Apocalypse Not Yet

I was talking to my independent financial adviser the other day. He’s a patient man. He mentioned that I’ve been predicting the cataclysmic disintegration of the financial system for 10 years now.

Ten years. So it is. Although to be fair, I got past the ‘Armageddon tomorrow’ stage quite a long time back. The point my IFA was wearily making is that I still won’t be convinced that Business As Usual (BAU) is sustainable whereas he can’t see what’s wrong when the markets keep going up and the funds his clients are invested in keep growing nicely.

A courtesy call isn’t the place for a discussion about net energy and turning points, so I agreed to his proposed reallocation of my modest exposure to the markets and left it at that.

The thing is he’s right; there are very few signs on the surface that much is wrong with the economy. The big picture looks, if not rosy, at least reassuringly ‘normal’.

Yet this reassuring picture is made up of details that are consistently unsettling. The financial woes of schools and the NHS, even before the back-loaded Private Finance Initiative interest payments start to kick in. The bursting of the university-places-for-all bubble as more and more school leavers recognise it was only a scam to load them up with debt in return for mostly worthless degrees.

Behind all this is a sense of growing weakness; like a racing cyclist who’s been unable to take enough food on board – their finely-tuned system wants to keep going but the flow of fuel to the muscles is no longer sufficient.

When the flow of high-quality energy from coal faltered a century ago, oil and gas kicked in with the thermal bonanza that took the industrialised world from Kittyhawk to the moon and from the Bell telephone to the Internet.

This time round, there are no more massive seams of cheap BTUs to be mined. It’s manifested in the phenomenon where oil producers can no longer extract oil profitably at the kind of prices consumers are willing or able to pay. Which is another way of saying that net energy is entering the twilight zone.The fires under the boilers are dying down. Renewables will realistically run an economy about 25% the size of today’s.

That’s an article for another time, though. The take-away today is that the solid mass of thermal Jenga blocks that underpins our way of life has been eroding since the Millennium, when net energy turned the corner. What’s happening to the NHS, pensions, the auto industry and almost everywhere else you look are the first small cracks you see in the soil at the top of the slope as the land starts slipping.

Let’s see how they widen over the next 10 years. Easily far enough to swallow a good many of today’s expectations, I’ll bet, even if there’s no full scale avalanche.

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There goes the equestrian statue

Genocidal maniacs get statues put up in their memory. So do lots of other people. Florence Nightingale, Paddington Bear and Oliver Cromwell come to mind. Oh, sorry, quite a few people think Cromwell was a genocidal maniac, don’t they?

No-one could call Robert E. Lee genocidal. Or a maniac. He was rather prone to fighting battles using an army of men with no shoes on their feet or food in their bellies but that wasn’t unusual in the mid-19th century. General Lee was a good military leader who fought for what most people see as the morally-wrong side in a war whose nuances were so complex that legions of historians are still fully occupied sifting through them 150 years later.

No-one should have the slightest respect for white supremacists, neo-Nazis or the still-extant breed of bullying, black-hating redneck that does his or her best to restore overt segregation. But does that mean removing every lump of bronze recognisable as General Lee on an ‘orse from town squares across the former Confederacy? I’m coming from this from the point of view of the great-grandson of a genuine black slave (though his masters were also black and also African).

General Lee certainly fought, to a greater or lesser extent, for the right to keep slaves, since that was a large part of the root causes of the civil war. It tends to get forgotten that the North’s animus against slavery was not solely or even primarily a moral issue. Abolitionists there certainly were, and they were vocal in their opposition to slavery on what we’d today call human rights grounds. But they were a minority in the North where it’s fair to say that many citizens’ views on freeing slaves didn’t extend to welcoming them as next door neighbours or as prospective sons or daughters in law.

The North’s anti-slavery concerns in the lead up to the civil war were quite as much economic and political as moral.

America’s main economic rival, Britain, together with her neighbouring northern European countries, was rapidly developing the new form of fossil-fuelled industrial consumer economy that conferred enormous economic and military reach on those nations. America, with its enormous resource base, had the potential to outdo the combined might of Britain, France, Germany and Italy (the latter’s north industrialising on the back of imported British coal) in the long run. But in this context, the southern states’ slave economy was a millstone around America’s neck.

Slavery allowed the south to maintain a near steady state economy. It didn’t create consumers, which were essential to the expansion of  the new industrial economies. Worse, since Britain’s early-mid-19th century industry centred on textiles, cotton exports from the American south actively helped Britain to increase her dominance at the same time as holding back the North’s attempts to grow as a rival industrial power to Europe.

Throw in the traditional American culture of independent-mined obstinacy that helped create the states in the first place, and the south was never in a million years going to to sit back and allow the North to tell it to industrialise for the sake of Yankee global ambitions.

Underneath those pretexts, everything quickly got all human and very messy as people used their big brains to come up with as many tendentious and self-serving justifications for, on the one hand, maintaining slavery as others came up with moral arguments for abolishing it. By the 1850s, it was clear to any logically-minded person who’d ever seen a coal fire, let alone a steam engine, that the southern economy was doomed in the long run as long as fossil fuels remained economically viable.

Given humans’ tendency to try to delay whatever inevitable is staring them in the face, the southern states’ cascade of secession declarations was a completely predictable response to what southerners saw as rising coercion from the North. To the industrialising North, an independent south was no more use than a south that stayed within the union but ran on raw human power.

That meant war. The wonder was that the south lasted so long: the hungry, unshod rebel infantry who fought at Antietam and Gettysburg were in many ways symbolic of the confederacy’s relative economic weakness. A lot of the credit for losing the war so slowly has to go to better southern generalship. If Robert E. Lee was the right man fighting the wrong cause with insufficient means, George McClellan was his mirror image. Preening, petty, backstabbing, timid and tactically inept, George B.’s mishandling of the more powerful Union armies came close to costing his side the war and definitely prolonged the struggle.

How many more statues of Robert E. Lee are there in the US than statues of McClellan? At least 10:1 I’d guess. Militarily, that makes complete sense.

More to the point, though, how many statues, busts and plaques are there in southern state capitols (and not a few northern ones) commemorating the many racist politicians behind the Jim Crow laws, which denied black Americans civil rights for a century after the civil war? I bet there are boatloads of them. But of course no-one learns their names in history lessons and their prideful memorials don’t sit astride horses in public squares so no-one’s agitating to pull them down.

The point is rightly made that many of the statues of southern generals were erected as recently as the 1930s and the 1950s. Quite a few people see such rearward-looking statue-raising as a two-fingered gesture to the north and to agitators for civil rights for blacks. But if they’re southerners, I guess, the statues are a symbol of resurgent southern pride and culture. Of course, that all depends on which bits of your culture you’re actually proud of.

By all means, discuss removing statues of dead generals. While we’re at it, let’s take a vote on chipping Washington and Jefferson’s faces off Mount Rushmore. Me, I guess I could take a trip to Ghana, where I’m sure I’d find a statue or bust somewhere of a past Ashanti (Asante) ruler to object to on the grounds that his people kept slaves and one of them was my great granddad and therefore his statue might be seen as a symbol of oppression (note: I wouldn’t see it as such).

If a particular statue of Robert E. Lee was erected as a sly symbol of oppression, it shouldn’t be difficult to identify that fact by reference to press reports of the speeches and from articles published at the time. In that case, everyone can debate the speeches and articles and decide whether the statue should stay, go or be given some contextual signage (although good luck to the latter lasting more than a few days). If not, leave it up, even though it’ll always be a dog-whistle to certain people.

As Jim Crow showed, the pen is mightier than the sword. It was politicians’ pens that condemned generations of black Americans to violence, poverty and insecurity for 100 years after the civil war, not a bronze replica of Robert E. Lee’s ceremonial sabre.

High entropy farewell

Quadranting travelled to the coast yesterday to see his aunt turned into about 250kg of CO2.

Well, it would have been bit less than that. Auntie was pretty tiny and they cremated her in a lightweight bamboo coffin. Yet, for all its simplicity, this low-key funeral was still an exercise in high entropy living.

Mourners arrived from far and wide – all but one of them by car. Vans delivered wreaths. Gas from Norway or Russia roared through the burners at the crematorium. Coal and gas-powered internet connections brought everyone together.

Small event. Gargantuan system. That’s the nature of life in a developed country. Even the little things we do float on a roaring sea of pure heat. The fossil sources of that heat become less affordable every day. We don’t notice because the process runs at a glacial pace. Industrialised countries are also adept at displacing the bad effects on to poorer nations.

So yesterday the sun shone, birds sang and, amidst death, we scarcely noticed the real miracle we call modern life.

Aside

Mr MINT is Brilliannnt!

Goldman Sachs. The Vampire Squid. The people who invented toxic, mortgage-‘backed’ bullshit securities then bet against the customers they were selling them to.

The c**ts who doubtless love the NSA for its ability to suck up emails with the words ‘Goldman Sachs’, ‘c**ts’ and NSA all in one sentence.

Goldman Sachs whose former employee, economist Jim O’Neill popularised the term BRICs not only for Brazil, Russia, India and China but also as a kind of mantra for the wishful belief that a bunch of emerging economies would imminently heave the stagnating West on to their shoulders and carry us all on to the sunny uplands promised by Progress.

Well, that didn’t go well did it?

But bank-backed, free market fuck-wits economists are famously impervious to their own deep misguidedness – even when the smoking, cratered evidence of it is all around their feet.

So Mr O’Neill is staging a comeback with a phrase borrowed from Fidelity: the MINTs.

He reckons that Mexico, Indonesia, Nigeria and Turkey all have ‘favourable demographics’ for the next 20 years. He writes:

“Could Indonesia do what’s needed to lift the country’s growth rate to 7 percent or more … or would it have to settle for ‘just’ 5 percent?”

Today BBC Radio 4 gave him a whole three quarters of an hour to wander around Mexico, mic in hand, asking much the same question. He visited a plastic brush factory, a (German) car plant and a (Canadian) aerospace fabrication facility.

Brilliannnnt!

Each encounter set him bubbling over with such enthusiasm for what economists call ‘potential’ that I couldn’t help thinking of the Brilliant Kid from The Fast Show.

To be fair, he did go to a couple of places blighted by poverty and drug crime (the latter notoriously aided by facilities laid on by the big banks). But you got the impression that he didn’t see anything there that couldn’t be remedied by SNLEHW (Standard Neo Liberal Economist Hand Waving).

The funniest or most cynical segment of the BBC programme was Mr Mint’s visit to Pemex, Mexico’s state-owned oil companies. Via a fantastic string of energy cliches, we learnt that Mexico is sitting on ship loads of deep-water crude whose pent up riches will magically gush forth at dizzying rates as soon as the state gets out of the way and allows in foreign capital and knowhow.

As in, you know, the Macondo deep-water oil spill disaster in the Gulf of Mexico, blamed on those paragons of Western knowhow, Haliburton and BP. And curiously for the man who flogged the BRICs meme so tirelessly, no mention of Brazil’s much vaunted deep offshore oil development, which is turning out to be less of a bonanza than a costly quagmire.

Fat fees

Surely that isn’t because the banks have already made nice fat fees from talking up Brazil’s oil prospects and steering investors towards it – as they did from the Shale Oil Boom-soon-to-be-bust in the US?

Mr O’Neill has only just got started and already the MINTs look like the next BRICs – another set of Brilliannnnt! investment opportunities to be sold to fattened-up investors by the people who brought you Subprime, the War on Drugs (finance dept.) and fracking lease-flipping.

But maybe he knows he can push the MINTs story only so far. One big fat omission from his BBC programme was Mexico’s soaring obesity rate. Diseases arising from excessive chubbiness threaten to flatten Mr O’Neill’s demographic advantage thesis unless someone does something to curb people’s evolutionary vulnerability to peddlers of fatty foods and sugary drinks.

‘Someone’ would be the government. Probably a bit too confusing for Mr MINT, who couldn’t see any contradiction between the government handing its already-dwindling resource revenues to foreign firms with one hand and conjuring up public money for thousands of graduate educators out of thin air with the other.

He thought both ideas were simultaneously Brilliannnnt!

Fracking silly numbers for UK gas

It’s quite hard to overstate the sheer idiocy of the claims made by UK shale gas’s most ardent promoters.

They’ve been in a state of pantie-twisting excitement ever since the British Geological Survey came out with its highly questionable estimate of 1,300 trillion cubic feet of frackable gas ‘neath the ageless hills of the North.

The big claim is that just 10% of that resource would be enough to maintain Britain’s gas consumption at current rates for 40 years.

They don’t say how many wells would be needed – probably because they’ve not thought about it.

Well, according to the US Geological Survey (which is like the British one, only bigger and with actual hands-on experience of shale gas fields), the average fracked gas well in Marcellus Shale yields 0.8 billion cubic feet of gas over its lifetime.

One of the marvellous tricks you can do with Google Chrome is type “130 trillion divided by 0.8 billion” into the omnibox and get the answer without needing to check you’ve entered all the right noughts.

It even spells out the result: “one hundred sixty-two thousand five hundred.”

So IF there’s 1,300 trillion bcf of gas up there, and IF they can get 10% of it, and IF the production rates are as ‘good’ as the US average, the North West can look forward to around 160,000 separate doses of fracking to get it all out.

Fracking well being drilled

This times 160,000 anyone?

If all the gas was under Lancashire, that’d be 60 wells per square kilometre, assuming they opened up every inch of the county not already under roads or buildings. For comparison, rig density in real-world fracking in the US is more like three wells per sq km (or 80 acres per rig).

Even if the volumes that bubble up in gasmen’s pipe dreams really are there in Britain, it’s clear that there’s physically no way to get out more than a tiny fraction of them. Not even if they turn the North West into the world’s biggest pincushion.

As for the economics of shale gas, they don’t add up either. At least, not for anyone except the City and a few big landowners like the Church of England. But that’s another story for another day.

The Permanent Low Growth Disconnect

Pundits popped up on Radio 4 this morning to drop passing mentions of the UK’s permanent low growth outlook into their previews of the Autumn Statement.

Their hints bobbed across the breakfast airwaves as we digested the news that George Osborne will have to ‘extend austerity’ for another year to 2018.

I guess many people took away the thought that that means it will take even longer for things to turn round.

But that’s not what they said. When you cut the drug of hope with the talc of the truth lurking in that word ‘permanent’, the actual implication is that things won’t get better at all. Come 2018, we could find ourselves exchanging austerity for something more astringent.

We’re being softened up. The future won’t be the happy, shiny place we allowed ourselves to believe it would be. Or the one ‘they’ promised us if you took the politicians’ mantra of endless growth as a pledge they could somehow deliver.

Writing this at my PC in a warm room, central heating working and electricity flowing, streaming classical music over a 20MB web link, there’s no obvious connection between my blissful life and the bad news on the radio.

But the roll-over from increasing to decreasing net energy is not an abstraction. It’s real and it’s starting to trash the easy economic dogmas of the past 70 years.

UK industry hit by costs and ‘dying’ supply chain” reports today’s Telegraph business section. Yup. Not merely ‘inefficient’ or ‘under-invested’ but on the way to the knacker’s yard.

This is what happens to a highly technology-dependent society when its most important input – cheap fuel – goes away.

Life doesn’t suddenly change. Chaos doesn’t erupt. Hairline cracks appear. Then big ones. And even some of those – like the pensions breakdown – can be papered over for a long time.

But it gets clearer and clearer that we turned a corner five to 10 years ago. “Where’s the demand gone?” muttered one of Radio 4’s pundits this morning. That’s the connection. Welcome to the century of unaffordability.

A fool in a fool’s paradise

Somewhere in his book Whoops, John Lanchester writes that “the western liberal democracies are the most admirable societies that have ever existed.”

My instinctive reaction as a confirmed Long Emergenista was “oh no they’re not. They are fool’s paradises where objectionable elites dose unwitting masses with atrocious pabulum in an ultimately-doomed attempt to preserve the unsustainable.”

Then I thought about it for a moment and had to admit that the western democracy I live in is actually pretty admirable and paradisical by almost any historical standard.

Admirable if only for the freedom of speech it allows the great majority of citizens (for what that’s worth when everyone is talking and no one is listening). And paradisical because …well look around. Guaranteed warmth, medical care and food for a higher proportion of the population than ever before. And on top of that there are myriad diversions, from the internet to easy travel to anywhere in the world, that are cheap as chips when they’re not actually free.

Joe Bageant’s hologram is taking over the world. Simultaneously seductive and repellent, it permeates the mass psyche through the medium of a billion LCD screens.

Knowing it to be an imposter, an aberrative artefact of fossil-fuelled machine consciousness, is no defence. Resisting its pull is exhausting: eventually you long for the sleep that eventually claimed every last living person in Invasion of the Bodysnatchers and to wake up reprogrammed to consume with the contented persistence of a grazing herbivore.

Is this how things looked to the citizens of post-peak Rome? It was obvious that the empire was crumbling and their economy cannibalising itself. But their magnificent, modern city was surely eternal, and anyway why worry while the bread kept coming and the circuses just got better every week?

Probably. But hey, my new 7-inch tablet has finished charging. And I feel so tired. Maybe I’ll just have a little nap. Then I can stop worrying until I wake up. As a fool in a fool’s paradise.