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The next financial crash is imminent, and China’s resource crisis could be the trigger


China’s economic slowdown could be a key trigger of the coming global financial crisis, but one of its core drivers — China’s dwindling supplies of cheap domestic energy — is little understood by mainstream economists.

All eyes are on China as the world braces itself for what a growing number of financial analysts warn could be another global economic recession.

In a BBC interview to mark the 10th anniversary of the global financial crisis, Bank of England Governor Mark Carney described China as “one of the bigger risks” to global financial stability.

The Chinese “financial sector has developed very rapidly, and it has many of the same assumptions that were made in the run-up to the last financial crisis,” he warned:

“Could something like this happen again?… Could there be a trigger for a crisis — if we’re complacent, of course it could.”

Since 2007, China’s debts have quadrupled. According to the IMF, its total debt is now about 234 percent of gross GDP, which could rise to 300 percent by 2022. British financial journalist Harvey Jones catalogues a range of observations from several economists essentially warning that official data might not reflect how bad China’s economy is actually decelerating.

The great hope is that all this is merely a temporary blip as China transitions from a focus on manufacturing and exports toward domestic consumption and services.

Meanwhile, China’s annual rate of growth continues to decline. The British Foreign Office (FCO) has been monitoring China’s economic woes closely, and in a recent spate of monthly briefings this year has charted what appears to be its inevitable decline.

Last month, the FCO’s China Economics Network based out of the British Embassy in Beijing documented that China’s economy had “further softened… with indicators weakening across the board”.

The report found that: “Investment, industrial production, and retail sales all weakened, despite easing measures”; and noted that high-level Chinese measures to sustain economic growth were running out of steam.

China’s economic slowdown, moreover, coincides with brewing expectations that Wall Street’s longest running stock market bull run could be about to end soon.

One analysis of this sort came from Wall Street veteran Mark Newton, former Chief Technical Analyst at multi-billion dollar hedge fund Greywolf Capital, and prior to that a Morgan Stanley technical strategist.

Newton predicts that US stocks are close to peaking out, leading to a massive 40–50 percent plunge starting in the spring of 2019 or by 2020 at the latest. He explained that:

“Technically there have started to be warning signs with regards to negative momentum divergence (an indicator that can signal a pending trend reversal), which have appeared prior to most major market tops, including 2000 and 2007.”

Newton’s forecast is similar to a prediction made by US economist Professor Robert Aliber of the University of Chicago Booth School of Business. Earlier this year, INSURGE reported exclusively on Aliber’s forecast of a 40-50 percent stock market crash (in or shortly after 2018), based on examining the dynamic of previous banking crises.

The vulnerability of both the US and Chinese economies — not to mention the string of other vulnerabilities in numerous other countries from Brexit to Turkey to Italy — demonstrates that whatever the actual trigger might be, the resulting impact is likely to have a domino effect across multiple interconnected vulnerabilities.

This could well lead to a global financial crash scenario far worse than what began in 2008.

But financial analysts have completely missed a deeper biophysical driver of China’s economic descent: energy.

Last October, INSURGE drew attention to new scientific study led by the China University of Petroleum in Beijing, which found that China is about to experience a peak in its total oil production as early as 2018.

Without finding an alternative source of “new abundant energy resources”, the study warned, the 2018 peak in China’s combined conventional and unconventional oil will undermine continuing economic growth and “challenge the sustainable development of Chinese society.”

These conclusions have been corroborated by a new paper published this February in the journal Energy, once again led by a team at the China University of Petroleum.

The study applies the measure of Energy Return On Investment (EROI), a simple but powerful ratio to calculate how much energy is being invested to extract a particular quantity of energy.

The team attempted a more refined EROI calculation, noting that standard calculations look at energy obtained at the wellhead compared to what is used to extract it; whereas a more precise measure would look at energy available at ‘point of use’ (so, after extraction from the wellhead, processing and transportation until it is actually used for something tangible in society).

Using this approach to EROI, the study finds that over a period of around three decades (between 1987 and 2012), the value of the energy extracted from China’s domestic fossil fuel base declined by more than half from 11:1 to 5:1.

This means that more and more energy is being expended to extract a decreasing amount of energy: a process that is gradually undermining the rate of economic growth.

A similar finding extends to China’s coal consumption:

“In 1987, the energy production sectors consumed 1 ton standard coal equivalent (TCE) energy inputs for every 10.01 TCE of produce net energy. However, in 2012, this number declined to 4.25.”

The study uses this data to simulate the impact on China’s GDP, and concludes that China’s declining GDP is directly related to the declining EROI or energy value of its domestic hydrocarbon resource base.

But it isn’t just China experiencing an EROI decline. This is a global phenomenon, one that was recently noted by a scientific report to the United Nations that I covered for VICE, which warned that the global economy as a whole is shifting to a new era of declining resource quality.

This doesn’t mean we are ‘running out’ of fossil fuels — but it means that as the resource quality of those fuels decline, we increase the costs on our environment and systems of production, all of which increasingly impact on the health of the global economy.

As long as mainstream economic institutions remain blind to the fundamental biophysical basis of economics, as masterfully articulated by Charles Hall and Kent Klitgaard in their seminal book, Energy and the Wealth of Nations: An Introduction to BioPhysical Economics, they will remain in the dark about the core structural reasons why the current configuration of global capitalism is so prone to recurrent crisis and collapse.

75 Comments on "The next financial crash is imminent, and China’s resource crisis could be the trigger"

  1. makati1 on Wed, 12th Sep 2018 7:28 pm 

    “The study uses this data to simulate the impact on China’s GDP, and concludes that China’s declining GDP is directly related to the declining EROI or energy value of its domestic hydrocarbon resource base.”

    That is a misleading statement. So, China’s “declining” GDP, from 6.9% to 6.8%, is going to cause a financial crisis? WOW! Talk about wishful thinking by the Neocons.

    China has no resources other then domestic? If that statement is true, then the US is in the same situation, or worse. The US has huge debt in its domestic resource recovery, which is steadily growing day by day. EROI is manipulated to say what the “study” wants it to say. Facts are elusive, or missing.

    The US GDP has been all lies for at least a decade and is truly in the negative, meaning ZERO growth. But, that is ignored.

    The Chinese economy is not a true capitalist economy. The major corporations and basks are government owned and controlled so they cannot fail. Not so in America. Comparing apples and carrots.

    We live in a world of lies as countries and people try to keep BAU going as long as possible. Some of us want it to crash and rest to a much lower level. It appears to be happening, albeit slowly.

    “How did you go bankrupt?”
    “Two ways. Gradually, then suddenly.”

    ― Ernest Hemingway, The Sun Also Rises

  2. dissident on Wed, 12th Sep 2018 7:28 pm 

    Depending on how the EU-crat morons in Bruxelles treat Russia, China could get an extra 150 bcm of rather affordable natural gas per year on top of what is going to be delivered starting in 2020.

    China is also building up its nuclear power generation capacity. This article is a bit too hysterical about the “looming crisis”.

  3. Bloomer on Wed, 12th Sep 2018 9:28 pm 

    I am with makaki1 on this topic. I think the exCanadian finance minister should be more concern with Brexit then a small downward blip on China’s GDP. I mean come on Mark what does the UK bring to the table? They don’t make squat have little to no natural resources.

  4. Outcast_Searcher on Wed, 12th Sep 2018 10:12 pm 

    Good point Mak. Decelerating a bit is a FAR different thing than declining, when the growth rate is persistently high.

    Especially when economists have long been predicting China’s longer term growth will gradually decelerate to a rate more line with the US, over the coming 20 to 30 years, just as a result of a maturing economy.

  5. Outcast_Searcher on Wed, 12th Sep 2018 10:18 pm 

    But then Mak claims that:

    “The US GDP has been all lies for at least a decade and is truly in the negative, meaning ZERO growth. But, that is ignored.”

    No citations of course. Based on what? The voices in your deranged head?

    You’re acting bipolar.

  6. makati1 on Thu, 13th Sep 2018 12:15 am 

    Outcast, think. What is the GDP but numbers controlled by the government. It is not based on reality anymore, just like the oily numbers we are fed daily here. Fiction. Fantasy. Lies.

    Think about inflation in the US. Not the government propaganda but the REAL inflation. Somewhere over 6%, not the current 2.5%.

    As for GDP:

    When you constantly change the formula, you can control the answer. The US is shrinking in every important area. Not growing. Asia is growing. The stats prove it.

    Asia: 5.5%
    E.Asia: 5.3%
    Central Asia: 4.2%
    N.America: 2.8%
    Europe: 2.4%
    E. Europe: 2.8%

    Enough refs for you?

  7. makati1 on Thu, 13th Sep 2018 12:24 am 

    BTW: Outcast, has YOUR costs gone up this year? Healthcare? Rent/home value? Food? I’m sure it has. Big time. Has YOUR income increased to match or accede that inflation? I doubt it.

  8. print baby print on Thu, 13th Sep 2018 12:35 am 

    China is the real engine of growth ( new factories , mines etc) if its stall whole world stall

  9. makati1 on Thu, 13th Sep 2018 12:36 am 

    I might add, Outcast, that my income increase has exceeded inflation here in the Ps. An 8% increase since January 1st, 2018. About 25% in the last five years.

    And, my actually lifestyle has moved down the ladder to a comfortable level way below my income. No debt. No taxes. Lots of friends. Life is good outside the US police state.

  10. makati1 on Thu, 13th Sep 2018 12:40 am 

    PBP, yes, but I do not see it stalling in the near future, if ever. China plans years/decades ahead. The US plans for tomorrow, maybe. I expect the US to crash and burn long before China.

  11. MASTERMIND on Thu, 13th Sep 2018 12:54 am 

    Peak oil caused the 08 crash, they dragged it out a few years by creating money, lowering the interest rate, and dumping cash down the sinkhole that is fracking, but the collapse process has already been initiated..

  12. MASTERMIND on Thu, 13th Sep 2018 1:26 am 

    “I could see the white man did not care for each other the way our people did. They would take everything from each other if they could. Some had more of everything than they could use, while crowds of people had nothing at all. This could not be better than the old ways of my people.”

    – Black Elk

  13. marmico on Thu, 13th Sep 2018 3:36 am 

    might add, Outcast, that my income increase has exceeded inflation here in the Ps. An 8% increase since January 1st, 2018. About 25% in the last five years.

    You are a moron. The peen peso “official” inflation rate is 6.4%. It’s gotta be at least 15% using the shadow stats moron calculations.

    Your $1200 per month US social security benefit ain’t worth shit in the shithole that you live in.

  14. MASTERMIND on Thu, 13th Sep 2018 3:50 am 

    Rush Limbaugh shares fake story that sharks are flying around in Hurricane Florence

    Rush Limbaugh: Reports from NOAA show that “sharks have been lifted into Hurricane Florence” and “now you might end up with a shark in your front yard”

  15. MASTERMIND on Thu, 13th Sep 2018 3:52 am 


    Financial catastrophe resulting from resource depletion and a debasement of value of fiat currencies. Then a 12-month window of tyranny and government lockdown on citizens, followed by a 6-month window of absolute carnage and death. Then, a period of about 6 months of slow die-off and that’s pretty much that. Oh, and starting sometime within the next 5 years or so..

  16. makati1 on Thu, 13th Sep 2018 4:00 am 

    marmico, do you live here? No? Then you have no idea what it is like or the inflation rate. All you have is US propaganda and bullshit. It has averaged about 3-4% over the last 10 years. Not 6+%.

    Inflation for most things is minimal. Food has gone up less than 26% TOTAL in 10 years. Gasoline is about the same now as it was in 2008. Our condo rent increased about 23% over those same 10 years. Condo purchase prices actually went down. And on and on.

    At 6% per year, over 10 years, means that prices went up over 60% since I moved here. LMAO

    Now, prove me wrong.

  17. makati1 on Thu, 13th Sep 2018 4:06 am 

    BTW marm, my SS is way above the figure you posted and it converts nicely into a comfortable living here. In fact, I do not even need it to live here, but I do use it for preps, non-taxable investments and peso cash savings. Keep paying your US taxes so I can keep building my reserves. LOL

    Haircut $2
    Dental crown $120
    Doctor visit $15
    100 mile A/C bus trip $2.50
    Laborer $1 per hour.

  18. MASTERMIND on Thu, 13th Sep 2018 4:09 am 


    marmico is just salty because he is stuck in a collapsing police state..

    I envy you mak..If I could escape I would in a nano second..

  19. makati1 on Thu, 13th Sep 2018 4:27 am 

    MM, if you can teach English or have some other needed profession, (chemistry?) you could get a job here. You would need do some research but it may be possible.

    You can live here like in the US for about P60K NET ($1,200) per month. (My total monthly expenses in Makati was about that amount.) And, you can make about $100,000 per year and not owe Uncle Sam a penny in taxes. And/or, you can meet and marry a beautiful Flipina girl and be a citizen. I would make the attempt if I were you. Good Luck!

  20. Davy on Thu, 13th Sep 2018 5:44 am 

    “The heart of the Chinese model is malinvestment. It’s about building up non-performing loans and figuring out what to do with them.”
    “There is not a snowball’s chance in hell [the Chinese weakness] will not flow through to the US stock market.”
    “Perhaps the biggest lesson of all is that increasingly we live in a world of debt-fueled growth that shapes the investment proposition of financial assets. That means business cycles are increasingly overwhelmed by credit cycles.”

    “The Most Important Asset Class In The World (Is Not What You Think)”

    “China certainly qualifies as important based on rapid credit growth and high levels of debt…China’s credit boom is one of the largest and longest in history. Historical precedents of ‘safe’ credit booms of such magnitude and speed are few and far from comforting. The July 27, 2018 edition of Grants Interest Rate Observer assesses, “Following a decade of credit-fueled stimulus, China’s banking system is the most bloated in the world.

    “China is building 20 million apartment flats a year. It needs about 6 to 8 to cover both urban migration and depreciation of existing stock. So 60% of that 25% is simply being built for speculative purposes, for investment purposes. And that’s 15% of China’s GDP of $12 trillion. Put another way, it’s about $2 trillion. That $2 trillion is 3% of global GDP. And so I can’t stress enough of just how important that number is and that activity is to global growth, to commodity demand, and a variety of different things. It [Chinese residential real estate] is the single most important asset class in the world.” Chanos is not the only one who sees building for “speculative purposes” as an impending problem.

    “We’re constantly asked about how good Chinese data are. Is it all bad? It’s all bad, but it’s bad and different variations.” Chanos shared his opinion as well: “As much as the macro stuff has intrigued me … what’s so interesting about China is the lower down you get, the more micro you get, the worse it looks, in that the companies don’t seem to be profitable, the accounting is a joke.” Miller makes clear what the challenge is: “[China] is the second largest economy in the world. This is probably the most mysterious big economy in the world. And people have been so willing to work on it based on guestimates.”

    China has substantial capability to manage liquidity and contagion risks. As a result, according to Miller, “We don’t spend a lot of time worrying about an acute crisis. If China falls and China does have the hard landing that a lot of people predicted, it’s not going to look like it did in the United States or in Europe. You have a state system, a state-led system in which almost all the counter-parties are either state banks or state companies. They’re not going to have the same freeze-up of credit that you did in some of these other Western economies.”

    “China’s credit-saturated economy … is the primary force behind the recent gyrations in FX. The reality is that China’s currency is most intimately connected, as with any currency, to the domestic economy – debt, asset prices, real estate prices, and efficiency gains and losses rather than just trade.”

  21. Davy on Thu, 13th Sep 2018 5:55 am 

    “China: Why We Should Be Even More Worried After The Devaluation”

    “A 10% tariff hurts a small part of the economy. However, a 10% devaluation hurts all Chinese citizens equally and massively. The yuan devaluation is not a tool for exports. Devaluations are a form of price control and a disguised reduction of salaries. As such, they hurt more than what they aim to protect.”

    “However, with rising household and corporate debt. the yuan devaluation is a shot in the foot of the economy, as purchasing power is being diminished and loan repayment capacity is falling. It is wrong to believe that a devaluation does not pose a problem for debt incurred in yuan. Margins are falling because the yuan is devalued, but costs are not falling in tandem.70% of corporate costs do not fall with the yuan, they rise -energy, fixed costs, imported goods and services- and working capital requirements have been rising, as we have seen in the published earnings of most of the companies in the Shanghai Index.”

    “Household disposable income is also falling as inflation appears underestimated by official figures. Most independent analyses see real inflation closer to 2 percentage points higher than official data shows. Living costs have risen much faster than the headline inflation suggests, and the recent devaluations add to this problem, which makes debt-repayment capacity suffer with a weaker currency. There are numerous reasons why we should worry about China’s decision to end its control of credit growth. The government has been encouraging riskier lending by cutting deposit reserve rates and pumping liquidity into the system. The silent bailout, which has led to the PBOC injecting hundreds of billions of dollars into the financial system, is not reducing the excess risk-taking, it is encouraging it. Industrial Production is showing evident signals of slowdown and fixed investment as well.”

    “China money supply growth exceeds the US one, while a significant part of fixed investment and credit goes to low productivity sectors or returns below cost of capital. The idea that the yuan is “gold-backed” clearly disappears when we look at the total gold reserves compared to money supply. Gold reserves are less than 0.25% of China’s money supply. Unfortunately, China’s stealth devaluation is not making the country more competitive, it is making household and corporate debt riskier as the purchasing power of the yuan is diminished. Meanwhile, foreign exchange reserves remain almost 20% below the peak level and the PBOC has abandoned its objective of fighting against excess debt. The yuan devaluation is not solving the economy’s problems.”

  22. Davy on Thu, 13th Sep 2018 6:02 am 

    “China Is Now Left With Just Three Options, And They Are All Equally Bad”

    1. intervene in currency markets to offset market pressures risking a new wave of reserve depletion;
    2. raise interest rates to defend the currency causing monetary tightening and risking economic weakness; or
    3. let the currency depreciate beyond the above critical levels along with market pressures risking capital outflows and a more abrupt move. It goes without saying that all three choices have severely adverse consequences for the market and the global economy, and yet Donald Trump would be delighted with any of the three. After all, recall what One River CIO Eric Peters said last week when he explained what the easiest way to bring China’s system crashing down was: “The best way to bring Beijing to its knees is by running a tight monetary policy in the US. China has the world’s most overleveraged, fragile financial system.” In 2008, China’s total debt-to-GDP was 140%. It is now roughly 300%, while GDP is slowing. “The economy is held together by capital controls. If those fail, the whole system fails.” The capital flight in 2015/16 cost the government $1trln in reserves, and that was with ultra-dove Yellen in charge. Imagine what would have happened with Volcker at the helm. The Chinese are dying to get their money out.”

  23. Davy on Thu, 13th Sep 2018 6:23 am 

    “China’s ‘Digital’ Totalitarian Experiment”

    “China’s “social credit” system, which will assign every person a constantly updated score based on observed behaviors, is designed to control conduct by giving the ruling Communist Party the ability to administer punishments and hand out rewards. The former deputy director of the State Council’s development research center says the system should be administered so that “discredited people become bankrupt”. Officials prevented Liu Hu, a journalist, from taking a flight because he had a low score. According to the Communist Party-controlled Global Times, as of the end of April 2018, authorities had blocked individuals from taking 11.14 million flights and 4.25 million high-speed rail trips. Chinese officials are using the lists for determining more than just access to planes and trains. “I can’t buy property. My child can’t go to a private school,” Liu said. “You feel you’re being controlled by the list all the time.” Chinese leaders have long been obsessed with what Jiang Zemin in 1995 called “informatization, automation, and intelligentization,” and they are only getting started Given the capabilities they are amassing, they could, the argument goes, make defiance virtually impossible. The question now is whether the increasingly defiant Chinese people will accept President Xi’s all-encompassing vision. By 2020, Chinese officials plan to have about 626 million surveillance cameras operating throughout the country. Those cameras will, among other things, feed information into a national “social credit system.”

    “Xi Jinping will not be as restrained as Rongcheng’s officials. He evidently believes the Party must have absolute control over society and he must have absolute control over the Party. It is simply inconceivable that he will not include in the national social credit system, when it is stitched together, political criteria. Already Chinese officials are trying to use artificial intelligence to predict anti-Party behavior. Xi Jinping is not merely an authoritarian leader, as it is often said. He is taking China back to totalitarianism as he seeks Mao-like control over all aspects of society. The question now is whether the increasingly defiant Chinese people will accept Xi’s all-encompassing vision. In recent months, many have taken to the streets: truck drivers striking over costs and fees, army veterans marching for pensions, investors blocking government offices to get money back from fraudsters, Muslims surrounding mosques to stop demolition, and parents protesting the scourge of adulterated vaccines, among others. Chinese leaders obviously think their social credit system will stop these and other expressions of discontent. Let us hope that China’s people are not in fact discouraged. Given the breadth of the Communist Party’s ambitions, everyone, Chinese or not, has a stake in seeing that Beijing’s digital totalitarianism fails.”

  24. Davy on Thu, 13th Sep 2018 6:34 am 

    “JPMorgan Predicts the Next Financial Crisis Will Strike in 2020”

    “The JPMorgan model calculates outcomes based on the length of the economic expansion, the potential duration of the next recession, the degree of leverage, asset-price valuations and the level of deregulation and financial innovation before the crisis. Assuming an average-length recession, the model came up with the following peak-to-trough performance estimates for different asset classes in the next crisis, according to the note.”

    “A U.S. stock slide of about 20 percent.
    A jump in U.S. corporate-bond yield premiums of about 1.15 percentage points.
    A 35 percent tumble in energy prices and 29 percent slump in base metals.
    A 2.79 percentage point widening in spreads on emerging-nation government debt.
    A 48 percent slide in emerging-market stocks, and a 14.4 percent drop in emerging currencies.”

  25. makati1 on Thu, 13th Sep 2018 7:47 am 

    “A patriot must always be ready to defend his country against his government.”―Edward Abbey, American author

    “The citizenry’s unquestioning acquiescence to anything the government wants to do in exchange for the phantom promise of safety and security has resulted in a society where the nation is being locked down into a militarized, mechanized, hypersensitive, legalistic, self-righteous, goose-stepping antithesis of every principle upon which this nation was founded.

    This is not freedom.

    This is a jail cell.

    Set against a backdrop of government surveillance, militarized police, SWAT team raids, asset forfeiture, eminent domain, overcriminalization, armed surveillance drones, whole body scanners, stop and frisk searches, roving VIPR raids and the like—all of which have been sanctioned by Congress, the White House and the courts—our constitutional freedoms have been steadily chipped away at, undermined, eroded, whittled down, and generally discarded.

    Our losses are mounting with every passing day.

    Free speech, the right to protest, the right to challenge government wrongdoing, due process, a presumption of innocence, the right to self-defense, accountability and transparency in government, privacy, press, sovereignty, assembly, bodily integrity, representative government: all of these and more have become casualties in the government’s war on the American people, a war that has grown more pronounced since 9/11”

    There are no patriots left in America, Snowflakes, couch potatoes, druggies, Confusion about gender, dumbed down serfs being bled to death by their own government, etc. A third world police state trying to keep the “American Dream” alive unsuccessfully with with blatant propaganda. So be it. Well deserved.

  26. twocats on Thu, 13th Sep 2018 9:45 am 

    the article is very good and well-reasoned. investigative journalism quoting the Chinese University of Petroleum etc. This is China’s own scientists saying this – not neocon hacks.

    The problem with China is that it is carrying much of the Global QE load at this point – at a time when the US is tightening (raising interest rates, letting debt mature w/o repurchase). If China lets up on the gas – there is a HUGE question about what will happen.

    The world has never experienced QE on the level we’ve seen, so obviously it’s never experienced QT on any level.

    Everyone is going lose – and China will not be spared – not in the slightest. Chinese are so optimistic about China, their personal prospects, and the future in general. The comedown from this MALINVESTMENT HIGH is going to be BRUTAL

  27. joe on Thu, 13th Sep 2018 9:50 am 

    Next recession? When did the last one end? A decade of low interest rates does not equal a a recovery. When the next recession comes how low will they cut rates? (Eh, rhetorical question ).
    They narrowly avoided the end of civilisation by saving the banks and spending with tarp etc but I imagined that they would stop at some point. The ECB never really ended its meddling in the free markets since 08. The EUSSR will be 1st to fall is China tips over.

  28. Boat on Thu, 13th Sep 2018 10:32 am 


    Swat teams taking on drugs. Explain why they are not patriots. 10’s of millions of jobs provide a service or needed skill you call snowflakes. More like your just out of balance with normal thinking.

  29. Antius on Thu, 13th Sep 2018 12:06 pm 

    The peak everything crisis is beginning, much as the original Club of Rome Limits to Growth study predicted that it would. We face a pincer movement: Greater energy requirements for the production of raw materials (due to depletion) combined with declining energy quality (due to depletion).

    Many people are confused by the fact that energy shortages are not leading to much higher prices. But this is actually easy to explain. If a set amount of energy is needed to generate a unit of prosperity, then there are limits to the affordable price of energy. To put it more simply, if you are using one unit of energy to produce $1 worth of goods, then the price of energy can only rise so far before it becomes unaffordable. If disposable incomes are being squeezed by debt and other costs, then affordability (which drives price) can actually go down, even as depletion causes supply to go down. It is for this reason that we may be facing a future of declining supply and declining prices. Wealth is a function of energy availability; energy price is a function of wealth.

  30. Sissyfuss on Thu, 13th Sep 2018 3:13 pm 

    You get it Antius. Talk to Boat. He thinks “your” not getting it.

  31. claes rydeman on Thu, 13th Sep 2018 5:19 pm 

    Mak this is an exact copy of your own text:

    Our losses are mounting with every passing day.
    Free speech, the right to protest, the right to challenge government wrongdoing, due process, a presumption of innocence, the right to self-defense, accountability and transparency in government, privacy, press, sovereignty, assembly, bodily integrity, representative government: all of these and more have become casualties in the government’s war on the Chinese people, a war that has grown more pronounced since Emperor Pooh”

  32. claes rydeman on Thu, 13th Sep 2018 5:42 pm 

    OK. alright, I forgot to highlight the essential words in my last comment :

    “Mak this is an exact copy of your own text:

    Our losses are mounting with every passing day.
    Free speech, the right to protest, the right to challenge government wrongdoing, due process, a presumption of innocence, the right to self-defense, accountability and transparency in government, privacy, press, sovereignty, assembly, bodily integrity, representative government: all of these and more have become casualties in the government’s war on the CHINESE PEOPLE” , a war that has grown more pronounced since “EMPEROR POOH” (maybe better known as xi jinping) has become the personal owner of a quarter of the worlds population.

  33. makati1 on Thu, 13th Sep 2018 7:02 pm 

    claes, ““Mak this is an exact copy of your own text:…” NO, it is NOT! Reread!

    This is my post:

    “Free speech, the right to protest, the right to challenge government wrongdoing, due process, a presumption of innocence, the right to self-defense, accountability and transparency in government, privacy, press, sovereignty, assembly, bodily integrity, representative government: all of these and more have become casualties in the government’s war on the American people, a war that has grown more pronounced since 9/11””

    Nowhere in my post do I mention China or Poo. It is a direct quote from the original article about conditions in the US today.

    Your comprehension of English is not very good. Trying to put a different spin on my comment is proof that you don’t understand, are just stupid, or a US government bot.

  34. makati1 on Thu, 13th Sep 2018 7:06 pm 

    Boat, you are a snowflake/couch potato. Your bullshit about jobs is just more US MSM brainwashing, The US is going down and taking you with it. Enjoy the ride.

  35. makati1 on Thu, 13th Sep 2018 9:00 pm 

    “At the very beginning of September, a grand Chinese-African forum was held in Beijing, bringing the heads of 54 African states and 27 regional organizations to the table. The unprecedented scale of the event is reflected in the number of political and economic breakthroughs that was achieved in the course of the negotiations….

    all the arguments made in Washington and London about Beijing’s aggressive “credit colonialism” pretty much fall on deaf ears in Africa. If some states are even willing to listen to those highbrow Western mentors, like the do in Kenya, local politicians will only limit China’s role in their economy, but will not outlaw it. …

    many have a question about China’s true goals in Africa. Clearly, they are strategic in their nature, since Beijing works in cooperation with a total of 51 out of 54 African countries, while being engaged in the construction of 2,500 industrial and infrastructure facilities….

    Many Western observers argue that China is not only willing to trade with Africa, but is preparing the continent for the construction of large production facilities in order to outsource its production needs to Africa. …

    The game seems to be well worth the risk – by moving production to Africa, China will drastically reduce production and logistical costs, since it will not be necessary to transport resources and oil from Africa to China to ship back goods. This fact will make all African countries avid supporters of Beijing’s policies. In fact, Beijing wants to do with Africa what the US did with it in the nineties, when American production capacities were transferred to China, getting the production base as close as possible to the actual consumers.”

    The Chinese are not dumb, as some Americans would like to think. They plan way down the line and have the resources to make those plans work. Not so America, where tomorrow is not thought of until the sun comes up on the East Coast.

  36. makati1 on Thu, 13th Sep 2018 9:25 pm 

    “America’s three principal adversaries signify the shape of the world to come: a post-Western world of coexistence. But neoliberal and neocon ideology is unable to to accept global pluralism and multi-polarity,…

    The bitter reality is that U.S. foreign policy has no definable objective other than blocking the initiatives of others because they stand in the way of the further expansion of U.S. global interests….

    Russia, China, and Iran, the three nations now designated America’s principal adversaries. Each one is fated to become (if it is not already) a world or regional power and a key to stability—Russia and China on a global scale, Iran in the Middle East. But each stands resolutely—and this is not to say with hostile intent—outside the Western-led order. They have different histories, traditions, cultures, and political cultures. And they are determined to preserve them. …

    They signify the shape of the world to come—a post-Western world in which the Atlantic alliance must coexist with rising powers outside its orbit. Together, then, they signify precisely what the U.S. cannot countenance.”

    Well said.

  37. makati1 on Thu, 13th Sep 2018 9:46 pm 

    “The North American wind industry will reach a turning point in three years when the industry begins to spend more on operations and maintenance than it spends on installing new wind turbines.
    This is presented as a big “green business opportunity,” but the industry fill find that dependence on fossil fuels includes not only making and installing wind turbines, but also maintaining, decommissioning, dismantling, and recycling them. — RF”

    They only exist because of tax advantages/subsidies. All will fade away after the crash. No money to maintain. No money for new. Just expensive junk littering the landscape.

  38. makati1 on Thu, 13th Sep 2018 10:10 pm 

    “… fp is another soft prop site.. sometimes their slip shows, lol.. but i suppose their funding is depend on the state apparatus.. in fact the usa has become the new ussr with it pay for propaganda approach.. everything coming out of the usa news today is suspect.. if i want a little arsenic in my reading, i know where to go.. …

    … isn’t it funny that the guy who tries to imitate Stalin writes op-eds in US newspapers?
    And that still does not say a word on why all the major Western universities are developing Chinese language departments, exchanges with China, and that the way to success for any businessman on the 5 continents is to go open a factory there and sell junk back home….

    So, what is the Outlaw US Empire afraid of? Given Xi’s and Putin’s words, it’s afraid of nations capable of doing business far better than it can, that’re free from being restricted by the goals of Corporatism, and that puts forth what was once known as the American Dream….

    You’re supposed to leave your brains at home when reading Western newspapers and magazines….

    Elsewhere in the article there is mention of “re-education” camps where people are allowed to leave to eat meals and go home to sleep. Sounds a lot like they’re going to school, night school or college to me….

    The story about China in west media are always full of fabrication and half truth….

    I’m from China but live in the West for 20+ years. I’ve witness how West MSM lies and how most audience naively believe their lies. But that’s not the reason I assume the stories are false: I have more knowledge about Chinese government. The current Chinese government (Not the people) is much smarter to deal with many issues than most western media journalist can image. The policy of what the stories show is very stupid one”

    Nuff said.

  39. makati1 on Thu, 13th Sep 2018 10:21 pm 

    Cloggie: “Technological utopianism fueled by science fiction is nothing new. If you’ve never seen it, watch Disney’s short animated film “Magic Highway” from 1958. It’s remarkably similar to this recent promotional film for an Elon Musk tubular underground transportation system in Los Angeles….

    We constantly hear that driverless cars are just around the corner. We’re told they will revolutionize transportation and enable us to continue using our car-based transport and land-use system. If they’re made by Tesla, they’ll be powered by magic, solar-powered, super efficient batteries and we’ll all be able to keep living our hyper-mobile, hyper-consumptive lifestyles without any damage to the environment….

    But many folks, including the owner of the driverless shuttle company EasyMile and scientists at MIT and other institutions who are actually working on the technology say widespread use or deployment of driverless vehicles is a long way off and may never happen at all:…”

    “A driverless car is still a car. It still needs energy, at least some of it from petroleum, to be manufactured, moved and disposed of. Anywhere from 23-46% of the energy a car consumes in its lifetime is an inherent part of its manufacture and disposal. The steel, aluminum and plastics in its body and tires, the lithium (or lead/acid) in its batteries, and the asphalt and concrete for its roadways all require fossil fuels, mining, rare-earth metals, and/or huge amounts of energy to manufacture.”

    Techie dreams, nothing more.

  40. Cloggie on Fri, 14th Sep 2018 2:02 am 

    Well makati, you have to admit that over the last 200 years many techie dreams have come true: steam engine, locomotives, electricity, cars, flying, rockets, nuclear energy, internet, moonlandungs, television, gps and the list goes on and on.

    So there is absolutely nothing impossible about tying together a few hundred thousand large wind turbines or hundreds of millions solar panels. And self-driving cars are already a reality, although still in the testing phase.

  41. makati1 on Fri, 14th Sep 2018 3:10 am 

    Cloggie, you also know that steam engines, locos, electric and cars were simple inventions with a lot of CHEAP energy to produce them in quantity. Not so today. The cheap energy is over, forever.

    Any new tech ideas will NEVER get built out to any significant amount. NEVER. We are regressing as a race, not progressing. Only weapons systems tech is getting the financing to advance. Wind mills and solar panels are not military needs.

    Your dreams are impossible, but you will never see that. You are too deep in the techie religion.

    BTW: Planes, rockets, nuclear energy, internet, moon landings, television and GPS are ALL spinoffs from military research and use, not domestic ideas. That includes solar panels. ALL of them. Cars were promoted by the petroleum industry to sell oil, not for practical reasons. Think about that.

  42. makati1 on Fri, 14th Sep 2018 3:26 am 

    ” Orban and Salvini are the future of Europe, not French poodle Emmanuel Macron or Angela Merkel, whose power animal is the cockroach….

    Meanwhile in Germany, people call Merkel a traitor at public appearances and Alternative for Germany rises in the polls while Merkel’s support sinks….

    This rebuke is like a parent saying, “Not while you live under my roof….!”

    And the child walks out the door on their 18th birthday and rarely calls.”

    Which goes first? America or the European Union? Tossup…

  43. Cloggie on Fri, 14th Sep 2018 6:44 am 

    “Cloggie, you also know that steam engines, locos, electric and cars were simple inventions with a lot of CHEAP energy to produce them in quantity. Not so today. The cheap energy is over, forever.”

    Pssst, please don’t share this wth anybody else as it is still a top secret, but wind and solar come for free, honest! Unlike these camel jockeys, Mother Nature doesn’t invoice.

    “You are too deep in the techie religion.”

    …and into European politics and society, which are very different from American.

    “We are regressing as a race, not progressing”

    Who is “we”? America indeed is sinking into second world status as a consequence of mass third world immigration. The US as the worthy successor of the USSR.

    But as you quote yourself in this thread: Salvini and Orban are the future of Europe, not US deep state adept Merkel and her immigration folly.

    And China is not regressing either, nor does Russia.

    I am currently near Split in Croatia. What a difference with 1989!!! The country is blossoming whereever you look, apart from a few shabby commie apartment blocks they forgot to tear down. The country is 100% white and all anticipating a future within the EU. Allthough the euro is not yet the official currency, they gladly accept the euro everywhere (try that in

  44. makati1 on Fri, 14th Sep 2018 6:44 am 

    Americans, do you see this happening in the Carolinas?

    “We value your safety. In case you’re stranded or in need of shelter from the rains and flooding, feel free to take comfort in our malls and use our lounges, restrooms, phone charging stations and Wi-Fi to connect with your loved ones. All McDonald’s, supermarkets, drug stores and 24-hour convenience stores are also open for your needs. Overnight parking fees are waived. Take care everyone!”

    “SM, Robinsons, Ayala and Megaworld Malls announced that they will waive overnight parking fees on Friday, September 14, in areas that could be affected by super typhoon ‘Ompong,’ which primarily threatens the Cagayan-Isabela area. Heavy to intense rain is also expected in much of Luzon and a few Visayas areas. Below are the respective advisories from the malls on their separate Facebook and Twitter pages.”

    Same in America? I don’t think so! But it is the best advertising that you can get, cheap. Taking care of your customers when they are in need.

  45. Cloggie on Fri, 14th Sep 2018 7:03 am 

    EU intends to circumvent US sanctions against Iran and enable European firms to continue to do business via a new channe/financial institutionl. Even the UK participates:

    The initiative is French.

  46. Davy on Fri, 14th Sep 2018 8:22 am 

    neder, those companies with low US exposure may. Those with high exposure likely will not. Let’s see what Mercedes does. I am not supporting the sanctions BTW. I would like to see the global financial system disarmed but that is likely too late.

  47. Cloggie on Fri, 14th Sep 2018 9:16 am 

    Stopping how? US sanctions consist of blocking payments, that’s all. This mechanism is now cancelled. You can have trade intermediaries buying stuff in Europe, transporting the goods (including brand new Mercedesses) via Turkey or Caspian to Iran. The real important signal is that the EU is now openly defying the overlord of former fame. Europe is now strong enough to do so and over Iran we are backed by Russia and China. Heck, even by Britain. Trade with Iran will be more difficult, but still possible aaaaand legal.

  48. Cloggie on Fri, 14th Sep 2018 9:23 am 

    My biggest fear is that Bregret will finally get the upperhand. British politics is currently in a state of torment:

    The Conservative AND Labour Party could split over the issue:

  49. Antius on Fri, 14th Sep 2018 9:28 am 

    I can imagine the way the Iranians will get around this with relative ease is to set up a chain of intermediaries. If a company in France, say, wishes to buy an Iranian product, then Iran will first sell it’s product to a third party, in Pakistan say, and the Pakistani company will then sell the product to the French company. Vice Versa.

    The US sanctions merely increase the cost of doing business in both directions by having to employ middle men. No doubt there will be enterprising individuals that will make a fortune out of this.

  50. Davy on Fri, 14th Sep 2018 9:44 am 

    US sanction also consist of black balling companies who violate sanctions. Any major company will have to weigh exposure accordingly. The US is a huge market and Iran modest. This is true of the Chinese also. The sanction will be effective because of this. The rest is just talk. There will be good business opportunities for sanction busting as is always the case. Those companies with low exposure will buck the sanctions especially if alternative avenues for payment and credit are created.

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