Saturday, 12 July 2008

Recession, Depression or Economic Meltdown?

Hard times are coming, for some they are already here.

It now seems as though a recession is unavoidable, but how hard will it bite?

Over the last decade as house prices have risen exorbitantly, so has mortgage equity withdrawal as home owners have cashed in on the relatively cheap credit this affords them, and consequently British household debt is the highest recorded in World history.

So ultimately this debt has driven our economy (principally made up of the service sector, with manufacturing unable to compete in a global economy), and the significance of this is already being felt, with the BBC reporting that it 'shrank at its quickest rate in nearly seven years' during June!

This obviously has the potential to lead to a cycle of redundancies and a further decline in consumer spending, nothing new there. No, what is really frightening is the incredible rise in global oil prices, which are driving up the cost of living at a time when many peoples´ disposable income is falling.

I am sure I do not need to spell out just how vital oil is to our economy - in short it is a raw material required to manufacture plastic, pesticides and chemicals, transport goods, food and people and produce electricity. It is not an overstatement to say society would collapse without it.
Peak Oil

Back in 1956, M. King Hubbert theorized that as oil is a finite resource, that there would be a peak in the amount of oil that can be extracted from any given reserve and duly speculated that the US oil reserves would peak in production in the 1970s. He was proved right.

Energy Return on Energy Investment (from Wikipedia)

When oil production first began in the mid-nineteenth century, the largest oil fields recovered fifty barrels of oil for every barrel used in the extraction, transportation and refining. This ratio is often referred to as the Energy Return on Energy Investment (EROI or EROEI). Currently, between one and five barrels of oil are recovered for each barrel-equivalent of energy used in the recovery process. As the EROEI drops to one, or equivalently the Net energy gain falls to zero, the oil production is no longer a net energy source. This happens long before the resource is physically exhausted.

Once oil production has peaked, demand will outstrip supply (ceteris paribus, for example assuming an alternative energy source hasn´t been discovered) and the price of oil will continue to rise.

Many now speculate that we are approaching Peak Oil globally (though this excludes reserves in territory such as Antarctica, in which no drilling rights exist), and some believe this is the real motive behind the USA´s decision to invade Iraq. Other sources indicate it may already have peaked -

The consequences of a global peak and then decline in oil production are far reaching, as I have already stated oil is integral in sustaining our modern society, in fact oil and fossil fuels, as an abundant source of energy, are what has enabled the global population to grow as it has done.

We will have to be more economical with our use of oil, though even with utilising new technologies such as more fuel efficient engines, one should expect countries´ economies to shrink and that our standards of living regress, in addition to civil unrest and possibly wars fought over oil and other resources, too.

It wasn´t until May this year that parliament has really addressed the issue, only then issuing a statement supported by 50 MPs. Prior to this the BNP was the only political party to acknowledge this potential catastrophe - no doubt our Ministers and MPs have been too busy with their snouts in the trough to notice.

50 MPs sign Peak Oil Commons Motion
Friday, 23 May 2008
50 MPs warn government that global oil production may be peaking

London, 23rd May 2008 - A cross-party group of MPs including former Liberal Democrat leader Sir Menzies Campbell have signed a Commons motion urging the government to review its estimates as to when global oil production will peak and begin to decline.
Will Britain cope in a Peak Oil inspired recession?

Consider that we no longer manufacture anything, that since around the turn of the century we have for the first time in many years been net oil importers, together with a burgeoning civil service which has swollen by 600,000 since 1998, the increased burden of the additional unemployed and the rising cost of importing food.

Finally, given all of this, how can our govenment justify further immigration - people who will consume food, services, fuel, etc - and would this exacerbate tensions between our communities? The future does not look bright for Britain.

Like the Roman


6 comments:

Anonymous said...

Looks like we are up Shit Creek without a paddle.

As John of Gwent says: could this be the thing that wakes up the sheeple?

johnofgwent said...

I was damn lucky in the recession of 1990-92. I had just started a freelance contract in the UK developing a piece of technology that was later shipped round the world, indeed it quite literally linked together the whole planet.

I drove across half the UK to the site every week in days when petrol was a mere 37.9 pence a litre and a pint of beer little more than a quid in london.

And we had a tory government that belived small businessmen should be allowed to run small businesses.

And my near-unique ability to test things to destruction and then work out why they had broken and suggest ways to stop it breaking again meant I sat out the recession fully and gainfully employed. because the colour of my skin meant nothing to an american company that hired and fired on merit the way nelson used to run his part of the navy.

I remember the company I was hired by ran an open day in the depths of the blackest days in 1991. They wanted half a dozen people. They ran adverts in the local papers, the 'net had hardly been invented then. The ad asked you to turn up at 4pm.

By 2pm fifty people were standing patiently outside the doors. By four pm the queue stretched round the block.

I well remember one unthinking, unfeeling bastard shouted across half the office "John, pack your bags there's twenty people out there willing to take your job". Unthinking and unfeeling because I knew that there were fifteen other people working in that building who WERENT as good as I was, KNEW they weren't as good as I was and KNEW their permanent jobs were more at risk than my contract was.

To his credit, the Board-Level-Director of the US Parent company who hired me in the first place, who was standing next to me reviewing the the latest system stress test at my CAD terminal yelled back "THATS GOOD WE WILL NEED ALL TWENTY TO REPLACE HIM"

I hope I still have those abilities at hand. I'll be needing them. "Christmas Cards" has a whole new meaning for me this year. Except it doesn't. Maggie T gave me my first Christmas P45 in 1982. I'll be getting my fifth this year.

Now comes the test of mind over matter.

Yes I know, The old gag. "They don't mind, and I don't matter".

But I prefer the quote from larry niven's "inferno". A sci-fi rendition of Dante's divine comedy. In dante's original it is the poet Virgil who takes him on a tour of hell. In Niven's version it is, I believe, supposed to be fellow sci-fi author and director John Carpenter who wakes up dead and finds Benito Mussolini is his guide through hell.

As "Carpentier" awaits judgement his guide - whose identity at that time is not yet revealed to us - shrugs off the advanced of lucifers minions saying he has been judged once and cannot be so judged again.

It is the same with the P45 and the voodoo doll alike. You can fall to your knees and enter the depths of despair or you can get off your knees and live a free man.

Where DID I put that battleaxe ?

Anonymous said...

Weller once sang, "Walls come tumbling down", he wrote it for Thatchers bunch of traitors, though of course it is even more relevant today.

bernard said...

It's none of the three you mention, GA.
The killer punch, and the one every govt fears, is Stagflation; falling consumer spending combined with rising inflation.
It becomes endemic in all socialist controlled economies sooner or later.

Anonymous said...

Today the left leaning Daily Mirror reports the true inflation figures which are double figures.
And five times higher than admitted by government.
Again points to all POLITICIANS are hiding facts.
I thought inflation was around 12% which i wrote to my local MP stating this, it appears my figures are an underestimate.
AND HERES THE WORLD FACT BOOK DEBT FIGURES.
Five Countries with the Highest External Debt, 2006

1. United States $10.0 trillion
2. United Kingdom, $8.3 trillion
3. Germany, $3.9 trillion
4. France, $3.5 trillion
5. Italy, $2.0 trillion
Source: CIA, The World Factbook, as of 9
THAT WAS 2006. FAR WORSE TODAY..THINK OF THE SIZE OF THE UK COMPARED TO SAY THE USA. WE ARE IN DEEP SHIT.
ADD ALL THE PPP INITIATIVES DEBT FOR FUTURE GENERATIONS TO PAY BACK FOR SCHOOLS AND HOSPITALS.
ALSO THE HUGE PENSION CRISIS THAT WILL HIT IN APPROX 15 YEARS TIME!
AND A NATIONAL DEBT OF £6.3 TRILLION TODAY.

BRITISH COMPANIES SOLD OFF TO INDIANS AND ARABS LIKE NEVER BEFORE LEAVING BRITS UNDER THE CONTROL OF ....EXACTLY WHAT ENOCH SAID;
Accidental?
Like hell it is!!

Anonymous said...

A must read for anyone that cares about this country.
Then ask yourself why no mention officially.
Then ask why is Britain up for sale across Arab states because it is!
Re-directing attention away for whats'going on seems to be Westminsters main aim.
Climate change we didn't swallow neither did we Sar's virus..same with bird flu and all the other dire warnings.
Then Gun Crime that became old hat.now it's knife crime they realise today's society has a short concentration span.
WHEN WHAT WE SHOULD BE WATCHING IS THE CREEPING SHARIA FINANCE INTO THE UK. THE BUYING UP OF ASSET'S AT KNOCK DOWN PRICES. INVESTMENT'S INTO ALL OUR BANKS FROM SAUDI BACKED NATIONS.STOCK EXCHANGE WITH ALREADY AN ARAB MAJORITY SHARE.
NO WONDER THE BISHOP AND QCs SPEAK OF AN ACCEPTANCE OF SHARIA LAWS.IF IT CARRIES ON THIS WAY IT WILL BE BY STEALTH THAT AN ISLAMIC STATE IS FORMED IN THE UK.
AND A GOVERNMENT THAT INVITES IN THE VERY PEOPLE RESPONSIBLE THE MUSLIM BROTHERHOOD AKA HAMAS.

http://shariahfinancewatch.wordpress.com/2008/06/20/shariah-finance-fifth-generation-warfare/

HISTORICAL DEVELOPMENT

The origins of the modern financial jihad infrastructure, including all Islamic economic and financial regulatory organizations like the 1991-Bahrain-registered and -based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), date back to the 1920s and were an invention of Muslim Brotherhood founder Hassan al-Banna. He designed political, economic, and financial foundations to enable Muslims to fulfill a key form of jihad mandated by the Qur’an—financial jihad.8

He viewed finance as a critical weapon to undermine the infidels—and “work towards establishing an Islamic rule on earth.” 9 He was first to understand that to achieve world domination, Muslims needed an independent Islamic financial system to parallel and later supersede the Western economy. Al-Banna’s contemporaries and successors (such as the late Sayed Qutb and current Yusuf al-Qaradawi) set his theories and practices into motion, developing shari’a-based terminology and mechanisms to advance the financial jihad— “Islamic economics,” finance, and banking.10

Early 1930s MB attempts to establish Islamic banking in India failed. Egyptian president Gamal Abdel Nasser shut down the second attempt, in 1964, after only one year, later arresting and expelling the Muslim Brotherhood for attempts to kill him.11

But Saudi Arabia welcomed this new wave of Egyptian dissidents, as did King Saud bin Abdel Aziz earlier waves in 1954 and 1961.12 Their ideas so appealed to him and his clerics that in 1961, Saud funded the MB’s establishment of the Islamic University in Medina to proselytize its fundamentalist Islamic ideology, especially to foreign students.13 In 1962, the MB convinced the king to launch a global financial joint venture, which became the cornerstone and engine to spread Islam worldwide. This venture created charitable foundations, which the MB oversees and from which most Islamic terrorist groups benefit.14

The first were the Muslim World League (MWL) and Rabitta al-Alam al-Islami, uniting Islamic radicals from 22 nations and spinning a web of many other charities with hundreds of offices worldwide.15 In 1978, the kingdom backed another MB initiative, the International Islamic Relief Organization (IIRO), which, with all these “charities,” is implicated for funding al Qaeda, the 9/11 attacks, Hamas, and others.16 These “charities” are used to advance the Muslim Brotherhood and Saudi political agenda, namely empowering the ummah and imposing worldwide shari’a. “I don’t like this word ‘donations’,”. al-Qaradawi told BBC Panorama on 30 July 2006. “I like to call it Jihad with money, because God has ordered us to fight enemies with our lives and our money.”17

In 1969, the Saudis convened Arab and Muslim states to unify the “struggle for Islam,” and have ever since been the Organization of the Islamic Conference’s (OIC’s) major sponsor. The 56 OIC members include Iran, Sudan, and Syria. The Jidda-based, “pending the liberation of Jerusalem,” OIC’s charter mandates and coordinates “support [of] the struggle of the Palestinian people, . . . recovering their rights and liberating their occupied territories.” 18 The OIC charter includes all the MB principles. Its first international undertaking in 1973 was to establish the Islamic Development Bank (IDB) “in accordance with the principles of the shariah,”19 as prescribed by the MB—and to launch the fast-growing petrodollar-based Islamic financing market. The IDB, more a development than commercial bank, was established largely “to promote Islamic banking worldwide.” 20 “[A]n Islamic organization must serve God… and ultimately sustain …the growth and advancement of the Islamic way of life,” writes Nasser M. Suleiman in “Corporate Governance in Islamic Banking.”21

CREDIT CRUNCH...ACCIDENT OR BY DESIGN?