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Wednesday, January 20, 2016

An avalanche of defaults

The mainstream economists are just beginning to catch up with The Return of the Great Depression, published in 2009.
The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

"The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up," said William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS).

"Emerging markets were part of the solution after the Lehman crisis. Now they are part of the problem, too. Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he said.

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something," he told The Telegraph on the eve of the World Economic Forum in Davos.

"The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians."

The next task awaiting the global authorities is how to manage debt write-offs - and therefore a massive reordering of winners and losers in society - without setting off a political storm.
What is interesting to consider is if there is a connection between the nonsensical climate change propaganda and the coming avalanche of debt-defaults. If I were a member of the global elite who a) genuinely believed that resources like fossil fuels are limited, b) was in a position to decide how society's winners and losers would be reordered, and c) did not subscribe to Christian morality and lacked a moral conscience, I would use the financial apocalypse and subsequent reordering to make sure that I, and my allies, held all the title to the resources necessary to ensure our control of them.

This would permit the construction of a global feudalism and extend the time in which the dwindling resources could be utilized, and would permit aristocratic resource-holders to retain a small First World technological society while the resourceless commoners are reduced to Third World technostasis.

That doesn't even rise to the level of science fiction, of course, economics being a science only in the ancient sense of a field of knowledge, but even as pure economic imagination, it's coherent and perhaps even worrisome in light of the present circumstances.

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96 Comments:

Blogger Josh January 20, 2016 8:04 AM  

How large is the global elite in your estimation?

Blogger VD January 20, 2016 8:19 AM  

It's the One Percent, so 70 million max. Probably less than half that; around 25 million.

Blogger Jason Roberts January 20, 2016 8:22 AM  

Your "advice" to the elite was the plot of "Quantum of Solace."

Anonymous Joe Blowe January 20, 2016 8:28 AM  

How large is the global elite in your estimation?

According to David Rothkopf, Kissinger lackey and author of Superclass: The Global Power Elite and the World They Are Making, the Globalist Elite and their high level minions number less than 6000.

Blogger paradox January 20, 2016 8:32 AM  

....would permit aristocratic resource-holders to retain a small First World technological society while the resourceless commoners are reduced to Third World technostasis.

Let the Hunger Games comence...

Blogger VD January 20, 2016 8:34 AM  

Your "advice" to the elite was the plot of "Quantum of Solace."

Was it? I never saw that. Now THAT'S worrisome, given their predilection for predictive programming. But it's stupid; their efforts would be better spent developing the new fuels that will eventually be developed anyhow, although I suppose they may be working off a Chinese/Japanese model, both of which were effective.

Blogger Aeoli Pera January 20, 2016 8:41 AM  

It seems to be organized by demonic whispernet, so it's as large as it needs to be for the task at hand. People respond to incentives.

The personalities at the top generally strike me as high-functioning, conscientious, fairly intelligent, and quite boring as people (aside from what they get up to). Like Nazi leadership. Not psychopathic or crazy, just kinda boring and morally flexible.

Blogger dc.sunsets January 20, 2016 8:41 AM  

In a fiat world, Debt=Wealth which becomes an irresistible temptation to initiate pyramid schemes writ gargantuan.

A debt jubilee is coming, of course, but it won't be orderly, it will be via cascading defaults, and with it will go all those illusory claims on underlying assets & capital.

I've long wondered who would end up with clear title to all those assets and capital once the dust settles.

The answer to this question will govern (in more ways than one) what the next couple centuries will look like.

Blogger Aeoli Pera January 20, 2016 8:43 AM  

In contrast, psychopaths tend to be something like low-level supervisors and managers, where they can enjoy manipulating people directly.

Blogger Ron January 20, 2016 8:47 AM  

original location for quote in case anyone wants to look it up:

(at least, this is what I found)

http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html

Blogger Bodichi January 20, 2016 8:47 AM  

C.S. Lewis has described these boring tyrants

http://www.samizdat.qc.ca/arts/lit/Toast_CSL.pdf

Blogger dc.sunsets January 20, 2016 8:47 AM  

It's an illusion to think the "top .25%" of top-line "wealthy" today will emerge whole. The vast majority of wealth disparity about which many wring their hands is the "rich" playing Ponzi. Most of their wealth is the very stuff poised to evaporate.

The real question is, who constitutes the top .25% who hold clear title, without leverage or mortgage, to real wealth? The British Royal family? Hereditary monarchs across Europe? And/or our current billionaires who, even after losing 90% of their paper wealth will still be in that top 0.25%? And of those, who will have the sense to be somewhere else when the bombs or Molotov cocktails are thrown?

Blogger Melampus the Seer January 20, 2016 8:49 AM  

Fundamentally, debt is not money. Money must be fungible and durable. Debt is fungible but not durable. When will these dolts understand that? Well, perhaps they do, and their purpose is malevolent.

Blogger Salt January 20, 2016 8:55 AM  

The Global Power Elite and the World They Are Making, the Globalist Elite and their high level minions number less than 6000.

Plenty of ammo to unload on them. Like cops do.

Blogger dc.sunsets January 20, 2016 8:56 AM  

although I suppose they may be working off a Chinese/Japanese model, both of which were effective.

The East Asian model is static (which in this case is good.) Too much embedded cultural deference for authority for widespread innovation to occur. Isn't the most historically consistent model for the future that as the West hibernates, contracting into a dark/Middle Age, East Asians maintain (but don't grow) current conditions? Then, in a century or five, the West reemerges with vigor and resumes the upward trajectory of Mankind. In this forecast, China/Japan play the role of the Middle East during Europe's incubation period (the Middle Ages.)

Blogger El Borak January 20, 2016 8:59 AM  

Debt jubilees have been going on for 5,000 years, as far back as the Sumerians."

Indeed. And surely telling millions of Americans that, in exchange for their credit cards being written off they no longer have SocSec or a pension, will not result in massive social unrest.

Most Americans don't realize that as massive as their personal debts are, their entire future is ordered around their "political capital", those legal debts that they accumulated from their children while paying their elders. Except that they didn't have any children. And the Mexicans brought in to replace those missing children have no intention of paying those debts back. Why should they?

Blogger LES January 20, 2016 9:09 AM  

Deuteronomy 15:6

6 For the LORD your God will bless you just as He promised you; you shall lend to many nations, but you shall not borrow; you shall reign over many nations, but they shall not reign over you.

Proverbs 22:7

7 The rich rules over the poor,
And the borrower is servant to the lender.

OpenID economicsophisms.com January 20, 2016 9:12 AM  

"Our macroeconomic ammunition to fight downturns is essentially all used up,"

This is demonstrably false. QE has been done in Japan and the US and in both cases nominal measures such as nominal GDP and inflation picked up following the QE. Negative rates have been tried in Sweden and the EMU with similar results. In a fiat money regime the central bank should always be able to stimulate, just create more money and you can stimulate nominal spending.

Blogger Dave January 20, 2016 9:17 AM  

a potent cause for mischief...this will be uncomfortable for a lot of people who think they own assets that are worth something

You really have to read between the lines with chief economists. Is he trying to tell us that IPhones and IPads will become a little more difficult to come by?

Blogger Bluntobj Winz January 20, 2016 9:19 AM  

Wealth will soon be stripped back to first and second order assets. Invest accordingly and in good future locations that have water, fuel, and less diverse populations.

Anonymous Rolf January 20, 2016 9:19 AM  

@17 - and that is the problem. People have become addicted to borrowing from other people without the expectation of having to pay it back. Something for nothing. It tends makes people fat and lazy and scared. They don't want to give up such illusory promises, even if it means putting other people's kids into debtor's prison. Scared people do irrational things.

I'm two years from paying off the house. Most people around here.... not so much.

Anonymous Takin' a Look January 20, 2016 9:20 AM  

@LES

That's all well and good when things are Lawful. They are not visibly so nowadays. Jubilee also had another function, it allowed the Kings to return arms back to the debtors in case of war. Yes, when you go into debt, your privilege to be armed is supposed to be stripped from you. Theoretically, the debtee is required to protect you as he would any other invested chattel.

Blogger ScottD January 20, 2016 9:21 AM  

In the coming "confusion" whoever then-currently physically holds (and can protect) the asset will be the owner.

Anonymous Takin' a Look January 20, 2016 9:26 AM  

@ El borak

Indeed, the Archdruid Report had an interesting perspective on this. All those civic fraternal orders weren't just for secret handshakes and funny hats.

Blogger Thomas Davidsmeier January 20, 2016 9:29 AM  

How could there possibly be an avalanche of defaults? Won't the government save us?

Blogger Derek Kite January 20, 2016 9:31 AM  

@18 Not true. Japan continues it's downward spiral, at best there is a short term delay of the inevitable base trends.

Central bank stimulus makes it cheaper to borrow money. Borrowing money is a mortgage on a positive outlook for the future. Yellen or whoever can't change that.

And a banking system whose survival expertise is sucking up to the monetary authorities is incapable of 1. surviving otherwise, 2. doing the productive work of allocating capital. No amount of printed money can change that.

Blogger dc.sunsets January 20, 2016 9:34 AM  

In the coming "confusion" whoever then-currently physically holds (and can protect) the asset will be the owner.

I suspect it will be more a case of who "owns" the actual allegiance of whatever political system remains who will decide who owns what.

This then becomes a question of just how far down the Rabbit Hole things go.
Plan A: things go on unchanged.
Plan B: wealth is reordered but the political system's "revolution" is more like during the 1930's, invisible to most.
Plan C: Visible redo of the actual political organizational chart (e.g., 1860's)
Plan D: Dissolution of the old order, temporary WROL/Zombie Apoc, complete with large-scale starvation & pandemic disease.

Step right up, pick your forecast...

Blogger pyrrhus January 20, 2016 9:34 AM  

What is interesting to consider is if there is a connection between the nonsensical climate change propaganda and the coming avalanche of debt-defaults. If I were a member of the global elite who a) genuinely believed that resources like fossil fuels are limited, b) was in a position to decide how society's winners and losers would be reordered, and c) did not subscribe to Christian morality and lacked a moral conscience, I would use the financial apocalypse and subsequent reordering to make sure that I, and my allies, held all the title to the resources necessary to ensure our control of them.

Profound statement VD, and that is what the elites are maneuvering to accomplish. However, China and Russia are also in the game...and a US population that they have been unable to disarm....

Blogger pyrrhus January 20, 2016 9:36 AM  

@27 Ultimately it will be Plan D...

Blogger dc.sunsets January 20, 2016 9:38 AM  

@26 exactly. Issuing vast unbacked debt (i.e., Japan's approach) simply draws out the time during which real capital is redeployed to utterly useless purposes.

Japan is moving ever more of its economy into Guy A digging a ditch, Guy B filling it back in while Guy C (their political/cultural elite) take a commission on the exchange.

The only reason they appear to be getting away with it is that the Japanese people hold such cultural deference to authority. They are metaphorically in a giant circle, obeying orders to drive the guy in front of them into the ground like a tent peg.

Blogger dc.sunsets January 20, 2016 9:42 AM  

@29 I hope not. IMO it is impossible to prep for Plan D while remaining able to handle A, B, or even C, unless living on a farm at a Mennonite standard of living seems like fun (and if Argentina's experience is useful, living in isolation in Plan D is extremely hazardous.)

Anonymous #8601 Jean Valjean January 20, 2016 9:43 AM  

@13 Fundamentally, debt is not money.

Money is, and has always been, debt.

See "Debt: The First 5,000 Years" by David Graeber.

Anonymous WinstonWebb January 20, 2016 9:53 AM  

Aside from the conventional (i.e. good) wisdom to prepare oneself at a local level, are there any avenues for a middle class man to game the collapse to his advantage? Or have all of those options been removed by the super class? Surely there is a way to profit from global defaults. But being a novice at economics, I often can't see the opportunities until after the fact.

Blogger Thomas Davidsmeier January 20, 2016 9:58 AM  

I think that it is to get in to production at the ground level. Get a farm. Learn the ropes. Not only is organic type agriculture healthier, it also is pretty much self-contained. You don't need near as much inputs from far away when you aren't dependent on fertilizer.

Now, I just need to teach the kids to shoot so that we've got a nice little platoon to defend the place.

Anonymous WillBest January 20, 2016 9:58 AM  

You ultimately have to get enough people to believe in your new world order to control it. The US being so diverse makes that improbable. A dissolution of the US into smaller countries, means any elite hoping to retain the really valuable assets are going to have to forgo things like people's primary residence, credit card debt, student loans, etc.

Blogger Skylark Thibedeau January 20, 2016 10:05 AM  

@16 Who will be Byzantium? Constantinople was the real depository of Western Classical Knowledge. They had continued on with a Greek speaking Roman Empire as the West was in the so called 'Dark Ages'. Whatever the West recovered from the Moors during the Crusades had been gotten by the Muz from Rum.

Blogger dc.sunsets January 20, 2016 10:06 AM  

Get a farm.

Sounds great. Until you recall that there's ample precedent in the USA for the FedGov to march in and force you to do what they tell you. And until you recall that never in the history of Mankind have farmers occupied the high ground of political power (except perhaps when they constituted a large power bloc, which today might look like ADM, not a CSA participant, and to ADM, you'd be either a competitor or takeover target.)

It's a total paradox; those who produce to satisfy the most basic needs are never "on top."

Whatever comes, "ownership" of visible assets/capital while not being very politically connected will probably not work out too well. It never has before.

Anonymous Michael Maier January 20, 2016 10:14 AM  

. Blogger VD January 20, 2016 8:34 AM
Your "advice" to the elite was the plot of "Quantum of Solace."

Was it? I never saw that. Now THAT'S worrisome, given their predilection for predictive programming.


That was the tough part about walking out of that film. Quantum fails as even a decent popcorn / action flick.

But it was almost terrifying to realize to realize that our real-life Bond villains and their plans really are exactly that damned mundane, even while causing untold amounts of misery and murder.

Except Putin, of course. He seems utterly ruthless and awesome at the same time. At least he seems to have Russia's interests at heart and his head screwed on straight.

Blogger Shimshon January 20, 2016 10:20 AM  

"Except Putin, of course. He seems utterly ruthless and awesome at the same time. At least he seems to have Russia's interests at heart and his head screwed on straight."

I can't remember who said it, but I remember reading not too long ago that someone wrote Putin resembles nothing less than a "cool Bond villain" while bemoaning that Obama is like...I can't remember specifically, but words like dufus, clown, inept and so forth come to mind. America could use their own "cool Bond villain" to make things right. Trump isn't quite in that league, but he will do. He's probably more like a "cool Austin Powers villain."

Blogger dc.sunsets January 20, 2016 10:34 AM  

Who will be Byzantium?
History rhymes.
I suspect that the West will hibernate because the concentration of people genetically predisposed to produce it will fall below a necessary threshold. The accumulated knowledge produced by the West will simply sit in books (and perhaps academic centers) awaiting the day when the necessary numbers and/or concentration of genetically-predisposed Westerners rises above that threshold again.

"Dark" Ages (periods of incubation) probably don't look Dark to contemporaries. Look at how many people think our current Keynesian/Monetarist, LBGT & immivasion fads are Business-As-Usual.... Maybe the great innovations of the 19th century up to the 1960's are massive compared to the cell phone and Facebook, an indication that the Dark Age is already upon us. I'd say so.

Anonymous CarpeOro January 20, 2016 10:34 AM  

@5 Let the Hunger Games comence...
Starving Games was funnier

@7 The Banality of Evil is a book if I recall about those types.

Titles will be worth only as much as the power to enforce them. Those that rely on government to supply the force alone will be hard put after awhile, unless they start directly paying the local forces. This opens them either to becoming the defacto local government or be at the mercy of an ambitious local interest (think the sheriff in the town that Jericho tried to make an arrangement in the tv series. First sheriff, then sheriff and mayor, accumulating power).

Blogger Remo - Vile Faceless Minion #99 January 20, 2016 10:40 AM  

Well it won't be just the 6000. If that's all they were they wouldn't be able to control anything as they are too few in number. They'll need a soldier class under them that get to live better than most and are above the law too the extent that they only are punished for not following the wishes and orders of the elite. Then you'll need an uber peasant class to fix and control all the drones and bots and cameras and everything and these should be terrified man-boobed people like Scalzi with barely enough testosterone to maintain organic functions. Then you'll have the 7 billion or so under that who are chattel for whatever the elites consider fun and sport.

Blogger James Dixon January 20, 2016 10:49 AM  

dc.sunsets, I think we're well past the point where a or b are options. It's going to be c or d, and d is looking more and more likely.

Blogger kmbr January 20, 2016 11:01 AM  

**Then you'll have the 7 billion or so under that who are chattel for whatever the elites consider fun and sport.**

Nah. They plan to whittle that number way down.

What do all their papers say? It's an abysmally low number. I can't remember and I'd be guessing but I don't even think it's a billion that they ultimately want taking in O2.

Anonymous BigGayKoranBurner January 20, 2016 11:08 AM  

I say we write off all of Soros's ill gotten gains. For all of history Elite looters have been destroying economies and looting hard assets with their connections to central banks. Napoleons greatest enemy was not General Winter but the bankers who got back at him for erasing debt of widows & children.

And surely telling millions of Americans that, in exchange for their credit cards being written off they no longer have SocSec or a pension

Better deal Iceland Style, toss Soros and company in jail/noose to exchange credit card debt for not sacrificing your first born.

31 Plan D while remaining able to handle A, B, or even C, unless living on a farm at a Mennonite standard

You could go somewhere with Mayberry style demographics and buy a decent amount of land assuming you could find work nearby. Hire some people to plant fruit/nut trees on your property, add insulation, get a greenhouse(earth bermed or underground), consider rain cached water and you will be able to live frugally in ABC.

For D have a plan to take all your 5 gallon food buckets to your grandfathers house or have supplies for an outhouse, a well bucket or way to get well water without power(or artesian well). A portable solar power battery recharger will go a long way in plan D but you could put solar panels on the roof while govt subsidies still exist. I believe David the Good has a video of how to build an outdoor clay oven, but rocket stoves can cook a meal with twigs.

A lifetime supply of ammo will be good for ABC&D. For a prolonged Nigapocolyse you should get a couple of the 8 man tent sized permanent glow in the dark after light exposure crystals. https://www.uvpaqlite.com/the-uv-paqlite-1.html

OpenID Jack Amok January 20, 2016 11:28 AM  

The problem for the Global Elite is that times of turmoil usually throw a bunch of them out of power. WWI saw 4 empires fall completely, and in a 5th (England), the ruling class were levered out of power even if they got to nominally retain their status.

I see a lot of similarities to the run-up to WWI. That war started because the elite at the time kept piling tinder up and throwing sparks around. They were too caught up in their own machinations to realize how fragile their system was and how their schemes just kept making it worse. Most importantly, they really couldn't conceive of a world without them in charge. They forgot about consequences.

Blogger Bard January 20, 2016 11:30 AM  

Winston,
I think there is money to be made in currencies and oil. Look at canada. They are linked. If/when oil rises and I think it will but may take a while, the currency will rise again. Same with South america. The big question is where we are in the cycle. Is this another turn or the final one. That is what no one knows. At some time the power elite will make a move backed by satan, if this is it, there is no profit but on the other side the greatest reset in human history with a righteous one not 1%

Blogger Bard January 20, 2016 11:33 AM  

If we are not currently building to that, then things can go hunger games for a very long time. Technology is the difference. That is why this time it is different.

Blogger Bard January 20, 2016 11:37 AM  

I am not a stock guy and only invest in tangibles. If we don't get a global currency by 2018 like on the cover of the Economist mag 30 years ago (predictive programming ), then all the currencies can't stay low vs the dollar

Blogger Bard January 20, 2016 11:40 AM  

Thoughts by those much smarter than I? What is the best way to invest in oil at current prices? A middle east intensification and the price will rise.

Anonymous Slowpoke January 20, 2016 11:42 AM  

Talking of this elite, think also that the boomer cohort of this elite started talking over it about ten to twelve years ago. This answers the question I've asked and heard asked, why are they trying to accelerate this when they had been boiling the fruit slowly for the past eighty years before. So maybe as evil will shall evil mar, the boomers might indeed screw up the elites plans in the end.

Anonymous Campestros Felfapton January 20, 2016 11:46 AM  

Interesting that the Eskimo term of jubilee bubbles up explicitly.

Blogger dc.sunsets January 20, 2016 11:49 AM  

dc.sunsets, I think we're well past the point where a or b are options. It's going to be c or d, and d is looking more and more likely.

I'd have said the same thing in 1995, 2000, 2003, 2008, etc. I've had my nose rubbed in the fact that no one knows the future, and the status quo is far more tenacious than any rational analysis could accept. I agree that Plan A cannot possibly be permanent, but it has lasted 20 years beyond its sell-by date. Those who went "full prepper" back then got utterly destroyed. I read story after story of people quitting their jobs, dumping their entire lives and pulling a Mel Tappan. Much to their later regret.

Markets (incl. oil, gold, stocks, RE, beanie babies) do not obey objective reason. Oil was oversold quite a while back, but those who bought UWTI got their heads handed to them. Everyone talks about the time they hit it big, they never own up to the dozen other times they got creamed.

Anonymous NorthernHamlet January 20, 2016 11:52 AM  

Aside from securing independence, I often wonder how best to profit to secure more savings long term in this situation.

We all can't be Nate, after all.

Blogger dc.sunsets January 20, 2016 11:53 AM  

@49 Bard: Not smarter than you, but if you want to leverage the upside on oil look at UWTI. Also look at what it did since last October when it looked like oil was basing in preparation for a rally. Any investment that loses 95% can lose another 95%. Never forget that.

Here at $1.49 maybe it's a buy. Or not. I'm not.

Blogger Rusty Fife January 20, 2016 12:11 PM  

@49.  Bard

Thoughts by those much smarter than I? What is the best way to invest in oil at current prices? A middle east intensification and the price will rise.

I'm in the industry and therefore don't invest in it; already have enough eggs there. The best advice I'd heard on investing is to keep it simple. Anything complicated is an opportunity for someone to steal your money.

Arguably the simplest is buying an index fund of oil stocks or th e oil commodity itself. I'm not a fan of index funds. I think they will fail hard.

Next is to buy a basket of 7-20 stocks. Don't know which ones to pick? Use a dart board, they do better than the vast majority of stock analysts.

Blogger dc.sunsets January 20, 2016 12:11 PM  

I often wonder how best to profit to secure more savings long term in this situation.

Keep what you have. In bear markets the math works against you. Only very patient, very talented and very lucky people make money on the short side. Fewer keep it.

And most people LIE about their market savvy.

Blogger Rusty Fife January 20, 2016 12:16 PM  

@49 Bard

The best part about the dart board is that you aren't emotionally invested in the pick.

I rebalance my top/bottom 20% picks monthly. I don't even care which ones are up/down.

Anonymous redsash January 20, 2016 12:16 PM  

Russian scientists concluded in the 20's that oil was produced by natural earth forces and not dead dinosaurs. Hence, once worked oil fields that have 'dried up' and left idle for 30 years magically start producing oil again. People, use a little common sense. For as much oil has already been found and consumed, dinosaurs would have had to existed shoulder to shoulder for millions of years. One can drive Hwy 70 N in Tn. and practically see it oozing out of the shale rock, and not a decomposed dinosaur anywhere in sight. Clue, when I die if I'm buried under 10 thousand feet of dirt or 6 feet of dirt, I will first explode from bacterial interaction, then I will emit various body fluids from all openings, creepy crawleys will have their fill, flesh will turn to dust, later on the old bones will be fossilized or turn to dust, but alas not one damn drop of 10w30 will I produce. Same for a dinosaur. There is no peak oil, and don't look for BP to start drilling at the body farm in Knoxville. Fear sells. For that matter with Iran getting back on line look for a buck a gallon gas.

Blogger Bard January 20, 2016 12:16 PM  

Thanks dc. I need to diversify a little out of US cash, gold, and rental properties but PE ratios in stocks are crazy and need to reset hard

Blogger Rusty Fife January 20, 2016 12:17 PM  

@56 dc.sunsets

I'd be all cash if I didn't think the banks would steal it.

Blogger Bard January 20, 2016 12:24 PM  

WWND?
What would Nate do?!#

Blogger The Kurgan January 20, 2016 12:29 PM  

I think these conclusions have been obvious for years. And yes, they are retardedly mundane. But if you met any billionaires (I have) you'll know they often function on a very different plane of "reality" from the rest of us.

Blogger Quadko January 20, 2016 12:37 PM  

doesn't even rise to the level of science fiction
I'd love to read some good economic and entrepreneurial speculative fiction. So much apocalyptic SF starts with the "Economic Things Went Bad" trope, glossing over the most important part.

And I threw entrepreneurial in, too, because I'd love to see more of that. That was a fun aspect of the early SF from Lensmen and Campbell; product research exploring into the new physics related to space opera technologies.

Yes, yes, if and when I "become a writer", I'll do it, too! :)

Anonymous Mr. Rational January 20, 2016 12:38 PM  

@58 once worked oil fields that have 'dried up' and left idle for 30 years magically start producing oil again.

There is a lot of BS coming out of Russia, a lot of it propaganda.  This is part of it.  Collapse of a reservoir or seepage from source rocks below (from the source shale into the reservoir sandstone) can add a bit or make more oil recoverable, but it isn't creating any.

If it only took 30 years to replenish an oil field, every old Pennsylvania and Texas field would be gushing again.  More to the point, the world would be spewing oil at the seams.  Notice that happening much?  I notice that they're drilling wells through the Marcellus in PA all the time, and all they're getting is natural gas; the oil is history.

For as much oil has already been found and consumed, dinosaurs would have had to existed shoulder to shoulder for millions of years.

Oil doesn't come from dinosaurs, it comes from algae growing and dying in shallow eutrophic seas and being buried under silt.  You can build up a hell of a lot of organic matter that way.  The latest offshore Brazilian finds have been beneath the layer of salt laid down when said sea became a dry seabed.

Blogger praetorian January 20, 2016 1:16 PM  

Thread music:

http://www.infinitelooper.com/?v=4TlPo0yCSa4

Money, money, money...

Anonymous Freestater January 20, 2016 1:23 PM  

@64

Did a quick check of Marcellus, you were right, there is basically no oil coming from there, but natural gas production is through the roof.

https://www.eia.gov/petroleum/drilling/pdf/marcellus.pdf

Blogger dc.sunsets January 20, 2016 1:26 PM  

@64 Not being a petroleum expert I don't debate Peak Oil (although the notion that we're running out of energy seems far-fetched.)

My question is this: if hydrocarbons are a product of geologic degradation of living matter, am I misinformed that astronomers infer the presence of hydrocarbons on lifeless planets and such? Not trying to veer too far OT...

Anonymous Athor Pel January 20, 2016 2:01 PM  

About oil, I've been doing a little research into geodes lately. Geodes being essentially hollow, vaguely spheroid to oblate masses of mineral matter that form via chemical precipitation within sedimentary or igneous rock layers.

Most people have seen the smaller ones with their hollows covered with quartz crystals and some have other minerals inside like calcite or barite. But some also have a liquid filling their hollows, a liquid like water or mercury or oil.

Of those filled with oil, none were found near enough to known oil deposits to help explain where the oil in the geodes came from.

People looking for simple and/or singular causes for oil formation are looking for somethat does not exist. The world under our feet is weirder and more complex than humans are ever likely to imagine.

Now my opinion on our financial system, it's simple, we're DOOOOOOOOMED!

But as long as the sun shines and the rain falls and you live in a place without major chemical or radiological pollution you can always grow your own food and raise your own livestock. Even if they're eloi.

Anonymous tublecane January 20, 2016 2:21 PM  

@3-As I recall they thought the conspiracy in "Quantum of Solace" was about oil, or something, but ended up being about controlling the supply of water. Which is ridiculous, because water isn't like fossil fuels, or most other commodities for that matter, and literally falls from the skies. Any global elite seeking to become feudal masters by becoming Water Barons are too stupid to worry about.

What is it with environmentalists and water, by the way? It's sillier than most if their fever dreams. I guess it's because everyone's been thirsty at some point in their lives and can imagine water shortages easier than wrapping their heads around "peak oil" or temperatures rising a degree or two per century.

Blogger Rusty Fife January 20, 2016 2:45 PM  

@67 dc.sunsets

When they talk about hydrocarbons; generally it is methane.

http://m.phys.org/news/2005-08-methane-extra-terrestrial-life.html

"When the water gets trapped over very, very long time periods," she says, an abiogenic reaction between water and rock makes methane, ethane, propane and butane.

Blogger James Dixon January 20, 2016 2:51 PM  

> Thoughts by those much smarter than I? What is the best way to invest in oil at current prices? A middle east intensification and the price will rise.

I believe the popular way is hedged futures contracts. But futures are something I've never even tried to play. Unless you really know what you're doing, it's a good way to lose everything you own 10 times over

> I'd have said the same thing in 1995, 2000, 2003, 2008, etc.

These things move at their own rate. Trying to time them is futile. All you can do is see the end point and try to prepare.

I'm hoping that a non-violent version of C is still workable (that's what both the tea party and Trump are efforts to accomplish, after all), but I have my doubts.

> I need to diversify a little out of US cash, gold, and rental properties but PE ratios in stocks are crazy and need to reset hard...

How fortunate for you that they seem to be in the process of doing so then. :)

Dow down almost 400 as I type this. It's been an interesting month so far in the markets.

Anonymous BGKB January 20, 2016 2:59 PM  

Did a quick check of Marcellus, you were right, there is basically no oil coming from there, but natural gas production is through the roof.

And Bath House Barry has been fighting liquefied natural gas for years.

What is it with environmentalists and water, by the way? It's sillier than most if their fever dreams

It might sound silly but where leftist rule you can't even collect rainwater. You can only live 3 days without water, its the ultimate slumlord power. Maybe they have a poisoning the well fetish.
http://cnsnews.com/news/article/oregon-man-sentenced-30-days-jail-collecting-rainwater-his-property

Anonymous Freestater January 20, 2016 3:40 PM  

@71

Many oil, coal, and natural gas companies have dropped 30 percent or more over the past 1-2 years. I would look for the top 20 companies in these industries and try and wait for a market bottom in energy and grab up the stocks of the big players left standing when it gets real bad. If I can get Exxon Mobil at it's 2009-2010 price level I'm jumping in.

Blogger James Dixon January 20, 2016 4:28 PM  

> If I can get Exxon Mobil at it's 2009-2010 price level I'm jumping in.

XOM is already paying almost a 4% dividend and has very low debt for an oil company. The payout ratio is less than 20%, so the dividend should be safe. They'll pay you to wait for the turnaround. Yeah, if the price drops more it'll look even better, but it looks pretty good now.
Obligatory disclaimer - we own shares of XOM.

Blogger Rusty Fife January 20, 2016 4:48 PM  

@75 James Dixon

I like the process they use to run projects. It's slow, steady, and risk sensitive; without being overly constrained.

Anonymous Freestater January 20, 2016 4:55 PM  

"XOM is already paying almost a 4% dividend and has very low debt for an oil company."

Ya I'm greedy, I'm waiting for the 6-7 percent dividends from the big companies. They are in a better position to actually pay high dividends than the smaller cap oil companies who will likely cut there dividends in tough times.

Blogger Josh January 20, 2016 5:13 PM  

I was playing around with some Fed data and found something interesting.

Since ZIRP in the US, depositors have lost 1.1 trillion in interest earnings, assuming the average interest rate would have been 3% and not zero.

Over that same time period, net income for all US banks was 1.7 trillion.

So roughly two thirds of all bank income is simply the direct result of ZIRP.

Anonymous Mr. Rational January 20, 2016 5:14 PM  

@67 Pennsylvania was the site of the original American oil boom.  Quaker State motor oil was named after it.  The oil that seeped out of the Marcellus made that boom, and... it's gone.  The source rock still has methane in it, but that's not going to last very long either.  The economic lifespan of a shale well is very short, and most of its production is in its first 2 years.

We have incredible amounts of energy available, but it's been ruled out of bounds by people with interests in BAU:  the better part of a million tons of uranium, just sitting there.  There's a deposit in Virginia that the owners of the land want to mine, but they're forbidden by law.

@68 Hydrocarbons including methane are formed naturally even in space.  Methane, ammonia and such are found in comets.  You don't need life to make hydrocarbons, but life uses lots of their precursors like fatty acids.

Blogger Josh January 20, 2016 5:33 PM  

UPDATE: I goofed on the math.

Bank net income was only 700 billion, not 1.7 trillion.

Anonymous redsash January 20, 2016 5:35 PM  

Take your algae, grass clippings, tree cuttings, or mulch, apply pressure, apply heat, apply a billion years of time and you will not produce one ounce of inorganic oil from a trillion tons of organic material. If you seek organic oil, squeeze it from some vegetables. I hear it's awesome for frying chicken.

PS Russia 1 Mr. Rational 0

Blogger thimscool January 20, 2016 6:52 PM  

Well said, Vox. Neofeudalism is the obvious solution for a global technocracy.

Anonymous Freestater January 20, 2016 6:54 PM  

Didn't we used to get oil from hunting whales? Maybe we can do that again when the shale runs out.

Anonymous Bozeman January 20, 2016 7:43 PM  

Rosa Koire. Our most favorite Lesbian, Homosexual Socialist who has exposed the Agenda, which is being executed Locally, through Urban Planning.

Thanks for playing.

Blogger Phillip George January 20, 2016 8:01 PM  

not really off topic but I'd just like to thank all the posters here for their wildly entertaining posts. If it is a zombie apocalypse I'll miss these posts more than food and "peak" water,

I'm reminded that in chaotic systems specific prediction is an impossibility. So, "make the future, don't just respond to one".

You're next money could be a basket of potatoes, or the gold retrieved from the teeth of some nearby cadavers. Laugh loud and laugh often. Napoleon, Pharaoh, or slave, ashes to ashes, dust to dust.

Jesus is the social capital. The One who "spoke DNA can organize life boats or functional "societies".

As a rapture theorist I also reckon we could both be right. The left behind and "take flight" are both correct.

Anonymous Mr. Rational January 20, 2016 8:30 PM  

@81 Rule 2:  back up your assertion.

Blogger SciVo January 20, 2016 8:35 PM  

@ economicsophisms:

Not if it goes to asset inflation instead.

Blogger SciVo January 21, 2016 1:42 AM  

@ Bard:

Look for operations with higher operating costs to go bankrupt, then buy and mothball them for later. Try and keep to ones close to you. If push comes to shove, you will need real assets that you can physically control.

Blogger SciVo January 21, 2016 1:49 AM  

@ NorthernHamlet:

The conventional wisdom is that it's better to be the guy selling shovels, mules and pans than the one with gold fever. So start a gun & survivalism shop.

Blogger SciVo January 21, 2016 2:00 AM  

@ tublecane:

Hollywood. LA. The Colorado River ends before the ocean, and a multi-way agreement keeps it from being even worse.

They write stories about that fear because it's theirs.

Blogger SciVo January 21, 2016 2:02 AM  

@ James Dixon:

Do not buy in. Check the charts about monetary base vs. markets.

Blogger David Hayter January 21, 2016 2:50 AM  

That's perfectly natural. That happens with the first Dark age. Scientific advancement was slowed, but not stopped. And this was not due to Christianity as the myth goes but the natural "winter" of history had come. We are due for another historical winter and the best outcome we can strive for is preserving out culture and technology.

Blogger Joshua Sinistar January 21, 2016 9:53 PM  

People often confuse Money and Power. They are not the same. Power can get all the money it wants to, but money is merely influence that can sway those with power. The levers of power are currently in the hands of incompetent political whores. As time wears on and conditions deteriorate, these losers will be replaced by strongmen. When confronted with force, the chickens in the henhouse of easy money by counterfeit debts, will run away from the rising storm. The Rats have already dug their nests deep in the ground to survive. I need only pour sixteen tons of concrete or cement down the tunnels to seal their doom.

Blogger Halifax Donair January 21, 2016 10:51 PM  

@45 I'm going to go out on a limb here and suggest that shit will really hit the fan with Soros dies, and his positions are wound down.

Blogger James Dixon January 23, 2016 1:54 PM  

> ...monetary base vs. markets.

I'm well aware of how the various QE programs have inflated the market, SciVo. Bargains are hard to find right now, but some of the oil and gas companies may qualify.

Blogger Thomas Davidsmeier August 29, 2016 2:24 AM  

I Cor. 13:1-10 "Though I speak with the tongues of men and of angels, but have not love, I have become sounding brass or a clanging cymbal. And though I have the gift of prophecy, and understand all mysteries and all knowledge, and though I have all faith, so that I could remove mountains, but have not love, I am nothing. And though I bestow all my goods to feed the poor, and though I give my body to be burned, but have not love, it profits me nothing.
Love suffers long and is kind; love does not envy; love does not parade itself, is not puffed up; does not behave rudely, does not seek its own, is not provoked, thinks no evil; does not rejoice in iniquity, but rejoices in the truth; bears all things, believes all things, hopes all things, endures all things.
Love never fails. But whether there are prophecies, they will fail; whether there are tongues, they will cease; whether there is knowledge, it will vanish away. For we know in part and we prophesy in part. But when that which is perfect has come, then that which is in part will be done away."

I am no great thinker or writer. I have never even posted on a blogsite(?) until now. I am just a mother, and longing for "perfect" (I Cor. 13:10) just as you all are.

Ask yourself if your "living hope" is "through the resurrection of Jesus Christ from the dead." (I Pet. 1:3), or is your hope in "prophecies, tongues, and knowledge, that will vanish away?" (I Cor. 13:8).

Are you long-suffering and kind, or have you closed your heart(Ps. 17:10), and are puffed up, rude, and provoked? (I Cor. 13:4-5) Are you motivated by your trust in the Lord, or your fear of men? (Prov. 29:25) Are you counseling by mocking and speaking of oppressing those who have oppressed you (Ps. 73:8), or are you delighting in the law of the Lord day and night? (Ps.1:1-2) Are you the "grievous wolves", or "feeding the church of God" (Acts 20:27-28)? Consider that the only food for the church is the Bread of Life (John 6:35) and the Word of God (Matt. 4:4, John 1:1).

Please consider the new commandment our Lord and Savior Jesus Christ gave to us. "That we love one another; as I have loved you, that you also love one another."(John 13:34)
And, “You have heard that it said, ‘Love your neighbor and hate your enemy.’ But I tell you, love your enemies and pray for those who persecute you, that you may be children of your Father in heaven. He causes his sun to rise on the evil and the good, and sends rain on the righteous and the unrighteous. If you love those who love you, what reward will you get? Are not even the tax collectors doing that? And if you greet only your own people, what are you doing more than others? Do not even pagans do that? Be perfect, therefore, as your heavenly Father is perfect." (Matt. 5:43-48).

Yes, our Lord, who laid down His life for our sins, asks us to love our enemies, and pray for them, something so hard we can do only with His help and grace.

I used to think that praying that my enemies would be smitten would fulfill what Jesus asks of me. I have come to realize that loving them means hoping for "all people to be saved and to come to a knowledge of the truth" (I Tim. 2:4), just as God desires: "Do I have any pleasure in the death of the wicked,” declares the Lord GOD, “rather than that he should turn from his ways and live? (Ezek. 18:23)

Please consider that he asks US to be "perfect"(Matt. 5:48), until He who is truly "perfect" comes.

In Christ,
Rebecca

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