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Is fast crash likely? Pt. 3

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Is fast crash likely? Pt. 3

Unread postby pstarr » Thu 05 Oct 2017, 18:35:35

Whoops! It's sort of behind a paywall, or you have to open the Krugman piece in an incognito window. The Gray Lady doesn't give it up for free anymore
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Re: Is fast crash likely? Pt. 3

Unread postby shortonoil » Thu 05 Oct 2017, 18:43:21

Given the interconnectivity of commerce between nations due to globalism, which is the intertwining of production distributed among many markets in many regions, just one debt collapse by a single major economy could snowball, crashing the entire world financial order."


Probably, except for Russia, they all look like basket cases. Even a limited war would bankrupt anyone fighting it. Is seems everyone has figured that out but the Saudis. It would be ironic if mankind avoided the last horseman of the apocalypses because they couldn't afford it! Petroleum just keeps on giving.
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Re: Is fast crash likely? Pt. 3

Unread postby pstarr » Thu 05 Oct 2017, 18:51:22

ha ha ha The Four Horseman are broke and can't afford oil :?

I'd suggest a Tesla and a Powerall but Dudes don't get much sunlight down in that nasty dark stable in HELL!
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Re: Is fast crash likely? Pt. 3

Unread postby Outcast_Searcher » Thu 05 Oct 2017, 19:59:18

donstewart wrote:global debt to GDP ratio
http://www.zerohedge.com/news/2017-06-2 ... on-327-gdp

The figures are from the 1st quarter of 2017, and were merely reprinted by Zero Hedge...they are not numbers COMPILED by Zero Hedge. You can research further, but I think they do not include unfunded liabilities.

Don Stewart

Ok. Got it. The rest of the world (the financial world, the economic news world, etc) uses government debt as the primary discussed metric for debt.

But of course doomers drag out every possible source of debt, to make the numbers sound scarier. Despite the fact that since the 2009 crash, for example, consumer debt per capita has shrunk meaningfully in the US. But of course, let's not discuss anything that doesn't sound like fast crash doom.
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Re: Is fast crash likely? Pt. 3

Unread postby donstewart » Thu 05 Oct 2017, 20:27:39

@outcast searcher
Just the facts. Explain it away however you choose to.
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Re: Is fast crash likely? Pt. 3

Unread postby ralfy » Thu 05 Oct 2017, 22:23:29

Outcast_Searcher wrote:It's all about finding a way to put a "doom" spin on things. Never mind that the effiency inspired by capitalism is a good thing. Never mind that people (and governments) CAN change if they are forced to. Never mind that things are beginning to change, i.e. renewable energy and automation, even if far more slowly than desirable, and even if humanity continues to stupidly grow the global population in their localized perceived self-interest.

At least there appear to be far more people around here that are willing to look at data and trends and concede that the "in our face" doom meme doesn't seem to hold water after constantly failing to materialize in over a decade -- and to the rational, not appearing imminent (barring large external random catastrophe like nuclear war or giant meteor).


It's not a doom spin but common sense.

Capitalism doesn't "inspire" efficiency but requires it. More important, the goal of efficiency isn't conservation but the opposite. Again, no spin there, doom or otherwise.

The point about governments and people changing is based on naivete.

Renewable energy has low returns and quantity. Automation as part of efficiency in capitalist systems takes place because of the drive for greater consumption.

The point about humanity increasing population and consumption per capita is the reason for greater efficiency.

The rest of your post makes no sense as you argue that either everything is fine or we face a global catastrophe.
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Re: Is fast crash likely? Pt. 3

Unread postby asg70 » Thu 05 Oct 2017, 22:35:42

onlooker wrote:no need to worry about resources since we can print money from thin air endlessly hehe.


Typical strawman.

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It's possible to worry about resources without buying into an insta-debt-bomb narrative. But perma-doomers have a binary doomer/corny way of looking at things. There's no middle-ground.
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Re: Is fast crash likely? Pt. 3

Unread postby marmico » Fri 06 Oct 2017, 02:33:08

The US nonfinancial sector (households, business firms and government) debt to GDP ratio has been flat as a pancake @ 250% since 2009. The US financial sector debt to GDP ratio has declined since 2009.

See Yardeni, Figure 2
https://www.yardeni.com/pub/fofdebtmeas.pdf

Total nonfinancial sector debt is $48 trillion.

Current fixed assets and consumer durable goods is $62 trillion, exclusive of land value.

https://fred.stlouisfed.org/release/tab ... nid=145900

Any member of the ETP Bozo Club want to take a stab at calculating land value? Someone did and came up with a value of $23 trillion in 2009.

https://www.bea.gov/papers/pdf/new-esti ... larson.pdf

Using 2009 land value and 2016 fixed assets and consumer durables gives a total of $85 trillion in assets.

$85 trillion in assets less $48 trillion in debt equals owner equity of $37 trillion or ~200% of GDP. So much for end is nigh.
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Re: Is fast crash likely? Pt. 3

Unread postby donstewart » Fri 06 Oct 2017, 06:31:31

is debt real?
We can ponder Catalonia and Puerto Rico. Why do the Supreme Rulers of the EU think that beating up grandmothers who turn out to vote in Catalonia is a 'measured response' and 'the law is the law and obedience is not optional'? Why did Trump, after seeing the devastation in Puerto Rico, say that 'the debts will never be repaid'' and then reverse himself a day later?

My daughter in Oregon says that the West Coast will never slide into the Pacific because 'it is all held together by blackberry roots'. I submit that the modern financial and political system is held together by debt. The Powers That Be simply won't face the facts of what they have wrought. Instead, we will get one of two solutions. Trump will go to Congress to get more money, paid for by more debt, to give to Puerto Rico so that they can both rebuilt and also continue to make payments on their bonds. And the EU, and Spain, will become ever more of a police state to force people to keep working to pay interest on the debts. Francoism is alive and well in Spain. The system will woke until it explodes.

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Re: Is fast crash likely? Pt. 3

Unread postby baha » Fri 06 Oct 2017, 07:29:09

Or we can have Jubilee!!

A bible term that means forgiving all debts and starting again. It's supposed to be done every 7 years. Hence the timeline of bankruptcies and credit.

We are supposed to be a global economy. It should be clear to the entire planet that these debts will never be repaid. We should forgive our stupid past transgressions and start from a base of self-maintenance with cooperation. Work together to make the world operate on an immediate basis. Energy in, Energy out. No drawing from the future. Live within your means.

But help the people around you to be happy and successful. It will help you too.

The people in Catalonia should just sit down and say they will not get up until you bastards leave. You can beat me down but you can't make me get up, and do your bidding.
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Re: Is fast crash likely? Pt. 3

Unread postby shortonoil » Fri 06 Oct 2017, 07:35:16

no need to worry about resources since we can print money from thin air endlessly hehe.


The central banks can print until the credit markets collapse. The credit markets are the mechanism that must be used to get that conjured money into circulation. It will function until falling bond rates crush it, or they run out of assets to cannibalize. A third of Europe's sovereign bonds are now already paying negative rates. It is now costing the world $2.7 trillion a year to keep supplying oil, and its products to the economy. That will continue to squeeze credit spreads until the banking, and monetary/ financial system stop functioning.
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Re: Is fast crash likely? Pt. 3

Unread postby donstewart » Fri 06 Oct 2017, 07:38:12

Another debt consideration?

From Tim Morgan's current blog post:
Energy policy, in fact, neatly encapsulates the overthrow of the markets. Where the big energy utilities are concerned, Mr Corbyn wants to nationalize them, whilst Mrs May wants to cap their prices.

Neither proposal is, even remotely, a market-based policy. Any adherent of Adam Smith-style market economics would propose neither nationalization nor price control, but would instead advocate breaking up these over-mighty players, in the interests both of competition and of consumer value. Yet no-one, anywhere within the British political cadre, seems even to have considered the break-up option.

Tim is complaining about the incompetent political and economic response to the current British malaise. However, I would like to zero in on the failure of ANY politician to consider breaking up the 'over-mighty players'. I'd like to take a little detour to help explain where I think the blackberry roots may be lurking. Max Keiser and Stacey Herbert, on a recent show, talked about how Bain Capital and KK&R, in their takeover of Toys R Us, sucked all the capital out of the company, which left it gasping for air with no reserve. So, consequently, the company goes bankrupt and the bonds are revealed as worthless. Meanwhile, Bain and Henry Kravis are rich from their ill-gotten gains.

I'm not an expert on the capital structure of the 'over-mighty players', but I would not be at all surprised if the amount of debt exceeds the true market value, just like Toys R Us. So the real problem is not the unwillingness to break up monopolies, but the fact that if the monopolies ARE broken up, the bankruptcy will be revealed. I expect the same to be true of the electric utility in Puerto Rico. The problem with bankruptcies is that the very few uber-rich control a highly disproportionate amount of the 'wealth', which is mostly in the form of money which is owed to them (in other words, poorer people owe them money).

Very, very few politicians are willing to step up to the plate on that one. Virtually all the politicians want to paper over the bankruptcy, one way or the other.

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Re: Is fast crash likely? Pt. 3

Unread postby Tanada » Fri 06 Oct 2017, 08:02:29

baha wrote:Or we can have Jubilee!!

A bible term that means forgiving all debts and starting again. It's supposed to be done every 7 years. Hence the timeline of bankruptcies and credit.

We are supposed to be a global economy. It should be clear to the entire planet that these debts will never be repaid. We should forgive our stupid past transgressions and start from a base of self-maintenance with cooperation. Work together to make the world operate on an immediate basis. Energy in, Energy out. No drawing from the future. Live within your means.

But help the people around you to be happy and successful. It will help you too.

The people in Catalonia should just sit down and say they will not get up until you bastards leave. You can beat me down but you can't make me get up, and do your bidding.


Naturally ancient Hebrew culture was built around the Jubilee cycle. The first year after Jubilee you could get a loan for 6 years very easily because the creditor had 6 years to make you pay. As you got closer and closer to the Jubilee the loans became shorter and riskier for the lenders and only those lenders trusted to a great extent were offered loans that last year because deadbeats knew they just had to delay paying until the Jubilee year and legally all debts were cancelled.

It did have the major benefit of limiting debt load on the culture in the sense that not even the government could engage in debts that lasted longer than seven years instead of the endless building debt cycle engaged in by most governments especially including the USA and out 20 trillion overhang.

Up until fiat money became widely accepted government funded wars were very limited in scope because after a certain debt limit was hit the government had to pay as it went. Under a system like that the scope of war is limited by the strength of the economy and the taxes that can be raised. The USA has actually played fast and loose with the concept of fiat money all the way back to the American Revolution when they issued paper 'continental dollars' that were not only over printed but vastly counterfeited. In the Civil War they did it again issuing United States Notes aka Greenbacks in the Union and the Confederate government printed its own paper currency as well. The vast majority of governments who tried the printing tactic fell apart making the paper worthless, but the USA gained a reputation from the Revolution and Civil wars that if you held onto their paper they would eventually make it good once the crisis was past. In fact the Constitution specifies that 'Lawful Currency' meaning money backed with precious metal is the only kind allowed. In 1964 the US Congress told the Treasury to stop using high quality silver for coins and since then the fiat debt has exploded beyond what most people can mentally understand.
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Re: Is fast crash likely? Pt. 3

Unread postby shortonoil » Fri 06 Oct 2017, 08:06:56

But of course doomers drag out every possible source of debt, to make the numbers sound scarier.


Do us a favor, and don't pay the power company the debt you owe them. Then you'll get to see how irrelevant private, and corporate sector debt is to the economy. With $2.5 trillion in debt the petroleum industry is paying 8% of its gross revenue out for debt service. Once they can't do that anymore they won't be pumping oil either.
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Re: Is fast crash likely? Pt. 3

Unread postby baha » Fri 06 Oct 2017, 08:13:16

Ha, ha, the answer is plain as day. I have seen it all my life but never had the power to implement it.

The Uber-rich don't have money or assets, they own debt. If the masses just sit down and say 'we ain't paying', Suddenly the rich have nothing. It's going to happen, then the rich crash and we just keep on keeping on. It will hurt...you will need candles...but we will get thru it. And be a better place.

This is why I build things. I want to put my hands on my assets and use them to make other assets. When the crash happens, I will still have my hands and my tools.
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Re: Is fast crash likely? Pt. 3

Unread postby tagio » Fri 06 Oct 2017, 08:55:01

Interesting OilPrice article cross-posted at Naked Capitalism today, "Tax Breaks Make $50 Oil Profitable."
https://www.nakedcapitalism.com/2017/10 ... e-u-s.html
Yves prefatory remark is "Another OilPrice post tonight raises doubts about the profit potential of US shale gas plays, most importantly the Permian Basin." [For those late to the party, she says "another" because Berman has written articles posted on OilPrice critiquing the alleged profitability of shale oil.]

And in the not-so-distant future I expect to see the headline, "Central Bank direct purchases of oil company bonds and banks' book of bad oil company loans makes $50, $40, $30 oil profitable."

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https://srsroccoreport.com/the-great-u- ... very-ugly/
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Re: Is fast crash likely? Pt. 3

Unread postby onlooker » Fri 06 Oct 2017, 08:59:05

shortonoil wrote:
no need to worry about resources since we can print money from thin air endlessly hehe.


The central banks can print until the credit markets collapse. The credit markets are the mechanism that must be used to get that conjured money into circulation. It will function until falling bond rates crush it, or they run out of assets to cannibalize. A third of Europe's sovereign bonds are now already paying negative rates. It is now costing the world $2.7 trillion a year to keep supplying oil, and its products to the economy. That will continue to squeeze credit spreads until the banking, and monetary/ financial system stop functioning.

Or people lose faith completely in currencies having any intrinsic value. As all this is unfolding, the economic players are simultaneously losing faith in money in the generic sense. The whole suite of negative repercussions will reinforce each other. As Don was saying when big financial entities can no longer hide their insolvency, a chain reaction can ensue freezing the credit markets. And as the Korowitz paper outlined this financial tumult can cause a a supply chain cross contagion that can in short order leave store shelves bare
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Re: Is fast crash likely? Pt. 3

Unread postby Outcast_Searcher » Fri 06 Oct 2017, 10:54:24

donstewart wrote:is debt real?
We can ponder Catalonia and Puerto Rico.

Well, that's an interesting question.

I just saw an article today where Musk is talking about wanting to have Tesla rebuild Puerto Rico's electric grid. (Presumably with Tesla equipment, though that was implied but not stated).

https://www.cnbc.com/2017/10/06/elon-mu ... maria.html

Now think about that. Puerto Rico had a moribund economy with $70+ billion in debt they'd defaulted on and were showing NO sign of wanting to repay BEFORE the hurricane wrecked their grid.

So how or why does Musk presume he's going to be paid? By the US via a guarantee? Or has he even thought about this? Or is he just grand-standing?

(Hint: no sane person who wants a strong chance of being repaid would lend Puerto Rico a CENT, based on their reputation and their economic status. The huge fall-off in their long term bond prices since the hurricane reflect the bond market's lack of confidence in their debt).

The left continues to shrilly blame the lenders instead of the debtors for the Greece debt fiasco. By implication, they want the US to fix Puerto Rico's entire infrastructure for free, even though they aren't a US state, and never have paid a dime in US income tax -- which funds both rescue operations and any government supplied infrastructure rebuilding. Oh, and of course the $70+ billion they have stiffed mostly US citizens.

So certainly, the masses don't take debt seriously enough, and have become all too complacent about assuming any problems can be solved, at least short term, by adding more debt.

...

The problem is that only works as long as people have the confidence to loan you the money you "need" (i.e. want) at affordable interest rates. That time will end at some point, if debt isn't managed responsibly and kept at sustainable levels.

I'm fairly sure we can agree on that idea. The tricky part is figuring out how much debt is OK.

If I could be "in charge" the biggest thing I'd change is that new debt would only be taken on for true emergencies/disasters. And in normal times when the economy is growing, we'd have a budget surplus -- to ensure net government debt remained a tiny value compared to annual GDP.

So is debt real? I'd say eventually -- when the consequences hit. But sadly, too many poorly educated (financially) people think that day can never come -- even when the world has plenty examples of that happening and devastating economies within the past 50 years.
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Re: Is fast crash likely? Pt. 3

Unread postby donstewart » Fri 06 Oct 2017, 11:27:17

Chinese Government and Peak Oil
https://medium.com/insurge-intelligence ... 33df2aeb6b

China is already a very large oil importer. The peak and subsequent decline that the government funded study predicts would make them ever more dependent on the cooperation of foreign countries. So you can see the logic behind China's current initiatives toward Russia and Saudi Arabia. Can they overcome not only the engineering problems of peak oil but also the geopolitical hostility of the United States?

Stay tuned....Don Stewart
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Re: Is fast crash likely? Pt. 3

Unread postby AdamB » Fri 06 Oct 2017, 11:40:47

tagio wrote:
marmico said:
2019 is the medium term for the ETP MAP. Do you not find it hard to imagine $41.16 in 85 days (2018) in the short term and $1.68 in 1195 days (2021) in the long term? The original ETP MAP was $44.42 on October 1


Your deliberate obtuseness and clownish behavior surrounding the ETP is sorely trying.


Cut and paste answers from sock puppets being relevant to those who are objectively testing the demise of this doomer porn idea how, exactly?
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