When Will The Music Stop?

After some light relief recently, if you can call it that, it is time for some more serious matters. The Oil Drum link below is a post of about 2200 words that attempts to deal with the complications of the future.

It begins by asking how energy needs can be met other than oil or fossil fuels. This is complex enough. But then it is argued that it depends on money and that the oil boom and debt are intertwined. This is not all because on that our current political and government structures have been built.

So the changes that need to happen do not just mean the ways and means of oil supply, they entail a profound reordering of international finance and political systems.

http://www.theoildrum.com/node/8350#more

That this may not be easy is seen in another post, hat tip Subrosa, from Planet Save on just who calls the shots in the world of today. Apparently, an analysis suggests that a small number of corporations are key to the world economy and finance.

The implication of this is that it is not the nation states that rule, it is them. They do not merely provide for the states and their governments, they provide the cash till for the corporations to take in the money.

http://planetsave.com/2011/08/28/who-runs-the-world-network-analysis-reveals-super-entity-of-global-corporate-control/

What this can mean on our own little patch is indicated by Richard Murphy drawing on other sources showing one small way by which a small number of banks are doing well out of public subsidy.

http://www.taxresearch.org.uk/Blog/2011/09/09/the-big-5-banks-private-welfare-state/

And now for the football results, sponsored by your favourite gambling firm…………

Choose Your Own Disaster

Not many days ago a group of geophysics experts and scientists gathered in California to discuss the prediction of earthquakes. After many fine minds have worked and studied the issues a good many feel that whilst it may be possible to identify the areas of higher risk, accurate prediction is unlikely.

Inevitably, the ancient gods then decided to show them who was boss to hit Washington DC with one large enough to shake things up a little. Just to add a touch of interest they have sent in a number of hurricanes and typhoons to make the point. One, Katia, is said to be on course to visit the UK in the next few days.

At about the same time another group of experts declared that the possibility of a volcanic eruption disrupting air travel was unlikely for a while to come. Within days Katla in Iceland became twitchy. This one could be bigger than last years and have widespread effects.

But there is another much bigger and more dangerous one that has signalled a swarm of minor earthquakes. This can be a precursor to an eruption. It is Mount Tambora in Indonesia.

Just put Mount Tambora 1815 into search and see what it can do. 1816 was “the year without summer” and the dire effects lasted rather longer than that. If this one goes up with a full eruption it could be a world disaster and not just one that causes some grief in the airport waiting rooms.

There are other seismic type events and some of those who follow finance and money in relation to chaos theory and collapse dynamics like to see patterns. When what seems a minor event or arrangement occurs what can happen.

For one in this area take a look at the treasureislands.org website run by Nicholas Shaxson and the story today, Friday 9 September about “Britain, New Offshore Gateway To China”.

A tale about the renminbi is not as immediately exciting as a big bang of one sort or another. But if what is happening does indicate the attempt by China to establish its currency as the world’s reserve instead of the dollar then it will mean immense changes to the whole of our thinking and ideas about world finance.

What it also means is that the UK is deserting the USA and tying itself to the Chinese financial system via the City of London. This is being done by stealth.

Our only hope is that Tambora will see off the present world financial system in the disruption it could bring. It has done it before and can do it again. According to Subrosa, if the clouds clear you could see a supernova out there tonight.

In the old days this would have been seen as an omen of the gods.

By The Rivers Of Babylon

In the Oil Drum there is an article on Saudi Arabia that managed to mix oil and water. It seems the two go together much more easily than we think. In SA their water supply largely depends on oil as it is produced by desalination from sea water.

This process is not cheap and does take a good deal of oil. As the population of SA grows and as they are using more water per head in common with many other countries they are now coming to a point of Peak Water.

This is not all as there has been a policy of increasing agricultural production for their food needs and this involves extensive irrigation. Some crops are thirsty and need a lot more than others. Once grains are being grown inevitably some is then used for fodder for stock to produce more meat etc.

Additionally, SA has been developing industry and other activities some of which need augmented water supplies. Add to that the fresh water that needs to be pumped down oil wells to force up oil in areas of reserve that are reducing and it is becoming very complicated.

As SA needs to use more of the oil it is producing, necessarily this impacts on potential exports. In the event of world oil prices rising this has its effects on the overall balance of SA’s financing.

The oil kingdoms and others have been a key source of finance in these troubled times so the less they have to spare then the less we have to spare as well. The intricacies of all this have not been lost on the governments of nations who are in increasing oil deficit, notably the USA and the UK.

Additionally, in the UK the SA elite have been especially active in various ways relating to our management of financial affairs to the relief and gratitude to many of our elite; notably, those who are centred in London and need the place propping up.

What has to happen is that the government of SA will need to invest a great deal of wealth in expanding its desalination and water distribution systems. Also, as the population has come to expect cheap water as well as other benefits politically it will be very difficult to increase prices by any amount.

It this pattern repeats itself in any number of other oil exporting nations on top of their own increasing demand for fuel and petro-chemical based consumer products then a great deal of future oil production may already be spoken for.

So if the interest in what happens in Libya and elsewhere becomes more frantic in the coming months it may not be just a question of oil and gas but one of water. Perhaps the Coalition will sing Psalm 137 at the beginning of Cabinet Meetings.

Personally, my answer is to take more whisky with it.

The Generation Game

As I have gone broody over computers time has been spent into looking around. This has not been easy since it means getting the head round all sorts of things that are not familiar. At the shop, going along the displays it is like an old fairground, one amazing spectacular after another to make you part with your hard earned cash.

What this brief excursion into current retail reality has taught me is that the world is changing ever faster and this means many of the jobs in it as well. Communication, the transmission of information, personal contact, data storage, search and research has been transformed. Things that might take days or weeks of running about and effort can be dealt with almost immediately.

This all has its costs. At one time the experience of age and of having lived long would be a vital source of information in a group or community. The ancient who knows how the river can flood because they remember the one of half a century ago or who knows the fields, the stars and the way of the weather was a vital and respected person.

Today the older person who is adrift of all the technology or who does not realise what modern communication systems are and how they work is on the wrong side of a deepening divide. Those who cannot afford to buy into this and are also adrift are equally at a loss. There are many in the Third World also not connected.

It was a strange experience sitting in somebody’s home sipping at a cup of tea while they went on with an international conference on a business matter. Would it be impolite for me to join in or bad manners to stay out? Given the sort of contribution made to conferences and meetings I have attended in the past probably it was better to stick to finding the bottom of the biscuit tin.

Yet I am someone who, because of the accidents of time and place, has a little more experience and knowledge of what is involved. Also, I have ready personal access to other people who know a lot more and are up with the latest developments. If I am beginning to find it hard to stay in the game then it is bad news for the great majority of my generation and perhaps the one following.

One problem with age is the misunderstandings that can arise. Checking out the webcam on one machine for sale when the picture came up I pulled a few faces. The persons across from me looked alarmed as you might expect. I was checking out the response speed and quality of picture but I suspect they thought something else entirely.

The realisation that nowadays I work in a very different way from the past and if I continue to try to keep up it will change further and more radically is a daunting one. Procedures and methods I learned in the mid 20th Century were not too far removed from those of the late 19th, give or take a typewriter or telephone or two.

The economic upshot is that we have an electorate and population now with many at the senior end who have little or no real understanding what most modern work is like or what has to be done to earn incomes whilst the younger ones are on a treadmill of change that is rapidly running faster and faster.

Will the generation gap become a generation war?

Hound Dog

The problem is that for all the information, relentless media and floods of reports and figures very few people if any know what is going on. Not only that but for the most part they have only a hazy idea of why and that is conditioned by old ideas and the need to defer to present ideologies.

We are told that to make some readjustments to banking practice will mean lower growth or even a reduction in GDP. As in the present calculations that money which is being slushed rapidly around bank accounts counts as economic activity then just how much does it matter if there is less of this and more of sensible husbandry?

How much “economic growth” in the past has come from the effects of a host of regulations driving up costs and adding financial complications to the activities of almost everyone. Indeed GDP will go up but efficiency and capability will go down.

If you have a hound and you want to hunt with it, do you use a dog that goes after the prey or one that chases its own tail? At all levels in government and in the management of a large part of our real economic activity there is a lot more chasing of tails than used to be the case and a lot less effective work.

So much of the material is put out is spin, public relations and often plain self interest statements. All too often “sponsored research” means findings made to order with the figures manipulated or a design that is made to produce a pre-determined result.

Some recent memoirs and other revelations tell of key figures who have neither a grip on the situation nor adequate reliable information. Decisions are driven by the narrowest of short term interests. Immediate gain and high returns are demanded without much of any regard to even the medium term.

There are said to be “gaps” opening up as well as increasing “disconnections” in a world that is globally wired up and in 24 contact with almost everywhere else. We demand total privacy whilst frantically socially networking and striving for our 15 minutes of fame. We want it all so long as we all have more than the next person.

National governments have surrendered their power to irresponsible global elites. We demand democracy and then give all our attention to football and celebrities. We complain about the way the world is going and then do not bother to address the issues.

In the meantime this has been happening:

http://www.project-syndicate.org/commentary/taleb1/English

In order to pay all our debts we need “growth”, but if this is the only growth we have been getting and will get we are not going to repay our debts.

Something has to give.

Where My Caravan Is Restive

“How horrible, fantastic, incredible, it is that we should be digging trenches and trying on gas-masks here because of a quarrel in a faraway country between people of whom we know nothing.”

The quotation is from Neville Chamberlain in September 1938 in a broadcast referring to the Czechoslovakian Crisis. It is not in my memory; perhaps I was scrumping or doing something equally socially useful at the time.

It might well apply to the current worries about the Bank of America in the USA although it is now apparent that a number of UK banks are embroiled in the disastrous mortgage mess there. It is going to cost someone a lot of money. Mostly it will be ordinary taxpayers.

So it is not so far away as it seems, it could be your own bank, whether it be nationalized or not. But it is more than that. As a consequence of the default of the major property groups owned by the Tchenquiz brothers the Bank of America now has control of the relevant assets put up as securities.

These include companies that hold the freeholds to a major part of the UK leasehold property sector and also those providing property management services to a high proportion of leasehold developments, critically including a large number in the retirement sector.

At least we think that it will be the Bank of America that owns these companies. But as a great deal of assets and income streams have been deployed into leveraging a variety of financial instruments for trading and speculation, it is far from clear who really owns what. The slew of toxic debts has meant that nobody anywhere may know.

In the media reports and discussion as to what is going on, there is some UK comment but not a great deal. It is almost certain that the government will not realize that a lot of UK property assets are on the slab in the USA and what the impact and effects may be if it all goes wrong is not known.

If the Bank of America can unload this unexpected burden onto someone then who can it be? Perhaps one of the larger Private Equity Groups, probably offshore somewhere, or the Chinese, always eager for a punt, or the Arabs, persistent collectors of property assets for the long term, or even the Russians, looking to put more squeeze on UK property.

Whoever it will be, it will not be good news for those involved. The only certainties are that the new owners will want to extract a much larger amount from these investments and almost all of it will go offshore one way or another given recent deals made by the government with financial interests.

This might well happen when the US authorities whack some of our big banks for a substantial amount of compensation money that they so badly need for their own property sector. The quarrel in a far away country could become a riot at home.

Go long on second hand caravan prices?

Taking To The Road

Yesterday, we spent many hours out in the sunshine. The trouble was it was on our local motorway which had been closed due to a bad accident with serious injuries. There is a stretch that is notoriously risky which has more shunts than an old BR marshalling yard. Clunk click every trip almost, but not the seat belts, the cars.

Quite a few pulled over onto the hard shoulder, to nap, have lunch or in some cases pick blackberries over the fence. Personally, we would not care to eat soft fruit that had grown next to one of the busiest motorway stretches but we have always been fussy eaters.

It gave me ample time to watch the traffic on the other carriageway and to look around. There were a lot of heavy vehicles about. What was striking was how many were from Eastern Europe and the The Balkans. The proportion has been increasingly over the last decade and is now high.

There are others from European destinations but their numbers have dropped slightly although there are still many Spanish food wagons. The numbers that have dropped substantially are the UK and Irish ones. One of our local international truck companies has now just closed as have others recently.

Sightings of Scots vehicles are quite rare apart from Eddie Stobart, but this company now has a European base. There are few Welsh and from many parts of England hardly any, notably the old industrial areas, although Norfolk Line has a few.

One complication is how the container ships are now directed. These may have changed patterns but it is uncertain. One thing that is certain is that the freight is not going by rail. If anything rail freight seems to be down as well.

What does this tell us about the real Balance of Trade? If this small sample which may not be typical and have its own distortions is any guide then it is not looking good for the future. If we have a declining balance in real terms then this will impact on other sectors.

If it means we are now more beholden to the old “invisibles” then this is not good news given what globalisation has given us in recent years. BBC4 ran a repeat of its history of container shipping to remind us of how changed it all is.

What is tragic is that during the 1960’s and 1970’s the UK and especially the Civil Service and governments simply did not register what was beginning to happen. It was not until the 1980’s that realisation happened and little of this was due to Mrs. Thatcher or for that matter Mr. Callaghan. They had been presented with change on a scale they could not have imagined.

It is my personal feeling that we are seeing some kind of change of this order now taking place under our noses and there are no UK politicians or civil servants who either recognise or understand what is happening and will happen regardless of all their policies and programmes.

Is there honey still for tea?