric acid (used for extraction), as well as coal dust. But hey, we need wind turbines to save the planet. And the electric car is definitely going to reduce carbon emissions.

I’m sorry to say that there is no amount of “greening” that going to remove this toxic sludge from the lives of those who live in Baotou. We are stealing the Earth from others. Our logic that solar/wind/the electric car is going to save the planet, instead of the most logical action of using far less, is destroying faraway lands and lives. It’s easy for us to sweep it all under the rug since we are not the ones directly affected by this lust for more energy consumption. We are simply sold on the latest and greatest technology that will save the planet and make our insatiable energy consumption a little bit easier to digest.

The public must be made aware of this catastrophe.

We must be willing to change or face the fact that people and earth and animals are dying for our inability to change.

Salar de Atacama, Atacama Desert, Chile

The International Energy Agency forecasts that the number of electric vehicles on the road around the world will hit 125 million by 2030. Right now, the number sits around 3.1 million. In order to support this growth, a lot of lithium is needed for the batteries to run this fleet. It is this lithium extraction that is destroying northern Chile’s Atacama Desert.

Lithium separation ponds, Atacama, Chile

Lithium is found in the brine of the salt flats, located in Chile. To extract the lithium from Salar de Atacama, holes are drilled into the flats to pump the brine to the surface. This allows lithium carbonate to be extracted through a chemical process. The whole process requires a lot of water. So much water in fact that the once life-supporting oasis is now a barren wasteland.

In an interview with Bloomberg, Sara Plaza tells the story heard time and time again: “No one comes here anymore, because there’s not enough grass for the animals,” Plaza says. “But when I was a kid, there was so much water you could mistake this whole area for the sea.” She recalls walking with her family’s sheep along an ancient Inca trail that flowed between wells and pastures. Now, an engine pumps fresh water from beneath the mostly dry Tilopozo meadow. “Now mining companies are taking the water,” she says.

The race for lithium extraction is viewed as a noble one. Electric cars are sold as a ticket to salvation from Climate Change. Electric auto makers want to make it easier and cheaper for drivers to convert to “clean”, battery-powered replacements for “dirty” combustion engines. Rather, they want more money and will sell us the “green” theory.

Extracting Atacama’s lithium means pumping large amounts of water and churning up salty mud known as brine. In Salar de Atacama, the heroic mission of saving the planet through electric cars is leaving another Indigenous community devastated.

If this was really about saving the planet, there would be regulations on single drivers in cars. Public transportation would be at the forefront, not affordable priced electric cars that EVERYBODY can own. Let’s be real here. The people that are poised to benefit the most from “green” energy are companies such as  Albemarle Corp. and Soc. Quimica & Minera de Chile SA, who are responsible for mining most of Chile’s lithium.

Sergio Cubillos, president of Atacama People’s Council, stands on an empty water tank at the village of Peine. Photo: Cristobal Olivares/Bloomberg

The locals, whose families have lived here for thousands of years, are not benefiting.

From Bloomberg: “The falling water levels are felt by local people. Peine, the village closest to the mining, has a license to pump 1.5 liters of water per second to supply 400 residents and a transient population of mine workers that can rise as high as 600. BHP’s Escondida copper mine has a license to pump 1,400 liters per second. Albemarle and SQM, the big lithium miners, have licenses to pump around 2,000 liters per second of brine.”

“We’re fooling ourselves if we call this sustainable and green mining,” says Cristina Dorador, a Chilean biologist who studies microbial life in the Atacama desert. 

Which begs the question: What is “green technology“?

The Earth is green technology. The blade of grass that grows towards the light is green technology. The breath of fresh air that is given to us by the plants on land and the plants in the ocean is green technology. The spring water that rises from the depths, mysteriously and miraculously, is green technology. This fragile environment that surrounds us, the unexplainable, intricately woven web of life that holds us, the environment that is degrading rapidly from our greedy lust for more and more, that is green technology. What we are being sold today from companies who are leading the rat-race of civilization is not green. This green technology that they speak of is actually dark red, almost black, stained with the radioactive, desecrated blood of people and earth.

In closing, from Derrick Jensen:

“There is no free lunch. Actions have consequences, and when you steal from others, the others no longer have what you stole from them. This is as true when this theft is from nonhumans as it is when it’s from humans.

But, as Upton Sinclair said, “It’s hard to make a man understand something when his job depends on him not understanding it.” It’s even harder to make people understand something when their whole way of life depends on them not understanding it.”





2019: World Economy Is Reaching Growth Limits; Expect Low Oil Prices, Financial Turbulence

10 01 2019

Posted on January 9, 2019 by Gail Tverberg

Another incisive self explanatory article by Gail Tverberg explaining the recent volatility and what outcomes we can expect from that this coming year (and next) MUST READ.

Financial markets have been behaving in a very turbulent manner in the last couple of months. The issue, as I see it, is that the world economy is gradually changing from a growth mode to a mode of shrinkage. This is something like a ship changing course, from going in one direction to going in reverse. The system acts as if the brakes are being very forcefully applied, and reaction of the economy is to almost shake.

What seems to be happening is that the world economy is reaching Limits to Growth, as predicted in the computer simulations modeled in the 1972 book, The Limits to Growth. In fact, the base model of that set of simulations indicated that peak industrial output per capita might be reached right about now. Peak food per capita might be reached about the same time. I have added a dotted line to the forecast from this model, indicating where the economy seems to be in 2019, relative to the base model.

Figure 1. Base scenario from The Limits to Growth, printed using today’s graphics by Charles Hall and John Day in Revisiting Limits to Growth After Peak Oil with dotted line at 2019 added by author. The 2019 line is drawn based on where the world economy seems to be now, rather than on precisely where the base model would put the year 2019.

The economy is a self-organizing structure that operates under the laws of physics. Many people have thought that when the world economy reaches limits, the limits would be of the form of high prices and “running out” of oil. This represents an overly simple understanding of how the system works. What we should really expect, and in fact, what we are now beginning to see, is production cuts in finished goods made by the industrial system, such as cell phones and automobiles, because of affordability issues. Indirectly, these affordability issues lead to low commodity prices and low profitability for commodity producers. For example:

  • The sale of Chinese private passenger vehicles for the year of 2018 through November is down by 2.8%, with November sales off by 16.1%. Most analysts are forecasting this trend of contracting sales to continue into 2019. Lower sales seem to reflect affordability issues.
  • Saudi Arabia plans to cut oil production by 800,000 barrels per day from the November 2018 level, to try to raise oil prices. Profits are too low at current prices.
  • Coal is reported not to have an economic future in Australia, partly because of competition from subsidized renewables and partly because China and India want to prop up the prices of coal from their own coal mines.

The Significance of Trump’s Tariffs

If a person looks at history, it becomes clear that tariffs are a standard response to a problem of shrinking food or industrial output per capita. Tariffs were put in place in the 1920s in the time leading up to the Great Depression, and were investigated after the Panic of 1857, which seems to have indirectly led to the US Civil War.

Whenever an economy produces less industrial or food output per capita there is an allocation problem: who gets cut off from buying output similar to the amount that they previously purchased? Tariffs are a standard way that a relatively strong economy tries to gain an advantage over weaker economies. Tariffs are intended to help the citizens of the strong economy maintain their previous quantity of goods and services, even as other economies are forced to get along with less.

I see Trump’s trade policies primarily as evidence of an underlying problem, namely, the falling affordability of goods and services for a major segment of the population. Thus, Trump’s tariffs are one of the pieces of evidence that lead me to believe that the world economy is reaching Limits to Growth.

The Nature of World Economic Growth

Economic growth seems to require growth in three dimensions (a) Complexity, (b) Debt Bubble, and (c) Use of Resources. Today, the world economy seems to be reaching limits in all three of these dimensions (Figure 2).

Figure 2.

Complexity involves adding more technology, more international trade and more specialization. Its downside is that it indirectly tends to reduce affordability of finished end products because of growing wage disparity; many non-elite workers have wages that are too low to afford very much of the output of the economy. As more complexity is added, wage disparity tends to increase. International wage competition makes the situation worse.

growing debt bubble can help keep commodity prices up because a rising amount of debt can indirectly provide more demand for goods and services. For example, if there is growing debt, it can be used to buy homes, cars, and vacation travel, all of which require oil and other energy consumption.

If debt levels become too high, or if regulators decide to raise short-term interest rates as a method of slowing the economy, the debt bubble is in danger of collapsing. A collapsing debt bubble tends to lead to recession and falling commodity prices. Commodity prices fell dramatically in the second half of 2008. Prices now seem to be headed downward again, starting in October 2018.

Figure 3. Brent oil prices with what appear to be debt bubble collapses marked.

Figure 4. Three-month treasury secondary market rates compared to 10-year treasuries from FRED, with points where short term interest rates exceed long term rates marked by author with arrows.

Even the relatively slow recent rise in short-term interest rates (Figure 4) seems to be producing a decrease in oil prices (Figure 3) in a way that a person might expect from a debt bubble collapse. The sale of US Quantitative Easing assets at the same time that interest rates have been rising no doubt adds to the problem of falling oil prices and volatile stock markets. The gray bars in Figure 4 indicate recessions.

Growing use of resources becomes increasingly problematic for two reasons. One is population growth. As population rises, the economy needs more food to feed the growing population. This leads to the need for more complexity (irrigation, better seed, fertilizer, world trade) to feed the growing world population.

The other problem with growing use of resources is diminishing returns, leading to the rising cost of extracting commodities over time. Diminishing returns occur because producers tend to extract the cheapest to extract commodities first, leaving in place the commodities requiring deeper wells or more processing. Even water has this difficulty. At times, desalination, at very high cost, is needed to obtain sufficient fresh water for a growing population.

Why Inadequate Energy Supplies Lead to Low Oil Prices Rather than High

In the last section, I discussed the cost of producing commodities of many kinds rising because of diminishing returns. Higher costs should lead to higher prices, shouldn’t they?

Strangely enough, higher costs translate to higher prices only sometimes. When energy consumption per capita is rising rapidly (peaks of red areas on Figure 5), rising costs do seem to translate to rising prices. Spiking oil prices were experienced several times: 1917 to 1920; 1974 to 1982; 2004 to mid 2008; and 2011 to 2014. All of these high oil prices occurred toward the end of the red peaks on Figure 5. In fact, these high oil prices (as well as other high commodity prices that tend to rise at the same time as oil prices) are likely what brought growth in energy consumption down. The prices of goods and services made with these commodities became unaffordable for lower-wage workers, indirectly decreasing the growth rate in energy products consumed.

Figure 5.

The red peaks represented periods of very rapid growth, fed by growing supplies of very cheap energy: coal and hydroelectricity in the Electrification and Early Mechanization period, oil in the Postwar Boom, and coal in the China period. With low energy prices,  many countries were able to expand their economies simultaneously, keeping demand high. The Postwar Boom also reflected the addition of many women to the labor force, increasing the ability of families to afford second cars and nicer homes.

Rapidly growing energy consumption allowed per capita output of both food (with meat protein given a higher count than carbohydrates) and industrial products to grow rapidly during these peaks. The reason that output of these products could grow is because the laws of physics require energy consumption for heat, transportation, refrigeration and other processes required by industrialization and farming. In these boom periods, higher energy costs were easy to pass on. Eventually the higher energy costs “caught up with” the economy, and pushed growth in energy consumption per capita down, putting an end to the peaks.

Figure 6 shows Figure 5 with the valleys labeled, instead of the peaks.

Figure 6.

When I say that the world economy is reaching “peak industrial output per capita” and “peak food per capita,” this represents the opposite of a rapidly growing economy. In fact, if the world is reaching Limits to Growth, the situation is even worse than all of the labeled valleys on Figure 6. In such a case, energy consumption growth is likely to shrink so low that even the blue area (population growth) turns negative.

In such a situation, the big problem is “not enough to go around.” While cost increases due to diminishing returns could easily be passed along when growth in industrial and food output per capita were rapidly rising (the Figure 5 situation), this ability seems to disappear when the economy is near limits. Part of the problem is that the lower growth in per capita energy affects the kinds of jobs that are available. With low energy consumption growth, many of the jobs that are available are service jobs that do not pay well. Wage disparity becomes an increasing problem.

When wage disparity grows, the share of low wage workers rises. If businesses try to pass along their higher costs of production, they encounter market resistance because lower wage workers cannot afford the finished goods made with high cost energy products. For example, auto and iPhone sales in China decline. The lack of Chinese demand tends to lead to a drop in demand for the many commodities used in manufacturing these goods, including both energy products and metals. Because there is very little storage capacity for commodities, a small decline in demand tends to lead to quite a large decline in prices. Even a small decline in China’s demand for energy products can lead to a big decline in oil prices.

Strange as it may seem, the economy ends up with low oil prices, rather than high oil prices, being the problem. Other commodity prices tend to be low as well.

What Is Ahead, If We Are Reaching Economic Growth Limits?

1. Figure 1 at the top of this post seems to give an indication of what is ahead after 2019, but this forecast cannot be relied on. A major issue is that the limited model used at that time did not include the financial system or debt. Even if the model seems to provide a reasonably accurate estimate of when limits will hit, it won’t necessarily give a correct view of what the impact of limits will be on the rest of the economy, after limits hit. The authors, in fact, have said that the model should not be expected to provide reliable indications regarding how the economy will behave after limits have started to have an impact on economic output.

2. As indicated in the title of this post, considerable financial volatility can be expected in 2019if the economy is trying to slow itself. Stock prices will be erratic; interest rates will be erratic; currency relativities will tend to bounce around. The likelihood that derivatives will cause major problems for banks will rise because derivatives tend to assume more stability in values than now seems to be the case. Increasing problems with derivatives raises the risk of bank failure.

3. The world economy doesn’t necessarily fail all at once. Instead, pieces that are, in some sense, “less efficient” users of energy may shrink back. During the Great Recession of 2008-2009, the countries that seemed to be most affected were countries such as Greece, Spain, and Italy that depend on oil for a disproportionately large share of their total energy consumption. China and India, with energy mixes dominated by coal, were much less affected.

Figure 7. Oil consumption as a percentage of total energy consumption, based on 2018 BP Statistical Review of World Energy data.

Figure 8. Energy consumption per capita for selected areas, based on energy consumption data from 2018 BP Statistical Review of World Energy and United Nations 2017 Population Estimates by Country.

In the 2002-2008 period, oil prices were rising faster than prices of other fossil fuels. This tended to make countries using a high share of oil in their energy mix less competitive in the world market. The low labor costs of China and India gave these countries another advantage. By the end of 2007, China’s energy consumption per capita had risen to a point where it almost matched the (now lower) energy consumption of the European countries shown. China, with its low energy costs, seems to have “eaten the lunch” of some of its European competitors.

In 2019 and the years that follow, some countries may fare at least somewhat better than others. The United States, for now, seems to be faring better than many other parts of the world.

4. While we have been depending upon China to be a leader in economic growth, China’s growth is already faltering and may turn to contraction in the near future. One reason is an energy problem: China’s coal production has fallen because many of its coal mines have been closed due to lack of profitability. As a result, China’s need for imported energy (difference between black line and top of energy production stack) has been growing rapidly. China is now the largest importer of oil, coal, and natural gas in the world. It is very vulnerable to tariffs and to lack of available supplies for import.

Figure 9. China energy production by fuel plus its total energy consumption, based on BP Statistical Review of World Energy 2018 data.

A second issue is that demographics are working against China; its working-age population already seems to be shrinking. A third reason why China is vulnerable to economic difficulties is because of its growing debt level. Debt becomes difficult to repay with interest if the economy slows.

5. Oil exporters such as Venezuela, Saudi Arabia, and Nigeria have become vulnerable to government overthrow or collapse because of low world oil prices since 2014. If the central government of one or more of these exporters disappears, it is possible that the pieces of the country will struggle along, producing a lower amount of oil, as Libya has done in recent years. It is also possible that another larger country will attempt to take over the failing production of the country and secure the output for itself.

6. Epidemics become increasingly likely, especially in countries with serious financial problems, such as Yemen, Syria, and Venezuela. Historically, much of the decrease in population in countries with collapsing economies has come from epidemics. Of course, epidemics can spread across national boundaries, exporting the problems elsewhere.

7. Resource wars become increasingly likely. These can be local wars, perhaps over the availability of water. They can also be large, international wars. The timing of World War I and World War II make it seem likely that these wars were both resource wars.

Figure 10.

8. Collapsing intergovernmental agencies, such as the European Union, the World Trade Organization, and the International Monetary Fund, seem likely. The United Kingdom’s planned exit from the European Union in 2019 is a step toward dissolving the European Union.

9. Privately funded pension funds will increasingly be subject to default because of continued low interest rates. Some governments may choose to cut back the amounts they provide to pensioners because governments cannot collect adequate tax revenue for this purpose. Some countries may purposely shut down parts of their governments, in an attempt to hold down government spending.

10. A far worse and more permanent recession than that of the Great Recession seems likely because of the difficulty in repaying debt with interest in a shrinking economy. It is not clear when such a recession will start. It could start later in 2019, or perhaps it may wait until 2020. As with the Great Recession, some countries will be affected more than others. Eventually, because of the interconnected nature of financial systems, all countries are likely to be drawn in.

Summary

It is not entirely clear exactly what is ahead if we are reaching Limits to Growth. Perhaps that is for the best. If we cannot do anything about it, worrying about the many details of what is ahead is not the best for anyone’s mental health. While it is possible that this is an end point for the human race, this is not certain, by any means. There have been many amazing coincidences over the past 4 billion years that have allowed life to continue to evolve on this planet. More of these coincidences may be ahead. We also know that humans lived through past ice ages. They likely can live through other kinds of adversity, including worldwide economic collapse.





Big Picture article

14 12 2018

It’s so nice reading an article that joins the dots….  I get so sick of people concentrating on one issue or another, ignoring everything else troubling civilisation.  From Consciousness of Sheep, who else….?

Britain has – apparently – been thrown into crisis overnight.  Meanwhile across the channel, French president Macron is desperately trying to extinguish the flames of another weekend of mass protests that have now spread to Belgium and Holland.  In Eastern Europe the hard-right are gaining support; even undermining the previously untouchable Angela Merkel’s power base in the former East Germany.  Across the Atlantic meanwhile, the lines between deranged Democrats and MAGA nationalists are being drawn in readiness for America’s second civil war.  We are surely living through the greatest crisis in modern history.

Well, yes indeed we are.  But everything set out in the first paragraph is no more than the froth on the beer.  These political spasms are merely the outward manifestation of a human catastrophe that has been decades in the making.

Two far greater symptoms of our predicament have gained at least some public traction this year.  First was an all too visible plastic pollution crisis that is increasingly difficult to ignore now that China has ceased acting as the West’s rubbish dump.  Second is the somewhat less visible insect apocalypse that has seen the near extinction of a raft of pollinating insect species; without which we humans are doomed to starvation.  Interestingly, while these two symptoms are only tenuously related to climate change, they have tended to be included under that shorthand heading.  Plastic certainly damages the environment, but its build up owes far more to the ongoing power of the petrochemicals industry and the myth of recyclingthan to changes in climate.  The same goes for the insects.  While there may have been some climactic impact on migrations and reproduction, the main cause is the vast quantities of chemical insecticides required by an industrialised agriculture tasked with feeding 7.5 billion humans on a planet that could barely feed one seventh of that without fossil fuels and agrochemicals.

In the affected areas, local populations have been stunned by a series of “red tide” events that result in the mass deaths of fish and other marine creatures.  Climate change is indirectly involved in these events because of the increased rainfall from warmer storms.  But once again it is our industrial agriculture that is the primary cause – the giant oxygen-free zones beneath algae and phytoplankton blooms that form because of artificial fertilisers washed off the land when it rains.  When marine creatures stray into these oxygen-free zones (which are pinkish-red in colour due to concentrated hydrogen sulphide) they suffocate before they can swim to safety.

Off most people’s radar is the ongoing sixth mass extinction, as we lose thousands of species every year.  Again, while some of this is directly due to the changing climate, the larger part is due to human activities like agriculture, deforestation and strip mining simply chewing up natural habitats to make way for the creation of the various resources – including food – required to sustain a human population that is projected to reach 10 billion by mid-century.

The use of the term “climate change” to describe these catastrophes is deceptive.  If we were looking at our predicament in totality, we would include these crises alongside climate change as a series of (often interacting) sub-sets of a much greater problem… let’s call it the “human impact crisis.”

Crucially, by focussing solely on a changing climate, we can exercise a form of psychological denial in which human civilisation is able to continue chasing infinite growth on a finite planet while yet-to-be-invented technologies are deployed to magically heal the damage that our over-consumptive lifestyles are having on the human habitat.

The focus on climate change also permits us to avoid any examination of those human activities that increasingly stand in the way of the bright green technological future we keep promising ourselves.  Shortages in a range of key resources, including several rare earths, cobalt, lithium, chromium, zinc, gold and silver are very likely to materialise in the next decade if Western countries get anywhere close to their targets for switching to renewable electricity and electric cars (even though even these are just a fraction of what would be required to decarbonise the global economy).

Energy is an even bigger problem.  For the first time since the dark ages, humanity is switching from high-density energy sources (nuclear, coal, gas and oil) to ultra-low density energy sources (tide, wind, wave and solar).  We are – allegedly – choosing to do this.  However, because we have depleted fossil fuels on a low-hanging fruit basis, it is costing us more in both energy and money to maintain the energy needed to power the global economy.  As more of our energy has to be channelled into energy production (e.g. the hugely expensive Canadian bitumen sands and the US fracking industry) ever less energy is available to power the wider economy. This has forced us into a crisis I refer to as “Schrodinger’s renewables,” in which the technologies being deployed supposedly to wean us off fossil fuels end up merely being added in order to maintain sufficient economic growth to prevent the entire civilisation collapsing.

This, of course, brings us back to the increasingly heated debates in the US Congress, the UK Parliament and the streets of 100 French towns and cities.  Economic growth is the fantasy that almost everyone is buying into as a solution to our predicament.  Sure, some call it “green growth,” but it isn’t.  In reality it is, and always was central bank growth.  Why?  Because every unit of currency in circulation in the West was created with interest attached.  In such a system, we either grow the economy or we inflate the value currency back to something more in line with the real economy.  The former is impossible and the latter is devastating… which is why central bankers around the world have been quietly panicking for the best part of a decade.

To be clear, since 1980 the western economic system has inflated a series of asset bubbles, each of which has subsumed and outgrown its predecessor.  In the 1980s companies bailed out failing companies to save themselves.  In the 1990s stock markets bailed out companies to save stock markets.  In the 2000s banks bailed out stock markets and then states and central banks bailed out banks.  Next time around it will be states and currencies that need bailing out.  And in the absence of space aliens, it is not clear who is going to be riding to the rescue.  What that means, dear reader, is that everything you depend upon (but didn’t know it) for life support – inter-bank lending systems, letters of credit and freight insurance, international trade arrangements, employment, state pensions, etc.  – is going to go away (at least until some kind of debt-write-off (either directly or via “helicopter money”) and a new currency system can be put into place.

The other legacy from this period of debt-based asset inflation is a series of grossly unequal societies; divided, ultimately, between those who get to spend the (uninflated) debt-based currency first and those (the 99 percent) who only get the currency after its value has been inflated away – primarily those who depend upon a wage/salary from employment rather than an income from shares and other investments.  Most people accept some inequality.  However a lack of economic growth (outside banking and tech) has created deep hostility to those political parties that cling to the pre-2008 neoliberal orthodoxy.  The result has been a growth in populist movements claiming to know how to restore the economy to rates of growth last seen in the 1990s.  Political economist Mark Blyth summed up the difference between the left and right wing variants of populism thus:

  • The right says neoliberalism ruined the economy and immigrants took your jobs
  • The left says neoliberalism ruined the economy and capitalists took your jobs.

Needless to say – as the boy Macron is learning to his cost – now is not a happy time to be a neoliberal politician.  The broader problem, however, is that the proposed solutions from the populists are no more likely to result in another round of economic growth simply because western civilisation is already well past the point of overshoot.  China – the place where most of the jobs went and where most of the stuff we consume is made – already consumes half of the world’s coal, copper, steel, nickel and aluminium.  It also consumes nearly two-thirds of the world’s concrete.  To grow at just 3.5 percent would require that China consume all of the world’s reserves of those resources by 2038 – at which point it would also be consuming a quarter of the world’s oil and uranium and half of the world’s grain harvest.  The impossibility of this is what people mean when they use the word “unsustainable” to describe our situation.

Nevertheless, even supposedly green parties cling to the promotion of economic growth as an electoral strategy.  Rather than admit the impossibility of further growth, however, they reach instead for some mythical “green growth” that will supposedly follow the industrial scale deployment of non-renewable renewable energy harvesting technologies like wind turbines and solar panels that require fossil fuels in their manufacture , and for which the planet lacks sufficient material reserves.  Promising de-growth is, however, politically toxic in the current climate.

Most green growth advocates imagine a switch from extraction and manufacturing to (largely digital) services that will somehow decouple resource and energy growth from GDP.  That is, we can all continue to prosper even as our use of planetary resources falls back to something like the amounts consumed in the 1750s.  Writing in Resilience, Jason Hickel gives the lie to this:

“This sounds reasonable on the face of it. But services have grown dramatically in recent decades, as a proportion of world GDP — and yet global material use has not only continued to rise, but has accelerated, outstripping the rate of GDP growth. In other words, there has been no dematerialization of economic activity, despite a shift to services.

“The same is true of high-income nations as a group — and this despite the increasing contribution that services make to GDP growth in these economies. Indeed, while high-income nations have the highest share of services in terms of contribution to GDP, they also have the highest rates of resource consumption per capita. By far.

“Why is this? Partly because services require resource-intensive inputs (cinemas and gyms are hardly made out of air). And partly also because the income acquired from the service sector is used to purchase resource-intensive consumer goods (you might get your income from working in a cinema, but you use it to buy TVs and cars and beef).”

And, of course, without the income derived from making all of that stuff for service providers to consume, nobody can afford to buy the services and the economy will collapse.  Not that anyone has noticed this for now, as we are descend into the politics of blame in which widening inequality and poverty at the bottom is blamed on one or other of a culture’s preferred out groups – Tories, Democrats, socialists, libertarians, migrants, the banks, the European Union, Israel, Angela Merkel, the Rothschild family, Donald Trump… choose your favourite pantomime villain; but don’t expect to be going anywhere but down.

Politics matter, of course.  In a future of economic contraction it is far better to be governed consensually by people who understand the predicament and who plan a route to deindustrialisation that has as few casualties as possible on the way down… one reason not to keep voting for parties that dole out corporate welfare at the top while driving those at the bottom to destitution.  That road tends to end with guillotines and firing squads.

For all of its passion and drama, however, the role of politics in our current predicament is somewhat akin to the choice of footwear when setting out to climb a mountain.  Ideally you want to choose a pair of stout climbing boots; but nobody is offering those.  For now the choice is between high heels and flip-flops to climb the highest mountain we have ever faced.  If we are lucky, the political equivalent a half decent pair of training shoes might turn up, but while the world is focussed on economic growth; that is the best we can hope for… and we still have to climb the mountain whatever shoes we wear.





How Donald Trump saved Civilization (and lost the planet)

22 10 2018

Just found this….  wow…….

 
The controversy swirling around murdered Saudi journalist Jamal Khashoggi has been moving Congress towards sending to the White House an Act* imposing broad sanctions on Saudi Arabia, effectively scrapping billions in pending arms sales.

Representative Adam B. Schiff of California, the senior Democrat on the House Intelligence Committee, said, “The kingdom and all involved in this brutal murder must be held accountable, and if the Trump administration will not take the lead, Congress must.”

***

In internal discussions, Mr. Kushner has urged the president and his aides not to abandon Prince Mohammed. But as Turkish officials leaked details of the grisly killing of Mr. Khashoggi and of the dismemberment of his body, the White House has become increasingly isolated in its defense of Saudi Arabia.

Take a moment and picture this scenario.
Caving to his image-advisors and pollsters who fret about a Blue Tide surging into key states, POTUS inks the sanctions.
As its mercantile supply line begins to dry up, Saudi Arabia does not blink. It does precisely what it said it would do. It retaliates by hitting the world where it hurts most: the oil supply.
For decades Saudi Arabia has been OPEC’s swing vote, able to turn up or down the light sweet crude flowing to international markets. No other producers have either the reserves or production to control the volume and thereby the price of petroleum.
Suppose they tightened the spigot. It would not be enough to merely reduce the flow. If they have learned anything in their years of military alliance with the Great Satan, it is the tactic of Shock and Awe. They close the valves. All of them. Call it the Third Middle East Oil Shock.
In spite of a record production year for the cartel of 32.78 million b/d, US sanctions on Iranian oil and deteriorating output from Venezuela have already begun pushing prices towards $100/barrel. Demand might be marginally slowing in climate-minded Europe or in economically stressed Turkey, Brazil, and Argentina, but in North America and Asia, oil consumption is still on an exponential trajectory. Despite the US’s shale oil production having increased at a spectacular annualized rate of over 5 million b/d (estimated), the hole created by Saudi Arabia’s withdrawal, accompanied by withdrawal of like supplies from its Middle Eastern OPEC neighbors out of enforced loyalty, would dwarf anything POTUS might have thought he held as a hole card.
Economic ripples became waves. Waves became a tsunami. The price of oil shoots to $400/b virtually overnight. It would take some weeks for that price to pass through refineries and reach retailers but already gas stations around the US jack up the price at the pump.
Then the Seventh Fleet sails into the Straits of Hormuz, but it is too little too late. The supertankers are empty. Short of landing the Marines to take the giant oil fields and recruiting an army of production engineers to run them, military options are few, and costly. Saudi Arabia, after all, is armed with state-of-the-art US weaponry, and with its honor at stake, is entirely capable of self-inflicting scorched earth if push comes to shove.
Meanwhile, back at home, everything descends to chaos. Markets crash. The most-energy-dependent sectors scramble to come up with downscaling plans that could keep the doors open, but within weeks — a month at the most — giants like WalMart and Amazon are shuttering million-square-foot warehouses. Freighters turn back to Shenzhen with full cargoes. Bankers are unwilling to extend lines of credit.
Economic contraction would spread like a pandemic across the face of Europe. It would reach into Russia and China, who had imagined themselves immune, but were already weakened by US economic sanctions. China’s giant economy demands 9 million barrels of refined oil each and every day.
Russia, now importing only 30,000 b/d, is likely to be the least harmed by a global energy supply drop, but is helpless to fend off the knock-on effects of global economic downturn, especially when its Chinese trading partner goes belly up. It could extend credit for gas purchases both Eastward and Westward but any expectation that it would be repaid would eventually be dashed. The world economy would be as a boxer who has been struck a knockout blow, still standing, but bound for the canvas.
In Scandinavia and Germany, breadlines form. In Spain and Italy, fascist movements take to the streets and find broad support. We’ve seen all this before, but this is a different beast. The event will be enormous, and it will be fast.
Central Banks and the Fed can meet in emergency sessions but the tools they used in earlier crises are gone, spent in 2008 and the lingering QE programs. In any case, this situation is not something that can be remedied by rejiggering debt. Energy is not money.
The televised bobbleheads we see wringing their hands over the Khashoggi affair, urging POTUS to stick up for “American values” would be mute. Their communications channels would be shutting down in any event. They might busy themselves thinking how they can feed their families as grocery store shelves go empty.
Of course, the other possibility would be that Donald Trump simply refuses to sign the sanctions bill and thereby saves Civilization. That is, until rising temperatures and rising seas erase it from memory.
Donald Trump has a chance here to do the right thing. He can kill Civilization and save the Earth. He just has to stick it to Saudi Arabia.

______

* Before Congress can take action of this kind, it is required to first invoke the Global Magnitsky Human Rights Accountability Act and give the President 120 days to investigate and recommend sanctions. Lawmakers did that on October 18.





Are NEW Chinese buildings really FALLING DOWN?

16 07 2018

Years ago, I remember hearing Nicole Foss saying that those Chinese ghost towns we have all heard about were never built to last; they were built to be finished so the builders could get paid by the government, and to hell with durability……

Well you would not believe how bad it actually is……  and to think that China consumed more cement over a recent three year period than the US consumed during the entire 20th century, for results like this, is simply appalling…. and it’s fast looking like it was all wasted.

ChineseCementDemand2011-2013

Australia’s economy utterly relies on China’s, and China’s is not looking too good now, especially after you watch the video below……. Nicole wrote this way back in 2011..:

Vulnerable Commodity Exporters

Commodity exporting nations, which were insulated from the effects of the 2008 financial crisis by virtue of their ability to export into a huge commodity boom, are indeed feeling the impact of the trend change in commodity prices. All are uniquely vulnerable now. Not only are their export earnings falling and their currencies weakening substantially, but they and their industries had typically invested heavily in their own productive capacity, often with borrowed money. These leveraged investments now represent a substantial risk during this next phase of financial crisis. Canada, Australia, New Zealand, are all experiencing difficulties:

Known as the Kiwi, Aussie, and Loonie, respectively, all three have tumbled to six-year lows in recent sessions, with year-to-date losses of 10-15%. “Despite the fact that they have already fallen a long way, we expect them to weaken further,” said Capital Economists in a recent note. The three nations are large producers of commodities: energy is Canada’s top export, iron ore for Australia and dairy for New Zealand. Prices for all three commodities have declined significantly over the past year, worsening each country’s terms of trade and causing major currency adjustments.

China – Not Just Another BRIC in the Wall

More than anything, the story of both the phantom recovery and the blow-off phase of the commodity boom, has been a story of China. The Chinese boom has quite simply been an unprecedented blow-out the like of which the world has never seen before:

China has, for years now, become the engine of global growth. Its building sprees have kept afloat thousands of mines, its consumers have poured billions into the pockets of car manufacturers around the world, and its flush state-owned enterprises (SOEs) have become de facto bankers for energy, agricultural and other development in just about every country. China holds more U.S. Treasuries than any other nation outside the U.S. itself. It uses 46% of the world’s steel and 47% of the world’s copper. By 2010, its import- and export-oriented banks had surpassed the World Bank in lending to developed countries. In 2013, Chinese companies made $90-billion (U.S.) in non-financial overseas investments.

If China catches a cold, the rest of the world won’t be sneezing – it will be headed for the emergency room.

There’s more to read about this on the Automatic Earth here….. an old article, but more relevant than ever.





Areas Of The World More Vulnerable To Collapse

16 06 2018

ANOTHER great post from SRSrocco…..  this one should be of particular interest to Australians though, because we are in a more vulnerable region…. and while Australia may look not too bad on those charts, it’s only because our relatively small population means we consume way less than most of the other nations of the Asia Pacific region…

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Certain areas of the world are more vulnerable to economic and societal collapse.  While most analysts gauge the strength or weakness of an economy based on its outstanding debt or debt to GDP ratio, there is another factor that is a much better indicator.  To understand which areas and regions of the world that will suffer a larger degree of collapse than others, we need to look at their energy dynamics.

For example, while the United States is still the largest oil consumer on the planet, it is no longer the number one oil importer.  China surpassed the United States by importing a record 8.9 million barrels per day (mbd) in 2017.  This data came from the recently released BP 2018 Statistical Review.  Each year, BP publishes a report that lists each countries’ energy production and consumption figures.

BP also lists the total oil production and consumption for each area (regions and continents).  I took BP’s figures and calculated the Net Oil Exports for each area.  As we can see, the Middle East has the highest amount of net oil exports with 22.3 million barrels per day in 2017:

The figures in the chart above are shown in “thousand barrels per day.”  Russia and CIS (Commonwealth Independent States) came in second with 10 mbd of net oil exports followed by Africa with 4 mbd and Central and South America with 388,000 barrels per day.  The areas with the negative figures are net oil importers.

The area in the world with the largest net oil imports was the Asia-Pacific region at 26.6 mbd followed by Europe with 11.4 mbd and North America (Canada, USA & Mexico) at 4.1 mbd.

Now, that we understand the energy dynamics shown in the chart above, the basic rule of thumb is that the areas in the world that are more vulnerable to collapse are those with the highest amount of net oil imports.  Of course, it is true that the Middle Eastern or African countries with significant oil exports can suffer a collapse due to geopolitics and civil wars (example, Iraq, and Libya), but this was not a result of domestic oil supply and demand forces.  Rather the collapse of Iraq and Libya can be blamed on certain superpowers’ desire to control the oil market as they are strategic net oil importers.

The areas with the largest net oil imports, Asia-Pacific and Europe, have designed complex economies that are highly dependent on significant oil supplies to function.  Thus, the areas and countries with the largest net oil imports will experience a higher degree of collapse. Yes, there’s more to it than the amount of net oil imports, but that is an easy gauge to use.   I will explain the other factors shortly.  If we look at the Asia-Pacific countries with the largest net oil imports, China, India, and Japan lead the pack:

China is a net importer of nearly 9 mbd of oil, followed by India at 4 mbd and Japan with 3.9 mbd.  Thus, as these net oil imports decline, so will the degree of economic activity.  However, when net oil imports fall to a certain level, then a more sudden collapse of the economy will result… resembling the Seneca Cliff.

We must remember, a great deal of the economic infrastructure (Skyscrapers, commercial buildings, retail stores, roads, equipment, buses, trucks, automobiles, etc etc.) only function if a lot of oil continually runs throughout the system.  Once the oil supply falls to a certain level, then the economic system disintegrates.

While China is the largest net oil importer, the United States is still the largest consumer of oil in the world.  Being the largest oil consumer is another very troubling sign.  The next chart shows the countries with the highest oil consumption in the world and their percentage of net oil imports:

Due to the rapid increase in domestic shale oil production, the United States net oil imports have fallen drastically over the past decade.  At one point, the U.S. was importing nearly three-quarters (75%) of its oil but is now only importing 34%.  Unfortunately, this current situation will not last for long.  As quickly as shale oil production surged, it will decline in the same fashion… or even quicker.

You will notice that Saudi Arabia is the sixth largest oil consumer in the world followed by Russia.  Both Saudi Arabia and Russia export a much higher percentage of oil than they consume.  However, Russia will likely survive a much longer than Saudi Arabia because Russia can provide a great deal more than just oil.  Russia and the Commonwealth Independent States can produce a lot of food, goods, commodities, and metals domestically, whereas Saudi Arabia must import most of these items.

Of the largest consumers of oil in the chart above, Japan and South Korea import 100% (or nearly 100%) of their oil needs.  According to the data put out by BP 2018 Statistical Review, they did not list any individual oil production figures for Japan or South Korea.  However, the U.S. Energy Information Agency reported in 2015 that Japan produced 139,000 bd of total petroleum liquids while S. Korea supplied 97,000 bd.  Production of petroleum liquids from Japan and South Korea only account for roughly 3% of their total consumption…. peanuts.

Analysts or individuals who continue to believe the United States will become energy independent are ignorant of the impacts of Falling EROI – Energy Returned On Investment or the Thermodynamics of oil depletion.  Many analysts believe that if the price of oil gets high enough, say $100 or $150; then shale oil would be hugely profitable.  The error in their thinking is the complete failure to comprehend this simple relationship… that as oil prices rise, SO DO the COSTS… 

Do you honestly believe a trucking company that transports fracking sand, water or oil for the shale oil industry is going to provide the very same costs when the oil price doubles????  We must remember, the diesel price per gallon increases significantly as the oil price moves higher.  Does the energy analyst believe the trucking companies are just going to eat that higher cost for the benefit of the shale oil industry??  This is only one example, but as the oil price increases, inflationary costs will thunder throughout the shale oil industry.

If the oil price shoots up to $100 or higher and stays there (which I highly doubt), then costs will start to surge once again for the shale oil industry.  As costs increase, we can kiss goodbye the notion of higher shale oil profits.  But as I mentioned in the brackets, I don’t see the oil price jumping to $100 and staying there.  Yes, we could see an oil price spike, but not a long-term sustained price as the current economic cycle is getting ready to roll over.  And with it, we are going to experience one hell of a deflationary collapse.  This will take the oil price closer to $30 than $100.

Regardless, the areas and countries with the highest oil consumption and net oil imports will be more vulnerable to collapse and will fall the hardest.  Just imagine the U.S. economy consuming 5 million barrels of oil per day, rather than the current 20 mbd.  The United States just has more stuff that will become worthless and dysfunctional than other countries.

Lastly, the end game suggests that the majority of countries will experience an economic collapse due to the upcoming rapid decline in global oil production.  However, some countries will likely be able to transition better than others, as the leverage and complexity of the economies aren’t as dependent on oil as the highly advanced Western and Eastern countries.





China is in trouble….

12 06 2018

Between yesterday’s revelation of Saudi Arabia’s appointment with 2030 and now this, the global economy is looking ever more shaky….
Republished from MISES WIRE..
06/09/2018

Before we discuss the economic situation of China, a few words about China’s strongman, Xi Jinping. The “new Chinese emperor” has engineered a meteoric rise. He started off as simple rural laborer but is now the most powerful Chinese president since Deng Xiaoping. Such a career path requires strength, tact, and probably a dash of unscrupulousness. 

While the rulers of China have been able all along to hedge their plans over longer periods than their Western counterparts have, the new legal situation has extended this planning horizon even further.1 In comparison with those of Western economies, China’s countermeasures against the crisis in 2008 were significantly more drastic. While in the US the balance sheet total of the banking system increased by USD 4,000bn in the years after the global financial crisis, the balance sheet of the Chinese banking system expanded by USD 20,000bn in the same period. For reference: This is four times the Japanese GDP.

increm-China-1.png

The following chart shows the expansion of the bank balance sheet total as compared to economic output. Did the Chinese authorities assume excessive risks in fighting the crisis?

increm-China-2.png

Neither the fact that China’s bank balance sheets amount to more than 600% of GDP nor the fact that they have doubled in terms of percentage of GDP in the past several years suggests a healthy development. Our friends from Condor Capital expect NPL ratios51F to rise in China, which could translate into credit losses of USD 2,700 to 3,500bn for China’s banks, and this is under the assumption of no contagion (!). By comparison, the losses of the global banking system since the financial crisis have been almost moderate at USD 1,500bn

The most recent crisis does teach us, however, that the Chinese are prepared to take drastic measures if necessary. China fought the financial crisis by flooding the credit markets: 35% credit growth in one year on the basis of a classic Keynesian spending program is no small matter.

increm-China-3.png

Chinese money not only inflates a property bubble domestically but also around the globe (e.g. in Sydney and Vancouver). Further support for the global property markets is in question, given the measures China has recently launched. Due to financial problems, Chinese groups such as Anbang and HNA will have to swap the role of buyer for that of seller.

The IMF has forecast a further doubling of total Chinese debt outstanding from USD 27,000bn in 2016 to USD 54,000bn in 2022. By comparison, in 2016 China’s GDP amounted to USD 11,200bn. This spells debt-induced growth at declining rates of marginal utility. From our point of view, this development – which we can also see in the West – is unsustainable.

increm-China-4.png

In its most recent report, “Credit Booms – Is China different?”, the IMF states that in 43 cases worldwide of strong credit growth (i.e. the ratio of credit to GDP grows more than 30% over five years), only five cases ended up without a significant slowdown or a financial crisis. The IMF also points out that no expansion of credit that started at a debt to GDP ratio above 100% of GDP ended well. It is worth noting that China has a high percentage of domestic as opposed to foreign debt, which definitely makes matters easier for the country. But the question is: Will it be different for China this time?

The 19th-century Opium Wars that China fought with England, which are deeply rooted within the collective memory of the Chinese people, are historical events that are of great importance in connection with the punitive tariffs imposed by the US, as they remain a fixed and integral part of the Chinese history curriculum in schools.2 If necessary, China could stir up anti-Western sentiment in order to implement measures that are hard on its own population, even if they are unpopular. The buck would of course stop with the Americans. Thus, the US could shoot itself in the foot with any escalation of the trade war, as we regard the ability to bear hardships and the cohesion of Chinese society as much stronger than those of the American society.

The demographic development of China is also worth a quick sidebar. The World Bank forecasts a population peak of 1.4bn for China in 2028. The decline in population that is predicted to set in around that time should proceed at a similar pace as the increase towards the peak.

increm-China-5.png

The fit-for-work population (aged 16 to 59) has been decreasing since 2012 and is expected to decline by almost 25% to 700mn by 2050. Thus China, much like the West, has the problem of an aging population.

increm-China-6.png

Conclusion

Unlike his Western competitors, China’s new strongman, Xi, can implement his long-term strategy in a targeted and gradual fashion. Xi explicitly underlined his goal of asserting China’s interests in the world by referring to military, economic, political, and diplomatic means in his speech at the National Congress in October 2017.3 He left no doubt that China was not willing to compromise in any shape or form with regard to its territorial integrity (N.B. Taiwan, Hong Kong, Tibet), and he issued point-blank threats against separatist tendencies.

However, the transformation of the economy could (intentionally or otherwise) cause economic distortions not only in China but globally. Recent years have been dominated by a massive expansion of credit. In fact, it is often said that China has blown the biggest credit bubble in history.

It seems, there are greater similarities between China and the US than may be visible at first glance. China builds real estate for a shrinking population, invests for an overindebted client (the US, which even insists on a drastic reduction of the bilateral trade deficit) and finances all this with money it does not have.4

  • 1.An analogy from the field of sports: The national sport of the USA is baseball; in China, it is Go. The approach to foreign politics is similar: The Americans are known for their short-term “hit and run” foreign policy, whereas the Chinese play the long game in their foreign policy and are very difficult to read in doing so.
  • 2.Recommended reading: The Opium Wars, by Julia Lovell
  • 3.http://www.bbc.com/news/world-asia-china-43466685
  • 4.A paraphrase of the famous quote from “Fight Club”: “We buy things we don’t need with money we don’t have to impress people we don’t like.”

Ronald-Peter Stöferle is managing partner and fund manager at Incrementum AG, Liechtenstein. He invests using the principles of the Austrian school of economics.