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When do you think the economy will crash?

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Re: When do you think the economy will crash?

Unread postby Pops » Mon 14 Nov 2016, 12:03:50

sjn wrote:
Pops wrote:The ETP bullshit needs to stay in the ETP BS thread.

Whether or not the ETP is mathematically defensible, even ignoring entropy (which I think is a mistake) can't we all agree that qualitatively, as we reach for the fruit (barrels) at the top of the tree, more effort and resources (capital) are diverted from the non-energy harvesting portion of the economy? That at some point that becomes unsustainable..?

comon man, you know I wrote the book on PO! Well at least the What is PO for PO.com:
suffice to say that oil becomes more difficult and expensive to extract as a field ages past the mid-point of its life.


Of course even that is an oversimplification. But nevertheless, I've not changed my belief that FF are finite. What has changed is my belief that the world economy, including oil production, can be summed up in a bumper sticker, no matter how many times it is quoted.

peakers to a one denied LTO would amount to anything but rather than admit to being wrong and modifying their view, they just donald their way through and double down - yeah, well, PO was really in '05; no, it was 72, no wait '28...

...my corn flakes are soggy, thanks PO.

lol, if no one wants to discuss actual events or challenge PO touchstones (like the sainted Hirsch Plan actually being about increasing FFs) (or that technology and price did beat "geology" if only for a time) that's fine, but don't pretend that because I try to keep an open mind that you need to quote to me the precept of finite resources.
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Re: When do you think the economy will crash?

Unread postby Tanada » Mon 14 Nov 2016, 12:28:24

sjn wrote:T, don't you think repairing/rebuilding fossil fuel orientated infrastructure would be a mis-allocation of resources at this point?


How do you tell the difference between a road or bridge built for fossil fuel vehicles and one built for ox carts? Fundamentally a road is a road and a bridge is a bridge. I think there is an excellent chance that a properly built road or bridge intended for heavy truck traffic would last a very very long time providing passage to ox cart traffic.

I also don't expect us to suddenly switch from trucks to ox carts, for one thing we lake the teamsters trained in operating ox carts and as far as that goes we lack the oxen to serve as the draft animals.

I do think we should not waste a lot of funding on rebuilding/upgrading airports, but given the modern mindset I think that funding will be inevitable and given PO it will turn out to be a waste.
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Re: When do you think the economy will crash?

Unread postby Revi » Mon 14 Nov 2016, 12:56:08

Tanada wrote:
sjn wrote:T, don't you think repairing/rebuilding fossil fuel orientated infrastructure would be a mis-allocation of resources at this point?


How do you tell the difference between a road or bridge built for fossil fuel vehicles and one built for ox carts? Fundamentally a road is a road and a bridge is a bridge. I think there is an excellent chance that a properly built road or bridge intended for heavy truck traffic would last a very very long time providing passage to ox cart traffic.

I also don't expect us to suddenly switch from trucks to ox carts, for one thing we lake the teamsters trained in operating ox carts and as far as that goes we lack the oxen to serve as the draft animals.

I do think we should not waste a lot of funding on rebuilding/upgrading airports, but given the modern mindset I think that funding will be inevitable and given PO it will turn out to be a waste.


I was looking at a book about the economy of Central Maine back in the mid 1800's and they had a list of all the oxen and teams in the town I live in. There were over 100 of them! They were the pickup trucks back then. I have a friend who is training up a team right now, and they could be useful if things happen according to the Etp model. If they are right, which they have been so far, oil will cease to be a profitable commodity as soon as 2022. Those oxen will still be around to pull a cart made out of the back of an old pickup!
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Re: When do you think the economy will crash?

Unread postby Cog » Mon 14 Nov 2016, 12:57:48

I would highly recommend you take some profit right now if you are invested in the stock market. There will be some buying opportunities on the dip in the next month or so. I'm swagging this guess but take it for what it is.
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Re: When do you think the economy will crash?

Unread postby SumYunGai » Mon 14 Nov 2016, 15:39:04

Cog wrote:I would highly recommend you take some profit right now if you are invested in the stock market.

That is some very good advice, Cog.
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Re: When do you think the economy will crash?

Unread postby Pops » Mon 14 Nov 2016, 16:10:08

SumYunGai wrote:
Cog wrote:I would highly recommend you take some profit right now if you are invested in the stock market.

That is some very good advice, Cog.

A week ago I would have said so but now I'd say the markets has lots of growth potential depending on the segment and what affects it-
corporate tax - out
regulation - out
repatriating foreign profits - in
Dodd-Frank -out
Consumer Protection - out
health insurance minimum benefits - out
interstate insurance (they'll find the state with the least consumer protections and move, just like credit cards)- in
interest rates -up
dollar - up

So for banks/financials/insurance - woohoo!
Drugs -up
Tech - it's an exporter so not so much
healthcare - downnnn
oil - drill everywhere baby! + higher dollar - doooown

it'll be great
(but what do I know)
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Re: When do you think the economy will crash?

Unread postby Cog » Mon 14 Nov 2016, 16:12:50

Well Pops its like this. I view the market as over-priced. Since I have retired, I have done nothing but make money in this market buying dips and selling immediately. I'm just saying its time to sell. You could be right as well. Throw the dice. If anyone ever tells you they know for certain what the stock market will do, I will show you a poor person.
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Re: When do you think the economy will crash?

Unread postby Cog » Mon 14 Nov 2016, 19:17:34

I wouldn't call it a crash but a 15%-20% downturn in the market would not be out of line.
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Re: When do you think the economy will crash?

Unread postby vtsnowedin » Mon 14 Nov 2016, 19:29:28

Tanada wrote:
sjn wrote:T, don't you think repairing/rebuilding fossil fuel orientated infrastructure would be a mis-allocation of resources at this point?


How do you tell the difference between a road or bridge built for fossil fuel vehicles and one built for ox carts? Fundamentally a road is a road and a bridge is a bridge. I think there is an excellent chance that a properly built road or bridge intended for heavy truck traffic would last a very very long time providing passage to ox cart traffic.

I also don't expect us to suddenly switch from trucks to ox carts, for one thing we lake the teamsters trained in operating ox carts and as far as that goes we lack the oxen to serve as the draft animals.

I do think we should not waste a lot of funding on rebuilding/upgrading airports, but given the modern mindset I think that funding will be inevitable and given PO it will turn out to be a waste.

Is not fossil fuel infrastructure best described as refinery's and pipelines? You might throw in rail cars that carry crude oil and finished oil products etc. but local roads and bridges have their separate purpose and utility.
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Re: When do you think the economy will crash?

Unread postby sjn » Mon 14 Nov 2016, 19:49:52

Pops wrote:
sjn wrote:
Pops wrote:The ETP bullshit needs to stay in the ETP BS thread.

Whether or not the ETP is mathematically defensible, even ignoring entropy (which I think is a mistake) can't we all agree that qualitatively, as we reach for the fruit (barrels) at the top of the tree, more effort and resources (capital) are diverted from the non-energy harvesting portion of the economy? That at some point that becomes unsustainable..?

comon man, you know I wrote the book on PO! Well at least the What is PO for PO.com:
suffice to say that oil becomes more difficult and expensive to extract as a field ages past the mid-point of its life.

Yes, of course, I know you know that! I was attempting to highlight the point which ETP attempts to quantify, that I'm sure you would agree with: As the energy production sector of the economy needs to increase it's use of energy, there is proportionally less remaining for the rest of the economy.
Of course even that is an oversimplification. But nevertheless, I've not changed my belief that FF are finite. What has changed is my belief that the world economy, including oil production, can be summed up in a bumper sticker, no matter how many times it is quoted.

peakers to a one denied LTO would amount to anything but rather than admit to being wrong and modifying their view, they just donald their way through and double down - yeah, well, PO was really in '05; no, it was 72, no wait '28...
Fair criticism. I still don't believe LTO resulted in much net energy to the system as a whole, much like tar sands. More entropy than oil.
...my corn flakes are soggy, thanks PO.

lol, if no one wants to discuss actual events or challenge PO touchstones (like the sainted Hirsch Plan actually being about increasing FFs) (or that technology and price did beat "geology" if only for a time) that's fine, but don't pretend that because I try to keep an open mind that you need to quote to me the precept of finite resources.

No offence intended. :-) Didn't realise people wanted to discuss things here! :roll:
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Re: When do you think the economy will crash?

Unread postby Pops » Tue 15 Nov 2016, 00:01:31

sjn wrote:I was attempting to highlight the point which ETP attempts to quantify, that I'm sure you would agree with: As the energy production sector of the economy needs to increase it's use of energy, there is proportionally less remaining for the rest of the economy.

Increased use of energy is no different than an increased tax rate or increased royalty demands or increased safety measures or increased cost of enviro remediation or any of a hundred things I'm sure.

The energy in a barrel of oil of a given flavor is constant, it's the price that changes, exactly the same as always.

When costs to produce rise, the price must rise if supply is to be constant, doesn't matter if the extra cost is diesel, steel, taxes or Tony Lamas.

If the utility provided by the oil to the consumer is sufficient, the increased price will be paid, if not it won't. Same as always.

Again, the energy available doesn't change, and it doesn't matter a bit the reason for the increased price, only the cost/benefit to the consumer.

If the new price is too high vs utility, demand will fall until balance
If the new price is too low, supply will fall until balance

It ain't rocket surgery, it ain't thermodynamics, it's just barter. It is just a market. Just supply and demand. Granted a most important and historically slow acting supply and demand that is really sticky in the short run but still just a market.
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Re: When do you think the economy will crash?

Unread postby sjn » Tue 15 Nov 2016, 04:28:47

Pops wrote:
sjn wrote:I was attempting to highlight the point which ETP attempts to quantify, that I'm sure you would agree with: As the energy production sector of the economy needs to increase it's use of energy, there is proportionally less remaining for the rest of the economy.

Increased use of energy is no different than an increased tax rate or increased royalty demands or increased safety measures or increased cost of enviro remediation or any of a hundred things I'm sure.
Indeed, many of those are actually exactly the same thing. Taxes are somewhat special though, since the revenue raised is generally used to support infrastructure that reduces costs/increases productivity of the economy, including, or especially the energy sector (always subject to diminishing returns and graft).
The energy in a barrel of oil of a given flavor is constant, it's the price that changes, exactly the same as always.
Of course it is. But how much effort went into producing that barrel varies, yet the sale price doesn't reflect that (for a marginal barrel). Supply/Demand.

When costs to produce rise, the price must rise if supply is to be constant, doesn't matter if the extra cost is diesel, steel, taxes or Tony Lamas.
Or debt must rise. Oil producers do not stop production when they lose money on each barrel of oil, instead they maximize cash flow. Given sunk costs (energy or financial), they would lose much more on each barrel unproduced.

If the utility provided by the oil to the consumer is sufficient, the increased price will be paid, if not it won't. Same as always.
...and so in aggregate the sale price is a proxy for the utility of the marginal barrel of oil to the economy at any given time.
Again, the energy available doesn't change, and it doesn't matter a bit the reason for the increased price, only the cost/benefit to the consumer.
The system-wide energy or the effort that goes to produce a marginal barrel changes, the cost of production. Less exergy (and more capital expediture) is embodied in that barrel, energy which wasn't utilised elsewhere. Exergy is the benefit to the consumer.
If the new price is too high vs utility, demand will fall until balance
If the new price is too low, supply will fall until balance
Are you referring to Sale prices of Cost of production? Sale price is set by the market, according to utility[/speculative future utility], affordability and quantity supplied. It can't be too high, or too low, it simply is. What it can be is below the cost of production, which is a financial issue for producers, or it can price certain potential buyers out of the market where they can't afford to pay the marginal price even where their usage could be "essential" in an economic or social sense.
It ain't rocket surgery, it ain't thermodynamics, it's just barter. It is just a market. Just supply and demand. Granted a most important and historically slow acting supply and demand that is really sticky in the short run but still just a market.
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Re: When do you think the economy will crash?

Unread postby vtsnowedin » Tue 15 Nov 2016, 04:42:22

sjn wrote: Sale price is set by the market, according to utility[/speculative future utility], affordability and quantity supplied. It can't be too high, or too low, it simply is. What it can be is below the cost of production, which is a financial issue for producers, or it can price certain potential buyers out of the market where they can't afford to pay the marginal price even where their usage could be "essential" in an economic or social sense.

While everyone feels that their every use of oil is essential in most cases it is optional and often wasteful or excessive. As supplies tighten and costs of delivered barrels rise we will re access what is essential and what is not.
We will be a long way past peak oil before we have no oil for truly essential tasks if such a thing actually exists.
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Re: When do you think the economy will crash?

Unread postby sjn » Tue 15 Nov 2016, 04:48:15

pstarr wrote:sjn, the ETP discussion has brought something new to the discussion, at least for me. Perhaps you guys discussed this before?

As net-energy declines (even in the face of continual production increases) less is available for productive work in the consumer society. Lots of oil, just not lots of money around. Deflationary forces down demand, makes supply look balanced, and result in lower prices. Somehow ETP models this?? lol

Sure, during the tight-shale boom the Hughes Tool Company sold more bits, Nippon Steel gets rich on pipe, but everywhere in the world, virtually every economy seems stuck in some sort of deflationary spiral. Even China. That's because too much oil is now stuck near the oil fields, lost down the well bore, grinding and cooking bitumen, trucking fracting liquids in circles moving freight loads. Not real economy.

Similar problem unconventional components like ethanol, NGL's. Liquids that don't really make it to the consumer as oil. Lost oil to the ELM dynamic, where the production income further displaces money supplies, moving it away from the consumer to the producer. And pointlessly enriching fiefdoms like Saudia Arabia and Texas 8O :razz:


This is what I've been saying since long before shortonoil brought up the ETP model. I have to admit though, I've never felt able to make a prediction on how long it can go on for. I thought the central banks would attempt to print themselves out of the hole, which they've been doing for a long while now, it could all unwind at any time or go on for years. My greatest fear has always been that we keep it going until we run the whole thing into the ground with ever falling utility to society and ever greater externalities*.

*I know you and shortonoil both do not recognise AGW as a serious threat, however, as an example, fracking releases a lot of methane to the atmosphere. This increases regional temperatures and triggers anomalous weather which results in costs that are never attributed to the marginal barrel of oil.
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Re: When do you think the economy will crash?

Unread postby sjn » Tue 15 Nov 2016, 04:50:43

vtsnowedin wrote:
sjn wrote: Sale price is set by the market, according to utility[/speculative future utility], affordability and quantity supplied. It can't be too high, or too low, it simply is. What it can be is below the cost of production, which is a financial issue for producers, or it can price certain potential buyers out of the market where they can't afford to pay the marginal price even where their usage could be "essential" in an economic or social sense.

While everyone feels that their every use of oil is essential in most cases it is optional and often wasteful or excessive. As supplies tighten and costs of delivered barrels rise we will re access what is essential and what is not.
We will be a long way past peak oil before we have no oil for truly essential tasks if such a thing actually exists.


To sustain 7.4B people: "such a thing actually exists". Without that constraint, not so much.
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Re: When do you think the economy will crash?

Unread postby vtsnowedin » Tue 15 Nov 2016, 05:17:14

sjn wrote:
vtsnowedin wrote:
sjn wrote: Sale price is set by the market, according to utility[/speculative future utility], affordability and quantity supplied. It can't be too high, or too low, it simply is. What it can be is below the cost of production, which is a financial issue for producers, or it can price certain potential buyers out of the market where they can't afford to pay the marginal price even where their usage could be "essential" in an economic or social sense.

While everyone feels that their every use of oil is essential in most cases it is optional and often wasteful or excessive. As supplies tighten and costs of delivered barrels rise we will re access what is essential and what is not.
We will be a long way past peak oil before we have no oil for truly essential tasks if such a thing actually exists.


To sustain 7.4B people: "such a thing actually exists". Without that constraint, not so much.

Most of those 7.4 billion are using a lot less oil per capita then we westerners are. How fast and how far the world population is reduced post peak oil remains to be seen but I doubt the relationship between oil supply and population will be direct.
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Re: When do you think the economy will crash?

Unread postby Pops » Tue 15 Nov 2016, 07:44:12

pstarr wrote:Pops, high oil prices will never signal the arrival of peak oil. On the contrary, low prices have proven it is here.

OK
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