Daily Digest

Daily Digest - October 2

Friday, October 2, 2009, 10:42 AM
  • Potash Slashes Guidance
  • Systemic Collapse: The Basics
  • US Senate OKs 1-Mo Emergency Extension Of Federal Government Funding Levels
  • Ford Says U.S. Sales Fell 5.1% After ‘Clunkers’ Ended
  • New jobless claims rise; Americans' spending jumps
  • CynicusEconomicus: Bank of England Bills and Printing Money
  • Gordon Brown - Elephant in the Room
  • Detroit: Too broke to bury their dead
  • Tumble in State Tax Revenue Has Broad Implications
  • Solar Panel Tariffs
  • Aquacalypse Now

Economy

Potash Slashes Guidance (Chris Martenson)

Potash Corp. of Saskatchewan Inc. (POT) recently guided to earnings in the range of $3.25 to $3.75 per share in 2009, down from its July view of $4.00 to $5.00. The Zacks Consensus Estimate is pegged at $4.39.

The company attributed the downward revision in guidance to lower potash demand and limited restocking by fertilizer distributors worldwide. It said global potash producers have curtailed nearly 20 million tons of production in the last 12 months.

The company expects a 60% year-over-year decline in potash sales volumes and an 85% drop in the combined phosphate and nitrogen gross margin.

Systemic Collapse: The Basics

Oil depletion is the most critical aspect in the systemic collapse of modern civilization, but altogether this collapse has about 10 principal parts, each with a vaguely causal relationship to the next. Oil, metals, and electricity are a tightly-knit group, as we shall see, and no industrial civilization can have one without the others.

As those 3 disappear, food and fresh water become scarce (fish and grain supplies per capita have been declining for years, water tables are falling everywhere, rivers are not reaching the sea). These 5 can largely be considered as resource depletion, and the converse of resource depletion is environmental destruction.

Disruption of ecosystems in turn leads to epidemics. Matters of infrastructure then follow: transportation and communication. Social structure is next to fail: without roads and telephones, there can be no government, no education, no large-scale division of labor. After the above 10 aspects of systemic collapse, there is another layer, in some respects more psychological or sociological, that we might call “the 4 Cs.”

The first 3 are crime (war and crime will be indistinguishable, as Robert D. Kaplan explains), cults, and craziness — the breakdown of traditional law, the tendency toward anti-intellectualism, the inability to distinguish mental health from mental illness. After that there is a more general one that is simple chaos, which results in the pervasive sense that “nothing works any more.”

US Senate OKs 1-Mo Emergency Extension Of Federal Government Funding Levels

Facing a midnight deadline, the U.S. Senate Wednesday approved an emergency one-month extension of current funding levels for the federal government.

The extension is necessary because lawmakers have been unable to complete work on the 12-must pass spending bills required to keep the various arms of the federal government running each year.

With the federal government's fiscal year in its waning hours, all non- essential parts of the government would have been required to shut down at midnight had the extension not been agreed to.

The Senate voted 62-38 to agree to the extension.

House lawmakers voted strongly in favor of the measure last week.

President Barack Obama must sign it into law by midnight to avert the shutdown.

Ford Says U.S. Sales Fell 5.1% After ‘Clunkers’ Ended (SkylightMT)

Oct. 1 (Bloomberg) -- Ford Motor Co. said September U.S. auto sales fell 5.1 percent, ending two months of gains, as waning demand after the “cash for clunkers” rebates may have cut industry deliveries to the second-slowest rate this year.

Ford’s total including the Volvo brand fell to 114,655 cars and trucks from 120,788 a year earlier, the Dearborn, Michigan- based company said in a statement today. The decrease was worse than analysts’ estimates.

“We knew sales would slow down significantly after the cash for clunkers surge,” said Stephen Spivey, senior auto analyst at Frost & Sullivan in San Antonio. “We see sales slowing down for the rest of the year. October will tell you what kind of rebound comes off that dip.” 

New jobless claims rise; Americans' spending jumps (SkylightMT)

WASHINGTON (AP) -- First-time claims for jobless benefits increased more than expected last week, a sign employers are reluctant to hire and the job market remains weak.

And even though consumer spending jumped by the most in nearly eight years in August, due partly to the government's Cash for Clunkers program, economists question whether the improvement can be sustained. They note that households face rising unemployment, tight credit conditions and other obstacles.

The Labor Department said Thursday that initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists had expected an increase to 535,000, according to a survey by Thomson Reuters.

CynicusEconomicus: Bank of England Bills and Printing Money (james_knight_chaucer)

It is, quite literally, monetization of government debt and, even if it was started as inflation policy (unlikely), it is now the only thing that is preventing government bankruptcy.

Gordon Brown - Elephant in the Room (james_knight_chaucer)

The British Prime Minister, an Economist and a Banker bear the full brunt of the Elephant in the Room during Question Time. Economic collapse can make your eyes water. {WARNING:  Graphic language and concepts}

Detroit: Too broke to bury their dead

Tumble in State Tax Revenue Has Broad Implications (Chris Martenson)

Wednesday’s Journal article on plunging state revenues noted that the second quarter was the worst performance for state taxes since at least the 1960s. The June data also mark the end of the worst fiscal year on record, so here is a quick recap of how state revenues performed:

2009 Tax Revenue Change from 2008

Total State Taxes: -8.2%

Sales Taxes: -4.8%

Personal Income Taxes: -13.6%

Corporate Income Taxes: -10.9%

Next year will almost certainly be worse.

Energy

Solar Panel Tariffs (Joemanc)

The issue began with a short letter to United States customs officials last December from the small American subsidiary of a Spanish energy company. The subsidiary, GES USA, wanted to know what the tariff would be to import certain solar panels from China.

On Jan. 9, the customs agency wrote back that the panels had become too sophisticated to qualify for duty-free import. Instead — because the panels contain a basic electronic device for safety and energy efficiency — they would be treated as electric generators, subject to a duty of 2.5 percent.

Environment

Aquacalypse Now (Chris Martenson)

Our oceans have been the victims of a giant Ponzi scheme, waged with Bernie Madoff–like callousness by the world’s fisheries. Beginning in the 1950s, as their operations became increasingly industrialized--with onboard refrigeration, acoustic fish-finders, and, later, GPS--they first depleted stocks of cod, hake, flounder, sole, and halibut in the Northern Hemisphere. As those stocks disappeared, the fleets moved southward, to the coasts of developing nations and, ultimately, all the way to the shores of Antarctica, searching for icefishes and rockcods, and, more recently, for small, shrimplike krill.

As the bounty of coastal waters dropped, fisheries moved further offshore, to deeper waters. And, finally, as the larger fish began to disappear, boats began to catch fish that were smaller and uglier--fish never before considered fit for human consumption. Many were renamed so that they could be marketed: The suspicious slimehead became the delicious orange roughy, while the worrisome Patagonian toothfish became the wholesome Chilean seabass. Others, like the homely hoki, were cut up so they could be sold sight-unseen as fish sticks and filets in fast-food restaurants and the frozen-food aisle.

27 Comments

fujisan's picture
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Re: Daily Digest - October 2

U.S. Employers Cut More Jobs Than Forecast; Unemployment Rises - Bloomberg.com

The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009. The data currently show a 4.8 million drop in employment during that time.

...

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Re: Daily Digest - October 2

Collectively, Economists Are A Perpetually Optimistic Lot

"In what should be no surprise to anyone, car sales crashed after the cash-for-clunkers program ended. Nonetheless, economists and analysts once again managed to be surprised by the rate of decline."

"People have that 'R' [recession] word stuck on the front of their forehead. It's really just a dramatic slowing of growth. We may not have a recession,"

"Bernanke Says Jobless Rate May Be Above 9% in 2010."

"A commercial real estate crisis is brewing and Bernanke either does not see it or will not admit it."

"There are potential financial crises related to the jobs, currencies, banks, commercial real estate, pay option ARMs, Fannie Mae, pension plans, state funding issues, global trade, protectionism, credit card defaults, deficit spending, unfunded liabilities, derivatives, and a still rising unemployment rate." (Mish's Global Economic Trend Analysis)

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Re: Daily Digest - October 2

If you haven't seen this Daily Show spot with Samantha Bee discussing HFT, you really should.

Quite funny.

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Re: Daily Digest - October 2

this might be obvious to most, but the link for "Systemic Collapse: The Basics" doesn't work as is- the first part of the address  has to be deleted, here is the correct link:

http://www.countercurrents.org/goodchild290909.htm

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Re: Daily Digest - October 2

Thanks.  Fixed above as well.

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Re: Daily Digest - October 2

Marc Faber on CNBC India, October 1, 2009

US Dollar Will Stay Weak Until Economy Improves: Bill Gross.........video on page.

http://www.cnbc.com/id/33136155#

Marc Faber and Nouriel Roubini (THE TRUTH ABOUT THE ECONOMY SERIES)

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Systemic collapse

If things play out as Peter Goodchild is proposing, we're headed for a very unpleasant world.  He suggests an obligate die off of the world's population back to its preindustrial numbers.   I suspect that means a viscious struggle for scarce available resources.  How do I prepare for this type of world?  What values do I teach my children?  Do they need to learn to be savage killers?  If this is what we can expect, maybe those who perish early are the lucky ones.   

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Re: Daily Digest - October 2

This is a great analysis of just how bad the unemployment situation is: http://economicedge.blogspot.com/2009/10/on-point-unemployment-report.html

Not only are we losing jobs, we're losing time. We usually analyze things in terms of jobs lost or gained, but we really need to normalize for the population (or at least labor force) size. We've been growing in this sense consistently since 2007 so things are more dire. According to Nathan, we will need to add over 14 Million jobs by September 2011 just to be on par (in normalized terms) with November 2007. This is doubleplusungood.

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Re: Daily Digest - October 2

NOTE: After reading #1 please read #6. They are very related and would push the unemployment numbers even higher.

1) "If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent, the highest on records dating from 1994."

"The average hourly work week fell back to a record low of 33 in September. That figure is important because economists are looking for companies to add more hours for current workers before they hire new ones."

2) G-7 Finance Chiefs Campaign for ‘Strong Dollar’

"Finance chiefs headed for Group of Seven talks in Istanbul pushing for a “strong dollar” amid concern its slide will impede their recoveries from the worst global recession since World War II."

3)" The U.S. will next week auction $39 billion of three-year notes, $20 billion in 10-year securities, $12 billion in 30- year bonds and $7 billion of 10-year Treasury Inflation Protected Securities over four consecutive days beginning Oct. 5, the Treasury said yesterday. The department sold $73 billion of the maturities the week of July 6, the last time the four securities were offered in the same week.

$6.94 Trillion

Treasuries’ third-quarter gain came even as the government sold $554 billion of notes and bonds, the most ever in a quarter. So far this year, U.S. sold $1.517 trillion of notes and bonds, compared with $585 billion at the same point last year. 

Barclays Plc, one of the 18 primary dealers that trade with the Fed, forecasts total 2009 issuance at $2.1 trillion, with $2.5 trillion projected for 2010.

President Barack Obama has pushed the nation’s marketable debt to an unprecedented $6.94 trillion in an effort to spur economic growth, support the financial system and service record deficits. The U.S. budget deficit is projected to increase to $1.6 trillion this year, equivalent to 11.2 percent of the nation’s economy, according to the nonpartisan Congressional Budget Office."

4) U.S. Consumer Bankruptcies Top 1 Million, Group Says

5) Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt

"The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery."

6) "Social Security Applications Almost Double Because of Recession

Applications for Social Security benefits rose almost 50 percent more than expected this year because of the recession, according to the federal retirement program..""

7) Millions Of Foreclosures Could Threaten Real Estate Recovery

"The general outlook that the housing market has bottomed is ‘premature’ optimism, according to the report.

‘The single largest impediment to a recovery in the housing market is the large number of loans that are either in delinquent status or in foreclosure that are destined to liquidate,’ said analyst Laurie Goodman.

Amherst estimates that there is a ‘shadow inventory’ of around seven million housing units, or 135% of a full year of existing home sales, compared with 1.27 million in early 2005."

 The backlog is due to high transition rates, low cure rates and a longer timeline for loan liquidation."

8) SAN DIEGO — "The sins of San Diego's recent past and an economic recession have city leaders facing a record $179 million budget deficit almost certain to lead to layoffs and service cuts.

To put the gap in perspective, if the city were to only use layoffs to cut its way out, it would need to ax 2,420 jobs — roughly one out of every four workers."

"Sanders noted that San Diego's deficit will be fueled by a $67 million decline in revenues, $57 million in investment losses by the city's pension fund and a $32 million legal settlement."

"Other large cities around California are also feeling the pinch.

San Jose faces a nearly $170 million deficit next fiscal year, Los Angeles' shortfall is expected to top $400 million and San Francisco's is predicted to hit $750 million."

 9) Arizona budget deficit could top $1.5B this year

PHOENIX -- There's more bad news for the Arizona economy.

"This fiscal year's budget deficit may top $1.5 billion as state revenues continue to slide at an unprecedented rate.

In a report released Wednesday, state budget analysts delivered the news. Governor Jan Brewer's staff also said that the state could face a deficit larger than the $1 billion shortfall originally predicted."

10) Jobless benefits extension hits snag in Senate

11) US Unemployment May Hit 15% in 2010: Strategist

12) (Washington) Pension funds fall short

"State: Higher contributions needed to keep system solvent, policymakers told"

13) Page Mill's East Palo Alto properties now in default

"Wells Fargo Bank confirmed Thursday that it has filed notices of default on all of Page Mill Properties' East Palo Alto holdings, potentially putting about 1,800 rental units on the road to foreclosure."

14) Proposed pension contribution hike shocks officers (Springfield)

"The projection developed by the actuary shows the percentage of salaries needed to pay off the unfunded liability would leap to more than 51 percent in 21 years and 387 percent five years after that. "

(The above quote is on page 2)

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Re: Daily Digest - October 2

The above posted  twice. How do you delete a message once it's posted?

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Re: Daily Digest - October 2

I don't know why they pushed back the date for fiscal year governement funding levels.  It's only going to be more expensive next month.  I don't see how it isn't. Personally I am expecting a big downturn. (potentially much bigger than last year)...but...if it doesn't happen like that, I still see a downturn of some sort and it to be significant, whatever you want to call significant.  A month from now, I think the credit markets will at the very least be shakier than today.

I think a fairly big problem is already here.  Expect either more delays, more borrowing at higher rates, or partial/complete shut down of services. Has to be one of those three.

I'm just wondering the significance of why they need to wait?  They want to wait an extra month before printing more money?  Are there huge treasury offerings ahead of what has been announced and they want to get those in?

Seems to me maybe we are still paying off or printing last years debts, and our Gov't wasn't ready for THIS YEAR's debts to start. Which in a sense means the credit market needs to support last year's debts & this year's debts at once.

Forgetting everything else, just this alone could cause a credit crunch and spike in rates imo.  Looks like 2 pegs need to fit in one hole.  That's going to cause problems imo.  Add another reason to be bearish in coming days, weeks, months.

At least that is just what  logic and deduction tell me.

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Re: Daily Digest - October 2

Love the Daily Show link.  Laughing

DD is alive and kicking! Still miss Davos of course....I know he is out there somewhere...Tongue out

The link on State Tax Revenues from WSJ is no longer working FYI.

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Re: Daily Digest - October 2

A friend of mine who owns & operates a large sporting goods & pawn in the Midwest was showing me his last year pawns in Sept. vs this year’s Sept. He has had 2.5 times more pawns this year vs last. There are no big industries in this area that have laid people off & generally this area has weathered past recessions very well.

 Looks like trouble ahead IMHO.

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Re: Daily Digest - October 2

Corporate Pension Plans Facing Huge Shortfalls: Study

http://www.cnbc.com/id/33121233

PS...saxplayer00o1 I really like the posts you make with all the links.....Nice work....Thanks.

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Re: Daily Digest - October 2

Systemic Collapse: The Basics

We may be in very big trouble but I am not buying the authors Mad Max vision of the world.

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Re: Systemic Collapse - The Basics

Is it just me, or does the author of the Systemic Collapse link seem to be making statements based at least as much on his personal belief (that a total systemic collapse is inevitable) as it does on actual facts?  Not to say it doesn't have useful information to be gleaned, but I have to say my BS filter (which, err... stands for "Belief System"!Wink) was going off at various points in that article.  To paraphrase his statements, any potential energy source or form of transport that isn't available RIGHT NOW is relegated to the 'nothing more than science fiction' category.  What I was seeing was the polar opposite of the "technology will save us" mindset.... his statements assume NO new innovations or even restructuring industrial societies to live using much less energy is possible.  As with most things, the truth will probably be somewhere in the middle.

- Nickbert

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Re: Systemic Collapse - The Basics
nickbert wrote:

Is it just me, or does the author of the Systemic Collapse link seem to be making statements based at least as much on his personal belief (that a total systemic collapse is inevitable) as it does on actual facts?  Not to say it doesn't have useful information to be gleaned, but I have to say my BS filter (which, err... stands for "Belief System"!Wink) was going off at various points in that article.  To paraphrase his statements, any potential energy source or form of transport that isn't available RIGHT NOW is relegated to the 'nothing more than science fiction' category.  What I was seeing was the polar opposite of the "technology will save us" mindset.... his statements assume NO new innovations or even restructuring industrial societies to live using much less energy is possible.  As with most things, the truth will probably be somewhere in the middle.

- Nickbert

Do you think so??Laughing(just playing devil's advocate here).  I read it more as challenging the conventional thought.  Its a scary article, but its as valid as many others that I read they along the same lines as this one or be they somewhat more cosy and fluffy.  In its purest form any technology that isn't here now is science fiction, but if it turns up tomorrow, even in an experimental or prototype form, it would be science fact.....but then there could be a long way to go to make it an "every day viable solution". 

As an aside, I saw on old cartoon of the Jetsons the other day.  My daughter loved it and I had seen any of these for years, it really struck me the way people in the 60s were thinking and how they thought things would work out.

.......Mad Max of fluffy?  I hope for one but am prep'ing for the other

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Re: Systemic Collapse - The Basics
nickbert wrote:

Is it just me, or does the author of the Systemic Collapse link seem to be making statements based at least as much on his personal belief (that a total systemic collapse is inevitable) as it does on actual facts?  Not to say it doesn't have useful information to be gleaned, but I have to say my BS filter (which, err... stands for "Belief System"!Wink) was going off at various points in that article.  To paraphrase his statements, any potential energy source or form of transport that isn't available RIGHT NOW is relegated to the 'nothing more than science fiction' category.  What I was seeing was the polar opposite of the "technology will save us" mindset.... his statements assume NO new innovations or even restructuring industrial societies to live using much less energy is possible.  As with most things, the truth will probably be somewhere in the middle.

- Nickbert

Nickbert,

I consider that Goodchilds' article is a natural extension of the concept CM alludes to as regards our civilization and peak oil in Chapter 15.  Could it be that our entire civilization is simply an extension of our discovery of an abundant and cheap energy source? I think it bears some contemplation. We of course have the right to change our mind when new evidence arrives to show that we have in fact found a replacement for the majical substance called oil.

But when I read an article on systemic collapse such as Goodchilds', I still have difficulty with it and find myself resorting to "bargaining" even though I consider that I have arrived at "acceptance".  Make no mistake, this is difficult material and not at all for the feint of heart!

I continue to focus on the future scenario that civilization will continue and that it will be a much simpler and in many way richer way of life. Where I live the Native Americans were the sole inhabitants only 162 years ago and they had existed in this area for thousands of years prior to the Age of Oil.  The long road back no doubt will be bumpy but IMHO that is where we are headed.

Coop

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systemic collapse

Nickbert

based on the crash course peak oil chapter, I pretty much came to the same conclusion as the author of Systemic Collapse.  CM just doesn't go into predicting the consequences.

I am concerned that once we are well onto the downslope of the peak oil curve, the world's collective ability to invest in energy alternatives will be lost.  Oil resources will be used for survival (or squandered in resource wars).  There will be little energy, money, and time  to spend on alternative energies.  The author is correct that the current alternative energies are highly dependent on an oil based infrastructure.  The other problem is human nature.   Human beings and societies still like to preserve the status quo, and I can't see anybody changing or wanting to change until it is too late.  Is a sustainable energy infrastructure within the realm of possibility?  I think yes.  Have we missed our window of opportunity?  Maybe.

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US Senate OKs 1-Mo Emergency Extension.....

I'd have to go back and look, but I don't recall not having to flop and twitch through at least a couple of Continuing Resolutions each Fiscal Year going back to 2004.

The Comptroller Branch at the command where I work has been burning the candle at both ends since the beginning of September trying to spend FY09 money and prioritize how the command is going to obligate and spend on critical projects starting 10/1/09.  It's kind of hard to figure out what programs get attention if you don't know how much the CR is going to trickle out a month at a time.

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Re: Systemic Collapse - The Basics

The biggest problem I see with the author's statements is he speaks from a position of "belief" which he states as certainty, plus he had made some very questionable assumptions and statements that stood out in my eyes.   Here's an example:

Quote:

To believe that a non-petroleum infrastructure is possible, one would have to imagine, for example, solar-powered machines creating equipment for the production and storage of electricity by means of solar energy. This equipment would then be loaded on to solar-powered trucks, driven to various locations, and installed with other solar-powered devices, and so on, ad absurdum and ad infinitum. Such a scenario might provide material for a work of science fiction, but not for genuine science. The sun simply does not work that way.

The last two sentences (emphasis mine) puzzle me, and I did not see anything else before or after that paragraph that backs up that statement.  Personally I see that last statement ("the sun simply does not work that way") as lazyness on the author's part... without supporting facts all it boils down to, "well, it just IS!!!".  Just how is a largely solar driven infrastructure NOT possible over time, as long as the EROEI is greater than 1 and the materials are available to make the panels?  And most of the metals and other materials we've mined and used over the recent decades still exist and at least some would be able to be recycled.  Forgive me for using Wikipedia, but for this they did cite their sources:

http://www.ecn.nl/docs/library/report/2006/rx06016.pdf

http://en.wikipedia.org/wiki/Photovoltaics

Quote:

Thin film technologies now have energy pay-back times in the range of 1-1.5 years (S.Europe).[65] With lifetimes of such systems of at least 30 years, the EROEI is in the range of 10 to 30. They thus generate enough energy over their lifetimes to reproduce themselves many times (6-31 reproductions, the EROEI is a bit lower) depending on what type of material, balance of system (or BOS), and the geographic location of the system.[67]

Now there are difficulties to such an approach to be sure, like energy storage during night-time hours, time taken to realize the net energy gain, and obtaining some of the materials... but these are technical hurdles, not show-stoppers.  The author seems to confuse 'difficult' with 'impossible'.

Maybe it's just how I interpret his article, but the author appears to assume only one possibility and that is one of complete systemic collapse.  I accept that could turn out to be the case (thus some of my preparations are geared towards that possibility), and unfortunately I think it's likely at least some parts of the world will experience that.  But the fact that he ignores any other possibilities shows that either he is making these statements as part of a belief system, or he suffers from a severe lack of imagination.  Seeing as the article was pretty well thought out in many other ways, I find the 'belief' explanation the most likely.  I agree with his statement that the society and infrastructure that we have currently cannot exist, the rate of current energy consumption is unsustainable, and there will be massive pain when we hit that energy wall.... where I have a disconnect is where he assumes that the only direction our societies can move would be backwards towards what was seen in the past.  I think it's just as likely 20-30 years from now we will see a kind of civilization and society that is something completely different from what anyone expects or has been seen in history.  But the truth is that no one knows how this all will play out, and anyone who pretends to loses a bit of credibility in my eyes.

- Nickbert

 

 

 

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Re: Daily Digest - October 2

Unemployment Rate is Highest in 26 Years

By Kevin G. Hall

     Jobs Report

October 02, 2009 "McClatchy" --- WASHINGTON — The nation's unemployment rate ticked up to 9.8 percent in September, its highest level in 26 years, as employers hastened their pace of layoffs, the government reported Friday in a worse-than-expected jobs report that was sure to quash any notion that the economic downturn is over.

Employers shed 263,000 jobs in September, a much worse showing than the 150,000 or so lost jobs that mainstream economic forecasters had expected.

Emphasizing just how disappointing Friday's report was, the average workweek for production and nonsupervisory jobs fell slightly to 33 hours in September. That number should be going up in an economic recovery.

The numbers were a reality check for anyone who was thinking that strong economic growth was just around the corner.

"I think you've got an economic recovery, but I think the pace of recovery is very disappointing relative to what a lot of people expected," said John Silvia, the chief economist for Wachovia, a large national bank based in Charlotte, N.C.

The jobs report was sure to call the Obama administration's economic stimulus efforts into question, since government hiring fell by 53,000 jobs. The administration and some economists, such as Silvia, maintain that this number would be worse if not for the stimulus efforts.

The figure deflects criticism that the administration is creating a massive government work force, however.

Appearing on CNBC television, Labor Secretary Hilda Solis tried to put a positive spin on the report, noting that jobs are disappearing at a slower pace than they were earlier in the year.

"We're at about the same rate (of job losses that) we saw in the last two months," Solis said, adding that it's a "struggle" to create jobs amid the worst economic climate in decades.

Coupled with poor consumer-confidence numbers earlier in the week, the jobs report added to a grim start to the fourth quarter on Wall Street. After closing down more than 200 points Thursday, the Dow Jones Industrial Average opened down more than 70 points Friday in the first 15 minutes of trading.

In a reflection of concerns that economic growth may be anemic, oil prices also fell almost $2 a barrel Friday morning in trading on the New York Mercantile Exchange.

The Labor Department's report included important revisions. Employers shed 201,000 jobs in August, according to the revisions, not the 216,000 first reported last month. While that was good news, it emphasized how bad September's numbers were, since 62,000 more jobs were lost in September than in August. The Bureau of Labor Statistics also said that 304,000 jobs were shed in July, not the 276,000 first reported.

Since the recession began in December 2007, the number of unemployed Americans has risen from 7.6 million to 15.1 million. The unemployment rate has doubled to 9.8 percent — the highest since June 1983 — up another tenth of a percentage point in September.

While Friday's numbers added to a number of indicators that suggest economic growth remains elusive, there was another important development in the Labor Department numbers that shows the economy is crawling back from a deeper hole than first envisioned.

The BLS revised March employment numbers, saying that the 663,000 job losses first reported for the turbulent month were wildly low. Statisticians now think that 824,000 jobs were lost that month, a difference of six-tenths of a percentage point, a whopping miss in mathematical terms.

This March revision "shows the huge hole we have been thrown into" as an economy, said Lawrence Mishel, the president of the Economic Policy Institute, a liberal policy-research organization.

"The good news is that the employment decline, down 263,000, is still far below the awful hemorrhaging in the winter months," Mishel said.

Amid expectations that the recession finally may be over, however, the jobs report Friday suggests that Federal Reserve Chairman Ben Bernanke was correct late last month when he warned that it will take a long time before many Americans feel as if recovery is afoot.

That's evident in the statistics for the long-term unemployed, people jobless for 27 weeks or longer. In September, 35.6 percent of the 15.1 million unemployed Americans — about 5.4 million people — hadn't had jobs for half a year or longer.

"Today's report is evidence that we have a truly massive crisis of long-term unemployment on our hands, especially now that jobless workers are using up the last of their unemployment benefits," Christine Owens, the executive director of the National Employment Law Project, an advocacy group for the unemployed, said in a statement. "Today's employment report is a marching order for Congress to pass unemployment benefit extensions to all states, quickly."

SEPTEMBER EMPLOYMENT BY SECTOR:

_ Construction, fell by 64,000.

_ Manufacturing, down 51,000.

_ Retail, off 39,000.

_ Professional and business services, negative by 8,000.

_ Transportation and warehousing, unchanged.

_ Financial services, unchanged.

_ Health care, plus 19,000.

_ Government, down 53,000.

spinone's picture
spinone
Status: Bronze Member (Offline)
Joined: Jul 12 2008
Posts: 49
Re: Systemic Collapse - The Basics

What the author is getting at is that there is no substitute for liquid petrolium.  The energy that we release was captured millions of years ago.  If we try to manufacture a similar liquid energy source now, the net energy gain is very low.  Liquid petrolium is easy to transport, and very energy dense.  No other 'fossil fuel' (coal, natural gas) has similar characteristics.  The work a gallon of gas can do is equal to over 3 months of one person's hard physical labor.  If you want to test it, fill your car with only one gallon and drive away from home until you are out of gas.  Now push your car home.  Once the easily extractable oil is gone, that work will have to be done another way.  I guess on the bright side that could take care of the unemployment level.

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Re: Systemic Collapse - The Basics
spinone wrote:

What the author is getting at is that there is no substitute for liquid petrolium.  The energy that we release was captured millions of years ago.  If we try to manufacture a similar liquid energy source now, the net energy gain is very low.  Liquid petrolium is easy to transport, and very energy dense.  No other 'fossil fuel' (coal, natural gas) has similar characteristics.  The work a gallon of gas can do is equal to over 3 months of one person's hard physical labor.  If you want to test it, fill your car with only one gallon and drive away from home until you are out of gas.  Now push your car home.  Once the easily extractable oil is gone, that work will have to be done another way.  I guess on the bright side that could take care of the unemployment level.

I fully agree with him in that there's no substitute for liquid petroleum.  Perhaps something approaching or exceeding the energy potential of oil will be realized in the future, but odds are unlikely it'll be anytime soon and extremely unlikely to be in time to take oil's place before the energy crunch is fully upon us. Learning to live with a lower standard of living and greatly reduced energy consumption is something we will very likely have to deal with for at least a decade or two, probably more, and will have to come to terms with.  What I don't get is his idea that this must create a complete societal collapse.  If our economy is a function of how much 'free' energy is available to perform work, future economies and societies will reduce in complexity down to the level that can be sustained by remaining energy sources.  These energy sources are far inferior to oil in terms of EROEI, but many still supply more 'free' energy and work than was available to our ancestors before the industrial age.  Some 'overshoot' to the downside in societal and systemic collapse is expected where people struggle to adapt to the new reality and retool societies to live within the new limitations, but collapse to a near stone-age agrarian level of existence?  Anything is possible (and as I said before perhaps some areas in the world will collapse to that level), but that is quite a stretch to assume that will be the case for the whole of human society.  Perhaps the author is drawn to the idea of that level of existence where people are closer to the earth to be a romantic notion (and in a way it is), but we need to separate beliefs from facts.

- Nickbert

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Daily Digest - October 2

+1 to saxplayer00o1 as well for all the links in the articles.

Jeff

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Systemic Collapse - The Basics

Yes, it does seem the author dwells in the darkness a little too much. But I can get the point: that it's not going to be the same as it is right now and changes, they be a-comin!

Jeff

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