Laughing all the way to the cliff……

23 05 2014

Pope Benedict is quoted as having written “The promise was that when the glass was full, it would overflow, benefiting the poor. But what happens instead, is that when the glass is full, it magically gets bigger”.  This prompted in me memories of my youth when we were promised so much technology, none of us would have to ever work, because technology would replace labour, giving us limitless leisure time.

So what happened?

Money got in the way.  Sure, robots can build cars.  Yes, gigantic combine harvesters can cut thousands of acres of wheat (and it’s only a matter of time before they do this without a driver, like the mining industry is introducing driverless Tonka Trucks).  Even ‘checkout chicks’ are being replaced with infuriating self checkout lanes……. Then we have those even more infuriating robotic answering services which Jim Kunstler recently had this to say about:

Robot phone answering systems also allowed corporations to off-load the cost of doing business onto their customers, mostly in the form of wasting vast amounts of their customers’ time. Included in the off-load was the cost of paying receptionists (as telephone answerers used to be quaintly called) and all their medical and retirement benefits — just another manifestation of the vanishing middle class, by the way, since a lot of women used to be employed that way (let’s skip the gender equality side-bar for now). After a while, the added privilege of companies being able to evade responsibility for their actions hugely outweighed the cost-saving advantage of firing some lower level employees.

Trouble is, robots don’t buy cars, harvesters don’t buy bread, and computers don’t buy groceries……  Money buys those things.  So the providers of money had no choice but to keep us all enslaved using ‘Labour Productivity’ to ensure ‘we’ could earn the money to buy the stuff made by the technology that displaced our jobs.

The result is that today’s largest sector of the economy is the financial one.  For at least twenty years, we have been encouraged – dare I say browbeaten? – to borrow ever more money to buy stuff we don’t need and which won’t last, to impress people we don’t know or care about, creating mountains of waste and oceans of plastic……

Remember those..?

Speaking of plastic, I reckon it all started with credit cards.  I remember getting my first Bankcard in the late seventies.  What an innovation that was.  How primitive they were compared to the current ‘paywave’ technology!  The card had to be put in a machine that used the raised characters on the card to make carbon copies of your details, then you had to sign the form, all in triplicate…  can you imagine the fuss such a thing would cause in a modern supermarket queue?

I can’t remember what my credit limit was back then, but it wasn’t thousands of dollars, I’m sure of that.  And you wouldn’t pull it out for any old transaction, because you were still paid in cash back then……!  Yes dear reader, cash…  The paymaster would come to your desk with a tray full of brown envelopes with real money in them and a pay statement.  One of those envelopes had your name on it, and you had to sign a form saying you’d received it, and you counted your cash (including the coins!) to make sure no one had made an error.  But when computers came along, all those people lost their jobs, nobody was needed to count your money anymore.

I know I’m showing my age now.  And feeling all nostalgic about the good old days when petrol cost fifty cents a gallon, when the Club of Rome had only just published its Limits to Growth Report, and everyone just decided to ignore it, because 2020 was so far into the future, it would be someone else’s problem.

We all thought we were laughing all the way to the bank back then……  but little did we know we were in fact laughing all the way to the cliff.

Everything, and I mean everything today is about money.  Nobody ever does anything anymore unless there’s money to be made.  They’ll even do useless things, unsustainable things, unethical things, immoral things, unbelievably stupid things….. just for the money.  Even the government’s onto it.  If there’s money to be made, they’ll throw the poor, the sick, the elderly, anybody who can’t grow the money pile, onto the shit heap we call the economy.  What are they thinking?  How can greed take over like this?  How on Earth did the Australian people get sucked in by the lies this current government were proliferating before the election?  And then elect the worst government in all of human history?  Well, alright, Hitler was worse…….  but just give these bastards a chance to catch up.

Yes, you’ve worked it out……  I despair.  See you on the edge of the cliff.

PS.  Did anyone else see this momentous piece of news about tight oil in California?  I haven’t laughed so hard in a very long time…..

In 2011, the Energy Information Administration (EIA) of the US Department of Energy commissioned INTEK Inc., a Virginia-based consulting firm, to estimate how much oil might be recoverable from California’s vast Monterey Shale formation. Production of tight oil was soaring in North Dakota and Texas, and small, risk-friendly drilling companies were making salivating noises (within earshot of potential investors) about the potential for an even bigger bonanza in the Golden State.

INTEK obliged with a somewhat opaque report (apparently based on oil company investor presentations) suggesting that the Monterey might yield 15.4 billion barrels—64 percent of the total estimated tight oil reserves of the lower 48 states. The EIA published this number as its own, and the University of Southern California then went on to use the 15.4 billion barrel figure as the basis for an economic study, claiming that California could look forward to 2.8 million additional jobs by 2020 and $24.6 billion per year in additional tax revenues if the Monterey reserves were “developed” (i.e., liquidated as quickly as possible).
 
We at Post Carbon Institute took a skeptical view of both the EIA/INTEK and USC reports. In 2013, PCI Fellow David Hughes produced an in-depth study (and a report co-published by PCI and Physicians Scientists & Engineers for Healthy Energy) that examined the geology of the Monterey Shale and the status of current oil production projects there. Hughes found that the Monterey differs in several key respects from tight oil deposits in North Dakota and Texas, and that currently producing hydrofractured wells in the formation show much lower productivity than assumed in the EIA/INTEK report. Hughes concluded that “Californians would be well advised to avoid thinking of the Monterey Shale as a panacea for the State’s economic and energy concerns.”
 
On May 21 the Los Angeles Times reported that “Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national ‘black gold mine’ of petroleum.” The EIA had already downgraded its technically recoverable reserves estimate for the Monterey from 15.4 to 13.7 billion barrels; now it was reducing the number to a paltry 0.6 billion barrels.
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Are we there yet?

18 03 2013

A couple of years ago, I wrote a post with exactly the same title as this one, regarding whether we were at Peak Oil or not……  Well this one is about Peak Debt….. and the reason I’m writing it is that a momentous event in a tiny place with a population of just 1.1 million called Cyprus happened overnight, which could have enormous repercussions for the global economy……

One of John Lennon’s most pertinent lyric in a whole lifetime of song-writing this morning is “I read the news today, oh boy”…..

Traders braced for market turbulence amid bailout chaos in Cyprus

A Cypriot parliamentary vote on the proposed €10bn (£8.6bn – AU$12.5bn) international bailout, which also includes plans for a raid on bank deposits, is expected to be held on Monday. President Nicos Anastasiades said the bail-out was “painful” but necessary to avoid a “disorderly bankruptcy”.

Christopher Pissarides, a Nobel Prize-winning economist and chairman of the government’s economic advisory committee, warned that the island’s fragile economy would collapse within “two or three days” if the legislation was not passed.

What I want to know is, how many days will it take to collapse the economy if a bank run occurs?  Monday (local time) is a bank holiday.  Coincidence?  You tell me…..  but apparently there are queues at the ATMs in Nicosia already.  If this doesn’t cause a run on the banks, I don’t know what will.  It’s not even inconceivable that a run on banks in all the PIIGS nations of Europe could start over the next few days.

Steve Keen believes the EU has thrown Cyprus to the wolves.  In Business Spectator, Steve eurowrites

If there was one lesson that I thought the world had learnt from the Great Depression, it was the need to guarantee depositors’ funds. So much for that fantasy. Now the EU has shown that its obsession with austerity has gone so far that even this historical wisdom has been abandoned. Not only are depositors’ funds not guaranteed, they are being lost even in banks that have not (yet) failed.

So who will have confidence in banks, any bank, after this?  Is the money even there to be withdrawn…?  Steve Keen thinks not……

The public will be waiting a while: the cash currently simply doesn’t exist. Currency constitutes only a tiny percentage of the aggregate money supply – whether defined as that found in bank at-call cheque and savings accounts (M2), or including term deposits and other not-at-call accounts (M3). If everyone wants it, then only one in twenty will get it, if Europe’s figures are at all comparable to America’s (see figure 1). That’s why a collapse in confidence in deposits is called a bank run: only those who run first to the bank get their money.

Graph for The EU has thrown Cyprus to the wolves

Now most people have no idea that their money is not in the bank at all…..  and when the word gets out that if you want your dough right now,  you won’t get it, there will be some seriously pissed off people outside the banks…!

The Matrix utterly relies on confidence.  We are all (well mostly…) confident that because it is printed on a ten dollar note that it is actually worth ten bucks, then it must be.  It’s labelled legal tender even…..  what could go wrong?

Heaps…….

For starters, it appears a lot of Russians, wealthy ones one could reasonably expect, have been using Cypriot banks as safe havens for their Rubles.  Silly Ruskies…  But as that favourite show of mine (The Gruen Transfer) has been asking, “what would Putin do?”  I doubt he’ll be taking this lying down…..  the British government has already said they would rescue any armed services personnel in Cyprus who loses money over this…  The repercussions could be very unpleasant.  The stock market has already taken a 2% hit, though that sector of the economy goes up and down every time I sneeze…  The best the rest of the world can hope for is that Cyprus is sufficiently unique that it won’t spark panic in Athens and Madrid or in Lisbon, Dublin and Rome.  I know people taking their money out of Aussie banks today…..  not kidding.