Sunday, January 31, 2016

President Trump

"From here this presidency sure looks like an unqualified success."

  It has been more than a year now since The Donald moved into 1600 Pennsylvania Avenue and he continues to be thwarted at every turn by that do-nothing Congress and the Democrat Party.

We all had expected that by now the Asian countries that have dumped their goods here and almost bankrupted our country by causing our trade deficit would have felt the bite of tough new rules, but the Trans Pacific Partnership tied Donald's hands on that one.

Mexico still won’t keep its illegals — the source for Americans’ drugs — on their side of the border. NAFTA prevented the border closing there. It wouldn't even take those Mexican tractor-trailers off our roads, and who knows how many of them are filled with illegals being dropped off in Ohio and Pennsylvania? Still, we are pouring concrete for a bigger wall all the time, whether Mexico pays for it or not. They should because they created this problem, but so far Donald has not gotten a single peso from the ingrates.

And, of course, the Muslims have always been fighting us when they are not too busy squirmishing between themselves. The Donald's executive order closed all our borders to refugees from Syria, Libya, Egypt, and Afghanistan; countries populated by still more ingrates who are unwilling to pay for the wars that we started on their behalf. And wouldn't you know? That is now going to the Supreme Court, challenged by the Democrat Party as unconstitutional. As if the President of the United States, as Commander in Chief, doesn't have the power to keep all the riffraff out. That wishy washy Supreme Court is not conservative enough! The Donald will get his chance to change that, soon, with real right-winging, bitter-clinging, proud clingers of our guns, our God, and our religion, and our Constitution.

Solving our trade deficit wasn't as simple as ending the supply of cheap Chinese stuff. Donald got around Congress and the TPP by calling that retailer CEO summit at the White House. But it still comes in from places protected by those bad trade deals negotiated by idiot presidents who didn't know the first thing about the art of the deal. Now the Chinese stuff goes to Australia and gets rebranded before the container ships take it to WalMart. That is why the prices we pay didn't change much, so I guess we can be grateful. The Chinese and Koreans should be too, but are they? No way.

When the Donald sent the marines to grab Iraq’s oilfields last month there was a big uproar at the UN but what could they do, the toothless liberals? Donald just vetoed any Security Council resolution they passed. Now we control a significant supply of the world’s oil and can set prices where we like, and not just where the Saudis want them, in the basement. We all have to put up with higher prices at the pump now, but rising crude prices have stopped the slump in fracked gas futures and got us back on the path to the energy independence that made America strong.

If the Saudis gripe about that, Donald says he is ready to send a bunch of oil sheiks to his reopened Guantanamo just to let them know who's in charge. Sure, he hasn't gotten rid of ISIS yet, but give him time. He will get their oil too, and you can take that to the bank. The marines are just settling into Iraq now. Syria is a quick hop.

Donald's poll numbers are quite good, and it is long past the honeymoon stage. People are calling him the Second Great Communicator. Doubters have to eat crow. Our military is stronger than ever, and we are respected again, whether foreigners like it or not.

We will know soon whether that do-nothing Congress passes the President's energy plan and American builders can get started on those 100 new nuclear plants. That will be a real shot in the arm for the economy, as well as making energy cheap again. People say the President is a climate denier, but those new nukes will do more to stop climate change than anything Obama did in Paris. Put a trillion dollars into nuclear power, like we will, and your other countries can be energy independent too, you UN people.

People criticize the President for ordering the National Football League to move the Super Bowl to New Jersey, but now that more than a third of the teams have relocated to California, it seems only reasonable that the East Coast should get its share of the action. Some of the best football we've ever seen was played in snow.

When the Donald took office the economy was in shambles. Stocks were getting schlonged. Oil, coal, and car companies were talking bankruptcy and wanting bailouts. The Donald doesn't do bailouts. How about that?

The Donald met with all the banks and cut them checks. He refinanced the country. Remember: this is a guy who knows what it is to go bankrupt and still wind up with high-rise penthouses and golf courses. That's exactly what he did for America. Who cares what the dollar is now worth in Timbuktu? We will soon have legal casinos in every city and every state, and they won't be run by Indians, either.

We are still only a year into this presidency, but from here it sure looks like an unqualified success. We guess that's only to be expected when you buy the best.

“I’m Donald Trump and I endorse this message” — Trump for President 2016 

Sunday, January 24, 2016

The Paris Gravity Well, Part II: Trillionization

"We will not suddenly convert steel mills, cement kilns and road surfacing machines to operate on sunbeams."

Charlie said, "That's the trouble. You see it the way the banking industry sees it and they make money by manipulating money irrespective of effects in the real world. You've spent a trillion dollars of American taxpayers' money over the lifetime of the bank and there's nothing to show for it. You go into poor countries and force them to sell their assets to foreign investors and to switch from subsistence agriculture to cash crops. Then, when the prices of those crops collapse, you call this "nicely competitive" on the world market. The local populations starve and you then insist on austerity measures even though your actions have shattered their economy….

"You were intended to be the Marshall Plan, and instead you've been carpetbaggers."
— Kim Stanley Robinson, Sixty Days and Counting: Science in the Capitol (2007).

“With fundamentals changing slowly and risk appetite falling rapidly, the stage is set for a longer period of risk asset underperformance,” Jabaz Mathai, a strategist at Citigroup Inc., said.  “There is no quick fix to the headwinds facing global growth.”
"Similar periods of weakness have occurred in only five other instances since 1985: (1) the majority of 1988, (2) the first half of 1991, (3) several weeks in early 1996, (4) late 2000 and early 2001, and (5) late 2008 and the majority of 2009 … all either overlapped with a recession, or preceded a recession by a few quarters."
There has been a storm brewing since the last trifle with full-on collapse in 2008-2009. The extend-and-pretend debt balloon was reinflated and stretched to new enormities as Keynesian cash infusions fueled a Minsky Moment, if not a Korowicz Crunch.

The instability in finance is compounded by the instability in demographics. In Mexico City, Bogata and Rio they call them NINIs — the millions of youth between 15 and 24 who neither study nor work. They are now about a fifth of the population in the underdeveloping world, responsible for higher rates of homicide, gangs, and unwed pregnancy. Of those born to NINI mothers, there is a 22.3% greater likelihood of becoming a NINI, according to the World Bank. All this tinder simply builds, bides its time, wanders the streets, waits for a revolutionary spark.

As we said here last week, the trigger for the markets' sudden move may have been what happened in Paris but could not stay in Paris. When it filtered out from the December summit that 195 countries had actually done the unimaginable and set a goal of carbon neutrality, meaning phasing out net fossil fuel emissions by 2050, the financial sector was at first caught dumbfounded. The World Bank guys flinched.

Now it has sunk in. The Guardian reports:
Former OMB Chief David Stockman's recap
Investors face a “cataclysmic year” where stock markets could fall by up to 20% and oil could slump to $16 (£11) a barrel, economists at the Royal Bank of Scotland have warned. In a note to its clients the bank said: “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point.
Government subsidies are about to undergo a titanic shift. Many governments spend more on fossil-fuel subsidies than they do on health and education, more than a trillion dollars. Consumer benefits such as subsidized fuels and cheap finance add $548 billion per year. Government support for companies to expand production add another $542 billion just in G20 overdeveloped countries, and a mere top 8 of those will spend $80 billion of this kind every year, four times the investments going to renewables globally.

Tomorrow those same Big-8, and 188 others, will begin spending several times those trillions subsidizing renewables. Jeremy Leggett, founder of Solar Aid and Solarcentury, calls it "trillionization." It won't begin to fill the energy gap that the switch will create, but the psychology of sunk investment will be in charge from thereon out.

Oil producing states and countries are aghast. The "clear signal" that Paris sent was not what they were expecting. In Alaska, the Permanent Fund has been running in the red and the legislature is talking about an income tax. Had the Paris Agreement not come together, they might hope for a rebound of fossil prices and investments in drilling the North Slope and Arctic Refuge.

Petroblas, the national oil company of Brazil and wellspring of the Brazilian Economic Miracle, is now cash negative. It will be forced to turn to the government for a bail-out, but to where will its government turn?

In Mexico, the deficit is running 100 billion and the peso has dropped from 12 in 2014 to soon-to-be 20 against the dollar. If you have dollars you can get a meal in a good restaurant or a room for the night for 5 or 10 of them. So far in January the price rise of food for the average Mexican is alarming. Onions are up 19%, poblanos 15%, bananas 10%, tomatoes 9%.
The national oil company, PEMEX, came out on Monday saying it is not true that its operating with losses, but below the $26 per barrel it would be. On Tuesday the price dropped to $24.74. It closed the week at $22.77 but as we write this you can buy a barrel in Mexico City for as little as $20.32. Mexico's federal budget is entirely dependent on oil money and don't look now but Mexico, when it was petrodollar flush, became a net importer of most staple foods and many other essential commodities, which helps explain the grocery dilemma. Mexico now buys onions, poblanos, bananas and tomatoes from California. Also beans, corn and rice.

Gotta love those World Bank guys.

Venezuela, which surprised everyone by signing the Paris Agreement at the final hour, declared an economic emergency on January 15. France, which foolishly drank too much atomic kool aid thinking it might spare itself from petrocollapse, has a budget shortfall of 2.2 billion dollars and declared national economic emergency on January 17. The jobless rate in France, the eurozone's 2d largest economy, is above 10%, compared with a 9.8% EU average.

Andrew Roberts, RBS’s credit chief, said:
European and US markets could fall by 10% to 20%, with the FTSE 100 particularly at risk due to the predominance of commodity companies in the UK index. London is vulnerable to a negative shock. All these people who are long [buyers of] oil and mining companies thinking that the dividends are safe are going to discover that they’re not at all safe.

We suspect 2016 will be characterized by more focus on how the exiting occurs of positions in the three main asset classes that benefited from quantitative easing: 1) emerging markets, 2) credit, 3) equities … Risks are high.

Zero Hedge reports:

"For dry bulk, China has gone completely belly up,” said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo, talking about ships that haul everything from coal to iron ore to grain. “Present Chinese demand is insufficient to service dry-bulk production, which is driving down rates and subsequently asset values as they follow each other.”

“China’s slowdown has come as a major shock to the system,” said Hartland Shipping’s Prentis. “We are now caught in the twilight zone between shifts in China’s economy, and it is uncomfortable as it’s causing unexpected slowing of demand.”

The continued collapse of The Baltic Dry Index remains ignored by most.

According to  Zero Hedge:
The North Atlantic has few to nil cargo traveling in its waters. Instead, the giant container ships are anchored. Unmoving. Empty.

Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped.

The slow response to the Paris outcome has been a complete portfolio review by every actuary and bean-counter in the biggest banks and investment houses, pension funds and mutuals. Hedge fund managers are scratching and sniffing for places to park billions being lifted from soon-to-be-stranded fossil assets. The clean-tech market, signaled first by China, is reacting by recycling cash out of fossil holdings.

Peter Sinclair of reports:
The Energy Information Administration calculates in its 2015 analysis that the average U.S. levelized cost for new natural-gas advanced combined cycle plants is 7.3 cents per kilowatt-hour — the same as solar.

However, to compare accurately, we have to add about 10 percent to the cost of solar to firm up this variable resource. So we’re close to cost parity, but not quite there.

At $1 per watt, the levelized cost falls to just 5.7 cents per kilowatt-hour, well below cost parity with new natural-gas plants. With two-axis trackers and the best solar resources, which increase the capacity factor to 32 percent, that cost falls to just 4.5 cents per kilowatt-hour. We’re headed to $1 per watt as an all-in cost in the next five to 10 years.
Bloomberg New Energy Finance reported last summer that wind power was the cheapest source of power in the U.K. and Germany in 2015, even without subsidies. The article’s tagline reads: “It has never made less sense to build fossil fuel power plants.” The same article highlights the feedback loop that solar and wind power have in terms of reducing the cost-effectiveness of fossil fuel power plants due to the dispatch order of renewables versus fossil fuel plants.

The solar singularity is indeed near (here?) in the U.S. and increasingly around the world. I described previously that 1 percent of the market is halfway to solar ubiquity because 1 percent is halfway between nothing and 100 percent in terms of doublings (seven doublings from .01 percent to 1 percent and seven more from 1 percent to reach 100 percent). The U.S. will reach the 1 percent solar milestone in 2016. We’re halfway there. Buckle your seatbelts.
There are plenty of unemployed oil workers ready for retraining. James Howard Kunstler: 
So, in 2015, the shale oil companies laid off thousands of workers, idled the drilling rigs, and kicked back to pray that the price would go back up. Which it didn’t.... The landscape of North Dakota is littered with unfinished garden apartment complexes that may never be completed, and the discharged construction carpenters and roofers drove back to Minnesota ahead of the re-po men coming for their Ford F-110s.
To see what does well in the new, post-Paris domain, watch stocks like First Solar (FSLR), Renewable Energy Group (REGI), SolarCity (SCTY) and Siemens (SIE) over the next quarter, and mutuals like Firsthand Alternative Energy (ALTEX), New Alternatives (NALFX) and Guinness Atkinson Alternative Energy (GAAEX). Some of these know their audience and have vowed to screen for social justice. Gabelli SRI AAA says, for instance:
The fund will not invest in the top 50 defense/weapons contractors or in companies that derive more than 5% of their revenues from the following areas: tobacco, alcohol, gaming, defense/weapons production....
There is a psychology that sets in once the corner is turned on fossil investments that may make a big difference in the political debate about climate change. For more than half a century the GOP, the Fossil Lobby and Wall Street have blocked, cut or delayed investments in renewables and papered it over with greenwash. Forced by pledges made in Paris — and a legally-binding agreement with the word "shall" used 143 times — and the emergence of a huge new global competition to begin not only unchaining the clean-tech sector, but to actively promote it with subsidies, research grants and moonshot-scale deployments, the psychology of chasing after sunk investments will drive an apolitical energy conversion.

Moreover, and Greenpeace are ramping up campaigns to make sure the promises made in Paris are kept.

No pipelines, no mines. You said 1-point-5!
No pipelines, no mines. You said 1-point-5!
No pipelines, no mines. You said 1-point-5!

Clean energy will not deliver a 1:1 replacement for fossil fuels. Get over it. We will not suddenly convert steel mills, cement kilns and road surfacing machines to operate on sunbeams. But the investments we do make, and the worsening weather, will drive us to make even more and ever larger investments, in a forlorn search for a full replacement. While wasteful, it is not nearly as wasteful as the industrial and military investments of the past century or more.

Persian Gulf wars, going back to antiquity, have never been fought over sunlight. As David Stockman recently recalled:
[A] 45-year old error ... holds the Persian Gulf is an American Lake and that the answer to high oil prices and energy security is the Fifth Fleet.
That doctrine has been wrong from the day it was officially enunciated by one of America’s great economic ignoramuses, Henry Kissinger, at the time of the original oil crisis in 1973. The 42 years since then have proven in spades that its doesn’t matter who controls the oilfields, and that the only effective cure for high oil prices is the free market.
The switch to sunlight will make the lives we are living better for many, especially those on the front lines of the oil wars, even as we continue towards an Anthropocene Armageddon with little sign of being able to change that trajectory.

Guy McPherson is fond of reminding us, after University of Utah professor Tim Garrett's deft analysis, that industrial civilization is a heat engine.

In a well-read article in Climate Change in November 2010, Garrett ran the simple arithmetic:
Specifically, the human system grows through a self-perpetuating feedback loop in which the consumption rate of primary energy resources stays tied to the historical accumulation of global economic production — or p×g — through a time-independent factor of 9.7±0.3 mW per inflation-adjusted 1990 US dollar.

If civilization is considered at a global level, it turns out there is no explicit need to consider people or their lifestyles in order to forecast future energy consumption. At civilization’s core there is a single constant factor, λ = 9.7 ± 0.3 mW per inflation-adjusted 1990 dollar, that ties the global economy to simple physical principles. Viewed from this perspective, civilization evolves in a spontaneous feedback loop maintained only by energy consumption and incorporation of environmental matter.

Unsold cars sit on receiving docks all over the world
Because the current state of the system, by nature, is tied to its unchangeable past, it looks unlikely that there will be any substantial near-term departure from recently observed acceleration in CO2 emission rates. For predictions over the longer term, however, what is required is thermodynamically based models for how rates of carbonization and energy efficiency evolve. To this end, these rates are almost certainly constrained by the size and availability of environmental resource reservoirs. Previously, such factors have been shown to be primary constraints in the evolution of species

What this means is the same thing that Gail Tverberg, Richard Heinberg and many others have been saying for a very long time — modern economies are a product of cheap energy. Take that away and they crash and burn. That’s the good news. Garrett says there is no other climate remediation model that works. Civilization is a heat engine whether it is powered by nuclear fusion or photovoltaics. The global economy must crash for humanity to stand a chance. McPherson would take it a step farther and say it is already too late, enjoy what time you have.

The famous Fermi paradox raises the question: why haven’t we detected signs of alien life, despite high estimates of probability, such as observations of planets in the “habitable zone” around a Sun-like star by the Kepler telescope and calculations of hundreds of billions of Earth-like planets in our galaxy that might support life. To produce a habitable planet, life forms need to regulate greenhouse gases such as water and carbon dioxide to keep surface temperatures stable. Early extinction, before interstellar communication, solves the Fermi Paradox. So does merely the extinction of civilization capable of interstellar communication without the same degree of trauma. No civilization, no heat.

But wait! Can that excess heat civilization is producing be turned into air conditioning for the planet? Is there a permacultural decroissance that could rescue our genome? Stay tuned, but first, next week, we play the Trump card.

Sunday, January 17, 2016

The Paris Gravity Well, Part I

"The idling of rail, barge, ship and pipeline traffic is the biggest change of its kind in 30 years."

   The World Bank Guys talked about rates of return and the burden on investors and the unacceptable cost of the doubling of the price of a kilowatt hour. Everyone there had said all of this before, with the same lack of communication and absence of concrete results.

Charlie saw that the meeting was useless. He thought of Joe, over at the daycare. He had never stayed there long enough even to see what they did all day long. Guilt stuck him like a sliver. In a crowd of strangers, 14 hours a day.

The bank guy was going on about differential costs. "And that's why its going to be oil for the next 20, 30 and maybe even 50 years," he concluded. "None of the alternatives are competitive." Charlie's pencil tip snapped.

"Competitive for what?" he demanded. He had not spoken until that point and now the edge in his voice stopped the discussion. Everyone was staring at him.

He stared back at the World Bank guys. "Damage from carbon dioxide emission costs about $35 per ton. But in your model, no-one pays it. The carbon that British Petroleum burns per year by sale and by operation runs up a damage bill of $50 billion dollars. BP reported a profit of $20 billion so actually its $30 billion in the red, every year.

"Shell reported a profit of $23 billion but if you added the damage cost it would be $8 billion in the red. These companies should be bankrupt. You support their exteriorizing of costs so your accounting is bullshit. You are helping to bring on the biggest catastrophe in human history.

"If the oil companies burn the 500 gigatons of carbon that you are describing as inevitable, because of your financial shell games, then two-thirds of the species on the planet will be endangered, including humans. But you keep talking about fiscal discipline and competitive edges and profit differentials. It's the stupidest head-in-the-sand response possible."

The World Bank guys flinched at this. "Well, we don't see it that way."

— Kim Stanley Robinson, Sixty Days and Counting: Science in the Capitol (2007).

 While the story coming out of the White House Press Room this week was phrased as a temporary moratorium on new coal mining leases on federal lands, the bigger story was in the details of the review that the President had ordered. Like Robinson's character in Sixty Days, the White House recognized that the real cost of coal is not currently accounted for in its price, so the new review will tally the environmental impacts, including destruction of public lands from air and water pollution from strip mining and failed mine reclamation, public health impacts from transporting and burning coal, damage from ash spills, greenhouse gas emissions and climate change. It will set a price on future leases based on this thoroughgoing review that brings the cost of coal in line with the reality of the actual costs.

If this had to be run through Congress, powerful coal-state Senators like Mitch McConnell would derail it before it got out of committee. As merely Bureau of Land Management regulatory policy, it falls under the Executive Branch, where the President's is the only opinion that counts.

Tomorrow senior politicians, digiratti activists and Hollywood stars ski into the Swiss resort of Davos for the annual World Economic Forum. The theme was to have been the 4th Industrial Revolution – robots, AI and the  biotechno singularity — but the buzz is all about the latest crash of the world economy.

The trigger for all this change may have been what happened in Paris but could not stay in Paris. In December we reported from the United Nations climate meeting where many of these same characters — John Kerry, Leonardo DiCaprio, Justin Trudeau, Angela Merkel — were on stage. We described then how an amazing role reversal was in progress and how it had transformed COP-21, midway through the second week of deadlocked negotiations.

The roles that switched were between the dominants, like Exxon-Mobil, Shell and BP, and the submissives — the entire renewables industry. Renewables are largely a digital world, enjoying advancements in crystal structure, solid state controllers, neodymium and other rare earth metallurgy that follow the proscribed arc of Moore's law, doubling in efficiency and halving in cost at close intervals, driving exponential adoption and dissemination.

Fossils, in contrast, are an analog industry, trying to wring the last drops of intoxicating elixir from the carpet of the pub after closing time. In 2015 those two curves crossed, and renewables are now cheaper (even free at some hours for select consumers in certain markets) while coal, oil and gas are queuing up outside bankruptcy court.

Salvaging beer from the bar floor after last rounds
The US Department of Energy reported this week:

The Short-Term Energy Outlook (STEO) released on January 12 forecasts that Brent crude oil prices will average $40 per barrel (b) in 2016 and $50/b in 2017. This is the first STEO to include forecasts for 2017. Forecast West Texas Intermediate (WTI) crude oil prices average $2/b lower than Brent in 2016 and $3/b lower in 2017. However, the current values of futures and options contracts continue to suggest high uncertainty in the price outlook. For example, EIA's forecast for the average WTI price in April 2016 of $37/b should be considered in the context of recent contract values for April 2016 delivery, suggesting that the market expects WTI prices to range from $25/b to $56/b (at the 95% confidence interval).

The decline in oil price is too little, too late. It cannot keep pace with the price decline we are seeing in the clean tech revolution. Consequently, more people now work in the US solar industry than in oil and gas at the wellhead. In 2015, for the third straight year, the solar workforce grew 20 percent. Clean tech employs far more women than fossil, and 5 percent of the workforce is African American, 11 percent Latino, and 9 percent Asian/Pacific Islander.

At the same time, rear-guard action by the Coal-Baron-selected legislatures in Arizona and Nevada —  states that could be leading the nation in solar power production — have led to layoffs in the renewables sector. The pushback over solar and wind fees by grid owners, punitive taxes, and net metering promise to keep those states in the Dark Ages, as they did the United States for the past four decades.

In a famous L'il Abner cartoon, Pappy Yokum tells L'il Abner, "Any fool can knock down a barn, it takes a carpenter to build one." To which L'il Abner replies, "Any fool? Let me try!"

Listening to the Republican presidential candidates debate is like watching a Fox-den full of L'il Abners.

US Solar Power 2010-2015
So it is not surprising that at the stroke of a pen, three Republican appointees on the Nevada Power Utility Commission decided the fates of millions of ratepayers when they killed solar feed-in-tariffs in that state. It was not unlike Michigan governor Rick Snyder deciding to kill and maim thousands of Detroit residents by switching their water to a polluted source and then covering up the damage. You might say no-one gets killed or maimed from solar energy, and that's closer to true, but plenty more get poisoned every year from the fossil alternative.

The numbers being parsed in Davos will be puzzling to many attending that meeting. From a peak in January 2015 to last October, movements of crude by rail declined more than a fifth. The research group Genscape said rail deliveries to US Atlantic coast terminals continued to drop to the end of the year and the spot market for crude delivered by rail from North Dakota’s Bakken region “is at a near standstill.”

Just 5 years ago investors clamored for more tank cars to pick up the slack from overwhelmed pipeline capacity. Now those cars sit idle on sidings and no one is ordering more. Pipelines are idle too, as refineries on the coasts have found that it is cheaper to buy crude of higher quality than shale oil, shipped by ocean tanker from Canada, Nigeria and Azerbaijan.

Junk bond sales are all that supports
the fracked gas Ponzi scheme.
A Congress desperate to please its oil masters in an election year abolished four-decade-old restrictions on exporting domestic crude. While some tankers now take crude from the Gulf Coast to refineries in Venezuela, where the heavy sludges and half-formed keragens can be more economically processed because of fewer environmental restrictions, the US then imports back the finished products at a hefty mark-up.

The idling of rail, barge, ship and pipeline traffic is the biggest change of its kind in 30 years. And while the shift away from coal-powered energy, the long recession, and the petering out of the fracking and shale Ponzi real estate play would obviously lead to fewer tons, barrels and cubic feet being moved, it doesn't explain the full depth of the stoppage. The rail and barge slowdown is now spreading to more consumer-oriented segments. Intermodal carloads typically related to consumer goods fell 1.7 percent in the final quarter of last year.

"We believe rail data may be signaling a warning for the broader economy," the recent note from Bank of America says.

"Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009."

“When people get hungry, governments fall” — Stuart Scott, Through A Dark Portal, Radio Ecoshock, January 13, 2016

If you can read the tea leaves, or even if you can't, we are now in the long slide. We will examine the financial road ahead, and the Paris Effect on that, in greater detail next week.

Sunday, January 10, 2016

Antifragile Food Systems

"The alpha person at a gathering of "high status" persons is usually the waiter. "

  In the film, No Escape, Owen Wilson and Lake Bell's characters play a stereotypical USAnian couple, Jack and Annie Dwyer, cast abroad like fishes out of water. He is a corporate engineer in charge of putting a water plant into a fictional Southeast Asian country. She is the dutiful wife, bringing along to the temporary assignment two young children and their favorite kitchen appliances.

When civil war suddenly erupts before they have even gotten past jet-lag and they find themselves in an urban killing field, hunted by machete-wielding guerillas who are really angry about the way Jack's corporation has stolen and monetized their water rights, they must run for their lives, which they do for the next hour or more of screen time.

That's the plot, but the film is less about why the couple got into their predicament or why this small country has decided to murder all its foreign tourists than how Jack and Annie and their children absorb the changed circumstances, adapt to their precarious situation, and do what it takes to survive. Theater audiences are rooting for them, despite their complete lack of preparation.

In Antifragile: Things that Gain from Disorder, Nassim Nicholas Taleb distinguishes antifragile from words like robust or resilient by saying that when something is antifragile, it benefits when things go bad. Taleb is a recovering Wall Street quant trader. He understands hedges and shorts, and indeed, wrote the textbook on dynamic hedging in 1997. His subsequent books, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (2001) and The Black Swan: The Impact of the Highly Improbable (2007) redefined at how traders look at risk and how people should think about risk in life choices.

If Jack and Annie had read either Fooled by Randomness or The Black Swan, they would not have been thrown into such profound stupor when the country they had landed in suddenly dissolved into anarchy and savage brutality. These things, or equally unpredictable things, are to be expected, even predicted.

Antifragile goes a step beyond and asks how one can be prepared to benefit from Black Swan events. Taleb gives the example of biological and economic systems. Efficiency and optimization are the final stages of succession — a mature ecology. They are also fragile. Inefficient redundancy is robust. Degeneracy is antifragile. The early sere following some disturbance is filled with fast-growing, thick-stemmed "weeds" that require few soil nutrients or supporting microbial diversity. If there is not much sun, too much wind or rain, poorly suited pioneers will fall aside and those better selected will dominate.

Fragile systems hate mistakes. Antifragile systems love them. Postmodern thinking, almost completely divorced from nature, is built on a scaffold of prior delusions. Medieval Europe, grounded in a theological storyline that is unwavering (like hard-core Evangelical Christianity or Sunni Islam) is more robust. But the pre-European Mediterranean seafaring cultures — pantheistic, surrounded by random dangers and ubiquitous risk (pirates, police states, conscription, volcanoes) and utterly free enterprise, was antifragile. People in that time exchanged rites and gods the way we do ethnic foods. Like Silicon Valley, ideas and gods failed fast, failed often, but occasionally winners emerged.

Taleb casts this into mathematical metaphors: the fewer the gods the greater the dogma and higher the risk of conflict and loss. For atheists n=0; Sunni purists n=1; monophysites n=1-2; Greek Orthodoxy n=3-12; pagans, wiccans and most native peoples n=infinite. Whose religion is more fragile and likely to occasion bad things happening?

Jack and Annie Dwyer are in the fragile, corporate employment class. They are pampered. They did well in school. They don't need to know a word of the language of the country they have been sent to. They complain if there is no a/c in the room or the limo doesn't arrive on time. They are intellectual tourists. Their antifragile counterpart is a slacker — fläneur is the word Taleb uses — the creative loafer with a large library or an X-box. Taleb says the alpha person at a gathering of "high status" persons is usually the waiter.

Engineering and corporate middle management are fragile professions. Financially robust professions in the run-up to ponzicollapse would be dentists, dermatologists, or minimum wage niche workers. Antifragile jobs in the overtopping and onset of decline are payday check cashing tellers, taxi drivers and nomadic fishermen. The Roma, living parasitically at the urban edges of European cities, are antifragile, but have vulnerability to travel restrictions. When Sweden closed its border crossings and started doing screening of incoming migrants, Denmark had to follow or risk being swamped with migrants denied entry to Sweden. Holland, Germany and France did the same. This is not a good thing for gypsies, but they are resilient enough to make do with one country at a time and antifragile enough to exploit weaknesses in border security and even turn that into new opportunities and enterprises.

What is an antifragile food system? This becomes especially important as we enter an era of rapid climate change and civil disintegration. A decade ago in "From Foraging to Farming, Explaining the Neolithic Revolution" (J Econ. Surveys 19:4:561-586, 2005), Jacob Weisdorf at the University of Copenhagen reviewed the main theories about the prehistoric shift from hunting and gathering to agriculture. The transition, also known as the Neolithic Revolution, was necessary precursor for capitalism, industrialization and the monotheistic religion of economic growth. Hunting and foraging societies were egalitarian and communal. Farming and herding societies are vested, competitive and hierarchical.

The Neolithic Revolution augured slavery, which began as agricultural serfdom and abides today as the "jobs" system. Taleb opines that in the days of Suetonius, 60 percent of prominent educators (grammarians) were slaves. Today the ratio is 97.1 percent and growing.

Charles Darwin in The Variation of Animals and Plants Under Domestication (1868) said:

The savage inhabitants of each land, having found out by many and hard trials what plants where useful ... would after a time take the first step in cultivation by planting them near their usual abodes.... The next step in cultivation, and this would require but little forethought, would be to sow the seeds of useful plants.

Did it really take several million years for our upright hominid ancestors to get the idea they could domesticate plants and animals, or had they known that much longer and invariably decided it was a bad idea?

One hypothesis is that the extinction of large herding animals by Paleolithic hunters led to farming. This is discounted by the fact that the loss of the former did not coincide with the gain of the latter, either geographically or chronologically. Another theory is that we were forced into farming by population pressure, but that is countered by the fact that the first domestications took place in resource-abundant societies. Moreover, dietary stress would have marked the skeletons of foragers and studies have failed to show any nutritional stress immediately prior to plant domestication.

Another theory is that the rise of agriculture came from ‘competitive feasting;’ the idea that culinary diversity conferred social status and therefore resulted in competition to create delicacies. Let's call this gourmetgenesis. Unfortunately for foodie anthropologists, it appears that early domestication unambiguously consisted of a small number of important staples rather than appetizers, pastries and confections.

Those who study the evolution of consciousness suggest that the shift may have occurred, with or without sacred plant intervention, about 10 millennia ago when the brain had a hundredth monkey moment and, like Kubrick's apes before the shiny monolith, transformed bone shillelaghs into plows and space stations.

More recent work suggests that climate shifts not only contributed to the Paleolithic large mammal extinctions and may have caused psychedelic mushrooms, vines and cacti to extend their ranges and abundancies, but also permitted more reliable predictions about weather, which allowed crops to be grown more consistently.

Some ancient Greeks thought that this process was cyclical, and that eventually good weather would lapse and we would return to hunting and foraging. Medieval Christianity embedded the meme that the process is linear, an inexorable progression of human civilization from brutality to refinement.

Weisdorf notes:

Farming [is] still assumed to have been clearly preferable to foraging. But, in the 1960s, this perception was to be turned upside down. Evidence started to appear which suggested that early agriculture had cost farmers more trouble than it saved. Studies of present-day primitive societies indicated that farming was in fact backbreaking, time consuming, and labor intensive.

In the 1960s, "a picture began to emerge that showed that foraging communities were able to remain in equilibrium at carrying capacity when undisturbed." Where the ratio of population to productive land area is favorable, foraging generally provides greater return on labor invested than tilling and herding. Once the ratio becomes unfavorable, tilling and herding are not only more effective, but necessary. To any foraging society, therefore, two disciplines are required. They must regenerate land resource and restrain population growth. Soil fertility sí, human fertility no.

In Resilient Agriculture: Cultivating Food Systems in a Changing Climate (New Society 2015), Laura Lengnick gives her take on the progression from foraging to pastoralism to agriculture:

Foraging and the early farming systems that followed it propose very different solutions to the same basic question facing all animals: How best to allocate the available time and resources to acquire food? All things being equal, animals (including humans) tend to solve this effort-allocation problem by maximizing the capture of calories, protein and other desired foods in a way that yields the most return with the greatest certainty in the least time for the least effort. Moderate, reliable returns are usually preferred over fluctuating high returns. It turns out that, for a long time, foraging was a good solution to the effort-allocation problem facing early humans. But climate change changed everything.

Lengnick, Resilience Design Criteria for Agroecosystems
Lengnick describes the strategies employed by native peoples of North America. They foraged and hunted, sustainably used irrigation, amended with fish scraps and animal manures as fertilizers, rotated grain and legume crops and selected and improved their seeds. She looks at the Mohawk, Cherokee, Mandan and Hohokam as representative of the North American Northeast, Southeast, Northern Great Plains and Southwest. She then turns to the practices brought by European colonists, before and after the arrival of petroleum, modern machines and chemicals. Regional specialization continues today, based more on industrial infrastructure than soils or suitability, but climate has thrown in a monkey wrench, much the way it did 8-12,000 years ago.

From the summer of 2013 through late winter 2014, Lengnick interviewed 25 award-winning sustainable producers from across the United States. All had been farming in the same location for at least 20 years, many for 30 and some for 40 years or more. Many expressed concerns about the path the food system has taken over the last 50 years and their frustrations with scientific, economic and regulatory policy. Listening to their stories is like sitting around a campfire with two dozen Joel Salatins.

At the Happy Cow Creamery, artisanal dairyman Tom Trantham told Lengnick,

Really, we see some drought and hot temperatures every year. This year (2013) is the first year that we haven’t really had a drought. This year it has been really wet. We had the rain, but we also didn’t have the sun, so we had two big problems. I’m 72 years old, and I’ve never seen as much rain in a year in my life, anywhere. It really affected my crops. Our hay was 9 percent protein. It would normally have been 18 or 20. Like I say, never in my life have I endured that much rain.

Lengnick, Resilience Design Criteria for Agroecosystems
Lengnick's distillation of their advice is sage. Produce food as part of an ecosystem. Adapt by going back to letting nature do what nature does best. Lengnick calls this "adaptive management," but what she is speaking of is what the UN has been calling "eco-agriculture, and it contains a suite of tools and practices that not only provide greater food security but can, scaled quickly enough, undo the worst of the Fossil Age's climate karma.

For Lengnick,

Functional diversity and response diversity describe the capacity of the agroecosystem to maintain healthy function of the four farming system processes (energy, water, mineral, community dynamics) and other ecosystem services. Functional diversity describes the number of different species or assemblages of species that participate in agroecosystem processes to produce ecosystem services. Response diversity describes the diversity of responses to changing conditions among the group of species or species assemblages that contribute to the same ecosystem function. Agroecosystems designed with high functional and response diversity have the capacity to produce ecosystem services over a wide range of environmental conditions.

Like Taleb, Lengnick identifies the fragility of monocultural, industrial farming practices:

Appropriately connected agroecosystems will build relationships that enhance functional and response diversity. Many weak (i.e., not critical to function) connections are favored over a few strong (i.e., critical to function) connections. Agroecosystems that rely on a few strong connections for critical resources reduce their resilience to events that disrupt those connections; in contrast, many weak connections enhance response capacity.

In permaculture, we speak of harmony and stress and some see those as opposites, but in a more tantric Buddhist interpretation they can be viewed as a symbiotic pair. Stress is the bending of a system away from its natural pattern, making it fragile. Harmony is the restoration of balance and connections, inherently antifragile. Natural succession is a cycle of disturbance, experimentation, and equilibrium. There is no steady state, there is only the constancy of change.

In another month we leave for Belize to teach the 11th annual Permaculture Design Course at Maya Mountain Research Farm (seats still available here). Personally, it will be our 50th time instructing the standard 72-hour Design Course. We often say, when we teach in such places, it is not the people that are the instructors there, it is the land. In this case it is land that has been refined, articulated, complexed and restored to if not the Paleolithic model, then to a Neolithic transitional stage, where both domestic and wild systems co-exist in a riot of cascading productivity.

If the Dwyer family had taken this workshop, or read Lengnick's book, they would not have been caught by surprise when their world of modern illusions suddenly dissolved. They would probably never have gotten into that situation to begin with.

Sunday, January 3, 2016

Dystopias and Eutopias

"Cities like Miami, New Orleans, Tokyo and Venice will squander billons to forestall the inevitable and for a while may even seem to succeed, only to lose it all in one spin of the wheel — a single bad day with some monster storm."

The wind billowing out the seat of my britches,
My feet crackling splinters of glass and dried putty,
The half-grown chrysanthemums staring up like accusers,
Up through the streaked glass, flashing with sunlight,
A few white clouds all rushing eastward,
A line of elms plunging and tossing like horses,
And everyone, everyone pointing up and shouting! 

—Theodore Roethke, The Child on Top of the Greenhouse

Watching the development of the Arctic superstorm on, our eyes drifted to the Eastern Mediterranean, curious about the lake effect of that large body of water on Palestine and the Middle East. We had seen a photo earlier in the week from Instagram of a trolley making its way through snow in Istanbul, and we knew Eastern Mediterranean weather was likely cold. 

We latched onto two curious patterns. The first was that cold air mass descending out of the Russian steppes, crossing the Black Sea, passing through the Dardanelles and entering the Mediterranean, where the hot air mass in Africa wheeled it around to lash the shores of Gaza. It was no surprise to see our heroic permaculture pioneer there in Ramalla, Murad AlKhufash, bundled up against the cold. 

The other pattern we saw was farther west, beyond the boot of Italy, where two air masses converge and bend up into the continent. The first comes in off the North Atlantic, collides with that hot high in North Africa and swings up into Provence. The second is a westward flow of cool Mediterranean air moving down from the Italian Alps, out through the San Remo Bay and then along the gold coast, past Nice, Cannes, Monaco, before suddenly sweeping north, drawn like a magnet to that same compass heading in the Golfe de Lyon. 

We watched, rapt, this vacuum in Southern France, endlessly drawing warm air up into Southwest Europe. It is a weather pattern as old as human history. This is where the oldest known hominid settlement, a stick and sealskin family lodge around a central firepit, is found at Terra Amata, 400000 BCE. "Tautavel man" (possibly Homo heidelbergensis) built refuge there, moving along an annual coastal hunting route during the Mindel glaciation. The cave paintings at Lascaux date to the middle of that Ice Age, when this part of Europe was relatively warm and food was plentiful, although stone tools discovered at Lézignan-la-Cèbe in 2009 date humans in France to at least 1.57 million years ago.

What we are looking at now, with this modern satellite imagery, is the climate signature of very old refugia — the places to which our kind, the two-leggeds, repaired when climate changed abruptly. 

As the weather warmed again, there was an expansion of peoples from southwest Asia into Europe from the Aegean and Eastern Steppes, about 8500 years ago, marked by the introduction of Indo-European speech. Vascons bear the remnant genome — related to none other in the world and retaining a fragment of Neanderthal DNA — and pre-Indo-European linguistic roots. These peoples were likely forced from the lowlands and pushed upland by Middle Eastern migrants from 6500 to 4000 BC, moving eventually into the Pyrenees, where they live today in the Basque region of Spain and Andorra.

As an aside, when we were researching the history of the conquistadors for The Biochar Solution, we came across the fascinating tale of Lope de Aguirre (1510-1561), nicknamed El Loco ('the Madman')  who was psychotically depicted by Klaus Kinski in Werner Herzog's B-film, Aguirre: the Wrath of God, in 1972 (where our friend, the bioregional poet and singer, Christopher Wells, performed as an extra). Aquirre, a Vascon, was said to be nearly 7 feet tall and was uncomfortable in leather boots, which compells us to muse about the possibility of his Neanderthal bloodline. When Aguirre was sentenced to public flogging for his cruelty towards the indigenous peoples he conquered and enslaved, he endured his whipping but then pursued the judge who sentenced him. Over three years he ran 6,000 km (3700 miles) through the mountains and jungles on foot, unshod, on the trail of the judge, who slept in armor to protect himself. He caught and killed the judge but was pardoned in exchange for his Indian-fighting services, until once more atrocities and his open rebellion against the Spanish crown made him a hunted rogue agent, gone off the reservation, and he so was recaptured and terminated with extreme prejudice. 

The people living in the highlands of what is today Bolivia might of thought they had a pretty good life for themselves in a place of great natural beauty until that guy showed up.

Five hundred years before Aguirre, the Southern French and Italian coast was the tribal homeland for the Ligurians, whose language carries as many Celtic words as Indo-European, and who were conquered in the Punic Wars by Rome. The ancient Roman port of Ventimiglia, on San Remo Bay, lies close to one of Europe's most treasured ecovillages, at Torri Superiori, which perches just back up that river valley, at the transition point where paved roads give way to mountain trails, and a days' walk will take you through many vacant, or nearly vacant, fieldstone towns and cobbled hamlet ruins in the foothills.

In 1834, Henry Brougham, Lord Chancellor Lord Brougham and Vaux, discovered the sleepy fishing village of Cannes and built a winter villa there with immense lawns of turf imported from Britain by sail. Lord Brougham, epitomizing Britain's ruling class, is remembered for his stern attack on the radical idea of providing public education:

I should regard anything of the kind as utterly destructive of the end it has in view. Suppose the people of England were taught to bear it, and to be forced to educate their children by means of penalties, education would be made absolutely hateful in their eyes, and would speedily cease to be endured. They who have argued in favour of such a scheme from the example of a military government like that of Prussia have betrayed, in my opinion, great ignorance of the nature of Englishmen.
— Report of the Parliamentary Committee on the State of Education (1834).

Trailing in Brougham's turfboat wake, wealthy Victorian scoundrels landscaped themselves along the gold coast and over the present Italian border to Bordighera, San Remo and other Ligurian villages (until 1860, Nice and Menton were in the Kingdom of Piedmont-Sardinia), building exotic terraced gardens and palatial estates befitting the rewards of extractive colonial empire. It was in a family villa near Ventimiglia that Lord Balfour hosted the San Remo conference to design the partition of Palestine, haughtily issuing "Israel's Magna Carta," and precipitating the Jerusalem Nebi-Musa riots of 1920-21.

It was not just the warmth and healthy winter climate that attracted the British gentry. The cost of living was lower there than in London, Belfast or Edinburgh, and if one had served her Majesty in one of her distant colonial outposts and remembered fondly being waited on by servants — and the cool tropical drinks out on the veranda — one could hire poor 
French peasants for a pittance. These were the years following Napoleon's ruin, when empirical overreach sank French fortunes in a foolhardy Russian winter campaign and then got mopped up and tossed into history's dustbin by Wellington and the Prussians.

To some British ex-pats, the Riviera was simply an escape from Victorian morals, a place for singles and gays to freak freely — as Somerset Maugham put it, "a sunny place for shady people."


Last week we listened to a Kunstlercast podcast in which James Howard Kunstler chatted with Chuck Marohn of  The two mused at how estate prices had fallen in the rust belt and how easy it would be for aspiring youth and young families of like-minded kith and kin to move in, build collaborative, regenerative local economies while incurring zero debt, and even be supported in that reclamation process by the greater city, state and county taxsheds interested in recovering misallocated and stranded assets amid cascading petrocollapse.

Personally, we think climate change should be a major consideration. As we listened to scientist emeritus James Hansen in his Paris talks last month, we heard the urgency of his concern for sea level rise and took that to heart. But no one can say with certainty how fast an individual section of coastline will give itself up to the waves and that provides some comfort to coastal dwellers. Cities like Miami, New Orleans, Tokyo and Venice will squander billons to forestall the inevitable and for a while may even seem to succeed, only to lose it all in one spin of the wheel — a single bad day with some monster storm.

In Climate in Crisis (1990) we speculated that the hot interiors of continents were not going to be pleasant places in the coming years. With some exceptions, most will become dreadfully hot and water starved, subject to tornadoes, wildfires and even dust bowl conditions. The Pacific Northwest will be more wet, as will the American Southeast, but that also means much greater humidity and unless you can power air conditioning with renewable energy, not very happy places in warm times of the year. Mosquitoes and biting flies will love the change, and will proliferate too in thawing regions closer to the poles.   Much of the Amazon Basin (another lockbox of untapped viruses) is expected to desertify at 3 degrees above now, and that will alter rainfall patterns for a very large part of the world. Being on the Equator, their climate may begin to resemble the lower quadrant of Saudi Arabia in a few decades.

When we taught our most recent permaculture course in Iceland we thought that would be a lovely place for young people to settle and build ecovillages. Cape Breton Island, Nova Scotia, fits a similar mold. We used to think that might be a great place to relocate our family and maybe take up fishing. After watching and the gigantic storm now churning through the Arctic, we have second thoughts.
One thinks of higher elevations as refuges, and indeed, some very spectacular real estate can be found in the Rockies, Alps and Snowy Mountains. Insofar as the rain-shadow effect of cross-mountain winds continues, these may provide some areas of refuge, albeit gradually shrinking. So may certain islands, if they rise up from the sea to secure elevations and can shelter from superstorms.
As refugees continue to pour north into Europe we are reminded what it may look like in these more comfortable microclimates like Southern France in the not distant future. Human numbers are already staggering, our fecundity rates show no sign of abating, and we add 220,000 to the number of us at procreating age, every day.


In the end, it matters not where we are. It matters who we are, and what we do with our knowledge and skills in the time we are given.

Through sunny fields
And valleys deep
Through noisy streets
And river's sweep

Although I may race
With the wind
I keep that quiet place

My heart; a chamber
Safe and warm
To give you shelter
From the storm

— Gabriela Duricova




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