The end of the world: when?

Douglas Smith

Zeus

T U E S D A Y , F E B R U A R Y 0 4 , 2 0 1 4

How To Time CollapsesOver the past half a decade I've made a

number of detailed predictions about

collapse: how it is likely to unfold, what

its various manifestations are likely to

be, and how it will affect various groups

and categories of people. But I have

remained purposefully vague about the

timing of collapse and its various

stages, being careful to always append

give or take half a decade to my dire

prognostications. I wasn't withholding

information or being coy; I really had no

way of calculating when collapse will

happenuntil five days ago, when, out

of the blue, I received the following email from Ugo Bardi:

Hi Dmitry,

You may be interested in this post of mine.

Starting from this post, I'm trying to draw a parallel betweenthe collapse of the Soviet Union and the impending collapse ofItaly. There are, as always, similarities and differences. Inparticular, the Soviet Union collapsed almost immediatelyafter that oil production flattened out and started declining.On the contrary, the Italian government survives despite a lossof 36% in oil consumption.

My impression is that it is all related to different taxationmethods. I understand that the Soviet tax system was basedmainly on commodity taxes and on taxes on production. Whenproduction stalled, people had nothing to buy and thegovernment had nothing to tax because most people ownednothing and had little or no savings in banks. So, thegovernment had no choice but to fold over and disappear.

Instead, the Italian system is based largely on income tax andproperty tax. The government is losing revenues on commoditytaxes (e.g. on gasoline) but it can compensate with property

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taxes. Italians, on the average, are rich, in the sense thatthey have savings in banks and most of them own their homes.So, the government can tax their properties and their savings.As long as Italians still have something taxable, then thegovernment will survive. It will disappear only when it hasmanaged to strip citizens completely of everything they have.

Do you agree with this interpretation? (BTW, Italy as a statemay be even more culturally diverse than the old Soviet Unionwas.)

Ugo

I wrote back:

Hi Ugo,

Very interesting article. Yes, the entire southern tier of the EUis in some early stage of collapse, but so far it hadn't occurredto me to draw parallels between it and USSR. Now that youmention it, the parallel is obvious: it is financial collapsetriggered by something having to do with oil, but withpolarities reversed, and delayed by a period of wealthdestruction.

In the case of USSR, taxation wasn't really a source ofgovernment revenue. The national economy was based ongovernment ownership of everything, central planning andbudgets, and a system of assigning ministerial contracts toenterprises owned by the ministries. The external economywas a matter of exporting hydrocarbons in exchange forforeign currency, which was used to buy grainmostly feedgrain for cattle, without which the population would becomeprotein-deprived and malnourished. Over the so-calledstagnation period of the 1980s the Soviet economy becamehollowed out because of several trends. Too much spending ondefense was one of them. Another was that investment incapital goods (machinery, plant and equipment) reached thepoint of diminishing returns, which is very difficult tocharacterize but not so difficult to observe. Lastly,Solzhenitsyn and the dissident movement had done irreparabledamage to Soviet prestige, destroying morale. The coup degrace, when it came, consisted of two pieces. One was theinability to expand oil production given the state of Soviet oilextraction technology of the era. The other was the fall in oilprices, down to $10/bbl at one point, because North Sea andAlaska both went on stream, and the Saudis pumped as muchoil as they could based on a tacit agreement with the US todepress oil prices and thus crush the Soviets. In this theylargely succeeded. The USSR became heavily indebted to theWest, and, at the very end, needed Western credit to keep thelights on in the Kremlin. One of the final scenes featuredGorbachev on the phone with [West Germany's Chancellor]Helmut Kohl asking him to ask the Americans to release somefunds.

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Now, I can see parallels to this in what is happening now in theUS and in the EU, but with all the polarities reversed: here oilflows in and money flows out, and the coup de grace [will be]high oil prices rather than low. Instead of failures of centralplanning, which failed to allocate production effectively, wehave failures of the globalized market, where production iseffectively globalized but consumption is ineffectivelylocalized among the wealthy and the formerly wealthy, andhas to be fueled by credit. Instead of diminishing returns fromdeployment of capital goods, we have diminishing returns fromdeployment of capital itself, where a unit of new debt nowproduces much less than a unit of economic growth. Thedamage to reputation and morale is mostly on the US side ofthe Atlantic, where in place of Solzhenitsyn and the dissidentmovement we have Abu Ghraib [scandal], [Wikileaks' Julian]Assange and [Edward] Snowden. With the EU, most of thedamage has to do with [the] experience of economicdisparities between the rich core and the increasinglyimpoverished periphery, and the recent move in Ukraine towalk away from the EU, and the ensuing Western-financedmayhem in Kiev, show that the bloom is off the EU rose aswell. The runaway military spending is likewise mostly a USissue, although epic failures in Afghanistan, Libya and Syria, inwhich the EU is complicit, are likely to have some effect aswell.

Comparing USSR to Italy is difficult because of the disparity ofscale: 1/5 of the planet's dry surface versus a smallishpeninsula; an economy that slowly decayed in isolation versusan integral part of the EU; a country where the choice isbetween burning hydrocarbons or dying of exposure versus onewhere the choice is between riding a scooter or taking thebus; a country with a ravaged agricultural sector unable togrow enough protein calories versus a nation of foodies wherecorner groceries make worthy subjects for oil paintings. But Ithink that when it comes to the actual collapse, when it finallycomes, there will still be identifiable similarities. Financialcollapse always comes first: all sorts of financial arrangementsunravel as the center becomes unable to float the periphery,and in response the periphery starts to withhold economiccooperation. The result is a breakdown in supply chains,shutdown of production, and, shortly thereafter, shutdown ofcommerce. In the case of the USSR, this unfolded in 1989-91 asthe various republics and regions refused to cooperate withMoscow. I suspect that this will also happen in the EU, at somepoint. But I think that you are exactly right that whereas theaverage Soviet citizen could not be fleeced, Italy, and much ofthe EU, still have plenty of fat sheep that the government canshear to keep things running. Thus we are looking at a fewmore years of steady decline before the lights start going out.This, then, is the key distinction: the USSR collapsed promptlybecause it was already skin and bones, whereas the US and theEU still have plenty of subcutaneous fat to burn through. Butthey are, in fact, burning through it. And so, the conclusion is,collapse will come, but here it will take a little longer.

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-Dmitry

Ugo responded:

I agree with you, of course. It makes perfect sense to me andit is the main point I was making: the Soviet governmentcouldn't tax Soviet citizens too much because they owned verylittle.

...

The Italian government instead has some luck in the sense thatItalians have some savings and most of them own their homes.So, the government is progressively strangling their citizens tosqueeze out of them all that they havewhile they still havesomething.

The last round of tax increases in Italy is targeting homes andit is really, really hurting, especially the poor. You can be poorhere, and still own a house that you inherited from yourparents. Now the government asks you to pay as if that housewere revenue! That is truly evil. People who don't have themoney to pay this property tax can only indebt themselveswith banks (or worse). Eventually, they'll have to sell theirhomes or give them to the bank (or to the Mafia)the result isdisaster for everybody, including for the banks, and even thegovernment. But the whole thing has a perverse logic. It hasthe advantage that it generates some immediate cash which isbadly needed, then the hell with the future.

The [next] phase will be to target bank accounts. Then, whenthere will be nothing left, the government will decamp andsay bye to everybody. Hell, what a planet I landed in.....

All the best,

Ugo

And so here is the outline of the method for calculating the timing of

collapses:

1. Find out when the collapse clock starts running by looking for a

significant drop in energy consumption

2. Calculate how long the clock is going to run by dividing the total

wealth of the citizenry by the economic shortfall of the shrinking

economy

For any industrial economy the collapse clock starts running as soon

as the consumption of fossil hydrocarbons starts dropping

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A R T I C L E S

Post-Soviet Lessons for a Post-American Century

Leons post-sovitiques pour unsicle post-amricain

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Lies Ps-Soviticas para um SculoPs-Americano

appreciably. It is sometimes difficult to tell whether this has already

happened if the country in question is still a major hydrocarbon

producer. Gross production numbers can still be holding steady or

even seem to go up a bit, but once you subtract all the energy that is

being expended on energy production itself, and on the unprofitable

mitigation of its many undesirable consequences, you might be able

see a decline sooner rather than later. Notably, the net energy yield,

or EROEI, is very low for all the newer unconventional sources that

have been trumpeted as panaceas in recent years, such as ones that

require hydrofracturing and drilling in deep water, tar sands and so

on. (The so-called renewables, such as wind, solar and biofuels,

are an even bigger joke, because all of them with the exception of

hydroelectric plants have net energy that is too low to sustain an

industrial economy, plus they all depend on technologies that are

nonrenewable unless the country maintains a vast industrial base

which happens to run on fossil fuels.) And so the drop in net energy

consumption is clear for Italy, which produces 7% of the oil it

consumes and imports the rest, whereas the picture is somewhat less

clear for the US, which still manages to supply around a third of its

oil.

Since all industrial economies literally run on fossil fuels, lower

energy consumption immediately translates into a lower level of

economic activity and a shrinking economy. The gap between the

expectations of economic growth that are dialed into all of the

financial arrangements, and the reality of economic decline driven by

lower energy availability, has to be plugged with the population's

savings. There are a number of ways of expropriating wealth,

generally proceeding from various kinds of stealth taxation measures,

to more overt measures, to outright expropriation. Taking the US as

the example (since I am most familiar with it) the expropriation

cascade is proceeding as follows:

1. Central bank policy of zeroing out of interest rates on savings

combined with massive money-printing. This forces money into

speculative markets (stocks, real estate, etc.) creating huge financial

bubbles; when these bubbles pop, savings are said to be destroyed,

but in reality that money has already been spent by the government

or used to fill the private coffers of those closely associated with the

government.

2. Government policy of canceling retirements or short-changing

retirees. The federal government has worked hard to make its official

measure of inflation all but meaningless so that it can justify its

policy of making cost of living adjustments to social security

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payments that are far less than the the real increases in the cost of

living. Another federal expropriation scheme is via guaranteed

student loans, which cannot be discharged through bankruptcy, and

which have created an entire class of indentured servants. At the

more local level, state and municipal governments are curtailing or

canceling retirement programs by virtue of going bankrupt.

3. Ever more onerous reporting requirements for financial

transactions, especially for those who try to leave the country and

expatriate their savings. All foreign bank accounts must now be

reported, and people who work abroad are now forced to file

voluminous annual reports that cost thousands of dollars to prepare.

Those who decide to repudiate their US citizenship are made to pay a

hefty exit tax. Nevertheless, record numbers of US citizens have been

doing just that. Just having a US passport often makes it impossible

to set up accounts in foreign financial institutions, which have little

desire to comply with US demands for financial disclosure.

These are the measures that are already in place. Looking at what's

been tried before, here and elsewhere, we can see what other

measures are in the works. Among them:

1. So-called bail-ins where insolvent financial institutions are

rescued by confiscating depositor funds. We can expect the script to

be similar to what happened in Cyprus: politically connected

depositors get word ahead of time and yank out their money

forthwith; everybody else gets shorn.

2. Limits on bank withdrawals. You might still have money in the

bank, but that's the only place you can have it. The semantics of

the verb to have can be quite tricky, you see...

3. Ever-increasing taxes on property resulting in property

confiscation. It works like this: government prints money and hands it

out to its friends; its friends use it to temporarily bid up property

values; property taxes go up to a point where the property owners

can't pay them; owners lose their properties. A staggering 63% of real

estate purchases in Florida last December were cash purchases.

4. Various kinds of sudden, new, super-complex regulations,

noncompliance with which results in very large fines. In turn,

nonpayment of these fines results in forfeiture of assets. The US has

some very curious laws according to which inanimate objects such as

cars, boats and houses can be charged with a crime, seized and

auctioned off. We can expect lots more of such property grabs in the

future.

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5. Gold confiscation, which happened once in the US already, so

there is a precedent for it. Yes, I know that this will make a number

of people upset, but I am yet to hear a convincing argument for why

the US government would not resort to gold confiscation when that

turns out to be one of the few remaining cards it can play.

This list is by no means comprehensive. If you feel that I have missed

something major, please submit a comment, and I will consider it for

inclusion.

Now, it would be nice if all of these measures worked like clockwork,

always producing the right amount of wealth confiscation to levitate

the government, and the financial scheme on which it is based, for a

little while longer. Alas, as with most things, something is bound to

go wrong at some point, most likely when you least expect it. And it

seems like a dead certainty that something will in fact go wrong well

before every last American citizen is relieved of every bit of their

accumulated wealth and is living peacefully in a roadside ditch,

wearing an attractive loincloth and a stylish mudpack for a hat,

quietly perfecting a nouvelle cuisine that features snails au jus and

dandelion salad au chaume. Maybe you can imagine it, but I can't.

Beyond a certain point, I can only imagine reports of widespread

public disturbances followed by breakdown of law and order.

Still, I hope that this framework will allow us to set an upper bound

for how long collapse can be deferred for any given country. Once

hydrocarbon consumption drops appreciably, the clock starts running.

Then it is possible to estimate how long the clock can theoretically

run by dividing the remaining net worth of the population by the size

of the hole in the economy created by falling energy consumption.

But after that things get messy. Some countries will hollow

themselves out quite peaceably, and go softly into the night, while

others will explode and fast-forward though the financial-

commercial-political collapse sequence. And so perhaps the most

useful thing to know is whether the collapse clock is already running

for any given country, because if it is already running, then it

becomes a fool's game to wait around for the inevitable outcome.

One reasonable approach is to get another passport and quietly

relocate to another country. It is important that this country be one

for which the collapse clock is not running and won't be for a long

time yet. Ideally this would be a financially secure, politically stable,

energy independent, militarily invincible, underpopulated, non-

extradition country which will be among the last to be severely

disrupted by climate change and where you could have lunch with

Edward Snowden. But this approach doesn't appeal to everyone, and I

understand that.

And so another approach is to adapt to what's coming while remaining

in the US, or in any other country for which the collapse clock is

running, by making yourself, and your wealth, should you have any,

illegible. Here is a very nice article by one smart cookie by the nameof Venkatesh Rao on the concept of illegibility. And here is his very

nice primer on being an illegible person. This kind of illegibility has

nothing to do with bad handwriting; it is about hiding in plain sight.

Please read these as homework, because I will have more to say on

this topic in the near future. And I would love to see a list of

countries for which the collapse clock is running, along with first-

order estimates for how long it could possibly run for each one, based

on their population's net worth and the country's economic shortfall.

But since this post has just gone over 3000 words, I am leaving this as

an exercise for the reader.

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Mark Sebela said...

I read the 5 stages and it was excellent. I borrowed it from

the library, cause I'm unemployed and frugal. I had to wait 2

months as there were 21 other frugal people ahead of me. I'm

curious as to your thoughts on how basic infrastructure

(roads, rail, bridges, etc) will effect the future and what role,

if any, did it play in the collapse of the USSR?

TUESDAY, FEBRUARY 4, 2014 AT 2:17:00 AM EST

Shawn Aune said...

One of you needs to CC Gail Tverberg.

:)


GHung said...

Another metric (and response) to consider is the number of

people making other arrangements, pre-collapse. This article

is of particular interest to me since I spent the summer of

1974 studying in the USSR, mainly Moscow and 'Leningrad'

(short visit to Kiev), after a couple of weeks in Italy, Austria

and Hungary.

Of course, in 'free Europe', all of the stores were open and

well stocked. Once in Russia, obtaining goods generally meant

putting on my best jeans and walking through the nearest

park. The 'free' (black) marketers would show up in due time,

offering all sorts of bargains that were simply not available in

the state-owned stores. Trade, barter, or foreign currency

were all gladly considered. I wore a pair of tennis shorts

under my jeans, just in case I needed to get back to the hotel

without my pants. The alternative economy was thriving at

the same time that folks were queueing up for a bit of fresh

chicken at the state store.

It's not only the wealthy who bypass or exit the formal

economy when the formal economy isn't serving the interests

of the population. Indeed, many folks decide early on that it

isn't in their best interest to continue to service the formal

economy.

I suppose it gets to be a chicken/egg argument: Do folks make

other arrangements because main stream economics is failing

them, or do economies fail because an increasing number of

consumers are failing to willingly support the official

economy? Either way, it's a death spiral for business as usual.

I'm getting a lot of informal bids for my services since 2008.

Anyone want to trade a good goat for some used PV

equipment, let me know.


Max said...

Excellent post!


Stanislav Datskovskiy said...

Outright confiscation of real estate is less lucrative than it

seems at first glance, given as buyers for the stolen homes

will not materialize out of thin air. (Bureaucrats occasionally

expropriate lands for their personal pleasure, but this is not

the usual scenario.)

Confiscation of cash (whether by turning paid-up home

owners into de-facto renters via ruinous taxation, or by

levying bank accounts) will remain an attractive proposition

while the resulting plunder continues to have some buying

power.

Everybody's favourite: forcible confiscation of gold - may be

avoidable, but only for the simple reason that desperate

people are certain to willingly trade their gold (diamonds,

bitcoin, spare organs, you pick) for so much as a promise of

food, security, safe passage to some far-away place, etc.

TUESDAY, FEBRUARY 4, 2014 AT 12:10:00 PM EST

Andy Brown said...

I've been noting for a while that transition people or peak oil

folks need to educate themselves about their local

technologies of expropriation. Because if they turn out to be

right about what turns out to have value in the future, they

often don't seem particularly well equipped to hang on to

that once the future gets here. I don't mean roaming mobs,

though such things happen. You're much more likely to be

relieved of your property by your town council. All I would

add to your list would be to encourage people to take an

anthropological look at how their local unpopular minorities

are kept under the thumb of the powers that be. There you'll

find a toolkit for popular injustice and guerrilla economic

warfare that should give you a sense of how you'll be treated

as you make the transition from comfortably poor to

destitute. And by all means, get yourself a voice on the town

council, if they're still cheap where you live.


Reverse Developer said...

Excellent work! Wish Cyrillic characters were legible for me...

I do not disagree with your analysis of collapse timing. But I

will offer an alternate outcome for US that depends upon

greater cooperation, education, organization and restraint

than we are probably capable of.

The solution depends upon understanding that it is not

quantitative easing per se that hastens our demise. It is as

you say, diversion of hastily printed $ into ponzi 'skillsets' that

add nothing to our cultural resilience and transition socio-

economic structures.

Consider that loss of cheap energy is the catalyst of this

collapse. That energy embodied in money is draining off.

Thus, more money is needed. If we must work 10x harder to

sustain ourselves without oil then don't we need 10X the

money supply? This only seems inflationary because the

increased money supply is not directed at a program of

transition: educating on and reverse developing for gradual

transition to localized closed loop energy and subsistence

technologies. In short, we are all resource managers now.

The rub, again, is that it is so difficult to maintain social

cohesion while everyone is in different stages of accepting

collapse: raging, grieving bargaining...

It is the only 'civilized' way out. Thus we will most likely be

revealed for the horrible infants we are, savage beings,

pretending nationhood while engaging in extreme ego

gratification. The potency oil bestowed, we misused. It might

have been used as a step upwards towards more concious

progress. Adversity may yet be such an opportunity, but the

odds do not look good.


skinnermichael said...

I think here in Britain the alarm on the collapse clock has

already chimed, it's just that the sound has been drowned out

by people hysterically mimicking the noises coming from

across the Atlantic ocean. Btw I fancy opting for the Orlov

option of a flat bottomed boat, except in my case it will be a

canal barge.


Glenn said...

It's currently kind of tricky to make a living as a migrant,

unless one is content with parasitic jobs, and the rent is high,

which doesn't help anything much. Most nomadic cultures did

not couch surf.

Get back to me in about a hundred years, there will be plenty

of migrant farm jobs available, which is a useful occupation.

They exist now, of course, but in _relatively_ small numbers.

Once we've run through all the chemicals and liquid fuel,

farm work will be much more labour intensive again, but still

seasonal. Workers will move with the seasons, planting in the

spring, harvesting in the fall.


miia said...

Interesting. Here in Finland, one of EU's supposedly safe core

countries, total energy consumption peaked in 2006 and fossil

fuel consumption in 2003. Finnish households also happen to

be among the poorest in the euro area when measured in net

worth, probably due to high taxes, relatively low purchasing

power and the welfare state (no need to save money). Of

course Finnish households tend to be small but this can hardly

be seen as a good thing when it comes to resilience. I wonder

how much time we have left. (ECB's study on European

households' net worth can be found at

http://www.ecb.europa.eu/pub/pdf/other/ecbsp2en.pdf.)


Ravi Uppal said...

My first posting but I am regular reader and have both your

books plus a fan . I lived in Hungary from 1992 thru 2009

.From the boom to the bust .Some observations :

1. As Ugo says nothing to tax .Exactly the same in Hungary

.Payroll taxes are about now 50% and cannot go up further .

2.Property tax increase just as you described . The property

prices in Budapest have fallen by over 50%(taxes up by

50%)and the there are no buyers and no renters .The market

is dead . Hungary does not need to build industrial or

warehousing buildings for the next 20 years . The problem is

that persons(workers) who received properties in

compensation for their dues for getting fired in the the

privatization of early 90'S are now unable to pay the property

taxes on these property .The rent from these use to help

them survive along with the meagre pension,but now no rent

and astronomical property taxes have killed them .I was in

Budapest in July 2013 and was astonished to see the sign

"Property acquired by Budapest municipality due to failure of

tax payment".I very much agree with both Ugo and you that

the govt is going to skin till you are dead .Both of you hit the

bull's eye on this833


k-dog said...

I think timing a U.S. collapse is a bit more difficult than you

present. As hydrocarbon costs increase in the U.S. the

American people will have to be squeezed to make up the

difference and when they cant be squeezed any more the

party gets raided and the orders come down to turn off the

music and everyone go home. That there is nowhere to go is

irrelevant and that defines collapse. To postpone collapse

different countries can be squeezed in different ways to make

up for the loss of fossil fuels and the picture gets

complicated. I think the idea needs to be restated in simpler

terms before returning to the U.S. question.

Cheap fossil fuels feed an economy like food feeds an animal.

With cheap fossil fuels gone a countries economy like any

animal will starve. But an animal can keep going for a while

by living off fat cells. In the American economy the citizens

are the fat cells and the American Body will deplete its

citizens of nutrition and only when it as finished doing so will

it die. By figuring out how long it will take for the American

economic body to use up its fat cells collapse can be timed.

The American situation is complicated as we are not a

homogeneous society. We are diverse. Essentially America is a

country composed of many different kinds of fat cells. Some

kinds of our fat cell citizens are already used up. The poor

have already been pretty much depleted with some

ethnicities suffering more than others. To them America has

already collapsed. But currently they are subsidized by

middle class fat cells which are now being used up but who

still have a nutrition remaining. Collapse cant happen until

the affluent fat cells actually feel the pinch and that has not

happened yet. America has a lot of those kinds of cells. As

those cells control media they can keep the American animal

standing up for quite a while through deception. Most other

fat cells will already be dead and the American animal will

from outside appearances continue to look healthy until

affluent fat cells begin to be consumed. Only then will the

American animal begin to shake and twitch.

When the affluent fat cells have robbed all the other fat cells

of nutrition then and only then will it be possible to time an

American collapse.

And America has a lot of fat to use up.

WEDNESDAY, FEBRUARY 5, 2014 AT 2:41:00 AM EST

WEDNESDAY, FEBRUARY 5, 2014 AT 2:41:00 AM EST

josh keiler said...

Hi Dmitry (and Kollapsniks) - do you think that moving into

crypto-currencies (ie. bitcoin, etc.) would be a smart idea to

avoid government interference (short-term), or do you think

since they depend on a pervasive, functional internet and

thus require high energy inputs that they are essentially

useless (long-term). Thanks.

WEDNESDAY, FEBRUARY 5, 2014 AT 6:35:00 PM EST

deflationista said...

this is an excellent article, dmitry...

jim kunstler touched on italy in his weekly blog: "Automobile

use in Italy is back to 1970s levels of annual miles-driven.

Thats quite a drop."

the clock is ticking....

WEDNESDAY, FEBRUARY 5, 2014 AT 8:18:00 PM EST

Mark Ferrara said...

Thank you Dimitri for all your great work! This is my first

comment.

What about Japan? As I understand it, they should be the first

to go according to some sources. (like Kyle Bass)

THURSDAY, FEBRUARY 6, 2014 AT 11:26:00 AM EST

Kristopher Dalton said...

Nice post and interesting read , but it still seems like you

have no way of predicting coming collapse.

THURSDAY, FEBRUARY 6, 2014 AT 2:30:00 PM EST

Mack's Track's by tom said...

Great article. I believe that you are correct about the USA. It

will go fast. Something will go wrong somewhere. USA

operates on a complicated system. One little thing goes

wrong somewhere and the whole enchilada will fall. On

another note have you heard of this fellow in Moab Utah

named Daniel Suelo? He gave up money 12 years

ago.http://youtu.be/EvU46JpFlXw


xxancroft said...

Thank you Dmitry and Ugo for a great collaboration with some

good take home inklings. Scary thing about the pieces of the

puzzle coming together is that it signifies that the world is in

the flux of a changing transition state where the true state of

affairs are crystalizing (or vapourizing) for all to see . . . and

when a threshold number start to see . . . then the world is

suddenly a different place for everyone.


clive mossmoon said...

@ Mark

You may be interested in this analysis.

http://www.godlikeproductions.com/forum1/message223176

7/pg1

According to Saddletramp's latest, the two weeks the 10 year

note spent over 3% broke the derivatives markets, triggering

massive margins calls which is what you see playing out in the

so-called emerging markets. He is a former banker with a

friend at the Dallas Fed. Definitely worth your time.

It looks like the banks are (finally) bringin 'er down.

FRIDAY, FEBRUARY 7, 2014 AT 12:30:00 AM EST

Amy La Gato said...

Mr. Orlov:

Re:

"1. Find out when the collapse clock starts running by looking

for a significant drop in energy consumption."

According to the EIA, US Oil Consumption has been on a

almost steady decline since 2005

(when it peaked) at 20,802,1615.

US Oil usage went down to 18, 771,4000 in 2009, ticked up

again to 19,180,126 and has since declined to 18,490,2136 in

2012.

There have been other drops in US Oil consumption from 1980

to 1983 and from 1989 to 1991, after each previous drop the

consumption rate soon reverted to an upward trend. The

bounce back from the drop in consumption in 2005 to 2009

was short lived and the decline in usage has sunk further than

the 2009 drop.

A more cornucopian view at RealClearEnergydotOrg is found

article in November of 2013 titled "U.S. Oil Consumption Falls

Off Cliff"

They cited three reasons for this decline, better gas mileage,

and more use of natural gas in heating and transportation.

This is whistling past the grave yard in my opinion. The

increase in the production and use of NatGas has been mostly

at the expense of the use of coal and not petroleum. 95% of

transportation fuels is petroleum based.

In yet another semi cornucopian article touting the glories of

NatGas and the glories of fracking Earth magazine recently

wrote that

"As has been the case since 1950, petroleum was the most-

consumed fuel in 2011, at 35.3 quads. Use of petroleum,

which includes crude oil as well as natural gas plant liquids,

has fallen recently from its peak historical level of 40.4 quads

in 2005. Natural gas, which had been consumed in roughly

equal amounts to coal for several years, accounts for almost

25 quads compared to coal's 20 quads in 2011. Natural gas and

renewable energy were the only fuel sources whose

consumption increased in 2011."

According to the US EIA as of 2011 the US used 5.1 less quads

of petroleum than in 2005. While not all of this was for

transportation, the vast majority f it was. The use of NatGas

for transportation went from 23 billion cubic feet in 2005 to

30 in 2011, to an average of 33 in 2013

(http://www.eia.gov/totalenergy/data/monthly/pdf/sec4_5.

pdf)

To reiterate, in 2011 the US used about 10 Billion more cubic

feet of NatGas for transportation while using 4.1 quads of BTU

less oil. To offset 4.1 quads of BTU the US would have had to

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use about 4 Trillion more cubic feet of NatGas as 1 trillion

(1,000,000,000,000) cubic feet (1Tcf) = 1.027 quadrillion Btu.

Which means that NatGas accounts for only 0.0025 of the

quads of BTU that have not been used.

In an economic system based on growth, one where the use of

oil would be increasing, the use of new technologies,

renewable and NatGas, does not explain a drop in

consumption of almost 2.5 million barrels of oil a day since

2005.

I would call that "a significant drop in energy consumption."

http://www.realclearenergy.org/charticles/2013/11/13/us_o

il_consumptiono_falls_off_cliff_107338.html

http://www.earthmagazine.org/article/highlights-2012-

outlook-natural-gas

www.eia.gov/countries/country-data.cfm?fips=US#pet

http://www.eia.gov/todayinenergy/detail.cfm?id=9210

FRIDAY, FEBRUARY 7, 2014 AT 10:07:00 AM EST

Revealed: Shocking Infowww.youtube.com

Closed-door talks at NYSE about timeline for next market crash.

Some of the Wealthiestwww.youtube.comAmerican families are preparing for a stock market collapse.Learnmore.

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