I have finished a first read of this paper from
Tullett Prebon Group Ltd a London based company. The paper is a study mainly based on UK and US
information. I would not expect you to read it all but different parts will be of direct interest.
It is on their home page.

www.tullettprebon.com

summary
part one: The end of an era 5
the four factors which are bringing down the curtain on growth
The economy as we know it is facing a lethal confluence of four critical factors – the fall-out
from the biggest debt bubble in history; a disastrous experiment with globalisation; the
massaging of data to the point where economic trends are obscured; and, most important of
all, the approach of an energy-returns cliff-edge.

part two: This time is different 17
the implosion of the credit super-cycle
The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit
super-cycle’ that spanned three decades. Why did this happen?

part three: The globalisation disaster 29
globalisation and the western economic catastrophe
The Western developed nations are particularly exposed to the adverse trends explored in this
report, because globalisation has created a lethal divergence between burgeoning consumption
and eroding production, with out-of-control debt used to bridge this widening chasm.

part four: Loaded dice 43
how policies have been blind-sided by distorted data
The reliable information which policymakers and the public need if effective solutions are to
be found is not available. Economic data (including inflation, growth, GDP and unemployment)
has been subjected to incremental distortion, whilst information about government spending,
deficits and debt is extremely misleading.

part five: The killer equation 59
the decaying growth dynamic
The economy is a surplus energy equation, not a monetary one, and growth in output
(and in the global population) since the Industrial Revolution has resulted from the
harnessing of ever-greater quantities of energy. But the critical relationship between
energy production and the energy cost of extraction is now deteriorating so rapidly that
the economy as we have known it for more than two centuries is beginning to unravel.

Ho hum, so what. Your assumption that government can manage the economy is still wrong.

"If only we had the right data sets, *then* we could manage the economy".

Wrong.

Dear Bazz,

We have to realise that
we cannot return to the old days of "reckless
plenty." We have to change our life-styles
if we are to cope in the future.

Doomsayers have been around for decades, however
they are now becoming more mainstream -
with good reason.

Humans are very bad preparing for change. But they're
very good at adapting to it when it arrives.

I agree with much of what Dr Morgan states. He points
out that too much debt, too little
cash flows and not enough growth is problematic.
That debts are unsupportable without sustained economic
growth. This he's based on the conditions in the UK
and the US and warns other developed countries.

Fair enough. He talks about the energy crisis that we
are all facing and how the planet has a finite
amount of resources. Thus if world population
continues to grow rapidly, if industrialism spreads
around the world, and if pollution and resource
depletion continues at an increasing rate, human
society is in trouble. One way or another sweeping
social changes await us.

But there is hope. Dr Morgan hasn't made any allowances for
the ability of technology to transform the way energy is
consumed and supplied. Our government has to set out
policies to ensure a strong economy, and support jobs
and growth. A plan to boost skills and innovation so we
can succeed in the Asian Century.

As a political commentator pointed out:

"The Prime Minister announced a policy of $1 billion
jobs plan recently which was a solid policy aimed at
improving Australia's patchy record in home grown
manufacturing and the commercialisation of innovation."

"The policy included a welcome re-allocation of
Research and Development funding away from giant mining
corporations. A policy recommended by the Business Tax
Advisory Group towards small and medium enterprises, as
well as an extra $500 million of investment in so called
"innovation precincts." In addition there was #350 million
in new funding for venture capital, through the
Innovation Investment Fund."

This is a step in the right direction.

Jardine, I think you misinterpreted what the article says.
It is not a prescription for fixing the problem.
It is a description of the causes of the problem.

There is a distinct possibility that it is not fixable.

Lexi, glad that you read the article. My previous concern on our
economy was quite narrowly focused, in that I could see how lowering
availability of energy was going to get us into big trouble sooner or later.
I had not realised how fragile the finance & economy are even before
the energy crunch arrived.
It makes me more pessimistic, because the effect will be so much worse
and we will not have the resources to adapt and have a reasonable
living standard.

Everything will depend on how much shale oil can be made available
to stretch the time governments will have to act to let us down gently.
Unfortunately shale oils decline rates makes them a financial black
hole and governments may have to subsidise them.

Dear Bazz,

I understand your concern.

Indeed, I remember
reading about the rises in the price of oil in the early
1970s - when gasoline was 38 cents a gallon at American
pumps - shocked the world economy. In the inflation and
and slump that followed, some 45 million workers in the
industrialised countries lost their jobs. Thanks largely
to energy conservation, there was an oil glut, and
prices though higher, became stable for the time being.
But oil is a non-renewable resource which will inevitably
be exhausted one day.

Given the interrelationship among technology, ecology,
and resources, can global industrialisation continue
indefinitely? Some writers, such as Dr Tim Morgan
glumly forsee a new era of scarcity, in which economic
growth would be replaced, by economic shrinkage.

Others, are highly optimistic that we will cope relying on
technological innovations to solve problems in the future
as we have in the past.

But predicting the future is a
risky matter at the best of times, and to project
trends for many decades into the future, when one cannot
be aware of subsequent technological and other factors
that might affect them, is not a very reliable way of making
forecasts.

For example if data on agricultural production a century
ago had been used to project trends into the future,
they would have pointed to a global mass starvation at this
moment. But the "green revolution" (the introduction of new
hybrid species of high-yield grain) and highly mechanized
agricultural techniques have greatly increased food
production in a way that could not have been anticipated.

Harold Macmillan summed it up beautifully:

"Events dear boy have a way of making idiots of us all."

Lexi,
The spike in oil prices in the 70s was of course different to what we are now facing.
At that time the causes of shortage were political when Saudi Arabia &
others banned the sale of oil to the US because of the war with Israel.
Supply was restored after the war.
What we are facing here is a physical decline in production.
quote;
in which economic growth would be replaced, by economic shrinkage.

I suggest that you read "The End of Growth" by Richard Heinberg.
As well, alternatively "Your World is About to Get a Whole Lot Smaller" by Jeff Rubin.
Google their talks on Utube.

Your comment on food production points up a problem.
Unless we can electrify farming totally we face the necessity to
increase the number of farmers by around 100 times to feed the present population.
To use electricity on that scale for everything we really have no
alternative to nuclear or geothermal.

With politicians in most countries just actively ignoring the problem
by the time it becomes clear to every man in the street it will be far too late.
I met and spoke to my MHR (Liberal) and exchanged some emails and
information with him, and then asked if he would ask the party to look
at the problem.
You could just about see him shuffling his feet & squirming.

That's where our major problem lies.