Global currency is declining, huge things happening

https://www.youtube.com/watch?v=QT1suJ9cYI8

The slight blip when Janet Yellen hiked interest rates by a tiny amount had an enormous effect. Look at where base currency is suddenly diving, looks like about September 2015. This is a ten minute watch but will give a good global picture of where the global economy is now. Lots of good charts. We have a long, long way to fall in this crash, says Mike Maloney. Stockmarket is tightly correlated with base currency. Lots are sitting on the exit button waiting to get out of the stock market. "We are in for something very dramatic. 2016 is going to go down as a record year. The top is in and stocks are not the place to be any more."

The 08 crash it took a year and a half to go down, this will be faster.

The energy return cliff and the end of growth

When we first started talking about peak oil (I heard about in 2004) we were worried about the price of oil going over $100 a barrel.

Many people say “They will find something”  They hear a radio item about shale gas being plentiful and are happy. Or others might dismiss it as a plot by the left. As oil gets discovered in so many new corners of the globe, people now say the concern about peak oil was unnecessary. But actually, because of climate change, almost all those resources have to be left in the ground!

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Once a barrel of oil would be enough energy to extract 100 barrels of oil. But nowadays we need much more energy to get energy.

Then we had the Global Financial Crisis in 2008 and all got busy worrying about housing bubbles, derivatives, debt bubbles, too big to fail banks and bailouts. This is all important stuff. The price of oil declined as the global economy declined and now keeps repeating these waves. Affordability oil became the issue.

In 2012 that same brother in law commented that my worry about oil was unfounded as the oil price hadn’t gone up as much as forecast and “they were always finding something”.

Now I realise what is happening and there is no better little book to explain it than the one former Green Party leader Jeanette Fitzsimons recommended in a recent talk run by the local Quakers. The book that blew her mind was The Perfect Storm – Energy, Finance and the End of Growth by Tim Morgan, Global Head of Research at finance broker Tullett Prebon. It is freely downloadable at http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf. I have printed it off and had it bound.

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The Net Energy Cliff according to Tim Morgan

Morgan says: There are four factors bringing down the curtain on growth. The economy as we know it is facing a lethal confluence of four critical factors – the fall-out from the biggest debt bubble in history; a disastrous experiment with globalisation; the massaging of data to the point where economic trends are obscured; and, most important of all, the approach of an energy returns cliff-edge.

When oil bubbled from the ground in Saudi Arabia a century ago, only one barrel of oil was required to extract 100 barrels of oil. The energy return on energy invested (EROEI) was 100:1. But for tar sands it is 20:1, North Sea oil today 5:1, shale oil 5:1 or less and biofuels 3:1. He says below an EROEI of 15 the profitability falls off a cliff. For decades EROEIs are declining. Few discoveries today offer much more than 10:1. So as time passes economies are spending a larger percentage on energy. At the household level when petrol and power costs rise we have less and less for other essentials. A nasty little graph  of oil’s dying EROEI is shown at http://deepresource.wordpress.com/2012/11/22/eroei-estimates-for-shale-oil/

The economy is a surplus energy equation not a monetary one. Too much energy has to be reinvested into energy extraction and too little energy is left for the essentials of food, government services, housing and investment.

The interesting thing is that Tim Morgan works for Tullett Prebon. It is the messenger which is unusual saying all these things. It isn’t Richard Heinberg or some sandal wearing, folk dancing greenie. In a way Tullett Prebon seems to be taking over where Matt Simmonds left off.

I think the most scary thing in his whole book is the graph of the energy returns cliff. While we blithely go into debt to build motorways and while we waive civil rights to protest at sea about deep sea oil drilling, it must be worthwhile paying attention to what this energy firm is saying.

 

Agrarian anarchist Professor Dr Guy McPherson speaks to Kim Hill

The promos for the Kim Hill interview announced that Guy McPherson's recipe for saving humanity is to help the global economic system collapse! Fly and help rise the price of oil, then it will collapse and we can save the planet. Take your money out of the big banks too. The Radio New Zealand podcast can be accessed here. This turns environmentalists' thinking on its head.

Guy lives on a rock in the middle of a desert in New Mexico with his small community. His visit to New Zealand has made a remarkable impact. I had never heard of him before three weeks ago and we were lucky enough to host him and his super wife Sheila last Monday and have him show his life changing slide show in our home.

And I have bought his book Walking away from Empire. It is the stimulation from people like Guy that challenges my beliefs. He says we are now at the stage with climate change where the positive feedbacks are kicking in and we are on target for a six degree warming by 2035. The International Energy Association forecast this if it is business as usual. Only if nations honour their promises will we get to 3.5 degrees by 2035 and they are not going to do this.

He told us that climate change activists are divided into those who want to save industrial civilisation and those who don't. Seems an awful choice to most of us. But logically he is right. Those who love the planet and want it to survive should hope for economic collapse. So next time I am faced with the option of flying I will do so.

Last night I followed the story on the standoff in the Straits of Hormuz, the 30 mile wide stretch of water near Iran which carries 14 oil tankers every day. One commentator was saying that it the tension between US, Europe and Iran is going to escalate over the next weeks and months. Iran is already drawing up legislation to block oil tankers there. I recommend following developments here, because the rising tensions may trigger a spike in the price of oil and a global economic collapse. All economic recessions have been preceded by a spike in the price of oil.