Dr Cumes is in good company in that he describes the financial problem
but in company with many others misses what really triggered off the whole problem.

A few dates;
May 2005 the production of crude oil plus condensates peaks at 75 Mbd.
June 2008 production of crude + condensates + bio liquids peak at 86 Mbd.
Sept 2008 The great financial crash occurs.
2005 to 2014 the plateau of oil production continues.
2014 the predicted date when oil production starts its long decline.

Of the five previous recessions four were preceded by spikes in oil prices.

When the economy cannot increase energy then GDP must also stop
increasing. This means no growth and no extra financial gain to
repay loans and interest.
The high oil prices pushed up food and petrol/ diesel prices and those
with mortgages has to choose if they could afford to pay their
mortgage. Many did not and so the house of financial cards fell.

It is these factors that the media financial commentators miss and
this is because both government and media just ignore anything that
sounds like peak oil.
It explains why some commentators such as Dr Cumes see a problem
with the "recovery" that we are experiencing but they do not seem to understand why.

Money and greed, there have always been Empires. See the TV program on Democracy-Athens.
They are there to grab riches. The present Financial Empire is the USA of America. But due to its immoral population it has 'crashed.'
Now, other Countries are trying to agree to modifications. Does that refer to Capitalism?
GDP is a failed concept now, some regard it as a "Ponzi" scheme because, "IT MUST GROW BIGGER EACH YEAR under present Political and Business expectations.
This calls for more people to feed more Factories etc.
With a Population that has already tripled from 2 billion to 6 billion in 50 years, that is a NO GO area. 6 billion now = 18 billion in another 50 years if nothing is done.
Therefore GDP and expansion along with greed must stop.
Capitalism AMERICAN style is doomed. A new type of Welfare state must arrive where jobs are rotated between paid unemployment and work.
Otherwise riots will ensue. The World is in a GIANT STATE OF FLUX.
China wants more monetary control.

The world has suffered from invest bubbles for centuries. It is in human nature that people will chase "easy money" with the assumption that nothing will change and are surprised when it does.

The point of legislation is not to prevent business, but to ensure that safe practises are followed. However, governments such as Greece are not bound by such strictures.

In spite of all of this, the GFC was no where near as severe as the doomsayers were predicting. Capitalism stumbled but did not fall, the world kept spinning and re learnt yet again a lesson the previous generation learnt before it.

I would have hoped for something a little more focused and balanced from someone of Cumes stature. To reiterate a few points that have to be repeated every time these these themes are trotted out, booms and busts are a part of the financial system. If you don't like them or don't think they should occur find another planet.
If you hope that the GFC will cause some major change to either the financial system or human nature you will be sorely disappointed.
But past disasters have at least taught as something about what to do when a bust occurs and this time, governments did do soemthing useful to shorten the crisis. Instead of restricting liquidity, as happened in the great crash, they increased it.
Most of the author's references to the depression are therefore irrelevent. The lessons of history were acted on, at least to some extent, and we are now onto a different point altogether.
Now the American banking system, where the problems started, obviously needs reform - not major change, as that is not going to happen - but reform. What reform where? Perhaps the author could tell us.

Boom and Bust is the way it is when energy has no practical limit.
The market performs as it always has in its feedback loops.
However, limit one of the inputs to the feedback loop and the control
system operates quite differently.
Oil and its energy is now limited. The old boom and bust has ended.

There will be another one, two or three cycles of recovery as oil
prices force a recession and a crash in oil demand pushes prices down
and allows a recovery for a year or two, but each quick recession
will I think be deeper and have a slower recovery until it finally stays down.

Welcome to the Long Emergency !

Endless growth cannot continue endlessly. One day this harsh realisation will come crashing down on Western societies. In places like Australia the demise of the manufacturing sector and our overwhelming dependence on imports will bring us to the verge of disaster. The US will never recover because they have no domestic economy from which to build that recovery. Australia is, unfortunately, following the US down this road to destruction at an ever increasing pace. Those encouraging this direction have protected their own interests and will never suffer what they burdon the rest of society with. Nor do they care.
The only solution is a move to an independent economy with higher exports than imports - entirely possible given this country's low population, and a move to a sustainable, steady state economic policy.

Darron C,
Basically I agree with you.
To a small extent it is already happening.
Because of the increased cost of freight across the Pacific, steel and
furniture manufacture has started moving back to the US and no doubt
the same will apply here.
As fuel costs bight into the difference between Chinese and US wages
more product manufacture will move back to the US, Europe and Australia.
There are thousands of container ships tied up in Europe and the
Singapore Roads. Many will never put to sea again.

We will not move to an import/export economy, we will move to an
everything local economy. It will I think, and hope, happen gradually
so as to let us adapt and not panic everyone.

Government and business are the problem as they do not wish to even
consider that we are in for initially a zero growth economy.
Followed by a contraction economy.

Just today I had the opertunity to speak with a property fund
executive, and it was enlightening to see the disbelief when I
questioned his planning for just the next two years.
They believe absolutely that we are recovering fast and it is all
go go go. Business as Usual state of mind is what will not just crash
their business but be a disaster for every Tom Dick & Harry.

At last an article that tells it like it really is.
Forget higher energy prices, these could be offset by modest gains in efficiency. Despite the FUD campaign from Old Energy, we could easily cut both our CO2 and energy expenses simply by investing in the right areas. Of course investment to *reduce* spending is anathema to the Right and to extreme capitalist generally.
The real issue is that a huge chunk of GDP is being siphoned out of the productive economy by the financial sector. Imagine if governments suddenly increased taxes by 30% and gave it to the wealthiest 2% of the population! This has been the effect of allowing our production to be off-shored and profits in the parasite industries to soar.
Interest rates will not be allowed to rise to the market level now as it would risk a cascading failure that would bring down the financial system. Tax payer handouts have delayed the issue and transferred it to the public sector, which allows the Leach Party to then claim that it is Government spending that is the issue. Of course the obscene profiteering that caused the need for "stimulus" is brushed aside.
Trouble is, as the USA and England has shown, keeping rates artificially low to prevent defaults just pumps up the bubble and makes it worse. Rather than put a stop to spending wealth that isn't there, the currency must be devalued via inflation. Prudent savers will lose the value of their savings, only the wealthiest asset holders (ie. the thieves) will not suffer hardship.
Competition in the financial sector is obviously not working. Other methods must be deployed to reduce their ability to suck the wealth from the rest of the economy.
And we need a proper media again urgently too.

Sir,

I read your writings with the deference due to a person of intellectual honesty and visual clarity.

I had just compiled and sent a reply to an article by Mr. David Richardson (OLO 15/03/10), and felt angry for the unchecked power of Banks and their blind greed, when I fell into reading your last piece.

Probably I should not have gone on reading.

You did not say anything that I did not know, but the way you said it made me feel that you were annoyed if not, like me, disconsolate.

Watching the crowd waiting to board an already overcrowded train on their way home, and reflecting on what you wrote, a question came to me, unexpected.

Is man really civilized? If he is as he claims to be, what does civilization mean?

Dictionaries have not helped me grasp the meaning of this term.

None of their definitions reflected a society wherein, as I observe, its individuals seem to have one and one only scope, that of ‘overpowering each other’.

As a young man, attending to colonies of laboratory animals, I noted that, properly managed, those beings did not cannibalize and, probably would not do so if they were not in cages, while man is now very close to doing it in its society.

Is there a gene that compels us to fight each other? Further, if there is such gene, and someone were to identify it, we should try to free ourselves of it.

As things are, I can but see man self destruction, much earlier then the time assigned to it by the ‘Geological Clock’.

Skeptic,

Of course dictionaries won't help you understand Western Civilisation... for they are merely the shorthand aids to literature.

Read the great works of the Western World and explore the development of ideas over hundreds of centuries and generations

Sadly your attitude, of seeking answers to complex questions in a reference book, unknowingly exposes the evidence of what it is our world lacks today.

ie a depth of understanding of what we are and where we came from!

Read the classics, the phisolophers, the mathematicians, the medicos, the judiciprudence practictioners and scientists who explored ideas and our culture over centuries and don't look to the musings or intrepretations a few later day wordsmiths and language afficianados.

goodluck my friend.

As Bazz may recall, I concur with his identification of the energy crisis being key to future global prosperity. Since man discovered the ability to make fire, the harnessing of energy has been key to our progress. For we now realise linear energy sources are unsustainable and inefficient, there is no alternative than to move to renewables.

Of the remaining reserves of current energy sources, it may be observed the asian tiger economies have realised the securing of their amassing of a significant proportion of those reserves, that is ongoing. As have western economies before them, which still retain that significant access. However, as the US was the predominant global economic power prior to the GFC, it may be observed the asian tigers have achieved ascendency. [e.g. currently, if the US did nothing with its GDP but pay its debt, it would take four years for it to break even]

So if we follow the maxim, if you are shivering from the cold and on a hiding to nothing, you are going to deal with the ‘man,’ we may observe currently the ‘man’ is the asian tigers. Curmudgeon demonstrates some common sense. Bazz identifies a key to the problem but is never able to articulate a qualified and comprehensive, potential resolution.

I disagree the hub of manufacturing will soon return to the US and Europe as current energy resources recede. For behind the eight ball of the asian tigers, who are observed with common global market parity, and hold advantage in economic prosperity, why would they allow that to happen?

It is observed a myopic westerncentric myth that western technology will prevail against economic and market forces. If that were evident, the asian tigers would be currently observed offering significant economic concessions to the west, and they are not.

They took the hit of the GFC, and it hardly dented them. It was a lot of their money driving the boom, yet with the onset of the GFC, the GDP growth of China only halved to 4%, a rate any country would be very happy with at any time.
Continued

Yes China is facing inflationary pressures owing to creeping global recession, and very recently reported, it has determined slowing its rate of growth, however, currently it is a decision of which it retains the privilege of setting the time frame and settings.

The global western economy is reliably predicted to enter into gradual decline over an extended indeterminate period, until GDP growth rates [and effectively standard of living rates] between the west and asian tigers comes into balance. The reliable factor qualifying this prediction is the expenditure multiplier ratio.

For whether you are anti capitalist and anti moneymen, or pro sustainable living, those sentiments do not address the issues which are before us now.

With further potential impacts of climate change, the moot question in the west is, which reliable instrument do we use to turn this juggernaut around? For as the GFC potentially demonstrated, economics as a comprehensive science retains a few bugs at the least, and is why it is not yet generally accepted as confirmed.

The instrument most obvious to deliver resolution to this issue is the science of management, constant of observation of its applied principles, to deal with, and deliver on such issue. The reason it did not save us from the GFC, is simply because it was benched by the abject contempt demonstrated by those responsible for its application, political, and market leaders, inclusive.
Continued

For most people are ignorant of the science of management, and many who are not, myopically disregard its applied principles for reasons of the expedience and convenience of their vested interest, as the GFC again reminded us.

That we require new paradigm and dynamics for developments such as renewable resources, and for balanced market regulation, we may readily observe management science comprehensively capable of delivering such outcomes.

The Levitt paper, Marketing Myopia, produced from Harvard in the mid 1980’s, has not diminished of its credibility and relevance to the successive events that share in common their economic malaise observed of recent economic eras.

For it is myopia, of vested interest, greed and indifference, such aspiration and associated self adulation, observed to continually fail and beset us, that the principles of scientific management are also able to assist us with remedying. We need to get with the program, everything else is observed incomprehensive.

Ngarmada wrote,
>I disagree the hub of manufacturing will soon return to the US and
>Europe as current energy resources recede.

Actually I did not say that. What I did say was that manufacture of products
will return to the US. Just as manufacture of products will return to Australia.

The point is long distance transport of products will become uneconomical.
In other words everything will become local. Globalisation will be
finished and I suspect that it will happen a lot quicker than we
might expect in normal circumstances.
Even within countries long distance transport will not be feasible
for many products including food.
If your appliance breaks down, you won't buy a new one, you will go
and see the local serviceman to get it repaired.
To buy a new table, you will go and see the local furniture maker.

This is the solution that apparently I had not expressed strongly enough.

It will not need masses of highly paid managers either !

Bazz, if you had a mass of high paid managers I doubt you would know how to utilise them. In fact it was not the status quo of cheque book management currently available, I identified as resourceful to the global issue we face. I clearly demonstrated, utilising the example of the GFC failure, such suggestion as prime example of aberrant notion. I further exemplified previous economic failures retaining similar aberration in common. I summarised the quality of management according to propriety of application to its scientific principles, as required.

If you were not ignorant of the science of management Bazz, you would comprehend such differentiation, for the only apparent prediction you are able to offer, ostensibly is a return to a ‘flintstone’ economy. Such notion may be observed simplistic when other evidence is observed.

For example, some years ago a large US vehicle manufacturer, developed, then trashed its electric car development, and is now redeveloping the technology. There is no better example of vested interest restraining development for the maximising of profit. That the development of such technology is observed advancing, with no obstructive physical restriction evident, suggests a dislocation with the premise of your prediction.

Hmmm am I arguing with a computer ?

James Cumes concluded:

"It is not yet absolutely too late; but we cannot afford to fritter away further time in purposeless pretences or kowtowing to the moneymen."

I remember Australian political commentators such as Jeremy Lee making the same predictions nearly 20 years ago. Since then I have watched his predictions come to pass... gradually so as not to stampede the herd, but steadily worsening our position nevertheless. Profitable publicly owned assets sold off, sucked into unnecessary wars against those who were not our enemies, our savings depleted by deliberate inflation, personal freedoms curtailed, working hours increased, whilst through good times and bad, banks keep reporting obscene profits and politicians keep doing very nicely.

The few people who have spoken out against the causes of our decline were not published by the mainstream media, and were largely ignored. The one person who did start to become noticed for advocating ideas opposing the existing system had her political career ruined when ALL the major political parties joined most of the mass media in condemning and ridiculing her. Pauline Hansen demonstrated the futility of trying to seriously reform the existing system by playing by its rules and laws.

James Cumes stopped short of advocating a popular uprising to rid ourselves of the corrupt political system we are saddled with, but if he had, he would not have been the first to say that revolution is now the only way of solving our political problems.

Perhaps there is an alternative for the small group of people who recognize and agree that our enemies are government, bankers, mass media, and Zionists. By forming an exclusive club for the purpose of developing and sharing strategies for escaping our enemies, perhaps we may avoid the downwards slide that the herd, through its inertia, seems sure to suffer.