Global financial system implosion begins

Discussion in 'world politics, current affairs and news' started by Falcon, Mar 26, 2008.

  1. TruXta

    TruXta tired

    I don't believe that's right. Got a source?
     
  2. Idaho

    Idaho blah blah blah

    Big corps don't expect to retire at a specific time. They don't need to cross their fingers at 58 and hope that a big crash doesn't wipe out their comfortable retirement
     
  3. TruXta

    TruXta tired

    Meh. 30 years of saving is plenty good enough for a retirable ROI. Did the stock markets even crash properly in 2008? How long did it take for them to set record highs after?
     
  4. grit

    grit an ugly force for good

    The point is still valid, if you go to retire while the market is in shit, it hurts very badly for retirement. The problem is this setup is still the best thing available to the averag person
     
  5. TruXta

    TruXta tired

    That depends entirely on how long you've been saving up, and when you started. If you started in 1980 and retired in 2010 you'd still at least triple your money.

    For instance, the Dow Jones was about 750 in 1980. At its lowest in 2009 it was around 6500.
     
  6. kabbes

    kabbes "A top 400 poster"

    They “lifestyle” retirement funds, which normally means a 10% switch per year from equities to bonds as you approach retirement precisely to avoid this volatility problem
     
    mauvais likes this.
  7. TruXta

    TruXta tired

    Thanks, didn't know that.
     
  8. brogdale

    brogdale Coming to terms with late onset Anarchism

    Italy has today entered it's 3rd (technical) recession of the decade since the CC.

    upload_2019-1-31_11-35-43.png

    Amazing stuff and all on the same 'hard' currency!
     
    Pickman's model likes this.
  9. Crispy

    Crispy The following psytrance is baṉned: All

    I'll have some of whatever Spain's taking
     
    mauvais and Enviro like this.
  10. yield

    yield zero

    INSTEX: Europe sets up transactions channel with Iran
    31.01.2019
    Germany, France and the UK have set up a payment channel with Iran called INSTEX, to help continue trade and circumvent US sanctions. Washington has cautioned EU nations against such actions.
     
  11. yield

    yield zero

    Limit Corporate Stock Buybacks Outline - Read & annotate without distractions
    Chuck Schumer and Bernie Sanders. February 03, 2019
     
    two sheds likes this.
  12. kabbes

    kabbes "A top 400 poster"

    For the sake of not falling into my own trap and giving full updates, it is worth noting that this is the Dow for the last month

    FA0B8079-18E1-4BFD-BEE3-BF95081E1197.png

    When teqniq posted about the 350 point fall, that was the first of the drops you can see, on 22 Feb. As you can see, though, that has actually been a blip in its rise over the last month.

    That’s the rosy one month view though. The year view is a more interesting story.

    182DC19B-5666-42AB-A2E6-8AFE2E352CAD.png

    Now that’s volatility! It’s up about 2% over the exact year right now but in that time it has jumped all over the shop, having been 15% lower and 6% higher than its current value. This is the true sign of potential implosion — no one has a fucking clue what the right value of anything is, such that it wobbles up and down within a 20% range in the course of a single year.

    (Before anybody gets shirty about the Dow being unrepresentative, it’s actually a pretty fair representation of what’s happened in other indices too. They’ve all largely moved together and you get the same kind of volatility in the FTSE 250 or DAX or S&P500 over the last year. Every market place is panicky as fuck.)
     
    yield likes this.
  13. yield

    yield zero

    Italian govt plans to separate commercial lenders from investment banks
    February 1, 2019
     
    CNT36 likes this.
  14. yield

    yield zero

    Picassos, a glass piano and missing billions: scandal of 1MDB reaches court
    Mon 11 Feb 2019
     
  15. yield

    yield zero

    A Fed pivot, born of volatility, missteps, and new economic reality
    Reuters. February 22, 2019
     
  16. yield

    yield zero

    The allure of financial tricks is fading (https://www. ft.com/content/a9f13afc-3c3d-11e9-b856-5404d3811663)
    (paywalled) Outline - Read & annotate without distractions
    FT. March 03, 2019
     
  17. yield

    yield zero

  18. Falcon

    Falcon Well-Known Member

    The International Energy Agency is now conceding, in its latest annual report, that peak oil has arrived. Unless oil companies discover and mobilise 16 billion barrels per year from this year forward, world oil output by 2025 will be 34,000 bbl/d below demand. If it does nothing, world output will roughly halve in the same period. This brackets the possible range of outcomes.

    To place that in context: oil companies discovered 2.4 billion barrels in 2016 and 7.0 billion barrels in 2017. This is the first time, to my knowledge, that the IEA has openly forecasted absolute liquid rate decline (whistle blowers within the organisation have, in the past, "smuggled out" the forecast in obscure text in prior year reports). That's because this is a deeply political statement: Hirsch estimates[1] the impact of the decline rate (3-5% per annum) represented by these reductions as "devastating" i.e. sufficient to crash the world economy.

    [​IMG]
    facebook photos upload


    [Source: International Energy Agency. 2018. "World Energy Outlook 2018" (link)]

    [1] Hirsch, R. (2205), 'Peaking of World Oil Production: Impacts, Mitigations and Risk Management' (link)
     
    Last edited: Mar 11, 2019
    yield and Crispy like this.
  19. elbows

    elbows WoeTimer

    I havent read it every year but I'm fairly sure they have gone on about worrying investment trends in regards oil production before. The 2018 one may be a particularly stark warning in contrast though, I cant remember. The issue never went off my radar, even when a wave of sites and people either fell silent or were too stubborn about adjusting their outlook when the originally envisaged schedule they had in their minds for peak oil needed at the very least a timetable tweak.

    If I am remembering properly, factors that complicated the original peak oil narrative were underestimating how much US Shale etc could do in the short-medium term, and not being well prepared to deal with sudden switches in the dominant mainstream narrative and economic reality away from the supply side and towards the demand side (eg temporary demand destruction post financial crisis). Hopefully we will be a little bit more flexible about the exact timescale we envisage this time, and also not be surprised if the underlying phenomenon end up masked by other narratives again.
     
    Falcon likes this.
  20. elbows

    elbows WoeTimer

    OK I havent gained access to the full report yet but I may. But just from reading the various summaries on their site, what they are saying becomes much clearer.

    As usual their report looks at a number of different scenarios, with the main 2 they are focussing on this time being the Sustainable Development scenario (SDS) and the New Policies Scenario (NPS). NPS is what they think will happen if governments stick to all the pledges and policies they have already made. SDS is more radical and the current policy reality is still miles away from it.

    The graphs that are being used to suggest that the IEA have forecast peak oil are in fact something different, and I would be extremely surprised if this is the first time they have shown this sort of thing in their reports. What those graphs are actually showing is the drop in production that would happen if there were no new investments, and comparing that to what they think demand will be under both the SDS and NPS scenarios. This data is still incredibly useful, including to people with an interest in peak oil. And there is still the same room for us to argue about detail that there has always been - eg whether, even if the investment is there, its actually possible to sustain production. I cannot be sure until I have access to the full report, but certainly in the summaries this report is not going to help with that aspect at all, and is not a prediction of peak oil. Instead it is better to think of it as a worst case, what would happen with no new investment, which is not the scenario that will actually unfold. Still useful for demonstrating the gap at its widest possible level, and how even under scenarios where climate change and energy policy are approached with a whole new level of radical transformation, demand will remain high. Note especially the title of the graph below.

    Screenshot 2019-03-11 at 11.54.33.png
    Screenshot 2019-03-11 at 11.38.56.png
     
    Falcon likes this.
  21. Falcon

    Falcon Well-Known Member

    Indeed. Worth remembering that they are a political, not technical, organisation and their products are political, not technical. However, they can only deny technical reality for so long.

    A reasonable question that credible industry observers are often asked to explain is why the whole thing hasn't already collapsed, given that this point has been forecasted and apparently passed a few times now.

    One explanatory factor has been the complete underestimation of the tolerance of the financial sector for the measures that have been taken to sustain the hallucination of viability e.g. excluding manpower, land, and equipment rental costs from annual balance sheet and profit and loss statements, and relaxing definitions of "reserves". Even the financial sector is realising the absurdity of this exercise.

    Forecasting is for fools but I do think we are going through some sort of 'plausible deniability' threshold. I suspect food will be the mine canary - 50% of what we eat (in industrial society at least) requires hydrocarbon and we are always only three square meals away from anarchy.
     
  22. Falcon

    Falcon Well-Known Member

    As I've often pointed out, it is meaningless to contemplate forward forecasts of production separate from historical records of discovery. They can't produce what they haven't discovered, so the historical discovery trend defines the range of plausible forward profiles and, therefore, the scope for arguing about detail.

    In short, there is effectively none, bar some Titanic deck-chair tidying. Discovery peaked around 1970; the single largest driver in the rate of change of technology (the space race) didn't make the slightest difference to the rate of decline of discovery; the discovery peak establishes a hard upper limit to the volume that can be discovered; all we can do, within very narrow limits, is alter the rate of production within that volume, noting that the longer we prolong peak, the faster the post-peak decline rate (i.e. the harder the economic crash).

    The story of the last 5 years has been the acceleration of oil from the next 5 years into the present via the fabrication of synthetic debt, and the intensification of the crash. The IEA are now finding it very difficult to conceal that reality.

    [​IMG]
    best craps app
     
    Last edited: Mar 11, 2019
  23. Crispy

    Crispy The following psytrance is baṉned: All

    How is "discovered" volume counted with respect to extraction technology?
    ie. the current shale boom in USA: Is that previously discovered and only now being extracted? Or previously discounted from "discovered" because it was thought impossible to extract?
     
    Last edited: Mar 11, 2019
  24. elbows

    elbows WoeTimer

    I cannot answer that question, and although in a couple of very real senses all this stuff is 'delaying the inevitable', the timing clearly matters. Especially when it comes down to people speaking passionately as if collapse is imminent, only to find the same old worl still staggering on more than a decade later.

    I would like to compare the 2018 IEA report to ones from previous years, but when it comes the the freely available public summaries on their website, they focus on different aspects each year.

    For the casual observer who may have read about this stuff on u75 for many years and wondered what happened, this graph from the IEA's 2017 summary is a notable part of the picture. Even if you disregard their forward projections, just look at 2015 compared to where things were heading in the 2000's and the trend for decades before.

    Screenshot 2019-03-11 at 12.22.08.png
     
  25. Crispy

    Crispy The following psytrance is baṉned: All

    It really bothers me that the amount of hydrocarbons in the ground exceeds the amount we'd be able to burn without wrecking the climate. Fucking geology, man :(
     
    NoXion likes this.
  26. kabbes

    kabbes "A top 400 poster"

    The biggest problem with peak oil conceptually is that we already have three times the commercial reserves (let alone what China has) than we can ever burn and stick within a few degrees of climate change. So it isn’t what we have that’s the limiting factor, it’s what is ecologically acceptable.

    Doesn’t change the fundamental point that this is a big limit on growth, but the limit is much more stringent than that predicted by peak oil.
     
  27. elbows

    elbows WoeTimer

    The real zombie apocalypse! So many thousands of years of ex, crushed life, brought back and exploited by the living in a very short space of time.
     
  28. elbows

    elbows WoeTimer

    I suppose it depends whose predictions you believe. If I had been born 20 years earlier than I was, it would have been possible for me to fear imminent peak oil doom in the 1970's, and would then, decades later, have been surprised to discover myself an old man with the peak still not upon me. I was aware of this a decade ago and so it wasnt that hard for me to adapt when it became clear that some of the predictions in the 2000's were, despite being on to something more broadly speaking, wide of the mark when it came to their sense of imminence.
     
  29. elbows

    elbows WoeTimer

    I must admit it is hard to discuss this topic with Falcon without getting flashbacks to a very particular argument we had almost 7 years ago. Despite being well aware of the magnitude of the issue, some things bothered me about the way Falcon represented it, and somewhere in the back of my mind I have remained curious about how some of these things may have been corrected, or dealt with in your narrative, in the years that have since passed.

    Specifically, I remember you arguing that UK oil production declined at a rate of 25% in 2011, and that in 2012 the decline would be >25%. This didnt impress me, because despite the rather obvious state of decline of north sea oil production, the realities of which I was not arguing against, there is no rule that states the decline rate would grow larger each year. And indeed it did not, production even went up a little bit at times. Again I am not trying to claim that this increase was some new golden age of production, but these sorts of extra extraction possibilities during the otherwise steep decline of mature and creaky oil resources does make a difference to total numbers, pace of actual global decline, plateau, etc.

    [​IMG]
     
  30. Falcon

    Falcon Well-Known Member

    The way it works is this: extraction is a function of cost, is a function of technology. Neoclassical economic theory posits that technology improves at a rate that magically yields an acceptable cost: as supply diminishes, cost rises, incentivising technological improvement, increasing supply, reducing cost. Rinse, repeat.

    As a theory, it has every admirable quality except that of being true. This is readily observed: the single greatest rate of change of technology was the period immediately following the peak of oil discovery (1970, also the moon landings), where the industry benefitted from computerisation, miniaturisation, remote (orbital) surveillance, etc. It didn't move the discovery decline rate needle an inch. There has been no comparable innovation since, only applications of those innovations.

    (As an aside, neoclassical economists know this. The reason the Chicago School of Economics, with Land Baron funding, invented it in the 1950s was to provide a fig leaf of plausible deniability and a pseudo-theoretical framework for rejecting land tax proposals going round at the time, as people first started to wake up to the collision between post-war infinity-based economics and a finite planet).

    The reason that post-1970 technology improvements haven't maintained discovery rates is because of the way we explore for and extract oil under capitalism i.e. on an easy first/hard last basis. The dynamic this establishes is like running away from a tree with a bungee cord attached round it and your waist. With each step forward, you require incrementally more muscle power to cover the same distance. The equivalent in the capitalist oil industry is that the rate of technology must increase to maintain the same rate of discovery/off take. In maths, this is modelled by the logistics function i.e. one in which a retarding force is proportional to displacement, and it is notoriously brutal. The rate at which technology is improving is much lower than the the rate it needs to to overcome the dynamic established by easy first/hard last exploitation strategies.

    A related factor which must be, and is not, taken into account in intuition-based forecasting is illustrated by the graph of "discovery" elbows is showing above. Like the properties of the logistic function, this is not intuitive, but vital for a proper understanding of what forecasts mean and where they go wrong. It arises from the nature of statistical sampling. One exercise in statistics is to guess the population of a bag of coloured balls from the pattern of balls as you pull them out one at a time. This is analogous to guessing the sizes of remaining oil pool sizes from the history of discovered oil pool sizes - oil forecasting. To materially alter a forecast based on historical trend, technology has in effect to add balls to the bag by, say, making recoverable oil which was not previously recoverable. Technology is not doing so. (It may appear to some to be be doing so, by lying about the economic cost. We call this "the shale industry").

    In elbows chart above, discoveries that show that Forties Field in the North Sea is larger than you first thought are fundamentally different from discoveries of new Forties Fields. When employing graphical methods (like elbows "discovery"chart, above), to maintain the physical meaning of an extrapolation, you have to treat the two types of discovery differently. Specifically, when you are redefining the size of something already discovered, you backdate the discovery to the date of the original discovery i.e. you make it larger on that date. That's the real size of the ball you pulled out of the bag that day. It's OK to plot new oil on the day you found it - a new ball that wasn't in the bag when you started sampling.

    The difference can be understood intuitively by imagining pointing a laser pointer at a far wall: discovering legitimately new resource is like tilting your wrist: a small movement results in a large displacement on the far wall. Redefining the magnitude of previously discovered resource is like lifting your hand up and down. Your small movement results in a small displacement on the far wall. (This is a rather unsatisfactory verbal treatment of the maths, but you can easily demonstrate this to yourself with a spreadsheet and investigate the asymptote - the "pointer spot on the far wall" in my analogy - of a graph of cumulative production with and without backdating).

    In Elbows' chart, which is commonly bandied about by oil companies who rely on the rather encouraging effect it produces in an unsuspecting public, the data is a mix of 80% "redefined" and 20% "new" discovery. The redefinition data has not been backdated, leading to a grossly misleading impression of the rate of discovery of new resource, and Elbows' feeling of dissatisfaction that the decline rate I noted (which is evident in the corrected data that oil firms maintain privately) is not evident in the public data they promulgate for propaganda purposes.

    In my graph, the data has been backdated. If you look closely at the graph of discovered resource, you'll see two rather small bumps on the way down. The first is the total contribution of the UK North Sea (hostile/offshore) and the US Alaskan (hostile/cold) fields. The second was the influx of capital and technology into former Soviet fields. The biggest discoveries of genuinely new resource post-1970, and tiny in relation to pre-70's discoveries.
     
    Last edited: Mar 11, 2019
    magneze and Crispy like this.

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