Those Controlling the Technology and Those Carrying Out the Tasks...,

opendemocracy |  Vulnerable employment, with workers experiencing high levels of precariousness, is a global phenomenon. The ILO projects global growth in vulnerable forms of employment to grow by 11 million a year. The impacts of this are being felt across developed, emerging and developing countries.

In the UK, much concern about the changing labour market has been framed in terms of the shift in risk that has occurred between employers and individuals. The gig economy is often used to epitomise the imbalance in power between those controlling the technology, and those carrying out the tasks: 

However, this shift of risk reaches far beyond Uber drivers and millennials on bicycles. It can be seen in the use of contracted, agency and temporary staff and in the unpredictability of zero and minimum hours contracts of those working for supermarkets, in warehouses, in social care and in universities. 

The impact of this on people’s lives is exacerbated by a parallel transfer of risk in the systems set up to support those who are unemployed or in low paid work. At the same time as work has become less predictable, the safety net has become less springy and with bigger holes. 

This shift can be seen in cuts to social security, in the changes and increasing conditionality that universal credit brings, in the way jobs are measured and impact on poverty is not. It is seen in adult learning and the introduction of adult learner loans. It is also seen in a childcare sector that does not have the capacity to offer care to those with unpredictable or non-standard hours, even though those are the jobs increasingly likely to be available for those on low pay. 

Do the Neocons Believe They Can Take Russia's Oil by Force?

lewrockwell |  I’ve gotten a couple emails from people who have asked me what I think the “end game” is in regards to Russia. And, indeed, the government is going into extra innings with this whole Russia vilification project. This is worse than someone who has held on to a grudge for years. The government does that, too, but they haven’t done it over ideology (as with Cuba) for quite some time now. What, then, is the motive?

The motive is perfectly clear: Oil. You see, Russia has already eclipsed Saudi Arabia as the world’s biggest oil producer. This means the big Saudi oil fields are drying up. And the government knows that, but they can’t tell us this because it’ll create a panic. One would think this would motivate the United States to get cozier with Russia. However, what the United States government fears is that if we do that, Russia will twig to the motive for it, and realize it has the United States over a barrel. An oil barrel. At which point the price goes up. Not to mention extracting concessions in the global sphere of influence.

Thus, what the United States is playing at here is trying to install a different “regime” in Russia. That being, one that Vladimir Putin does not control or have any influence over. This is easier said than done and the United States knows this. But the stakes are quite a bit higher than controlling the dwindling oil supply in the Middle East. Russia is obviously in control of most of the world’s remaining oil reserves. The United States needs a puppet regime in Russia to have access to that oil without paying the correct market price for it.

At some point, this gambit will fail. Russia is not the Middle East. A war with Russia cannot be won or cease-fired out of. Nor can a United States-backed “regime change” succeed over there. This is not the 1990s Russia of Boris Yeltsin. The United States, however, cannot come clean with the truth to the American people. The reason is because if the American people knew the truth, they’d never sleep nights anymore. The truth is this: Our entire economic system is based on petroleum and low-cost petroleum at that. But the actual nightmare is that our entire agricultural system is based on cheap oil.

The United States diet, especially for average Americans, is based on only three crops: Corn, wheat, and soy. Every processed food you see is based on fractions of those three staples. Meat is fed those three staples, even the farm-raised salmon you see in the store. Without those three crops, the United States would undergo a famine not seen in the United States ever at any point. The United States cannot feed itself without those three crops. What’s more, many large parts of the world depend on those three crops exported from the United States to feed themselves, too. Therefore, without them, the famine would turn into a runaway famine of global proportions.

FAIL: The Peak Oil Movement

thearchdruidreport |  The conviction that politicians, pundits, and the public would be forced by events to acknowledge the truth about peak oil had other consequences that helped hamstring the movement. Outreach to the vast majority that wasn’t yet on board the peak oil bandwagon, for example, got far too little attention or funding. Early on in the movement, several books meant for general audiences—James Howard Kunstler’s The Long Emergency and Richard Heinberg’s The Party’s Over are arguably the best examples—helped lay the foundations for a more effective outreach program, but the organized followup that might have built on those foundations never really happened. Waiting on events took the place of shaping events, and that’s almost always a guarantee of failure.

One particular form of waiting on events that took a particularly steep toll on the movement was its attempts to get funding from wealthy donors. I’ve been told that Post Carbon Institute got itself funded in this way, while as far as I know, ASPO-USA never did. Win or lose, though, begging for scraps at the tables of the rich is a sucker’s game.  In social change as in every other aspect of life, who pays the piper calls the tune, and the rich—who benefit more than anyone else from business as usual—can be counted on to defend their interest by funding only those activities that don’t seriously threaten the continuation of business as usual. Successful movements for social change start by taking effective action with the resources they can muster by themselves, and build their own funding base by attracting people who believe in their mission strongly enough to help pay for it.

There were other reasons why the peak oil movement failed, of course. To its credit, it managed to avoid two of the factors that ran the climate change movement into the ground, as detailed in the essay linked above—it never became a partisan issue, mostly because no political party in the US was willing to touch it with a ten foot pole, and the purity politics that insists that supporters of one cause are only acceptable in its ranks if they also subscribe to a laundry list of other causes never really got a foothold outside of certain limited circles. Piggybacking—the flipside of purity politics, which demands that no movement be allowed to solve one problem without solving every other problem as well—was more of a problem, and so, in a big way, was pandering to the privileged—I long ago lost track of the number of times I heard people in the peak oil scene insist that this or that high-end technology, which was only affordable by the well-to-do, was a meaningful response to the coming of peak oil.

There are doubtless other reasons as well; it’s a feature of all things human that failure is usually overdetermined. At this point, though, I’d like to set that aside for a moment and consider two other points. The first is that the movement didn’t have to fail the way it did. The second is that it could still be revived and gotten back on a more productive track.

What Mischief These Two Sissies Up To?

cbc.ca |  The Canadian government is also revising its policy for the North. The Liberals said they are replacing the previous government's northern strategy with an "Arctic policy framework." 

Former prime minister Stephen Harper's northern strategy put an emphasis on asserting Canadian sovereignty through the Canadian Rangers and addressing economic concerns through natural resource development.

There will be a specific component of the policy geared toward Inuit people.

Canada and the U.S. also announced they will start a process to identify low-impact shipping corridors. The process will include determining where vessels will not be allowed to sail and gauging what kind of infrastructure and emergency response systems will be needed for northern shipping routes.

WaPo |  President Obama moved to solidify his environmental legacy Tuesday by withdrawing hundreds of millions of acres of federally owned land in the Arctic and Atlantic Ocean from new offshore oil and gas drilling.

Obama used a little-known law called the Outer Continental Shelf Lands Act to protect large portions of the Chukchi and Beaufort seas in the Arctic and a string of canyons in the Atlantic stretching from Massachusetts to Virginia. In addition to a five-year moratorium already in place in the Atlantic, removing the canyons from drilling puts much of the eastern seaboard off limits to oil exploration even if companies develop plans to operate around them.

The announcement by the White House late in the afternoon was coordinated with similar steps being taken by Canadian Prime Minister Justin Trudeau to shield large areas of that nation’s Arctic waters from drilling. Neither measure affects leases already held by oil and gas companies and drilling activity in state waters.

“These actions, and Canada’s parallel actions, protect a sensitive and unique ecosystem that is unlike any other region on earth,” the White House said in a statement. “They reflect the scientific assessment that, even with the high safety standards that both our countries have put in place, the risks of an oil spill in this region are significant and our ability to clean up from a spill in the region’s harsh conditions is limited.

He Who Controls the Spice Controls the Universe

NYTimes |  Struggling to keep Iraq from splintering, American diplomats pushed for a law in 2011 to share the country’s oil wealth among its fractious regions.

Then Exxon Mobil showed up.

Under its chief executive, Rex W. Tillerson, the giant oil company sidestepped Baghdad and Washington, signing a deal directly with the Kurdish administration in the country’s north. The move undermined Iraq’s central government, strengthened Kurdish independence ambitions and contravened the stated goals of the United States.

Mr. Tillerson’s willingness to cut a deal regardless of the political consequences speaks volumes about Exxon Mobil’s influence. In the Iraq case, Mr. Tillerson and his company outmaneuvered the State Department, which he has now been nominated by President-elect Donald J. Trump to lead.

“They are very powerful in the region, and they couldn’t care less about what the State Department wants to do,” Jean-François Seznec, a senior fellow at the Atlantic Council, a research group in Washington, said of Exxon Mobil’s pursuits in the Middle East.

As America’s biggest oil company, with operations on six continents and a stock market value of more than $390 billion, Exxon Mobil is in some ways a state within a state. While Mr. Tillerson has never officially been a diplomat, he has arguably left an American footprint on more countries than any nominee before him — with an agenda overseas that does not always mesh with that of the United States government.

Why Are the Parasite 1%'s Terrified of the Producer 1%'s?

robertscribbler |  Rex will come to head an agency whose stated goals include the promotion of human rights and the advancement of U.S. policy aimed at mitigating and reducing the harms produced by human-caused climate change. But what Rex has done — for his entire 41 year career at Exxon — is promote the kind of oil extraction efforts in Russia that will saddle the Earth with yet one more gigantic carbon bomb and broker business deals with some of the worst human rights abusers in modern history.

Russian efforts to increase oil and gas production focus on Arctic regions of East and West Siberia. Exxon Mobile under Tillerson was slated to provide Russia with extraction assistance when plans were shut down by U.S. sanctions against Russia following its invasion of the Ukraine. Tillerson opposes sanctions and has, in the past, looked the other way when Russia has acted in an abusive fashion. Image source: EIA.)

For Rex and Exxon, in an admittedly risky courting of a Russian dictator well known for cynically turning against his ‘friends,’ a big deal with Russia promised to produce billions in profits by opening up Arctic oil exploration. Back in 2013, an arrangement was moving along in which Exxon would provide technical expertise for extracting a massive pile of hard to reach oil and gas reserves. Exxon didn’t seem concerned by the fact that Russia had betrayed a similar contract with British Petroleum, thrown one of the competitors to state-run Rosneft in jail, or forced a Total Oil CEO to flee Russia due to ‘sustained harassment.’

In 2014, the high-risk game that Exxon was playing with Russia went sour after Russia invaded the Ukraine. The U.S. under President Obama, decided to apply sanctions against Russia for its military occupation of Ukraine. And in subsequent years, Exxon lost at least 1 billion due to the combined sanctions and Russian military aggression. Russia, meanwhile, saw its Arctic oil extraction efforts slow due to lack of access to western technical expertise. Tillerson, at the time, used his position as Exxon CEO to put pressure on the U.S. to lift sanctions. Such efforts were arguably against the national interest — which focuses on containing and preventing aggression by foreign powers — and aimed at simply fattening Exxon’s and, by extension, Rex’s bottom line. In critiquing an Exxon CEO, we might lable these actions as amoral profit-seeking that runs counter to the national interest. But place Tillerson as Secretary of State and we end up with moral hazard writ large. For Tillerson, if he promotes similar goals while in office, would be wrongfully using a public appointment to pursue a personal monetary interest — in other words opening up the U.S. to corruption and enabling Tillerson to perpetrate graft.

To Resource Realists, What Do UN-NGO "Animal Farm" Noises About "Sustainability" Really Mean?

wikipedia |  On 25 September 2015, the 193 countries of the UN General Assembly adopted the 2030 Development Agenda titled Transforming our world: the 2030 Agenda for Sustainable Development. 

Following the adoption, UN agencies, under the umbrella of the United Nations Development Group, decided to support a campaign by several independent entities, among them corporate institutions and International Organizations. The Campaign, known as Project Everyone,^[16] introduced the term Global Goals and is intended to help communicate the agreed Sustainable Development Goals to a wider constituency. However the decision to support what is an independent campaign, without the approval of the member states, has met resistance^[17] from several sections of civil society and governments, who accuse^[18] the UNDG of ignoring the most important communication aspect of the agreement: Sustainability. There are also concerns that Global Goals is a term used to refer to several other processes that are not related to the United Nations.

The Official Agenda for Sustainable Development adopted on 25 September 2015 has 92 paragraphs, with the main paragraph (51) outlining the 17 Sustainable Development Goals and its associated 169 targets. This included the following goals:^[19]

REDUX 10/30/12 exploitation of arctic resources WILL happen...,

spiegel | September 16, 2012 was a historic date. According to the statistics of the National Snow and Ice Data Center in the US, Arctic sea ice shrank to cover an area of just 3.41 million square kilometers (1.32 million square miles) on that day. It was the lowest coverage measured since the beginning of satellite observations in 1979 -- some 760,000 square kilometers lower than the previous record minimum in 2007.

The extent of the shrinkage indicates that the Arctic is changing at a breathtaking pace; a new ocean is opening up.

At the same time, interest in both shorter shipping routes through the far north and Arctic mineral deposits is growing. Norway is one of the five countries bordering the Arctic that can benefit from their proximity to the region's presumed riches. The decades-long exploitation of oil and natural gas in waters further south has made the country extremely wealthy -- and hungry for more. At the same time, polar countries like Norway have to deal with increasing pressure from politicians and environmental groups, which complain about the risks of resource extraction and would like to see them remain untapped. In an interview with SPIEGEL ONLINE, Norway's new Foreign Minister Espen Barth Eide talks about the politics of resource extraction in the region.

REDUX from 4/11/08: Floating Arctic Nuclear Power Plants

Rosenergoatom is promoting floating nuclear power plants (NPP) for energy supply for Arctic oil-and gas drilling platforms. Instead of using gas to produce electricity for the platform one floating NPP can ensure needed power supply. A promotion brochure from Rosenergoatom details the plans to use the floating NPPs for offshore oil and gas installations in the remote Arctic oceans.

The general concept of the plan is based on the same technology as the floating nuclear power plant currently under construction at the Sevmash plant in Severodvinsk in the Arkhangelsk region.

The plant will be built as a barge where the core of the nuclear power plant is its KLT-40 reactor. This kind of reactors is similar to the ones onboard Russia’s civilian fleet of nuclear powered icebreakers operated by the Murmansk Shipping Company. Given the speed with which the Artic ice is melting, there won't be much foward-looking use for a fleet of nuclear ice breakers....,

REDUX from 4/11/08: Sevmorput

Murmansk gets the world’s first nuclear-powered oil drilling vessel

The Murmansk Shipping Company will turn the nuclear-powered container carrier “Sevmorput“ into a drilling vessel for the oil industry. The vessel will be ready for drilling operations in the Arctic within 18 months, the company announced this week.

With the transformation, the world will see the first ever nuclear-powered oil and gas service vessel. The place of work for the vessel is likely to be the Arctic, and first of all the Barents Sea.

The Energy Problem Behind Trump’s Election

ourfiniteworld |  The energy problem behind Trump’s election is not the one people have been looking for. Instead, it is an energy problem that leads to low wages for many workers in the US, and high unemployment rates in the European Union. (The different outcomes reflect different minimum wage laws. Higher minimum wages tend to lead to higher unemployment rates; lower minimum wages tend to lead to higher employment, but unsatisfactory wages levels for many.) The energy problem is also reflected as low prices of oil and other commodities.

To try to solve the energy problem, we use approaches that involve increasing complexity, including new technology and globalization. As we add more and more complexity, these approaches tend to work less and less well. In fact, they can become a problem in themselves, because they tend to redistribute wealth toward the top of the employment hierarchy, and they increase “overhead” for the economy as a whole.

In this material, I explain how inadequate energy supplies can appear as either low wages or as high prices. Basically, if energy supplies are inadequate, workers tend to be less productive because they have fewer or less advanced tools to work with. Their lower wages reflect lower productivity (Slide 20).  Slide 6 offers some additional insights.

Trump’s election seems to reflect the cooling effect that our energy problems are having on the economy as a whole. Citizens are increasingly unhappy with their wage situation, and want a major change. Trump’s election may at least temporarily have a beneficial effect, since it may work in the direction of reducing complexity.

Long term, however, it is hard to see that the policies of any elected official will be able to fix our underlying energy problems.

give industrial and agricultural ecosystems fossil fuels and they become unsustainably productive

NYTimes |  What, then, caused this Great Enrichment?

Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.

The liberal idea was spawned by some happy accidents in northwestern Europe from 1517 to 1789 — namely, the four R’s: the Reformation, the Dutch Revolt, the revolutions of England and France, and the proliferation of reading. The four R’s liberated ordinary people, among them the venturing bourgeoisie. The Bourgeois Deal is, briefly, this: In the first act, let me try this or that improvement. I’ll keep the profit, thank you very much, though in the second act those pesky competitors will erode it by entering and disrupting (as Uber has done to the taxi industry). By the third act, after my betterments have spread, they will make you rich.

And they did.

You may object that ideas are a dime a dozen and that to make them fruitful we must start with adequate physical and human capital and good institutions. It’s a popular idea at the World Bank, but a mistaken one. True, we eventually need capital and institutions to embody the ideas, such as a marble building with central heating and cooling to house the Supreme Court. But the intermediate and dependent causes like capital and institutions have not been the root cause.

The root cause of enrichment was and is the liberal idea, spawning the university, the railway, the high-rise, the internet and, most important, our liberties. What original accumulation of capital inflamed the minds of William Lloyd Garrison and Sojourner Truth? What institutions, except the recent liberal ones of university education and uncensored book publishing, caused feminism or the antiwar movement? Since Karl Marx, we have made a habit of seeking material causes for human progress. But the modern world came from treating more and more people with respect.

Ideas are not all sweet, of course. Fascism, racism, eugenics and nationalism are ideas with alarming recent popularity. But sweet practical ideas for profitable technologies and institutions, and the liberal idea that allowed ordinary people for the first time to have a go, caused the Great Enrichment. We need to inspirit masses of people, not the elite, who are plenty inspirited already. Equality before the law and equality of social dignity are still the root of economic, as well as spiritual, flourishing — whatever tyrants may think to the contrary.

overly simple models give misleading answers...,

ourfiniteworld |  Does it make a difference if our models of energy and the economy are overly simple? I would argue that it depends on what we plan to use the models for. If all we want to do is determine approximately how many years in the future energy supplies will turn down, then a simple model is perfectly sufficient. But if we want to determine how we might change the current economy to make it hold up better against the forces it is facing, we need a more complex model that explains the economy’s real problems as we reach limits. We need a model that tells the correct shape of the curve, as well as the approximate timing. I suggest reading my recent post regarding complexity and its effects as background for this post.

The common lay interpretation of simple models is that running out of energy supplies can be expected to be our overwhelming problem in the future. A more complete model suggests that our problems as we approach limits are likely to be quite different: growing wealth disparity, inability to maintain complex infrastructure, and growing debt problems. Energy supplies that look easy to extract will not, in fact, be available because prices will not rise high enough. These problems can be expected to change the shape of the curve of future energy consumption to one with a fairly fast decline, such as the Seneca Cliff.

It is not intuitive, but complexity-related issues create a situation in which economies need to grow, or they will collapse. See my post, The Physics of Energy and the Economy. The popular idea that we extract 50% of a resource before peak, and 50% after peak will be found not to be true–much of the second 50% will stay in the ground.

Some readers may be interested in a new article that I assisted in writing, relating to the role that price plays in the quantity of oil extracted. The article is called, “An oil production forecast for China considering economic limits.”  This article has been published by the academic journal Energy, and is available as a free download for 50 days.

some reflections on the twilight of the oil age - part 2.

cassandralegacy |  Let’s acknowledge it, the situation we are in, as depicted summarily in Part 1, is complex.  As many commentators like to state, there is still plenty of oil, coal, and gas left "in the ground".  Since 2014, debates have been raging, concerning the assumed “oil glut”, concerning how low oil prices may go down, how high prices may rebound as demand possibly picks up and the “glut” vanishes, and, in the face of all this, what may or may not happen regarding “renewables”.  However, in my view, the situation is not impossible to analyse rigorously, away from what may appear as common sense but that may not withstand scrutiny.  For example, Part 1 data have indicated,that most of what’s left in terms of fossil fuels is likely to stay where it is, underground, without this requiring the implementation of  difficult to agree upon resource management policies, simply because this is what thermodynamics dictates.

We can now venture a little bit further if we keep firmly in mind that the globalised industrial world (GIW), and by extension all of us, do not “live” on fossil resources but on net energy delivered by the global energy system; and if we also keep in mind that, in this matter, oil-derived transport fuels are the key since, without them, none of the other fossil and nuclear resources can be mobilised and the GIW itself can’t function.

In my experience, most often, when faced with such a broad spectrum of conflicting views, especially involving matters pertaining to physics and the social sciences, the lack of agreement is indicative that the core questions are not well formulated.  Physicist David Bohm liked to stress: “In scientific enquiries, a crucial step is to ask the right question.  Indeed each question contains presuppositions, largely implicit.  If these presuppositions are wrong or confused, the question itself is wrong, in the sense that to try to answer it has no meaning.  One has thus to enquire into the appropriateness of the question.”

Here it is important, in terms of system analysis, to differentiate between the global energy industry (say, GEI) and the GIW. The GEI bears the brunt of thermodynamics directly, and within the GEI, the oil industry (OI) is key since, as seen in Part 1, it is the first to reach the thermodynamics limit of resource extraction and, since it conditions the viability of the GEI’s other components – in their present state and within the remaining timeframe, they can’t survive the OI’s eventual collapse.  On the other hand, the GIW is impacted by thermodynamic decline with a lag, in the main because it is buffered by debt – so that by the time the impact of the thermodynamic collapse of the OI becomes undeniable it’s too late to do much about it.

At the micro level, debt can be "good" - e.g. a company borrows to expand and then reimburses its debt, etc…  At the macro level, it can be, and has now become, lethal, as the global debt can no longer be reimbursed (I estimate the energy equivalent of current global debt, from states, businesses, and households to be in the order of some 10,700EJ, while current world energy use is in the order of 554EJ; it is no longer doable to “mind the gap”).

some reflections on the twilight of the oil age - part 1.

cassandralegacy |  Since at least the end of 2014 there has been increasing confusions about oil prices, whether so-called “Peak Oil” has already happened, or will happen in the future and when, matters of EROI (or EROEI) values for current energy sources and for alternatives, climate change and the phantasmatic 2^oC warming limit, and concerning the feasibility of shifting rapidly to renewables or sustainable sources of energy supply.  Overall, it matters a great deal whether a reasonable time horizon to act is say 50 years, i.e. in the main the troubles that we are contemplating are taking place way past 2050, or if we are already in deep trouble and the timeframe to try and extricate ourselves is some 10 years. Answering this kind of question requires paying close attention to system boundary definitions and scrutinising all matters taken for granted.

It took over 50 years for climatologists to be heard and for politicians to reach the Paris Agreement re climate change (CC) at the close of the COP21, late last year.  As you no doubt can gather from the title, I am of the view that we do not have 50 years to agonise about oil.  In the three sections of this post I will first briefly take stock of where we are oil wise; I will then consider how this situation calls upon us to do our utter best to extricate ourselves from the current prevailing confusion and think straight about our predicament; and in the third part I will offer a few considerations concerning the near term, the next ten years – how to approach it, what cannot work and what may work, and the urgency to act, without delay.

the meaning of the war on terra...,

energyskeptic |  The opening quote in this book is “We must define the nature and scope of this struggle, or else it will define us.” Obama 2013

Danner has defined the nature and scope of this struggle as a war on terror.  He says that our presence in Iraq and Afghanistan is a Republican attempt to replace “being tough on communism as a defining cause in their political identity” with a war on terrorism.

To make the case for a “war on terror” as our reason for being there, Danner needs to state why we are NOT in the Middle east due to the 1980 Carter doctrine, which states “the overwhelming dependence of the Western democracies on oil supplies from the Middle East…[any] attempt by an outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”

Since then we’ve invaded, occupied, or bombed Iran (1980, 1987–1988); Libya (1981, 1986, 1989, 2011); Lebanon (1983); Kuwait (1991); Iraq (1991–2011, 2014–present); Somalia (1992–1993, 2007-present); Saudi Arabia (1991, 1996); Afghanistan (1998, 2001–present); Sudan (1998); Yemen (2000; 2002-present); Pakistan (2004-present); and now Syria.

The reason Carter said this is because many Americans, Europeans, and Chinese would die if the oil stopped flowing, but especially Americans since no other nation on earth is as dependent on oil as we are (why we have to be the world’s unpaid policeman is another topic).  Just consider a few of the things that what would happen if trucks stopped running:  by day 6 grocery stores would be out of food, restaurants, pharmacies, and factories closed, ATMS out of cash, sewage treatment sludge and slime storage tanks full, gas stations closed, 685,000 tons of trash piling up every day, livestock suffering from lack of feed deliveries. Within 2 weeks clean water would be gone since purification chemicals couldn’t be delivered. Within 1 to 2 months coal power plants would shut down due to lack of coal, and much natural gas is pumped through pipelines electrically, so natural gas power plants would shut down too.  And there goes the financial system – our energy, electricity, and other 16 vital infrastructures are inter-dependent, which makes us incredibly vulnerable, since many of them can pull each other down.

not just manufacturing, the global slowdown is monetary

alhambrapartners |  The Wall Street Journal reported a few days ago (h/t ZeroHedge) on the status of the ongoing disruption in domestic production of long haul trucks and vehicles. In what can only be confirmation of the state of US manufacturing, the huge drop in orders for new trucks matches shippers’ perceptions of the actual economic flow in goods. While economists want that to be an isolated circumstance of only manufacturing, goods activities account for a significant proportion of services as well. And it is getting bad:

Orders for new big rigs plunged and inventories of unsold trucks soared to their highest levels since just before the financial crisis, as uncertainty about future demand and a weak market for freight transportation weighed on truck manufacturers.

About 67,000 Class 8 trucks are sitting unsold on dealer lots, after sales in March dropped 37% from a year earlier to 16,000 vehicles, according to ACT Research. Class 8 trucks are the type most commonly used on long-haul routes. Inventories haven’t been this high since early 2007, said Kenny Vieth, president of ACT.

It leaves no doubt that “something” is very wrong now in manufacturing and normal economic flow.

“Fleets are being very cautious in the current uncertain economic environment,” wrote Don Ake, a vice president with FTR Transportation Intelligence, which reported similar order numbers for March. “Freight has slowed due to the manufacturing recession, so they have sufficient trucks to meet current demand.”

Some of this reduction in 2016, as the Journal reports, is due to companies over-ordering in 2014 and 2015 based on the narrative that the economy was actually healing, or at worse would stay in its “new normal.” It raises the issue as to whether these conditions and the manufacturing recession they reflect are cyclical or structural; or both.

As I wrote yesterday, the contraction in goods and the US economy’s basis for them may or may not be heading toward recession. It is clear, however, that whatever the ultimate cycle reality there are deeper imbalances that run back several years, likely traced to decades of financialization that is now overturning, and thus really supersedes cyclical discussion. What we see in the US is not limited to the US, however; it is a global phenomenon, which can only mean one possible explanation.

25 companies more powerful than most countries

FP |  At first glance, the story of Accenture reads like the archetype of the American dream. One of the world’s biggest consulting companies, which commands tens of billions of dollars in annual revenues, was born in the 1950s as a small division of accounting firm Arthur Andersen. Its first major project was advising General Electric to install a computer at a Kentucky facility in order to automate payment processing. Several decades of growth followed, and by 1989, the division was successful enough to become its own organization: Andersen Consulting. 

Yet a deeper look at the business shows its ascent veering off the American track. This wasn’t because it opened foreign offices in Mexico, Japan, and other countries; international expansion is pro forma for many U.S. companies. Rather, Andersen Consulting saw benefits—fewer taxes, cheaper labor, less onerous regulations — beyond borders and restructured internally to take advantage of them. By 2001, when it went public after adopting the name Accenture, it had morphed into a network of franchises loosely coordinated out of a Swiss holding company. It incorporated in Bermuda and stayed there until 2009, when it redomiciled in Ireland, another low-tax jurisdiction.

Today, Accenture’s roughly 373,000 employees are scattered across more than 200 cities in 55 countries. Consultants parachute into locations for commissioned work but often report to offices in regional hubs, such as Prague and Dubai, with lower tax rates. To avoid pesky residency status, the human resources department ensures that employees don’t spend too much time at their project sites.

Welcome to the age of metanationals: companies that, like Accenture, are effectively stateless. When business and strategy experts Yves Doz, José Santos, and Peter Williamson coined the term in a 2001 book, metanationals were an emerging phenomenon, a divergence from the tradition of corporations taking pride in their national roots. (In the 1950s, General Motors President Charles Wilson famously said, “What was good for our country was good for General Motors, and vice versa.”) Today, the severing of state lifelines has become business as usual.

ExxonMobil, Unilever, BlackRock, HSBC, DHL, Visa—these companies all choose locations for personnel, factories, executive suites, or bank accounts based on where regulations are friendly, resources abundant, and connectivity seamless. Clever metanationals often have legal domicile in one country, corporate management in another, financial assets in a third, and administrative staff spread over several more. Some of the largest American-born firms — GE, IBM, Microsoft, to name a few — collectively are holding trillions of dollars tax-free offshore by having revenues from overseas markets paid to holding companies incorporated in Switzerland, Luxembourg, the Cayman Islands, or Singapore. In a nice illustration of the tension this trend creates with policymakers, some observers have dubbed the money “stateless income,” while U.S. President Barack Obama has called the companies hoarding it America’s “corporate deserters.”

It isn’t surprising, of course, when companies find new ways to act in their own interest; it’s surprising when they don’t. The rise of metanationals, however, isn’t just about new ways of making money. It also unsettles the definition of “global superpower.”

too much utility maximization...,

zerohedge | One week ago, when we commented on the latest weekly update from Credit Suisse's very well hooked-in energy analyst James Wicklund, one particular phrase stuck out when looking at the upcoming contraction of Oil and Gas liquidity: "while your borrowing base might be upheld, there will be minimum liquidity requirements before capital can be accessed. It is hitting the OFS sector as well. As one banker put it, "we are looking to save ourselves now."

In his latest note, Wicklund takes the gloom level up a notch and shows that for all the bank posturing and attempts to preserve calm among the market, what is really happening below the surface can be summarized with one word: panic, and not just for the banks who are stuck holding on to energy exposure, or the energy companies who are facing bankruptcy if oil doesn't rebound, but also for their (now former) employees. Curious why average hourly earnings refuse to go up except for those getting minimum wage boosts? Because according to CS "It is estimated that ~250,000 people have lost their jobs in the industry in the last 18 months."

Which is bad news: as we reported late last week, the restaurant "recovery" is now over, so as these formerly very well-paid and highly skilled workers scramble to find a job, any job, they'll find that even the "backup plan" has failed, with not even the local McDonalds suddenly hiring.

protectionism, shaky debt, and weak banking systems have consequences

marketwatch |  One view of what caused the Great Depression in the 1930s is that the Federal Reserve failed to prevent a collapse in the money supply.

This is the famous thesis of Milton Friedman’s and Anna Schwartz’s A Monetary History of the United States, 1867-1960, and it was, more or less, the view of Ben Bernanke when he was chairman of the Federal Reserve.

The global economy today resembles that of the 1930s in several ominous ways.

Financial author Edward Chancellor recently called attention to a paper written by Claudio Borio, head economist at the Bank of International Settlements, that provides a fuller picture of the causes of the Great Depression. The paper also draws parallels between global economic conditions that led to the rise of protectionism in the 1930s and our situation now.

The paper’s thesis is that “financial elasticity” characterizes both the pre-Depression global economy and today’s global economy.  Elasticity refers to the buildup of capital imbalances such as money flows into emerging markets because of low rates in developed markets.