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The big meltdown - 2020?

Charles Blomfield's painting of the 1886 eruption of Mount Tarawera based on eyewitness accounts

Are we headed for the next succession of financial destruction? It’s been ten years since the global financial crisis (GFC) of 2008 that almost ruined western industrial civilisation. And while rich people in the west, at least mainstream media, seem to have the impression that we now are “back to business” lots of people around the globe are suffering from the reality of limits to growth that struck at the heart of the global economy in 08. Even if more fortunate people, like Swedes, can go on deluding themselves (for a little while) that there’s no problem with our current perverse growth paradigm there are people who don't have that luxury. Just take a look at most of the countries in the Middle East and you will quickly understand how peak oil, water scarcity, food crises, overpopulation and climate change can trigger endless misery and suffering (read Nafeez Ahmeds excellent book on this).

Contrary to the dominant narrative of “progress” I see major systemic crises converging towards the year 2020, or sooner! Are we reaching a major tipping point or simply another wave of entropy entering the system?



The symptoms of this can be found in the global economy itself with the rate of global growth stagnating (i.e. energy and debt limits) and tensions between countries competing for limited resources increasing. We also see it in the political sphere where maniacs with empathy deficit disorder get into power as a response to people's frustrations and start talking about all kinds of warfare: cultural, economic and military. We already see social unrest, conflict and trade wars but also talk about military wars connected to resources, mainly oil. Most societies are already very vulnerable, lack resilience to withstand further shocks, so a global financial meltdown could escalate fairly rapidly into chaos and destruction. When people lose everything, and they don't know why, they tend to get angry and violent. How will the US act? Will they unwind the empire, all military bases etc., or spend every bit of their last resources to plunder the planet? The place is more like an oligarchy so the über rich might decide they want the last of the oil, not for the people but for themselves. Europe is a basket case and is likely to break down, every nation on their own eventually. If a economic collapse doesn't do it, the flood of climate refugees will.

As for Sweden, we will see our massive housing bubble pop and a deep recession meanwhile people fleeing from the middle east will want to immigrate here. With the nationalist and xenophobic party, the Sweden Democrats, now being the third largest party things could turn out to their advantage as people become poorer and are likely to blame immigration issues. Similar to what we see in the rest of Europe. There is, however, a fairly strong left still in play in Sweden and to my surprise they got 10% of the votes in this year's election. So perhaps there is still some balance left in the political system, but without any major blocs the grownups in the government has yet to come to an agreement about how to rule, so maybe not. While they argue about who get what seat the world is on fire, and so it goes with large bureaucratic structures that become incompetent. And so the likelihood of social unrest increases.

As for the UN climate targets last chance of bending the emissions curve, I'm pretty pessimistic. A global financial meltdown will put all those hopes on hold and even if action did occur its likely too late to stop the climate from going above the 2C target. Moreover, what we need is not “green growth” but actual downsizing which would happen when the economy contracts. If we won't voluntarily give up consumption, mother nature will do it for us. But of course, it won't be what most people hoped for, it likely won't be a civilised and peaceful decent.

Will there be a global financial meltdown soon? Somewhere between 2018-2020? Well, I don’t know, but what's certain is that something has to give since we live on a finite planet where endless growth is impossible. There's no negotiating with nature.

Thank Ice Ages for Lakes

Map of the world's lakes with surface areas of 10 hectares or more. Dark blue areas reflect the high concentration of lakes in those regions. Credit: HydroLAB, McGill University

New research from the McGill University, published in Nature Communications, maps the distribution of our planet's lakes. It clearly shows how the last ice age shaped and formed many of the 1.4 million lakes, larger than 10 hectares, that contain 15% of all the lake water in the world. Dark blue color indicates density of lakes, and as the map shows the highest density can be found in the northern hemisphere, in regions previously covered in large ice sheets. The rest of the worlds lake water, 85%, can be found in the 10 largest lakes. About half of the lakes are freshwater and the other half are salt lakes.


Global distribution of water volume stored in lakes and reservoirs with a surface area of at least 10 ha. Source: Messager et al. (2016)

If we look at individual countries (table below) we find that Canada, Russia, USA, China, Sweden, Brazil and Norway rank in the top in regards to number of lakes and area (km2). While Russia stands out with the largest volume (103 km3) due to its many deep water lakes (e.g. lake baikal and lake vostok). Thinking in terms of drinking water, volume would probably be the most important parameter. But then again, distribution, pollution and many other factors come into play when determining access to safe drinking water.

Countries with most lakes
Country
Number of lakes (103)
Area (103 km2)
Volume (103 km3)
Canada
879.8
856.5
12.6
Russia
201.2
667.4
102.2
USA
102.5
340.3
23.5
China
23.8
81.0
1.0
Sweden
22.6
34.3
0.5
Brazil
20.9
31.4
0.2
Norway
20.0
13.9
0.3

The study only focuses on mapping out lakes it doesn’t say anything about what state these lakes are in etc. What we can tell is that the distribution of lakes is very uneven, very few along the equator and plenty in the north. Since water is such a critical resource and we’re already witnessing extreme heatwaves and extended droughts along the equator (e.g. southwestern US, Middle East) people are already realising that agriculture has to shift further north to survive, as do they.

Britain Realises Limits 40 Years Too Late

We don't need more reports

I find it amazing and tragic how organisations and governments keep issuing reports that confirm the dire situation humanity is in with regards to depleting resources, climate change and economic contraction. Latest is a report Limits Revisited: a review of the limits to growth debate commissioned on behalf of British MPs written by Tim Jackson (author of Prosperity without Growth, 2009) that concludes we are headed for “an eventual collapse of production and living standards” in the next few decades, given business-as-usual. 

The report makes for some interesting reading and refers to some very important studies but offers nothing new in terms of scientific insight. It simply restates what previous studies have already confirmed, the global economy is running into resource limits. Going forward we should not expect resource fuelled economic growth but rather contraction.

As for climate change, we are pretty much doomed to failure, for a 66% chance of avoiding 1.5°C warming (the “safe limit”) the world only has 6 years to decarbonise the entire economy. That seems impossible given that fossil fuels cover 80% of global energy consumption and it takes many decades to replace all the current infrastructure.

40 years of inaction

It has been more than 40 years since the Club of Rome presented the Limits to Growth report but absolutely nothing has been done to steer society onto a new “greener” path. Resource depletion and emissions have continued unabated. 

Living sustainably is now impossible and instead we have to focus on bolstering our resilience to coming shocks and disturbances. While I do think we should do everything in our power (e.g. limit the destruction of ecosystems, transition from fossil fuels to renewables, go from global to local economies) to change the way we live on this planet we also have to realise that many so called “solutions” are no longer viable because we waited too long. 

We could have stabilised our population at 3.84 billion in 1972, leaving more space for ecosystems and a larger per capita share of resources for people. We could have replaced much of the infrastructure needed to make a transition to alternative fuel sources by now. But we didn’t do those things. Now, instead, nature is forcing us to live within the planet's limits through the usual mechanisms (e.g. epidemics, starvation, drought). 

The war torn Middle East (e.g. Syria, Iraq, Yemen) is a clear case of overpopulation, depleting resources (freshwater, oil) interacting with climate change (megadrought) and conflict over the remaining resources. These states were fragile to begin with (e.g. high inequality, lack of trust, lack of infrastructure) so even small perturbations were enough to push them over the edge. 

But even countries with a higher degree of resilience from the outset have started crumbling under the pressure of entropy in form of deflation (e.g. Greece, Italy, Japan). The downward trend is global. The collapse process, i.e. reduction in socioeconomic complexity, is already underway.

Predatory Militarism on the Rise

IT IS 3 MINUTES TO MIDNIGHT Doomsday Clock. The Bulletin

Responses to resource scarcity

Throughout history, different societies have opted for different “solutions” to energy scarcity and collapse. Some might try to adapt to this new socioeconomic reality (Cuba 1990s), others may protect the elite at the expense of the general population (North Korea 1990s), while some may turn to external aggression and predatory militarism (Japan 1918-45) (Friedrichs, 2012). Predatory militarism is, according to Friedrichs, the result of desperation and temptation to gain resources through military means. In the Japanese case, the element of desperation prevailed. In the 1930s Japan started its aggressive military campaigns against China in attempts to prevent fuel starvation and external dependence on strategic resources. However, ironically this predatory militarism instead lead Japan to become increasingly dependent on importing critical commodities (oil) from the US (about 70-80% of gasoline). So when the US put in place a trade embargo (1941) Japan started looting oil from Borneo, Sumatra and the East Indies. And we all know what happened after that. In short, Japan tried gain critical resources from other countries, prompted by the potential of fuel starvation, which lead them to scrap free trade policy and to radicalise a strategy of predatory militarism to secure access to energy.

Worrying Trends 2015

Countries prone to military solutions like the US and Russia seems to have followed a Japanese-style strategy of predatory militarism.The US (and NATO) involvement in the Middle East to secure access to oil by military force is a clear example of this. We also see a worrying trend of potential US involvement in the South China Sea, as well as China’s use of its military power to secure oil and gas in Central Asia. However, it seems unlikely that China will stray further than that in terms of military force, instead they have been making trade deals with Iran and Russia for oil. China will probably hesitate to anger the US which has a much stronger military than China, but the country may become increasingly desperate for more energy as its population continues increasing while demanding reductions to coal pollution. I am more concerned about what the US might do next. Since 2001 the US have been in constant warfare, and for no benefit of the people of those countries (Afghanistan, Iraq, Libya, Syria, Yemen, Pakistan) or the countries receiving all the migrants from these war torn regions. Then we have Russia's invasion of Ukraine (or support of separatist movements as some like to call it), to secure the flow of natural gas, and now its involvement in Syria. This shows signs of major geopolitical instability in the oil rich Middle East and in Europe due to global scarcity of energy, and an escalating power play between NATO and Russia over "what's left".

October – Outlook from a Swedish perspective

On the military side of so called strategic deterrence we have seen an increase in military drills in our neighbourhood. During the summer both NATO and Russia conducted naval exercises in the the Baltic Sea. Now, during the fall, drills have intensified both in Russia, Belarus, and on NATO territory. Both naval and air forces have been deployed to show “might” on both sides. However, it is on the nuclear side of the deterrence strategy where most activity have been going over the last couple of months. It is likely that Iskander with nuclear capability is located in Kaliningrad and that the US has started to upgrade their capability with the new B61 nuclear bombs for fighters at German, Italian and Turkish air bases. At least according to credible Swedish commentators. Furthermore, the UK has voiced a wish to join NATO:s exercises on nuclear escalation (i.e. in the case of transitioning from conventional weapons to high alert for nuclear weapons deployment).
File:Nuclear weapons.png
Credit: WikiCommons


The Russian intervention in Syria has increased the likelihood of confrontation. Perhaps not intentional but the risk of unintended consequences, with potentially catastrophic results, getting out of hand has risen. Russian rocket launches from the Caspian Sea was, according to most experts, a demonstration of power for mainstream media and the domestic audience back home. But because the robotics system, similar to Iskander, can launch both conventional ammunition as well as nuclear this illustrates a serious upper hand that Russia has gained in terms of tactical and potentially mid range weaponry. It is, however, yet unclear if the images shown were real or potentially tampered with. The propaganda war between Russia and the West has reached such high levels that it's becoming increasingly difficult to know what is actually going on down on the ground.

For Sweden this escalation of tension between NATO and Russia is very troublesome, especially since exercises have been occurring on and around our borders. We don’t really have any defence to speak of and so popular support for joining NATO is increasing in Sweden, a similar trend is visible in Finland. Experts over here are mostly concerned with the unpredictability of Russia, which is very good at hiding its true intentions and preparations. The larger issue, however, is the political confusion over Russian statements and lack of insight into Kremlin's actual behaviour. The West’s analysis of Russia have been wrong all along and there has been little focus on the actual geopolitical consequences on the ground. This is of course a consequence of the whole propaganda war going on and the increasing inability of the government to solve complex problems.

Furthermore, there is very low public support for NATO and military interventions in Europe, which probably annoys the hell out of US "diplomats". Few soldiers have been mustered in Europe and the few who are in service are not ready for combat. Most Europeans don't want to get involved with either Russia or the US, but if they have to chose, well, Russia supply almost all of Europe's natural gas and oil so… yeah… I think you know the answer. 

As for other European countries turning to the predatory strategy we have seen some of that in terms of the nuclear powers (France, the UK, Italy) engagement in the Middle East. It is unclear what these countries may do under pressure, any large-scale military response inside Europe seems unlikely, but then again, history has shown that any liberal democracy can turn into an authoritarian military machine when conditions turn really ugly. The current economic crisis and hardship for people in southern Europe could perhaps lead to extremists rising to power again if there is another major economic blow (which looks like it's on its way now with the global economic slowdown). Even here in Sweden I see a trend towards people voting for the Sweden Democrats (far right wing) in pure frustration over the current government's incompetence. Of course, the problem is not so much political as it is a resource problem but most people don't see the connection. And so on and on the debate goes, generating more irrational political behaviour, which in turn angers the public even more.

Despite all these worrying signs in our close proximity our dear politicians, here in Sweden, have not been able to come to any agreement about funding emergency preparedness and response. So we are basically helpless if there is a conflict in our neighbourhood and will have to rely on Finland and other countries to help us out. Or perhaps we would simply hope that there is nothing of value to Russia and NATO here, we have no oil, coal or natural gas. 

Limits, desperate times and crazy solutions

Source: Pixabay CCO Public Domain

What about oil?

Oil is like a two edged sword. Considering climate change and ecological degradation we should stop using it tomorrow. Greenhouse gas emissions is only one of the reasons. Another is our usage of oil to make plastic products that now fill the oceans and kills marine life. On the other hand, we have made our civilisation totally dependent upon oil for transportation, food production, medicines and keeping the economy going. Economic growth is basically a function of energy (oil) per capita consumption. Also, in Sweden we import a staggering 50% of all the food we consume, while farmers go into debt or have to close down their farms (which is totally outrageous). If there is a serious oil shock we might not be able to feed our population and people would starve! One report said that we perhaps could eat more horse meat since we currently have 360 000 horses only for recreational use. That is a bizarre proposal for solution. 

I wonder what will happen when credit run dry due to an economic slow down, can we still import the oil we need? Looking at the current situation of falling commodity prices one might think that this would be a good thing. But I'm afraid it could be just the opposite. First of, it is lack of demand that has caused the current falling prices, people are broke and debt saturated, not some myth about "Saudi-America". Second, falling prices means that many commodity companies will face bankruptcy which eventually would mean falling supply. And once supply falls I'm not sure it will be able to come back online again as no one will fund these expensive and risky operations in a economic downturn. So either if there is a shock or we simply cannot afford it, we are very vulnerable to a loss of oil imports.

Limits to growth

Ordinary people are not aware of how precarious our situation really is since government officials have started changing their statistics. Since 2010 they have chosen to exclude GDP per capita measures adjusted for inflation, something that almost no journalist seems to have questioned. What has been seen as a "Swedish miracle" of strong GDP growth compared to rest of Europe, since 2008, has been total fiction that mainstream media fell for without critical analysis. Looking at the numbers, GDP per capita adjusted for inflation, we can see that Sweden actually only grew by 0.3% per year between 2006-2014 (see diagram). Compared to other "developed" nations Sweden places somewhere in the middle, with Poland having strong growth (3,5%/year) while the Greeks have suffered de-growth (-3,1%/year). What also becomes evident is that most of these countries have actually been stagnant or suffered de-growth. Something that is no surprise for those who are aware of the limits to growth, the fact that we live on a finite planet with a limited amount of natural resources and dwindling energy.  
Source: OECD statistics

Political theatre that serves no one

As with most things these days our politicians don't really have a plan for any of the above situations. It seems to be a rule these days that the more serious the situation gets the more they fight about inconsequential things. This becomes evident in the latest budget discussions. The conservatives don't want to raise taxes while the social democrats want to tighten finance but at the same time makes the debt problem even worse!

The central bank has adopted negative real interest rates and supported buying of securities in a desperate attempt to stimulate the economy while the government has presented a budget that is supposed to be financed by raising taxes and lowering government spending. This sends the signal of a totally incompetent government that has no clue of what its doing. These policies will only benefit the people who have financial assets, speculating on houses and stocks, while savers are being punished. Thus, making the debt crisis worse. The private sector has an enormous amount of debt (252% of GDP), way above the stagnant GDP per capita income, which according to one study makes Sweden the number one country with the largest private sector debt in the world.

Source: The Telegraph

Fictive wealth 

It is no wonder that the Swedish people are growing impatient with the political elite, especially when they present a story that does not fit with reality. The self serving myth of the "Swedish miracle" only help worsen the debt crisis at the same time as politicians escape responsibility. Swedish household debt has sky rocketed and now widely exceeds disposable income. The housing bubble reaches new highs for every month. But this is not real wealth, only fictive wealth, no products or services have been created. As most people probably understand, even if they repress it, there cannot be large deviations from the real economy without an eventual correction. It is not hard to figure out how it will end, rapidly growing asset prices in a country where income is stagnant is not sustainable. The hard part is telling when the bubble will pop. So when Swedes say "the Greeks have themselves to blame" then this will surely have to apply to the Swedes also when the crisis hits. All our debt is in the private sector, which is what kills economies, while the Greek debt is in terms of government debt.

A global slowdown   

Signs of deflation are now everywhere. Back in 2008 the central banks of the developed world and China decided to double down on failed policies that had promoted massive debts to accumulate in the private sector, that eventually led to a near implosion of the banking sector. Now here we are 8 years later and with $60 trillion in new debt that has not led to any significant recovery of the real economy, only asset inflation. But there is a limit to how much debt people can and are willing to take on. 
Source: The Telegraph

Now we see global currency markets in disarray, for example the Swedish krona lost 2.0%. The global debt bubble could be bursting leading to tightening financial conditions and a flight to safety into the US dollar. Emerging markets are struggling due to falling commodity prices. China has stumbled and is doing all it can to prevent a stock market collapse. Manufacturing and shipping is way down. And the list goes on, something is definitely happening. 

Desperate measures

Since interests rates are at zero, or negative, central banks have lost this weapon in their toolkit. All the stimulus that piled up even more debt has not led to any substantial recovery in the real economy. No monetary policy in the world can change the fact that we have reached limits. But desperate times have led to even more desperate measures. All G20 nations have put in force so called "bail-ins" which means that the big banks can take depositors savings next time there is a crisis. This is what happened in Cyprus. The EU is pushing Sweden to do the same and most likely we will go along with it, according to some sources it could come into effect by 2016. In other words, no one is safe when the next crisis hits. And all the suffering to come will be due to humanity's inability to understand that infinite growth on a finite planet is impossible and doomed to fail miserably.