Global financial system implosion begins

[Dr Jon]

Fuel is hygroscopic and absorbs water from the air

Haven't they heard of desiccants? These are commonly used to keep solvents dry in the lab.

ETA

Just spotted Goldman Sucks

The global financial crisis, it is now clear, was caused not just by the bankers' colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud
...
Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we've seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves

I don't know about Bambis - puppets, placemen and taxis for hire is more like it.

 

[A Dashing Blade]

Geek Gov Bonds going mental, 10year yields at 9.0%, CDS's widened 60bps so far today all on potential Greek withdrawl from Euro suspicions

 

[Jessiedog]

This'll go well.


Woof

 

[goebfwai]

Interesting. I see days after Brown accused Goldman of "moral bankruptcy" they are calling on it's clients to buy - and thus support - sterling. Seems very big of them. Then again maybe not, since a key tenet of the UK economic recovery plans are founded upon fostering a weaker pound to try and boost manufacturing and help boost exports. As for there being little to fear from a hung Parliament - that maybe true, then again it may not, who knows what the animal spirits and the chess men of high finance have up their sleeve. Goldman are certainly at complete odds with what opposite camps of capital are saying, including the Conservatives. Could be talking up their book before a big sell off?

Goldman says buy the pound as there's little to fear from a hung Parliament
http://www.telegraph.co.uk/finance/...es-little-to-fear-from-a-hung-Parliament.html

 

[spring-peeper]

Here and there on the news over the past few days they have held interviews with people who are experts in interpreting consumer law - consumers rights body people, folk from Which? etc.

They have all categorically stated - no ifs, no buts - that if a customer's contracted flight is delayed for whatever reason airliners/travel operators have to provide alternative accomodation and food commensurate with that delay. Airliners and tour operators can not refuse to do so or refuse to compensate. That is a breach of the law. If they don't provide it, and a customer ends up shelling out themselves, then they have to compensate a customer to full value of whatever they have spent. Whatever the terms and conditions of sale says, that's the law. It's called European Directive 261 or something.

And there is no limit to it, so if the only accomodation a customer could find was in a 5 star hotel at a grand a night, they have to stump up, which gives airlines/travel companies a clear economic incentive to provide the accomodation themselves or repatriate the customer by some other means.

If the airliner or travel company management don't know how to run their businesses properly and don't like the law, one possible solution would be to sign the businesses over to the workers and workers co-operatives.

This would also stem the tide of the redundancies within the industry.

I'm sure such workers co-operatives would be more than happy to ensure customers are well looked after, as well as ensuring the profits from the businesses are shared out properly amongst the people that do the actual hard work, day in day out at the coal face of the business - cabin crew, engineers, pilots etc.

I realise the chances of such a thing happening are remote of course, given the ideological top down hiearchical dogma that often exists in business leviathans. As history has shown, if such businesses fail or are in danger of doing so, they much prefer selfishly moth-balling their infrastructure so nobody else can use it or benefit from it, until they rust and crumble.

If you don't look after customers, your business is finished. The customer is king, or at least should be treated as such. Plus if you develop a reputation for sharp practice and this spreads then on a wider scale your actually damaging the wider economy. People stop spending when they get treated appallingly by businesses and their consumer rights and protections aren't observed or enforced.

I believe I am correct in saying that this is the first time in recorded history that commercial airliners and travel companies have suffered such a large scale closure of flight space, lasting nearly a week.

For the oldest of the businesses, that's literally decades they've had to save and build up their reserves in self-insurance for such a rainy day, or in this instance, an ashy week! If they don't have sufficient reserves because they've been distributing them to shareholders and fat cats at the top for decades, that is hardly the passengers fault. They shouldn't have to pay for the airliners and travel companies financial practices and lack of foresight.

Does this directive cover all forms of transportation?

 

[Falcon]

I believe I am correct in saying that this is the first time in recorded history that commercial airliners and travel companies have suffered such a large scale closure of flight space, lasting nearly a week.

But not the last.

For the oldest of the businesses, that's literally decades they've had to save and build up their reserves in self-insurance for such a rainy day

The global aviation business has in aggregate been losing money for nearly a decade now, rising to $9 billion this year alone. They have nothing to save with.

The fundamental principle is that you can only be responsible for something you can control---you buy insurance for everything else and socialise the cost of damage liquidation.

If a jet goes unserviceable because maintenance is underfunded, then of course the airline has unlimited responsibility to liquidate any damage caused to you by their decision because they can control maintenance investment and made that choice. But airlines have no control over volcanoes.

Take your argument to its logical conclusion: a really juicy coronal mass ejection would wipe out the global power and transportation infrastructure, probably, at this stage in the game, permanently: you would be getting back from Italy on a donkey. What is the airline's responsibility in that case? What is the basis for differentiating between a coronal mass ejection and volcano---capacity to pay? Well they have no capacity to pay now, unless you mean they should borrow even more money to do so.

If that bothers you, every passenger has the option to insure himself---you can get insurance for any eventuality, including typical "force majeure" risks such as last week's. You just have to be prepared to pay the premium. The premium, while expensive in relation to the cost of your flight when the risks have been externalised, is modest in relation to your repatriation cost in the event of a force majeure risk of that nature. If that still isn't attractive, then don't fly - it's that simple. Instead, people rely on the trust that the airline will cough up or that the cost of their private decision not to insure themselves will be socialised by their government. Those days, of necessity, are over.

 

[A Dashing Blade]

. . .
Goldman says buy the pound as there's little to fear from a hung Parliament
http://www.telegraph.co.uk/finance/...es-little-to-fear-from-a-hung-Parliament.html

It's the old "it's all in the markets" argument.
Find myself in agreement with GS prolly for the first time ever.

 

[goebfwai]

Does this directive cover all forms of transportation?

Off the top of my head, dunno, but have a read of this. And do a search for other articles on the site. The Telegraph's info on consumer legal rights in connection with it has been pretty good.
http://www.telegraph.co.uk/travel/t...500000-Britons-seek-250m-in-compensation.html

The global aviation business has in aggregate been losing money for nearly a decade now, rising to $9 billion this year alone. They have nothing to save with.

Oh dear. So in a declining market and with the age of cheap oil over, they are leveraged up to the hilt? And there was me wondering the other day why you never hear much about what the airlines are doing to prepare for the realities of the post peak oil world and market? Don't they realise there is a limit to the number of illegal wars western nation states can engage in, stealing oil from foreign countries in order to keep their engines turning? They don't seem to be preparing for it at all. I guess the levels of investment needed in new technology are beyond them. Probably the best they can hope for is commercially exploit under license some of the technology others are developing, like Uni research labs, the military etc. Maybe the airlines are just incredibly secretive and have something up their sleeve. Branson seems a bit more ahead of the game than most, with Virgin Space and his balloon outfit, although a whicker basket and a big red balloon clearly ain't gonna be the low carbon, mass transport of the future! Then again a safe way of exploiting hydrogen and a new age of Zepellin balloons might, or solar powered, helium filled versions? Advances in technology would mean the skeleton will be much lighter than those of the early 20thC.

 

[elbows]

Oh dear. So in a declining market and with the age of cheap oil over, they are leveraged up to the hilt? And there was me wondering the other day why you never hear much about what the airlines are doing to prepare for the realities of the post peak oil world and market? Don't they realise there is a limit to the number of illegal wars western nation states can engage in, stealing oil from foreign countries in order to keep their engines turning? They don't seem to be preparing for it at all. I guess the levels of investment needed in new technology are beyond them. Probably the best they can hope for is commercially exploit under license some of the technology others are developing, like Uni research labs, the military etc. Maybe the airlines are just incredibly secretive and have something up their sleeve. Branson seems a bit more ahead of the game than most, with Virgin Space and his balloon outfit, although a whicker basket and a big red balloon clearly ain't gonna be the low carbon, mass transport of the future! Then again a safe way of exploiting hydrogen and a new age of Zepellin balloons might, or solar powered, helium filled versions? Advances in technology would mean the skeleton will be much lighter than those of the early 20thC.

All they can do is try to improve fuel economy a little bit, we have seen some signs of this with the switch to larger planes.

Beyond that its about a vast reduction in the number of people that will fly, as the price of flying goes up. I dont think there is much point in the airlines trying to address that, they will just take the money while they can, and at some point the industry will go through extremely painful adjustment involving consolidation and various players going bust. We end up with an industry that is more like it was in the past - far less customers & flights, but more profit per passenger. How messy this end up being depends on how this change is managed, how quickly it happens, I guess it already started years ago but very slowly so far. Whilst it may seem in individual airlines interests to position themselves well for this challenge by deleveraging as much as possible, none of them want to rush into this future when the present way is more profitable in the short-term.

Other possibilities include the industry being protected, by having the price of fuel heavily subsidised, with all the other uses of oil taking the brunt of declining supply. Greater efficiencies and alternative fuel sources can help a bit but there are big questions as to how much they will scale up and how the price of alternative fuels will compare to oil, even the expensive oil of the future.

Or we'll get a bit of all of the above, coupled with wider economic decline that gradually or suddenly erodes demand.

 

[two sheds]

Other possibilities include the industry being protected, by having the price of fuel heavily subsidised, with all the other uses of oil taking the brunt of declining supply.

Already happens, doesn't it - aviation fuel is virtually tax free as I understand it. Bloody freeloading scroungers should pay their way

 

[spring-peeper]

Already happens, doesn't it - aviation fuel is virtually tax free as I understand it. Bloody freeloading scroungers should pay their way

I agree with the scroungers part, but I think that they will still be trying to claim from the airlines.

 

[Falcon]

Maybe the airlines are just incredibly secretive and have something up their sleeve.

No. You can run an airplane (and its manufacturing supply chain and support infrastructure) off a fluid derived from a million years of sunlight collected by a million acres of forest, and concentrated for free by a quintillion Joules of tectonic energy.

You can't run one essentially in real time off the sunlight incident on a field of switchgrass. There is nothing up the sleeve and commercial aviation is over.

 

[goebfwai]

Wow, is that true aviation fuel is practically tax free? Incredible - look at how much tax drivers pay on forecourt fuel.

Re aviation if they do indeed have nothing up their sleeve, then whoever manages to fill - even to a degree - the air passenger gap in a low carbon way, could well end up being the General Motors or TWA of the 21st Century.

In any event, mass air transport wont be what it used to be. Could well be that air travel becomes as individualised as car travel, and some sort of flying car (I understand there are a few projects on the go) begins to take up the market, although that will depend heavily of course on price, safety and the nature of the energy they use/fuel efficiency.

Does anyone know too what the state of play is with some of these exotic new energy experiments you occasionally hear about? I remember reading somewhere about some sort of appearance of anti-gravity some scientists have been able to achieve by circulating an EM field around an object, from inside out or something. Seemingly it creates a similiar kind of 'lift' that conventional aircraft are only able to achieve through velocity/aerodynamics - or whatever it is that keeps them aloft.

 

[two sheds]

I agree with the scroungers part, but I think that they will still be trying to claim from the airlines.

which, bleedin scroungers that they are, will be trying to claim from the government.

 

[spring-peeper]

which, bleedin scroungers that they are, will be trying to claim from the government.

I'm betting the governments pawns them off to whatever EU organization shut the skies down.

 

[Dr Jon]

...
There is nothing up the sleeve and commercial aviation is over.

Just about sums it up IMO.

 

[Bob_the_lost]

Nah, even if the price triples there'll still be a market. The golden age of cheap flights may be ending but that's not the same as saying commercial aviation is over (or about to be).

 

[spring-peeper]

Just about sums it up IMO.

Only the European airlines are servery affected. There are the only ones being subjected to this "pay everyones bill" law that the EU passed.

 

[Falcon]

Tipping Point—Near Term Systemic Implications of a Peak in Global Oil Production

What happens when the net flow of energy decreases through our civilisation?

Answers vary from "It won't, stupid" to "The end of the world, as we know it".

We depend on the availability of increasing flows of concentrated energy and it seems fairly certain that their withdrawal has major system implications. David Korowicz over at Feasta.org has a go at something a little more nuanced and gives us "Tipping Point Near---Term Systemic Implications of a Peak in Global Oil Production: An Outline Review" (March 2010).

He advances the ideas of bifurcation in non-linear systems and energy as a major state-variable to suggest a mechanism for why a small change in the supply of energy (from a small exponential increase to small logarithmic decline) can lead to a rapid loss of complexity.

He goes on to propose the specific non-linear, mutually dependent driving subsystems that comprise the "operational fabric" upon which the headline systems (food, transportation, etc.) depend. These are so integrated and co-dependent that a failure in one part triggers and reinforces failures in others. The document is a useful tour d'horizon of the mechanisms driving the consequences of peak energy. Good references, too. Worth a read.

 

[two sheds]

Bifurcation in non-linear systems (a fine phrase) reminds of Prigogine and his self organising systems.

Does make you wonder about our view of modern society as being a 'more advanced' civilisation. Less advanced because it is too dependent on fossil fuel, perhaps, so much more brittle and less robust than previous societies.

Shame we've not primarily used technology for where it could most benefit society rather than for automating tasks so we could get rid of workers most profitably or bring that *slight* software improvement that brings a more realistic in-game experience.

 

[goebfwai]

These are so integrated and co-dependent that a failure in one part triggers and reinforces failures in others.

Interesting link, thanks. Six days into the airspace shutdown, an excellent recent example of the above (among many) was the revelation that parts of the UK car industry were preparing to shut down production because the supply of vital parts was being disrupted.

Recent events will have brought the shortsightedness and risk of this home to UK manufacturers. Why have parts for British made cars made (or anything for that matter) in far away places abroad - transferring jobs, wealth and making your company vulnerable to supply chain disruption - when there are plenty of able workers that could make them here?

 

[Bernie Gunther]

<snip> Why have parts for British made cars made (or anything for that matter) in far away places abroad - transferring jobs, wealth and making your company vulnerable to supply chain disruption - when there are plenty of able workers that could make them here?

Because it's more profitable to do so and resilience isn't an acceptable criterion while corporate profit is the only acceptable criterion for making such decisions.

 

[spring-peeper]

Interesting link, thanks. Six days into the airspace shutdown, an excellent recent example of the above (among many) was the revelation that parts of the UK car industry were preparing to shut down production because the supply of vital parts was being disrupted.

Recent events will have brought the shortsightedness and risk of this home to UK manufacturers. Why have parts for British made cars made (or anything for that matter) in far away places abroad - transferring jobs, wealth and making your company vulnerable to supply chain disruption - when there are plenty of able workers that could make them here?

Maybe because the cost of labour is too high in the UK?

 

[Bernie Gunther]

Maybe because the cost of labour is too high in the UK?

Yes, but why should profitability be (in general) the only acceptable basis for making decisions affecting our society?

 

[spring-peeper]

Yes, but why should profitability be the only acceptable basis for making decisions affecting our society?

What you have it based on?

 

[two sheds]

Because it's more profitable to do so and resilience isn't an acceptable criterion while corporate profit is the only acceptable criterion for making such decisions.

Although this might tilt the balance back by lack of resiliance from hitting profits. Like Just-In-Time deliveries often being somewhat environmentally questionable, if lack of deliveries hit profits then they could fall out of favour.

 

[two sheds]

Maybe because the cost of labour is too high in the UK?

Clearly, yes.

With rents for even single people often being £600 a month our workforce should show willing by getting out on those streets and living on them so companies can cut labour costs to Chinese levels. Scrounging in waste bins could similarly reduce food costs to nearer third-world levels.

 

[Bernie Gunther]

Although this might tilt the balance back by lack of resiliance from hitting profits. Like Just-In-Time deliveries often being somewhat environmentally questionable, if lack of deliveries hit profits then they could fall out of favour.

Sure, but that's hoping profitability acts as a proxy for resilience, which it mostly doesn't, just like it mostly doesn't act as a proxy for sustainability or any other criterion of human well-being.

 

[two sheds]

Sure, but that's hoping profitability acts as a proxy for resilience, which it mostly doesn't, just like it mostly doesn't act as a proxy for sustainability or any other criterion of human well-being.

Yes, the words 'tinkering' and 'edges' came to me a couple of minutes after I posted it

 

[spring-peeper]

Clearly, yes.

With rents for even single people often being £600 a month our workforce should show willing by getting out on those streets and living on them so companies can cut labour costs to Chinese levels. Scrounging in waste bins could similarly reduce food costs to nearer third-world levels.

Since I'm having trouble understanding what you wrote, I'm going to assume you are being sarcastic.