My unpublished (100,000 word) book “The Financial Jigsaw”, is being serialised here weekly in 100 Issues by Peter J Underwood, author
Quote of the Week: “Recession is when your neighbour loses their job. Depression is when you lose yours.” – Harry Truman
NOTE – If anyone would like a free updated, 3rd edition, electronic copy of the complete book, I should be pleased to email a free PDF on request to: [email protected]. The book has many footnotes linking to relevant and explanatory Appendices, websites and videos.
BTW I am pleased to report that I have been banned by FB – no reason given but I suspect they have taken umbrage at the postings of my book – so it must be true then!
Here is a fellow traveller with his take on the Shale Oil fiasco: Capitalist Exploits
For a feeling of good, it is well worth reading Chris Martenson’s recent article. It starts gloomy but ends on an optimistic note: https://www.peakprosperity.com/surfs-up/
And the backlash and consequences of America’s latest adventure are becoming apparent:
“America can assassinate anyone, anywhere, at almost any time with limited collateral damage. Few of our adversaries can. With today’s technology, we surely would’ve killed Osama bin Laden in Tora Bora in 2001 along with the senior Taliban leaders harbouring him. We might’ve saved $6trln and 500k lives. Given that the US has this capability, might we rewrite the rules and adopt an assassination policy? Holding our adversaries to account, imposing a capital consequence when their leaders cross our Red Lines? Soleimani apparently thought the answer was no. How will our adversaries act in the future if they know they’re thus accountable?”
When is enough, enough? “The wealthiest one percent of the world’s population now owns more than half of the world’s wealth, according a Credit Suisse report. The total wealth in the world grew by 6 percent over the past 12 months to $280 trillion, Credit Suisse said. That was the fastest wealth creation since 2012 [14 Nov 2017]”. When I was consulting in the 1990s, I asked a millionaire businessman: “when is enough, enough?” He replied that it is never enough, Peter, it is the way of the world. Yes, his world, maybe, but not mine. So what have the mad economists come up with to right this wrong? You guessed it UBI!
https://mises.org/wire/universal-basic-income-dream-come-true-despots
“A concern that too much money is flowing to the small elite of the population, combined with people’s natural inclination to suspect others are being paid more than them has been a defining feature of the decade since the financial crisis.”
https://www.thisismoney.co.uk/money/comment/article-7357395/Who-1-Britain-one-them.html AND on a lighter relevant note (sorry this is VERY British):
https://www.youtube.com/watch?v=VKHFZBUTA4k
This week I am posting the EPILOGUE which has been kindly provided by my friend Dr Tim Morgan. Tim wrote a book in 2013 at the same time that I began The Financial Jigsaw:
https://www.amazon.co.uk/Life-After-Growth-global-economy-ebook/dp/B00F3D8M2C
His analysis of surplus energy systems and their gradual decay having reached a crisis in recent years exposed the disparity of the true and real economy of energy and the false financialised economy which makes unsupportable claims on the real economy. The outcome is a gradual decline in economic growth which we are experiencing today and a rising inequality of wealth as the globalists and their 1% elites strip all the resources from the remaining 99%. Tim’s website is well worth a visit (see below) and the many comments therein offer wonderful insights into our failing global systems.
Here is the link to last week: Issue 86
Now that Brexit is certain on 31st January 2020, I will continue to provide weekly updates as events progress:
Brexit Update – 17th January 2020
The Brexit deadline remains 31st January 2020 and Parliament has agreed the new exit plan (WAB): https://www.bbc.co.uk/news/uk-politics-50125338 – This bill will progress through several readings in Parliament and the House of Lords before becoming law at the end of the month.
You may follow a daily run-down on the current situation from my friend, Dr Richard North, as Brexit progresses: http://eureferendum.com/ I have said before, Brexit is a process, not an event.
“There are signs (for example, the repo crisis in New York and mounting problems in eurozone banks) that the periodic credit crisis that always follows a period of credit expansion is imminent. If it breaks out before January 31, the government will undoubtedly face pressure to put Brexit on hold.” A long article, but full of useful background and current valuable information:”
https://mises.org/wire/will-credit-crisis-threaten-boriss-2020-brexit-plans
The Brexit doom and gloomers have been proven wrong already as Airbus pledges expansion in the U.K. after Brexit: https://moneymaven.io/mishtalk/economics/airbus-to-expand-in-uk-after-brexit-9wGHGSQA7k2EREXZKbTwsA
Parliament is now at work this week. Details of Parliament’s deliberations can be found here:
As the UK is definitely leaving EUROPE, I will continue to comment on relevant
EU – UK events:
This article about the coming digital global currency, puts into perspective the thinking behind the BIS and central banks’ plans for the coming decade:
“Christine Lagarde was quizzed on whether creating a cryptocurrency was ‘a legitimate task for the ECB‘. Innovation in the area of payments is racing ahead in response to the urgent demand for quicker and cheaper payments, especially cross-border ones. The Eurosystem in general and the ECB in particular want to play an active role in this field, rather than just acting as observers of a changing world. I think we can safely take that as a yes. When you combine all the comments raised, there is one overarching message. Central banks are more than prepared for the digital revolution, primarily because they are the leading architects behind its inception.” https://stevenguinness2.wordpress.com/2020/01/12/a-european-perspective-on-central-bank-digital-currency/
I wonder why our BBC avoids all mention of the French protests. Are they afraid that it might erupt here in UK? Thank goodness for the New York Times reporting and ZeroHedge – street protests do work, at least in France anyway: “The mood was militant, and the more violent demonstrators once again clashed with the police, even as they sowed a trail of damage through eastern Paris. A bank branch was sacked, and bus shelters smashed and fires set. Unions said 150,000 protesters were in the streets of Paris on Saturday. –NYT”
And the EU nightmare continues – thank God we are leaving this crazy ‘disorganisation’:
“The logic is very European: first we curb our own business efficiency through regulation, and then we call other countries unfair competitors.” AND “As expected, Europe’s journalists are sticking with the Commission’s rhetoric by calling it a carbon border tax. For my part, I call it politicized European protectionism.”
https://mises.org/wire/european-green-deal-every-bit-bad-expected
The 3rd edition of The Financial Jigsaw issued recently includes a Preface, Epilogue and Appendices which I will publish here in advance. Here is the Epilogue:
EPILOGUE
“Surplus Energy Economics” by Dr Tim Morgan PhD
Energy Returned on Energy Invested (EROEI)
Source: https://surplusenergyeconomics.wordpress.com/
NOTE: My additions: […..] – Peter J Underwood 2020
Although I’ve spent many years as an analyst of energy, economics and strategy, I am probably best known for my work as head of research at https://www.tullettprebon.com/ a role I left in early August [2013]. Though my research covered a wide range of subjects, my main interest is in a wholly new way of looking at the economy.
At its simplest, this radical approach argues that there are two economies, not one. The first is the real economy of energy, labour, resources, goods and services. This real economy is a function of surplus energy.
Mankind began to create surplus energy through the development of agriculture, which freed up a small proportion of the population for non-subsistence activities. A much bigger step forward came when we discovered the heat-engine, which enabled us to tap vast reserves of fossil fuel energy. [Note: that a gallon of gasoline contains enough energy to replace approximately 54 days of human labour. Imagine pushing your car for 30 miles+ at 30mph – how many people would you need?]
The financial economy runs in parallel with the real one. Money has no intrinsic worth, but possesses value only as a claim on the real economy. The financial economy consists of a series of claims on the real economy, claims which include cash, debt and other forms of supposed value. For the most part, the financial economy has been an indispensable tool for the better management of the real one. Markets allow us to price assets, inputs, outputs, risk and return. They also allow us to undertake essential longer-term projects, such as building a power-station, a school, a road or a house.
But the financial economy has an essential anticipatory character. Every time someone lends, borrows, invests or takes out an insurance policy, he or she has to work to some collective expectation for the future. Based on 200 years of experience, our default assumption has been that the future will be much like the recent past – that is, it will be characterised by growth in the real economy. If, for any reason, growth does not pan out as we expect, the assumptions underpinning the financial economy system of claims cease to be valid, and claims may prove impossible to honour.
That’s where we are now. We’re nowhere near “running out” of energy, but what is critical here is the surplus energy equation. This is an equation which compares accessed energy with the energy consumed in the accessing process, and is known as the ‘Energy Return on Energy Invested’, or EROEI.
This ratio is now deteriorating rapidly, and has fallen to the point where growth in the real economy has ceased. [It is estimated that the ratio in 2019 is 10:1 and is now unable to sustain our current western economy.]
Unfortunately, the accumulation of financial economy claims has continued regardless, meaning that we are now burdened by excess claims – claims, that is, that an ex-growth economy cannot honour. This is most visible, of course, in the vast amount of debt with which the global economy is burdened.
Two things, then, will be obvious. First, we have to get used to an economy that doesn’t grow in the way to which we’ve become accustomed. Second, excess claims – not just debt, but other forms of supposed value that cannot be honoured – will need to be destroyed.
These challenges are not impossible, but they do need a radical change in how we do things, starting with an imperative need to look at the economy in a very different way.
[This is the basis of Part 2 of the Financial Jigsaw to be published later. The INTRODUCTION and free PDF of the book is available now on request to: [email protected] ]
[Dr Tim Morgan’s 2013 book is available at: https://www.amazon.co.uk/Life-After-Growth-global-economy-ebook/dp/B00F3D8M2C ]
Additional Note:
A minimum EROI of at least 10 is required to maintain civilization as we know it (Hall et al. 2008). In 2014 Lambert and Hall increased the EROI required to 14.
- If you’ve got an EROI of 1.1:1, you can pump the oil out of the ground and look at it.
- If you’ve got 1.2:1, you can refine it and look at it.
- At 1.3:1, you can move it to where you want it and look at it.
- We looked at the minimum EROI you need to drive a truck, and you need at least 3:1 at the wellhead.
- Now, if you want to put anything in the truck, like grain, you need to have an EROI of 5:1. And that includes the depreciation for the truck.
- But if you want to include the depreciation for the truck driver and the oil worker and the farmer, then you’ve got to support the families. And then you need an EROI of 7:1.
- And if you want education, you need 8:1 or 9:1.
- And if you want health care, you need 10:1 or 11:1.
Source: http://energyskeptic.com/2015/tilting-at-windmills-spains-solar-pv/
To be continued next Saturday
If you add The Great Society Welfare 30:1, Obamacare 40:1, Government Financed College Educations for anyone down to a 70 IQ 50:1, Deep State Break Away Civilizations 60:1, UBI 70:1 . Of course, you have to have a convincing way to keep the Farmers and Ranchers producing food for very little profit and often at a loss while the Middle Class incomes shrink to barely above the public assistance level. PS: One reason so many people Hate Trump is he puts America First instead of Democrats, Welfare Queens, Blacks, liberals, queers, etc. PSPS: The reason FB banned you is FB Cannot Take the Truth (FB=TPTB=Federal Govt).
All good, Robert, thank you – love it. So that’s that then, end of civilisation 2.0 as we know it. Back to the good old 1700s again – should be fun for all those sucking at the welfare tit, including the ass*ole banksters, politicians and bureaucrats.
Let them eat fiat.