Global financial system implosion begins

[Jon-of-arc]

Interesting. What's the basis for your belief that it hasn't begun ?

Implosion to me implies that it one point during this specific financial crisis, the financial system will collapse in on itself and no longer exist. Last time I checked, it was still going. So this may or may not be the end. I agree that the warning signs exist that this really could be some end of days type of shit, but it could just be a wobble... Who the fuck knows, until the banks and the markets cease trading.

 

[rover07]

At the risk of further derailing the thread, I'd echo that concern. I lose sleep over it.

I while away the sleepless hours playing 'spot the renewables':

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When that gets too exciting, I can gaze at the pulsating heart of our civilisation, watching the pulse quicken as it wakes to meet a new day.

It doesn't help, but it's kinda soothing.

Nice flow chart.

The only problem not solvable by renewables would seem to be Transport.

 

[JimW]

Patrick Chovanec, a professor at Qinghua University School of Economics and Management, with a bit of doom and gloom about the Chinese economy: property bubble to burst; much-touted private sector boom in Zhejiang unravelling etc: http://chovanec.wordpress.com/2011/10/03/economy-on-the-edge-of-a-nervous-breakdown/

 

[Falcon]

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"Indigenous production and imports" = 314.7 mmtoe
"Primary demand" = 227.5 mmtoe

UK indigenous gas decline rate = 15-20% (5 year halving period)[source]
UK indigenous oil decline rate = 7% (10 year halving period) [source]

Another great little real world, top down exercise to help the PV/biofuel/windfarm fans demonstrate the relevance of their hobbies. What primary resource schedule is required to support primary demand of 227.5 mmtoe using the given indigenous hydrocarbon production depletion rates?

For each notional hydrocarbon substitution technology, work out the equivalent (1) capital schedule (2) land schedule to balance supply and demand. For extra credit, estimate the land requirement (in multiples of the UK's current arable land surface area) necessary to substitute current transportation fuel demand with biofuel. Make sure you clearly mark the year in which the UK loses all income from oil and gas exports, to identify the point at which the full financing burden falls on the economy's non-energy sectors.

 

[Backatcha Bandit]

The only problem not solvable by renewables would seem to be Transport.

Left hand line represents current supply, with the yellow bit at the top representing transport.

Right hand line shows the contribution from 'renewables' - the red bit is the biofuels (both imported and domestic), which are arguably not sustainable and therefore could be excluded. The little green slither on top of that is our wind, wave, hydro and solar.

Seriously, you can't see the problem?

 

[Backatcha Bandit]

Implosion to me implies that it one point during this specific financial crisis, the financial system will collapse in on itself and no longer exist.

Dmitri Orlov, in his book about the collapse of the Soviet Union, remarks that upon his periodic returns to the FSU, he noted a marked deterioration - Yet, to those that were living through it on a daily basis, the collapse appeared as a slow continuum, with no specific event or marker that signified 'collapse', therefore passing virtually unnoticed amongst those experiencing it. Things are perceived to be 'getting worse', but by small daily increments. 'Boiling frog'.

Joseph Tainter, in his book examining 'The Collapse of Complex Societies' throughout history, also notes that collapse generally occurs as a continuously developing process (as does it's opposite), making the actual point of collapse difficult to pinpoint.

That said, hyper-optimisation and increasing complexity at the expense of resilience (the ability of the system to absorb shocks) make the prospect of sudden, catastrophic collapse all the more likely - particularly when confronted by 'Black Swan' events.

My personal view is that the collapse we're experiencing will develop more as a 'step function' - something between a gradual slide and a catastrophic crash - with sections of the economy going *bang*, while others hold together longer while the effects ripple through the system as a whole.

With regard to financial markets (being as they are, the 'fastest reacting' element of our system), the concentration of resources (IT) on reducing the time it takes for computers to make trades does make it a lot more likely that collapse would be very rapid, occurring on a timescale below human comprehension - basically, if the system is working properly, collapse will occur quicker than you could pull the plug.

 

[A Dashing Blade]

With regard to financial markets (being as they are, the 'fastest reacting' element of our system), the concentration of resources (IT) on reducing the time it takes for computers to make trades does make it a lot more likely that collapse would be very rapid, occurring on a timescale below human comprehension - basically, if the system is working properly, collapse will occur quicker than you could pull the plug.

Trivially simple solution to avert this potential . . . all electronic orders cannot be cancelled for 250ms after placement. But will this be imposed . . . will it f*ck.

 

[Backatcha Bandit]

Trivially simple solution to avert this potential . . . all electronic orders cannot be cancelled for 250ms after placement. But will this be imposed . . . will it f*ck.

Not sure I follow you - could you elaborate a little?

 

[Falcon]

My personal view is that the collapse we're experiencing will develop more as a 'step function' - something between a gradual slide and a catastrophic crash - with sections of the economy going *bang*, while others hold together longer while the effects ripple through the system as a whole.

I suspect one's perception of the pace of collapse will depend a lot on one's circumstance. Here in Las Vegas (where I'm waiting in a thunderstorm for a plane) there is a large and growing population of people living in the storm drains. These aren't the perennial homeless - these are people who, until fairly recently, had jobs and homes. To the extent that they are unlikely now to re-acquire those jobs and homes, the crash has happened for them. At the other end, the wealthy are unlikely to be touched for some time - the rich in the US are reported to be spending an increased amount of money this year planning and taking foreign vacations, "remodelling" their personal leisure resorts, etc.

The bellwether event, I think, will be the gutting of the middle-class brought on by the collapse of their savings and house value, and the first of the big pension fund defaults. That is likely to be a rapid event triggered by the collapse of the financial system under the debt burden.

 

[A Dashing Blade]

Not sure I follow you - could you elaborate a little?

Pretty good, easy to read expansion of the definition here, Wiki’s article is mainly Okish (6/10 imo)

I would argue that what has resulted is nothing less than big banks and hedgies playing computer games against each other for real money at speeds far faster than humans can react (well under 25ms compared to roughly 250ms).

So, to step back a second and look at the big picture, these are computer programs we’re talking about (no logical errors anywhere, 110% guarenteed?) which are trying to win a game against another computer program (ditto) where the game is played at super-fast speed but it’s a game that could materially impact the world economy (via fx rates, interest rates, equity prices, the general increase in volatility that these things induce) . . .

And politicians/regulators are allowing this.
F*cking myopic imo.

So put a stop to the whole thing and impose time limits on how long an order must be in the market.

 

[Backatcha Bandit]

I suspect one's perception of the pace of collapse will depend a lot on one's circumstance.

Indeed - the focus of Orlov's book (Reinventing Collapse) was a comparison of the FSU and the US. He argues that the FSU is loads better off thanks to things like the housing stock being state owned, so despite the collapse, people still had a roof over their heads. Not so in the US.

Infact, the subtitle of the book is 'The Soviet Example and American Prospects'.

these are computer programs we’re talking about (no logical errors anywhere, 110% guarenteed?) which are trying to win a game against another computer program (ditto) where the game is played at super-fast speed but it’s a game that could materially impact the world economy

Thanks, ADB.

Did you catch that TED Talk by Kevin Slavin: How algorithms shape our world?

'The future is bright - if you're an algorithm.'

 

[rover07]

Left hand line represents current supply, with the yellow bit at the top representing transport.

Right hand line shows the contribution from 'renewables' - the red bit is the biofuels (both imported and domestic), which are arguably not sustainable and therefore could be excluded. The little green slither on top of that is our wind, wave, hydro and solar.

Seriously, you can't see the problem?

If you produced a similar chart for 100 years ago. 90% of energy use would have been coal now that is only 10%.

The change to renewables is only just beginning.

To suggest that energy use is static is nonsense.

 

[Backatcha Bandit]

For sure. That's probably why no one is suggesting that it is static.

What I am suggesting, is that the pace of 'The change to renewables' cannot be expedited to the point where it can close that gap between the two bars in time to make any appreciable difference, given the time constraints as outlined by Falcon above, plus the rest (no capital, energy prices etc).

Too little, far, far too late.

I'm further suggesting that the widely held public perception that it can be done or in fact is being done and 'we'll all be OK, RE will save us' - what I term *Techno-cornucopian Fantasy* - is actually detrimental to achieving this aim.

Sure, it might look like we're making progress towards meeting our current demand from RE, because that's the narrative that the electorate find palatable at the moment. It's a fairy story.

An honest narrative would be more along the lines of: "We're completely fucked if we think we can maintain this level of consumption, so you're all going to have to get used to a lot less energy, unless you're fantastically rich".

But that's not much of a vote-winner.

 

[A Dashing Blade]

Did you catch that TED Talk by Kevin Slavin: How algorithms shape our world?

Have now, very interesting perspective, would recommend.

 

[Falcon]

If you produced a similar chart for 100 years ago. 90% of energy use would have been coal now that is only 10%. To suggest that energy use is static is nonsense.

You would also note that the energy source with which the coal infrastructure was dismantled and replaced, and which replaced coal, returned three times the net energy of the fuel it was replacing, rather than a tenth, and the global population was a third of its current size. The ability to replace our fuel source is *necessary*. The ability to replace our fuel source is not, by itself, *sufficient*. *What* replaces it, and the context within which replacement is attempted, is also relevant.

 

[Dr Jon]

Geologist sounds alarm at appetite for resources

Combined with the United States' massive debt problems, the intensifying competition for resources spell an uncertain future for Americans in the next few years, Matthews said.

"If you think we're going to convert from fossil fuel to renewables in a short period of time -- it's just not going to happen," he said.

Hmmm...

 

[elbows]

Italian credit rating slashed, mwah.

http://www.bbc.co.uk/news/business-15176947

 

[free spirit]

Compare with

yes, but there's a major problem with your statement, in that you've failed to demonstrate that PV is thermodynamically unviable, and I'm fairly certain that you'd fail just as badly to prove the same for any of the other technologies I had in mind. In fact, you've not just failed to demonstrate it, but apparently conceded the point, so it's a little odd to see you bringing it back up again albeit with slightly different wording.

 

[free spirit]

Cool - name the panel... (& give me the dims / Wp(stc) if you have it to hand), then PVGIS (or SAP if you prefer). Then mash that into H.4 DUKES 2011 (since it's in TWh and I'm feeling too lazy to do the conversion to MTOE).

do what?

I'll do it this way, you do it whatever way you want, then compare notes.


2,376,000,000 m2 of roof area total
* 80% (orientation - viable orientations taken as 90-270 deg, plus flat roofs)
* 115% (roof slope - conversion from flat surface area to sloped surface area)
* 50% (suitability - estimate of suitable roof areas allowing for shading etc)
* 80% (roof edges - allowance for space required around edge of arrays for wind loading etc, plus gaps around the panels)
* 0.5 (owner desire - allowance for people not wanting PV on their roofs)
* 0.5 (grid suitability - allowance for proportion of remaining roof for which the grid can't take the additional SSEG capacity)

= 218,592,000 m2

*0.15 kWp / m2 (ie 15% module efficiency)

= ~33 GWp total installed solar PV capacity

* 750GWh / GWp (ballpark estimate for average annual output inc allowance for average orientation and angle losses, shading, and solar variations)

= ~25TWh / year solar PV generation potential from roof mounted systems on existing roofs.

note, this figure could be significantly increased if we adopted additional inverter control measures to avoid the need for upgrading the local grid as much, such as those adopted in Germany that allow the grid operator to send a signal down the power line to the inverters to reduce their output when generation is too high. It could also be significantly increased if all new build were compelled to incorporate roof mounted PV, and the potential for PV coverings on carparks and the like were also factored in.

25TWh / year is around 7.6% of the UK's current annual electricity consumption, so won't solve the problems by itself, but has the potential to be a useful part of the solution in the UK as it is far more rapidly becoming in Germany.

 

[Falcon]

yes, but there's a major problem with your statement, in that you've failed to demonstrate that PV is thermodynamically unviable

25TWh / year is around 7.6% of the UK's current annual electricity consumption, so won't solve the problems by itself

OK. We're done. Thanks.

 

[Bernie Gunther]

How does 'can't replace unsustainable levels of fossil fuel consumption' mean the same thing as 'thermodynamically unviable'

 

[toblerone3]

I'm reading

"Sustainable Energy: Without the Hot Air"

at the moment.

 

[free spirit]

OK. We're done. Thanks.

is your brain wired backwards or something?

 

[free spirit]

How does 'can't replace unsustainable levels of fossil fuel consumption' mean the same thing as 'thermodynamically unviable'

that's what I was getting at btw, I just had a does not compute moment.

 

[Falcon]

How does 'can't replace unsustainable levels of fossil fuel consumption' mean the same thing as 'thermodynamically unviable'

I'm defining "viable" as "capable of maintaining the food supply for 6-heading-to-9-billion-people and keeping old folks who live north of the 60th parallel alive in the winter".

How are you defining it ?

 

[free spirit]

I'm defining "viable" as "capable of maintaining the food supply for 6-heading-to-9-billion-people and keeping old folks who live north of the 60th parallel alive in the winter".

so not the same meaning of thermodynamically unviable as anyone else would take it to mean then?

loving your constant changing of the goalposts btw.

 

[toblerone3]

.

 

[Falcon]

is your brain wired backwards or something?

Well you've conceded that your hobby, in your words, "won't solve any problems by itself". I'm not aware of any response from you to any observation about the material, energy and capital requirements of your toys, the infrastructure that builds your toys, and the infrastructure that builds the infrastructure that builds your toys. Do you perceive any value in pursuing this ?

 

[Dr Jon]

Just noticed that the 2nd edition of Steve Keen's Debunking Economics was launched of at UCL last night.
Looked interesting. Anybody go?

ETA
Incidentally, I have just remembered a 1985 (?) Radio 4 interview with Sid Rawle, "king of the hippies", in which he predicted a mighty economic crash that would topple the money god from its pillar, leaving its worshippers stunned and confused.

Hippies 1 : Economists 0

 

[Falcon]

so not the same meaning of thermodynamically unviable as anyone else would take it to mean then? loving your constant changing of the goalposts btw.

By "not the same meaning", I presume you mean the meaning that allows a technology to be considered as "viable" by ignoring the hydrocarbon fuelled industrial manufacturing process upon which its "viability" depends?

Yes.