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Booming Economic Growth?

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Booming Economic Growth?

Unread postby KingM » Tue 03 Jul 2007, 09:55:12

As a caveat, although I believe in big disruptions from PO, I'm not a doomer, and still hold out hope that we'll get through to the other side without a massive collapse.

Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries. Africa, as always, is a basket case, and Latin America is mixed, but most other parts of the world are growing smartly. I find this hard to fathom in light of high oil prices.

Any thoughts?
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Re: Booming Economic Growth?

Unread postby Heineken » Tue 03 Jul 2007, 10:00:31

Expressions like "growth" and "economic boom" are hollow ones. They are symptoms of our terminal disease.

The only capital that matters is natural capital, and that is in bankruptcy or nearly so.
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Re: Booming Economic Growth?

Unread postby benzoil » Tue 03 Jul 2007, 10:30:03

KingM wrote:As a caveat, although I believe in big disruptions from PO, I'm not a doomer, and still hold out hope that we'll get through to the other side without a massive collapse.

Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries. Africa, as always, is a basket case, and Latin America is mixed, but most other parts of the world are growing smartly. I find this hard to fathom in light of high oil prices.

Any thoughts?


The Austrian economists would call this a "crack up" boom. It may also be the apogee (I hesitate to use the word peak) of globalization. All those natural resources and cheap labor have to come from somewhere.

My guess also is that the world economy isn't quite as decoupled from the U.S. as some would like to think. Assuming a major U.S. recession is right around the corner due to the housing bust, you shouldn't have to wait long to see how the rest of the world fairs.
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Re: Booming Economic Growth?

Unread postby MC2 » Tue 03 Jul 2007, 10:46:28

KingM wrote:As a caveat, although I believe in big disruptions from PO, I'm not a doomer, and still hold out hope that we'll get through to the other side without a massive collapse.

Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries. Africa, as always, is a basket case, and Latin America is mixed, but most other parts of the world are growing smartly. I find this hard to fathom in light of high oil prices.

Any thoughts?


I think it's an excellent question. I can't address all those countries you listed, but I do have some experience with two of them. Let's take Russia first. They have their own oil supply, so they're somewhat insulated from the immediate effects of a Mid-East Peak. They're also "enjoying" the emergence of a middle class, which is fueling their growth. In many ways, they're comparable to a third world country that's been propelled into the first world since the path they're following is similar for their people (more wants, more things available). The difference is they have already passed through the industrial phase. So, they are well-positioned for the post-industrial phase.

As for China, here is a nation that is in what I like to call "catastrophic growth." It will overshoot, but the powerful central organization that has always managed its society will be able to correct that (but it will be ugly.) The big variable is how long the oil supply will hold out, and, how much trauma can their environment stand before its ill effects stop the party. China will be a most interesting stage to spectate for the next couple of decades. As far as the economic boom, I see it continuing in most of the places you mention, for at least the next couple of years, barring some global depression. In fact, I expect the boom there will have a "rising tide" effect with most of the first world economies, even our own.
After around 2010, all bets are off. Either we move en masse to more sustainable architectures, or the party is over. I see some hopeful signs, as nuclear power is once again on the table, some new technologies are entering the mix, and a number of powerful trends are converging in human information processing.
It will be interesting. Will there be enough time to make a transition?
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Re: Booming Economic Growth?

Unread postby MrBill » Tue 03 Jul 2007, 11:17:41

KingM wrote:As a caveat, although I believe in big disruptions from PO, I'm not a doomer, and still hold out hope that we'll get through to the other side without a massive collapse.

Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries. Africa, as always, is a basket case, and Latin America is mixed, but most other parts of the world are growing smartly. I find this hard to fathom in light of high oil prices.

Any thoughts?


Sorry just in the process of answering this question in another thread.
1. On the price of oil demand shocks have proved more important than supply shocks. This is working with historical data going back to 1973, so it is no guarantee looking forward is historical patterns breakdown. None the less it is for many here counter intuitive.

2. There is only a casual relationship between the price of oil and GDP growth. This may be why we have seen strong global growth in the past few years despite rising energy prices as well as commodities and base metals as well as the higher prices have been lead by demand.

3. The price of oil responds to GDP growth, but only with a delay.In otherwords, cheap oil does not necessarily result in higher economic output (think Japan in 1990s), but higher economic output will eventually lead to higher energy prices due to demand using up slack existing capacity.


Source: Oil Consumption vs GDP

More tomorrow on demand lead GDP growth despite higher energy prices. And actually these higher prices for commodities and base metals have substantially improved some African countries external balances. Again, more on that tomorrow. I have to run. Cheers.
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Re: Booming Economic Growth?

Unread postby FoxV » Tue 03 Jul 2007, 11:46:49

KingM wrote:Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries.


From my topic Why is Everyone Printing?
Russia (M3): ---------- +49%
India (M3): ------------ +20.3%
China (M2): ----------- +17.2%
New Zealand (M3): -- +18%
Australia (M3): ------- +13%
Great Britain (M4): -- +13%
South Korea (M3): -- +11.3%
USA (M3): ------------- +12% (Est.)
Canada (M3): -------- +10%
Eurozone: ------------ +10%
Japan (M3): ----------- + 6%

*Data from John Embry, Sprott Asset Management, Toronto, Canada.


Because the US money supply growth is now exceeding 13% (latest on Shadowstats.com The rest of the world has to print to match the US debasement, or to nationalize the USDs coming in. The results is a huge amounts of cash flooding the markets, causing booms all over the place (remember US represents 25% of global GDP, so whatever they do has a large effect on the world markets)

As for the African countries, these places have so little money that when an oil company comes to town and starts throwing around a few $100M in exploration, their economies spike dramatically.

edit---
btw, from Bloomberg, looks like hedge funds are starting to fold. This is what the Bear Stern funds did before their collapse as well. If people start cashing out, there will be a run on their MBS/CDO crap (the "didn't want to be a forced seller in this market" part).

hedge funds have been a big cog in the global printing machines. When they go, so goes the credit bubble, so the Boom
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Re: Booming Economic Growth?

Unread postby Concerned » Tue 03 Jul 2007, 18:05:46

KingM wrote:As a caveat, although I believe in big disruptions from PO, I'm not a doomer, and still hold out hope that we'll get through to the other side without a massive collapse.

Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries. Africa, as always, is a basket case, and Latin America is mixed, but most other parts of the world are growing smartly. I find this hard to fathom in light of high oil prices.

Any thoughts?


Well don't forget that a BOOM really means the top 2% get to keep 80% plus of the worlds wealth.

Some of us first worlders 25% of the educated workforce can pick up some juicy crumbs.

Everyone else can enjoy the so called boom vicariously.

Certainly Russia has a great BOOM going with designer shops, BMW and private aircraft in high demand. More millionaires in Moscow than New York. Of course no one cares that the great mass of the population is wholly impoverished to the extent that by 2050 the Russian population will be halved.

Thats the economic miracle and BOOM happening over there, wealth transfer from the many to the few, it's also a global phenomenon.
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Re: Booming Economic Growth?

Unread postby KingM » Wed 04 Jul 2007, 08:25:25

I agree with many comments on this thread. However, the real economic growth measures of increasing manufacturing and rising standards of living in Third World countries are also increasing. With oil prices through the roof and other energy costs high as well, I can't figure out how this is happening.

It does give me hope, however. The undulating plateau that we seem to be entering gives us more leeway and more time to transition to other energy sources. It's going to mean a huge headache, but there's no question we have enough energy and money to make these changes if we start sooner, rather than later.
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Re: Booming Economic Growth?

Unread postby MrBill » Wed 04 Jul 2007, 08:37:44

To KillJoy. Last post deleted. Adds nothing to discussion. Takes up too much bandwidth. Nothing to do with Peak Oil Depletion Economics. Thanks. MrBill.
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Re: Booming Economic Growth?

Unread postby Heineken » Wed 04 Jul 2007, 09:32:02

KingM wrote:I agree with many comments on this thread. However, the real economic growth measures of increasing manufacturing and rising standards of living in Third World countries are also increasing. With oil prices through the roof and other energy costs high as well, I can't figure out how this is happening.

It does give me hope, however. The undulating plateau that we seem to be entering gives us more leeway and more time to transition to other energy sources. It's going to mean a huge headache, but there's no question we have enough energy and money to make these changes if we start sooner, rather than later.


Manufacturing & etc. are at peak because we are at peak oil. Peak oil equals peak economic activity and peak consumption. It's that simple. Energy costs are irrelevant in this mix. It's the availability of energy that counts. If the energy is there, it gets used.

The more economic "growth" there is, the more the natural world dies, and the less real basis for human life there ultimately is.

More "growth" is a reason for less hope, not more.

Isolating economics from ecosystems is flawed thinking.

Also, there is no evidence yet of an undulating plateau. If oil-exporting nations have to start earmarking more of their oil for their own domestic use, we could see a steep peak, effectively, at least as far as the US and Europe are concerned.
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Re: Booming Economic Growth?

Unread postby jdumars » Wed 04 Jul 2007, 12:53:20

This thread got me thinking about how this phenomenon is structured in terms of 'the curve' -- and I came up with something relatively interesting. In reality, I believe there are 3 peaks, and we are in the second of the three. I did a very rough diagram:

Image

With oil (or any discovery of a natural resource), there are 3 distinct stages. Discovery/Production -> Processing -> consumption. The time lag on these is unique for each type of resource, as some raw materials are easier and faster to process than others. In some cases, the lag is much longer for processing (many ores qualify), and some consumption takes longer because of time-to-market (i.e. transporting LNG). Oil seems on the surface to be fairly consistent across these bands, at least for light sweet. What I find most interesting is that the "echo" between the curves gives the perception of a plateau at the top of the curves, even though there is a perceivable drop-off limited to the affected sector. That is to say that consumers on the end will be 2 peaks removed from the physical reality. It also means that by the time Joe consumer is aware of the problem, it's way too late to do much about it, because we're further down the physical curve than we had previously considered. I believe we may be in the second curve, maybe just starting into the 3rd. The economic boom makes perfect sense if you view it through this lens.

I know this is a little off-topic, but I'd appreciate any thoughts on this.
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Re: Booming Economic Growth?

Unread postby halcyon » Wed 04 Jul 2007, 13:00:49

KingM wrote:I agree with many comments on this thread. However, the real economic growth measures of increasing manufacturing and rising standards of living in Third World countries are also increasing.


Depends. Africa is sliding backwards. See gapminder.org for visualization of UN data that proves this.

KingM wrote:With oil prices through the roof and other energy costs high as well, I can't figure out how this is happening.


If you print money faster than the price of oil increases, will it explain part of the current "solution" ?

How about if you consider not only aggregate measures, but divided growth by:

- Sector (financial sectors grows vs. real industrial growth not so much if you tally it up)
- Demographics (rich are getting richer, middle class poorer)
- Geography (some countries are shrinking in real prodution terms, while others are growing really fast)

Also, earlier msg is a good reminder: when you still have a rising production profile for "all oil", then you can still grow.

The problems really start once you start the decline or experiencing the bigger dips on the plateau.

Are we there yet? I don't think anybody knows that for sure.

It does give me hope, however. The undulating plateau that we seem to be entering gives us more leeway and more time to transition to other energy sources.


Let's hope so!

It's going to mean a huge headache, but there's no question we have enough energy and money to make these changes if we start sooner, rather than later.


I'm not sure about the "no question" part, but yes, perhaps.

Hirsch study gives minimum 20 years for crash course mitigation program for US alone. I don't think that program has started and many people are unsure, if US has 20 years still left to mitigate before Export Land Model kicks in.

What did you do today? What did _I_ do today to make these things go forward?

Those are the hard questions.
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Re: Booming Economic Growth?

Unread postby Euric » Fri 13 Jul 2007, 22:36:49

Heineken wrote:Expressions like "growth" and "economic boom" are hollow ones. They are symptoms of our terminal disease.

The only capital that matters is natural capital, and that is in bankruptcy or nearly so.


Exactly! Growth is just a "feel good" word for asset inflation. Boom just means more buying on credit with no means to repay.

Each time I hear the financial news talking about increased growth I think of more and more people spending beyond their means.

Watch as growth declines in the US as more and more people will find it harder to get easy credit. When the credit dries up so will the growth, proving they are connected.

The time of big troubles will begin sometime after October when the sub-prime borrowers will start paying 13 %+ on their loans.
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Re: Booming Economic Growth?

Unread postby Euric » Fri 13 Jul 2007, 22:54:14

FoxV wrote:Because the US money supply growth is now exceeding 13% (latest on Shadowstats.com The rest of the world has to print to match the US debasement, or to nationalize the USDs coming in. The results is a huge amounts of cash flooding the markets, causing booms all over the place (remember US represents 25% of global GDP, so whatever they do has a large effect on the world markets)


In other words asset inflation. Most likely a necessary evil as everyone is trying to keep ahead of the ever inflating debt bubble. Hoping it won't explode in there faces.
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Re: Booming Economic Growth?

Unread postby seldom_seen » Fri 13 Jul 2007, 23:18:46

The Mogambo Guru wrote:The Bank for International Settlements (BIS) has reported that the total clot of global derivatives in existence is now $415.2 trillion, with comes out to 789% of global GDP.

In typical Mogambo parlance, grubby financial bets financed by banks and the financial services industry now total almost eight times the value of every freaking good and service produced on the entire freaking planet in an entire freaking year!

I guess that's our "growth." Basically just numbers in a computer somewhere. Imagined riches. A hyper-extended, over leveraged International slot machine.
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Re: Booming Economic Growth?

Unread postby MonteQuest » Sat 14 Jul 2007, 02:51:55

KingM wrote:Having said that, I'm puzzled by the continued economic boom that has now spread beyond China to India, Russia, Brazil, SE Asia and quite a few other countries. Africa, as always, is a basket case, and Latin America is mixed, but most other parts of the world are growing smartly. I find this hard to fathom in light of high oil prices.

Any thoughts?


There is a lot of money being made as a result of those high oil prices.

It's not being stuffed into some mattress; it's being spent.

High oil prices drove Venezuelan growth to 10.3% in 2006.

High oil prices drove strong economic growth in all oil-exporting countries. Even the economies of oil-exporting countries in Africa enjoyed an expansion.

This type of GDP growth exaggerates progress because it includes detrimental costs, such as those associated with global warming, falling water tables, loss of biodiversity, shrinking forests, expanding deserts, and collapsing fisheries, etc. Just a few among the many trends indicating that our current economic model and environment cannot sustain progress indefinitely.

Remember, even disaster costs are included in GDP.

The expanding global economy, though seemingly robust, belies the instability of our rather tenuous position.
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Every One of the World’s Big Economies Is Now Growing

Unread postby AdamB » Sun 28 Jan 2018, 01:55:32


A decade after the world descended into a devastating economic crisis, a key marker of revival has finally been achieved. Every major economy on earth is expanding at once, a synchronous wave of growth that is creating jobs, lifting fortunes and tempering fears of popular discontent. No tidy, all-encompassing narrative explains how the world has finally escaped the global downturn. The United States has been propelled by government spending unleashed during the previous administration, plus a recent $1.5 trillion shot of tax cuts. Europe has finally felt the effects of cheap money pumped out by its central bank. In general terms, improvement owes less to some newfound wellspring of wealth than the simple fact that many of the destructive forces that felled growth have finally exhausted their potency. The long convalescence has yielded a global recovery that is far from blistering in pace,


Every One of the World’s Big Economies Is Now Growing
Plant Thu 27 Jul 2023 "Personally I think the IEA is exactly right when they predict peak oil in the 2020s, especially because it matches my own predictions."

Plant Wed 11 Apr 2007 "I think Deffeyes might have nailed it, and we are just past the overall peak in oil production. (Thanksgiving 2005)"
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Re: Booming Economic Growth?

Unread postby Tanada » Sun 28 Jan 2018, 12:51:13

What a crock. The economy is booming because people have confidence and access to funds. All that 'stimulus' spending by the central banks and governments only helped those who were already in the top 5% stay in the top 5%.
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To strive, to seek, to find, and not to yield.
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Re: Booming Economic Growth?

Unread postby onlooker » Sun 28 Jan 2018, 13:00:53

It is but temporary. As, all major Economies are now relying for economic vitality on fiscal stimulus ie. Debt. This has become over recent years more and more evident and widespread. And the Stock markets are buoyed by these QE and fall into balloon dynamics. So all this is more akin to a Ponzi Scheme than to healthy fundamentals for the world Economy.
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Re: Booming Economic Growth?

Unread postby Outcast_Searcher » Sun 28 Jan 2018, 13:56:01

onlooker wrote:It is but temporary. As, all major Economies are now relying for economic vitality on fiscal stimulus ie. Debt. This has become over recent years more and more evident and widespread. And the Stock markets are buoyed by these QE and falls into ballon dynamics. So all this is more akin to a Ponzi Scheme and to healthy fundamentals for the world Economy.

Too much debt. That's been the doomer mantra for the 33 years I've been paying attention. Their projection, that the US and then the globe would collapse at any time via unpayable debt, hyperinflation,etc.

How many decades are people supposed to cower in their doomsteads, in case some day your ilk is right?

The world is far from perfect. Sorry, get used to it. Just because that makes you afraid doesn't mean that adaptability and innovation can't allow us to struggle on without collapse for at least decades more, even in a world with plenty of problems.

And if your doomer fantasies actually come to pass in your lifetime, what do you "win"? An extra month of survival until the zombies arrive in force? OTOH, when you don't win for decades on end, what do you lose?

But don't tell me. You and short et al are CERTAIN you are right THIS month, and doom is right in our face.

...

You'd think that when doomers are completely wrong about the US and global economy for decades on end they just might start to get a hint that maybe they aren't as prescient as they believe. If you want to meet the future productively, here's a thought. LEARN something from history.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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