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171 comments on The Failure of Networked Systems: The Repercussions of Systematic Risk
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In a world with declining extractable resources, there is no way there can be very much long term debt. Repaying the debt with interest will take too many resources.
In fact, I don't think it is a coincidence that the current debt defaults came at a time in history when oil extraction has flattened. We now longer had the underly resources growing at the rate they needed, to keep up with the debt, plus interest. Admittedly, the poor judgment of many in the lending industry may have hastened the process, but it was just a matter of speeding up the inevitable.
When you equate credit with modernity, I presume you are only looking at very short term debt. Paying wages at the end of a two week period. Paying for goods after they arrive. I can imagine this continuing, but long term debt, and even monetary systems that depend on long term debt, have to be replaced by more appropriate systems to our new more-constricted resources.
Just a note on the data:
So it's probably not coincidence, but one needs to be careful about assigning causality.
In particular, note that oil production has been increasing for most of 2008. World oil supply is up 1.4Mb/d YTD 2008 vs. 2007 average (also via IEA data). Even with OPEC's just-announced cuts, it's still virtually certain that oil production in 2008 will be a fair amount higher than in 2007; with production data available through Sept, production would need to drop to ~80Mb/d for the final three months of the year to avoid an increase.
Accordingly, these debt defaults have predominantly happened while oil production was increasing. That doesn't mean oil can't be a cause, of course, but it is something that theories need to take into account.
Gross production is almost meaningless now. We care about energy for it's ability to do work. 86 mbpd does not equate to 86 mbpd of last year. It was important while a barrel equaled a barrel. Look at the marginal cost structures now, and disparate items that make up 'oil'. NGPL and ethanol have 60% of BTUs as crude, yet are counted the same. Tar sands get counted the same, yet no subtraction is taken from the natural gas figures, etc. Very little cheap stuff left, and that is what powered the globalization and extreme specialization (import substitution policies).
I can't prove the specifics on net energy (though some should try to), so in that sense it is an unprovable hypothesis, and therefore not science. But connect your own dots - I've been trying to here for 3 years and 99% of people still don't get it. Show me 10-20mbpd of new capacity that costs $10-15 a barrel to replace the 1000:1 EROI of Ghawar and other old depleting fields and I will (happily) change my mind.
Don't forget the relentless increase in population. Outside of major disaters this force is not going to go away. I seriously doubt that the increase in production for 2008 kept pace with world demand from population alone much less if you include any of the secondary issues such as EROEI and Export land etc. I say they are secondary because the primary drivers of the economy are population and resources. Maybe not secondary in magnitude but thats a different issue. No matter what we do we cannot escape from the population issue it will remain.
US population growth is a bit over 1% a year we have to grow our GDP at at least 1% just to stay level. With the changing demographics and baby boomers retiring we probably have to grow and additional 1% at least to provide for the increased elderly population.
Esp given the US medical and insurance system. Medical expenses will become a increasing burden on the system.
Sure everyone can get poorer every year not a problem but that does not stop the pressure from population growth nor its pent up demand.
By any metric available the world is a decidedly poorer place in 2008 vs 2007. Trillions have been lost and the demand has still increased and the amount of available energy per capita has decreased using any sensible accounting for EROEI and energy density.
Why guess? It's easy enough to check:
Population Growth: 1.2%
EIA Oil Supply Growth: 3.5% (July07 to July08) or 1.6% (2007 avg vs. 2008 YTD avg.) or 2.0% (Jan-Jul07 vs. Jan-Jul08).
Any of those are higher than the population growth rate, meaning that the increase in oil supply in the last year has more than kept up with population growth.
Pit I made a vow not to respond to you but in this case I must.
World population grows every year year end and year out. If in any given year the oil supply growth does not exceed the population growth you have a deficit to balance.
These people don't simply disappear in the years that oil production increases did not meet population growth you have to carry them forward.
Given that 2008 is not over yet lets wait till we see the end of the year we have every indication that production is now dropping rapidly.
In any case
http://www.eia.doe.gov/emeu/international/oilproduction.html
2005 84,561.47
2006 84,521.21
2007 84,407.57
I'm happy to just call these flat so lets assume population increased in 2006 and 2007 by 1.2% this means to reach the same amount of oil per capita we need at least a 2.4% increase in oil production vs 2005.
Including the year of the increase we would need to see 3.6%
I stand by my argument I'd be surprised given this post
http://europe.theoildrum.com/node/4676
Its fairly obvious that the year will not end with a 3.6% increase megaprojects for 2009 is not looking promising although or deficit was shrunk this year it was not eliminated.
However if your serious about this you need to do a bit more work and work population vs oil supply back at least say ten years to get a good grasp on the current status of population vs oil supply.
For example 2004 was 83,104.80
So you had a 1.5% grow and thus 0.3% "extra" oil this year.
2000-2001 it went down.
The simple observation that peak production last time was in 2005 and we only finally broke it in 2008 is sufficient to suspect that oil production as not kept up with population growth.
Feel free to to work the problem correctly and get back with me.
Or cherry pick numbers to make your point.
I would not worry too much about year-to-year rises and falls, differences of a percent or two can easily be made up by more efficiency or waste. We have to look at the general trend.
And the general trend is that the amount of oil available per person peaked around 1980. Of course these figures are total oil production, not net available - but nobody's been able to produce net oil figures for the world yet.
The other thing to bear in mind is that the places with the largest population growth have actually seen the least growth in oil consumption. The biggest growth in consumption over the 1950-2005 period has come from the low population growth First World countries.
Yeah this is better but you should also bring in GDP growth each year vs population vs oil.
The problem is of course this conflates efficiency claims esp if you start looking at individual countries.
For example in the US we claim that the US has become much more efficient at using oil since the 1970's but this does not include the export of a lot of basic manufacturing overseas. And worse if you start looking at per person GDP growth or oil usage in the countries where manufacturing was exports the demographics tends to hide the truth.
Per capita oil consumption goes up but given that a lot of this is fueled by manufacturing for exports its not near as large a real growth in general wealth in the exporting countries.
Although the per capita oil usage peaked in 1980 the process was set in motion back in the 1970's with the move to pure fiat curriencies coupled with the peak of US production. It just took a bit for US production to decline and oil imports to increase and fiat currency inflation to become noticeable.
These are some of the underlying reasons we are seeing trends out to 100 years start peaking at the same time. The wheel where set in motion a long time ago. And as you showed the path we have chosen was firmly established by 1980.
A particular reason to look at the last few years however is that a tremendous amount of debt has been created to induce growth. In general the worlds GDP has been inflated by a moved into the financial world. So the GDP itself has been heavily inflated by growth in areas that at the end of the day actually remove money from more productive pursuits.
Whats really interesting is that the world does not even really try to compute what I'd call sustainable wealth. And easy metric would be the amount of personal savings in the bottom half of the worlds wage scale adjusted for inflation.
http://www.morganstanley.com/views/gef/archive/2007/20070604-Mon.html
What this fails to address is that most of this supposed global savings is concentrated int sovereign wealth funds and multi-national corporations.
You can question the real savings rate calculations easily.
http://globaleconomicanalysis.blogspot.com/2008/08/whats-behind-soaring-...
And further you can question the savings rate for third world countries.
http://www.dallasfed.org/research/eclett/2008/el0807.html
Given that most of the population of these third world countries barely participate in the modern banking system how can Morgan-Stanley talk about how much they have saved ?
http://angrybear.blogspot.com/2005/06/international-saving-comparisons.html
One thing I've not found is the actual spread of savings amongst the population in third world countries even though we have tons of information that the wealth is highly concentrated in the top 1%.
http://www.undp.org.cn/downloads/nhdr2005/06chapter2.pdf
http://www.wsws.org/articles/2004/jun2004/rich-j22.shtml
http://www.eurekalert.org/pub_releases/2006-12/unu-pss120106.php
No way we can talk about general GDP, oil usage and net savings without dealing with concentration of wealth. In fact in general it looks like overall all thats happened is that the exporting countries have created more extremely rich individuals.
And last but not least what has allowed this charade to continue ?
Assuming since 1980 the worlds gotten poorer outside of the top 1% whats happened ?
Why did we pull this off ?
http://en.wikipedia.org/wiki/Green_Revolution
Turns out that fertilizer was probably the underlying reason for success.
As the world increased its work force by the billion these billions in general are focused on obtaining enough food. We have been highly successful in providing bread for the masses. Also another incredibly important factor thats overlooked in the time honored Roman tradition is the circus.
Not only did these super poor people get access to bread they where also submerged with American entertainment. Real increases in personal wealth amongst the poor was successfully replaced with dreams of personal wealth as seen on TV.
Often overlooked and ignored the combination of food and the modern remote circus ala TV and music and las the internet has resulted in people willingly playing by the rules expecting to get their SUV and McMansion any day. And although in many countries when people are interviewed they publicly decry the sex and violence they perceive through films in America we should probably assume that the reality is quite different and the flood of effectively porn into the third world has acted as a sedative to the masses encouraging them to dream of making it to the land flowing with sex.
The selling of real food and virtual sex to the world by the wealthy is probably and not unsurprisingly the real reason that the warped financial system has worked.
Nothing more then bread and circus's just like the Romans.
Of course as peoples lives really worsen in the sense that the food supply worsens I suspect they will reevaluate their warped view of the American Dream.
I could, but
(a) GDP is meaningless, and
(2) that would go beyond the scope of a comment on an article on a blog, with both comment and article disappearing into obscurity in a week or so.
The rest about savings and the like I consider not much of an issue. Money's just an abstraction, its twins purposes being to make trade easier and act as a store of value - two purposes which don't have to be in the same thing, but in this case are. But what is the purpose of trading and storing value? To give us better lives.
There are not a lot of measures of quality of life. The UN's HDI (Human Development Index) is made up of,
1/3 GDP per capita
1/3 longevity
1/3 education, which is 2/3 adult literacy and 1/3 tertiary enrolment
so even that measure brings in useless GDP, but the other 2/3 I think are a fair measure - if people in general live a long time and can read and write and have a few well-educated ones around them, then probably a lot of other things are going well for the country.
Most of the "super poor people" who actually benefited from the Green Revolution have never seen a television, so can't get any dreams from it. Rather, what they saw was in their own communities, some well-off individuals in homes with running water and electricity, meat eaten every day, cars and radios and so on.
And most of the countries with very poor people in them have always had these well-off individuals as examples, but they just assumed things had to be that way. But as democracy has spread, one of the things people have done with their free speech is to demand better lives.
K
a guest post on this would be most welcomed...
On what, exactly? Email me and let me know.
Perhaps true, but even C+C alone is up well over 1Mb/d since last year. Can you honestly say that those extra 1.2Mb/d of C+C are "fake"?
The fact that oil production honestly and truly grew in the last year isn't a challenge to the notion of peak oil, but it is a challenge to lazy and alarmist descriptions of it that keep mindlessly repeating the same tired, old "plateau since 2005" line.
Yes, there was a plateau, and this year it was broken; new facts require a new argument.
If that's the case, you might want to take a hard look at the quality of the argument you've been using. I mean that in all honesty - if you believe you have an important point to make and people don't believe you, it's almost always the case that either your argument is bad or your point is.
For example:
Of course they do; we're talking about peak oil, not peak energy. You're conflating two significantly different things, which not only undermines your argument for anyone who realizes that, it muddies the situation and confuses people who might actually agree with you.
It would probably be more effective if you clearly and explicitly separated "declining quantities of liquid fuel" from "declining quantities of available energy" as arguments. You may see them as being inextricably linked, but trying to explain everything at once is rarely the most effective approach.
Memmel's self-imposed ban on responding to you is well regarded within the context of this poor example of supposed facts and logic.
C+C being up 1.2 since last year, when there was a supposedly intentional 1mb/d reduction by the KSA is meaningless. What does it mean to restrict then un-restrict production? Nothing. It means nothing. That does not represent new supply in any way, shape or form. The discussion you are having is about increases in supply, not resumptions of previous production. If you are attempting to claim you don't understand this, then I call foul.
Oil production grew? By how much? A couple hundred thousand barrels over what was possible already in 2006 and 2007? You are claiming this is a considerable and significant change? Earlier this year, when challenged to do so, the best Aramco could do was 300,000/d of production. That's going to save the world how, exactly?
Your claim that the plateau was "broken" indicates you have no understanding of stats, logic, or both. A 1 or 2% range in production over three or four years capped by a rise over previous peak of around 1% is a "break out" from plateau? No. this is a new absolute peak in production. It is likely well behind 2005 peak in terms of BTUs, as pointed out above. It is not a break of the plateau. To claim that, you would need a rise that is statistically close to or over a standard deviation above the previous peak and have it last a number of years. One year of even a statistically meaningful new peak is nothing but a one-time jump if it does not persist. That is, an anomoly, at best.
Your's is a an assertion with no merit.
Cheers
He is not suggesting they are fake. Very clearly Nate has stated that he does not believe that EROEI is the same this year as last year or the year before. Thus 100 barrels extracted at a cost of 10 barrels in 2000 versus 100 barrels extracted at a cost of 11 in 2005 versus 100 barrels extracted at a cost of 12 in 2008 are not the same. (I am just making up numbers to show the form of the argument, not the specifics.)
Pitt
1)yes. More natural gas use would decrease net energy not 'net liquid fuels'
2)I have very much on my plate and should probably post 'comments' less so I can focus on posts.
3)You are correct. I try to put too many subjects in one paragraph/post. It is a fault of mine. There are those who can follow it and those that cannot. No matter how eloquent or articulate I become however, the general person will continue to think of things in dollar terms, hence Peak Oil, broadly construed, is an inflationary event, not one that places hard limits on non-energy discretionary economy and propels us along the net energy cliff. The 2 very real impacts IF a net energy cliff is close are 1)price of oil going up more than price of other things (less ability to buy oil) and 2)more and more production coming offline as producers refuse to lose money. I expect for a while, the government will still 'lose' money as an oil producer, even at EROI breaken, as most energy inputs are non-liquid fuel..
4)do you have an opinion on Dollar/Euro situation? Are people in Ireland concerned?
Considering that the orthodox view of the current crisis is that the problem is rooted in the boom not being founded in actual value or production (i.e. the increasing house prices that everyone relied on were based mostly in people's belief in perpetually increasing house prices), I need to see some evidence of causation before I'm willing to accept this statement.
Keep reading. Mid-conversation. Large problem. No easy answers.
I probably should have written more, about how I equate modernity with belief relationships--which is made possible by credit. I am using the word credit more broadly. I am using the word credit to refer to any economic relationship that extends over time, and allows for economic behavior to be guided into the future. Crude oil futures curves, 25 year commercial construction loans, student loans, the ownership of fixed income securities by charitable trusts, and universities, and pension funds. Everything from letters of credit that allow for goods to be shipped over oceans, to commercial paper that allows a bread company to meet payroll before they have sold the requisite number of loaves. All of that defines modernity to me. The places that we can visit in the world that have none of these things are not modern. And I would neither want to live in those places, nor would I want to revert to them. So my view is that credit--from Latin, credere, to believe--is what makes modernity possible.
Of course, all ingenious inventions can be degraded, abused, contorted. And oh man, did we ever just commit such atrocities upon the modern credit system. For, it seems that every time humanity finds a way to secure itself a surplus through efficiency or other inventions of productivity, it never knows how to store the surplus. And those put in charge of managing the surplus tend to blow it.
Cheers,
G
I'm coming round to Gails view on this one because if you think about it we are shortly to experience the mother of all 'Black Swan' events (if you believe in PO). All the current debt structure is based around the future being pretty much as is. We saw what what happended in the financial markets when suddenly things where not what people expected -how much worse will it be when people begin to realize that the very future that enables debt to exist in its present form is taken away?
I'm not a Bond expert but it seems to me that Long Term debt is about to go through the roof. I'm not sure what shorter term debt will do -anyone?
Regards, Nick.
Yes. The current hiding places, USD cash and USD treasuries, and JPY cash, are the next places where the Grim Reaper will come for his pound of flesh. Flows back into JPY and USD are of course temporary covering flows. Those flows are being conducted by those who control a ton of capital either in hedge funds or corporations. In other words, we don't have to wait for individuals to buy back into the USD and JPY, because it's the large stewards of capital who are doing it for them. The USD and US treasury bonds are being bought now at the highest prices either as short-covering or as flight to safety. These too are capitulation trades. They are the opposite side of the selling of assets.
Only those currencies backed by strong balance sheets will survive. The Australian and Canadian Dollars, The Chinese Yuan, The Swiss Franc. The USD and the JPY are garbage currencies, with soaring debt to GDP ratios behind them. They are frankly abused currencies, and they will be trashed once the world is done with them. On balance, I think the EUR will actually come out of this OK. But, I am not as sure about that. It's also possible that oil will get some currency flows.
The key idea here is that a short-covering mania into JPY and USD, and the flight to safety in T-bills at a time when they are being printed into oblivion, are foghorn type warnings that a new phase will unfold afterwards. I would sort of liken it to the tide going out right before the Tsunami hits. You know, you get that strange sucking of the water away from land way, way out. Then comes the major move.
When money leaves the US treasury bond market, it will make the current liquidation from equity markets look like small beer.
I don't look forward to it.
G
According to the rough estimates of the Global Footprint Network, Australia has a biocapacity of 12.4 ha/capita and a footprint of 6.6 ha/capita, Canada a biocapacity of 14.5 ha/capita and a footprint of 7.6 ha/capita.
So there may be more opportunity to pursue a sustainable export economy to back up the CA$ and A$ than for currencies of biocapacity deficit nations like Japan, the US, and China.
They call anything with living organisms in it "biologically active land." So that both images below are part of our counted "biocapacity".
While both are biocapacity, they're not equal in terms of being able to produce what we humans use in our day-to-day lives. But 1 million hectares of the Mallee are counted as the same as 1 million hectares of Queensland rainforest.
Much of Australia is actually savannah or desert, and even the "good" agricultural land has just a few inches of good soil. It's only been kept highly productive agriculturally by large inputs of energy (in fertiliser, pesticides, etc) and water (rice growing the savannah region of the Mallee).
So really Australia has less than 12.4ha pc it can use. This puts the "biocapacity" deficit countries like Japan - with 67% forest cover compared to Australia's 20% - into perspective. A comparison of biocapacity in area per person makes Japan look bad, and Australia good.
But a comparison of actual biocapacity - the total amount of living things - makes Australia look worse off than Japan. Australia's biocapacity is a lot more fragile than Japan's.
A networked system which is already under some tension is very vulnerable to extra tension. Much of our land is already marginal, a bit of climate change, and...
Please don't burst my bubble Kiashu. *hands over ears* La...la...la...not listening....la...la...la.
Well, we can improve our biocapacity. You know, plant trees and stuff. But we're hacking into it rather than trying to build it up.
Like old Japan, those guys with their 67% forest cover, they produce all the timber they need for building and furniture and so on. Most of the timber they import is for paper products. They've built up the biocapacity of their land, at the expense of that in Australia and Malaysia.
So we talk about a "biocapacity trade deficit" - well, in the case of biocapacity, you want to import more than you export! That builds your place up. Japan gets cut off from the world for some reason, okay they have less advertising fliers printed, big deal. They can still build stuff.
But nobody has to have any biocapacity trade deficit or surplus, yet can still build their own country's up. There are things we can do. We're just not doing them. We're a mining country - and one thing we mine is the fertility of the soil. Which isn't much to begin with.
I am not suggesting that Oz has sane policy ... but that at the balance between resource base and population in Oz, there is every chance of doing well if a sane policy is adopted.
And regarding:
... no, Japan gets cut off from the world for whatever reason, there is a loss in population as people starve. 67% forest cover amounting to 0.05 hectares per person ... that's 500 m^2. 20% forest cover ... heck, 10% forest cover amounting to 3.8 ha/capita is 38,000m^2.
I don't see why Japan would starve. Perhaps you are imagining that forests get in the way of food production? That's what Haiti thought, so they cut them all down and are now eating mud.
Japan is the ninth largest rice producer in the world, they have 2.3 million farmers with an average farm size of 0.8 hectares; most of those farmers use machines and are only farmers part-time. In a crisis situation with Japan cut off those machines wouldn't be fuelled, but many of their other jobs would disappear and they could work full-time with manual labour.
Japan's population is flat and expected to decline (to 95 million by 2050), so they only have to feed 127.4 million people, no more.
They produce 10.97 million tonnes of rice annually, and consume 8.7 million tonnes. Their 10.97 million tonnes produced are enough to supply them with 86kg each annually, which is 825 calories daily.
While this is well short of the 2,000 required, Japan does produce other food. For example, they harvest 4.8 million tonnes of fish (1.38 million tonnes) just from mariculture and aquaculture) annually, or 37.6kg each annually, which adds another 500 calories. And of course they produce 8.25 million tonnes of cow milk, 2.9 million tonnes of potatoes, and so on and so forth.
Like all developed countries, if cut off from fossil fuels overnight they'd have a very hard time with their agriculture. But absent a global war, that's very unlikely. Really agricultural production follows a formula,
Labour x technology x biocapacity = production
If your technology disappears, so long as your biocapacity is strong and you have plenty of labour, you won't starve. It's countries like Australia with relatively low biocapacity, and that threatened by climate change, that would be most in trouble - knock off the technology, and all we're left with is labour.
Which doesn't mean I think we'll starve, either. But I do think that we'd have a harder time than Japan, simply because whatever the Ecological Footprint statistics say, they have greater biocapacity in their country.
On the other hand, if the Japanese find themselves without electricity for all their electronic gadgets then we could see a Japan Armageddon :)
20% forest cover on 7.692m km^2 for 20m would be 7.7 hectares per person versus 67% forest cover on 0.378m km^2 for 127m would be 0.051 hectares/person.
That is not to say that Australia has the water resources to sustainably support a substantially larger population, but the land mass itself of 38.4 hectares per capita means that Australia has opportunities in terms of per capita harvest of solar and wind resource that far exceeds the opportunities of either the immediate neighborhood to the north or further abroad in the East Pacific Rim.
But they both might be:
http://sustainablog.org/2008/10/23/24-african-countries-double-their-yie...
Bill Mollison - Dry Land Permaculture Strategies 1
http://www.youtube.com/watch?v=W15RRvKyJSk
Bill Mollison - Dry Land Permaculture Strategies 2
http://www.youtube.com/watch?v=WIelsCmdTA8
Bill Mollison - Dry Land Permaculture Strategies 3
http://www.youtube.com/watch?v=JGotaEnwqic
Also look for Bill Mollison, Globabl Gardener - Dry Lands for download, if you're of a mind.
Permaculture in Action - Greening The Desert
http://www.youtube.com/watch?v=4S6kTlz6Mk4
Cheer
Yes, I said somewhere else in the thread that we can build up our biocapacity.
But we're not doing it, and there's no sign we will be any time soon. I mean, look at the Murray-Darling...
As for Greening the Desert, that's a remarkable project, with remarkable results. But... once Geoff Lawton took off, the project was abandoned. The desert has gone back to being desert.
I'd love to see these things happen everywhere. "Permaculture" is the first word of the subtitle of my blog, after all. But it seems it's not easy for them to happen, and harder still for them to keep on under their own energy once they're going.
Either way, for the immediate future Australia has a large area of biocapacity, but it's very shallow in depth, and overall very fragile.
And over the long term, the quality of life will be substantially better if the transition from the current policy regime takes place in ten rather than twenty years, and better still if it takes place in five.
Relative to Japan, however, Australia is quite well positioned, insane current policy stance and all.
Jared Diamond disagrees with the conclusion in your last paragraph. According to Diamond (in his famous book, "Collapse") Australia is one of the most vulnerable to collapse of all high-income nations. Australia has a fragile ecosystem.
Japan will have to import food and energy, no matter what. On the other hand, the big role of nuclear power in generating Japan's electricity is a big plus facture for Japan. Finally, Japan has an unsurpassed reputation for producing industrial goods of high quality.
Under what circumstances would Japan be "cut off" from imports and exports?
That is a question to pose to Kiashu, it is his argument that due to having 67% forest cover, Japan could continue to build if cut off from imports and exports.
What kind of plausible scenario can anyone build in which Japan is cut off from imports and exports? The only one I can think of is World War III in which there are all-out thermonuclear exchanges between Russia and the U.S. IMO, such a World War III scenario is highly unlikely--maybe one chance in five hundred. Fifty years ago I thought there was a fifty-fifty chance of such a war, but the world has changed a great deal during the past fifty years--in some ways much for the better.
I read it as a statement regarding Japan's potential self-sufficiency, not a statement regarding a likely event. Since you claim that:
... you seem to be agreeing with me and disputing Kiashu, who said:
...
In Collapse Diamond had a lot to say about Japan and their forest situation as well. In essence Japan now has extensive forests because they use other countries timber rather than their own. It isn't really a sustainable practice because the needs of Japan outstrip their capacity as well.
Australia overall can be pretty much self-sustaining in terms of crops and mineral resources but not oil. Of course, crops can be renewable but mineral resources are finite. This self-sustaining capability is on the proviso that we actually apply some decent sustainability principles rather than the some of the quasi-sustainbility practices we have in place now. (Gunns - I am talking about you.) A lot of our excessive farming practices in the past had to do with crops and animals for export.
At times I am both despondant and joyed at the progress of Australian land use practices. At this stage I am firmly in the category of 'watch this space' and hedging my bets to whether we are actually headed in the right direction. :)
I don't know whether if I was Japan I would be putting my trust into nuclear power. A highly seismic environment and little ability to store nuclear waste will eventually come back to bite them in the long term. Far better for them to take stock in something more mundane but less risky like tidal power.
Of course, this is self-sustaining at the current footprint per capita ... given an overly car-dependent transport system, ample opportunity to shift the transport system to a more sustainable level, and with excessive sprawl development, ample opportunity to shift the settlement system to a more sustainable level.
Horne's "run by second rate people who share its luck" syndrome continues in full force, so the biocapacity will be less per capita in another ten years than now, and the longer before policy is reversed, the more materially frugal a sustainable living standard will be ... but compared to China, Japan or even, as long as the food distribution system is so heavily dependent on truck freight, the US, Oz has substantially more leeway to muddle through.
Gregor: Very eloquent. The current situation re the USD reminds me of the housing bubble in that you know it will reverse drastically but you don't know when.
Well put. As of Thursday evening, the US Treasury had issued $559 billion in special Treasury bills and notes to accomadate panic levels of demand. While an argument could be made that new Federal Reserve money is going in a circular path back to finance the Treasury, it is not a closed loop. In other words the Treasury is sucking in a great amount of the world's wealth recently. But before long when the panic wave of dollar buying is over, 1% interest rates earned on a currency that is about to hyperinflate its money supply won't be very appealing.
All the while the money stays ties up in Treasury, it is not being invested in companies around teh world.
So yes, this the tide going out before the tsunami. One can only wonder what will happen when that wave crashes and destroys the financial structures built upon dollars.
It is too early to tell where the dollar is going to wind up. With all goods falling to 'pawn shop' levels of value, it is hard to see anything of value left for the dollar to reflect.
You'll be able to pick up a Picasso for a song ... can you sing?
Fortunately, confinement of dollars to the corridors of finance keeps them from fueling inflation and the instant reaction of spiraling interest rates.
Unfortunately, confinement of dollars to the corridors of finance keeps them out of the hands of the people in the real world, where they might be turned to productive use.
I'm not sure I can explain this so that it is clear to others, but I feel you have edged towards my core response to the article: I see no limit based on the slowest link. A failure is a failure is a failure. It doesn't matter the nature of the link, only that it is necessary. I.e., it's not an issue of weakest links, but of being irreplaceable.
Credit is irreplaceable. Spending is irreplaceable. Growth is irreplaceable. Trust is irreplaceable. Etc.
It doesn't matter what fails, only that something does.
Cheers