Archive for April, 2011

Official Ireland in denial 2011: When Marxists and Capitalists agreed on the need for default and a referendum on the diktat.
April 27, 2011

Ireland truly is the land of the celebrity economist, where honest budding young economics students can look forward to a life of fame and notoriety for telling the truth upon their return from exile in 20 years time. Hopefully this will mean some Marxists joining the ever growing list of choppers and Keynesians whom we on the left have all come to love and adore/hate with mutual respect for having the balls to tell the truth.

Much is being made of Ireland’s inevitable default by International experts from Reuters, The New York Times,, Bloomberg, CitiLondon, the infamous credit rating agencies, and most notably the FT and our own legendary celebrity Economists. Paul Sommerville is a fierce advocate of telling it as it is, and always makes good watching on the VB show-even if he is forced to repeat himself several times by the nation’s favourite cynic of an armchair socialist. One article by David McWilliams (Source 1:  ) , who despite never quite getting the full picture always offers sharp analysis of where we are at, stated that we have to default by writing down 50% of our senior guaranteed debt and upto 70% of our subordinated debt. As well as this one can see from the figures he tallied that there is 35 billion euros of unguaranteed debt which many have argued forcefully, from Vincent Browne to Constantin Gurdgiev that we should give a 100% write down. The fact that Richard Bruton and every other Government Minister and TD have no real world experience outside of politics in the area of Economics is very telling. These people always peddle the line that there’s only 16 billion euro of unguaranteed debt, but the Department of Finance-unreliable as they usually are-are not wrong in saying that we have 35 bn euro of unguaranteed banking debt. This is about 2 bn euro more than all of last year’s tax take. That just shows how idiotic the arguments of the government are. They ignore, quite conveniently, the other 19 bn euro in unguaranteed banking debt yet to be paid. How they can call a sum that is 1.4 bn euro more than last year’s deficit of 17.6 bn euro ‘irrelevant’ defies all logic. Personally, as a student of economics amongst other things, I happen to think the crass stupidity of our dear leaders is down to the fact that Irish government’s tend to be, like most ones around the world, full of careerist mandarins running departments they don’t understand. Take Biffo-a solicitor who was in charge of many different portfolio’s which had nothing to do with Law as a Minister, most notably Finance. Then we had Lendahand-a solicitor who thought that money would stay in Ireland because of an island whose vanity is psychopathic, and who heard David McWilliams say Gurantee and just used that as an excuse to bail out his party’s mates in the banks and with the NAMA slush fund. Enda Kenny is a Teacher. All three of these people inherited seats from their dead parents, which tells you why they were raised, not long after graduation. The three people running the department of Finance are mandarins who all derived from the teaching profession, again with the happy coincidence of a nice job and huge pension for when the shite hits the fan. Michael Noonan, Brendan Howlin, and Brian Hayes know nothing about economics except that they must do what the big scary ECB tells them to or else.

For an example of how stupid our government is we need only look at what two men who definitely can’t be described as your run of the mill Irish celebrity economists say about our situation and government policy in relation to the ongoing FF/FG/LAB/IMF/ECB/EU Petain-Vichy Coalition policies. Firstly, Professor Richard Portes, an American professor of Economics and founder of the Centre for Economic Research says that(Source 2:] ) firstly on unguaranteed bank debt: ‘For the non guaranteed bank debt, one could just say this will not be shouldered by the state and let the banks negotiate with their creditors.’ It really is that simple, do ye see? Secondly, he goes on to ridicule of Noonan, and rightly so given the obsequiousness of our new puppet minister, ‘According to Ireland’s new Minister of Finance, “the ECB says you can’t”. With great respect, where in the world can the central bank tell the government what it can or cannot do in fiscal matters? And what authority has the ECB to do this under the treaties? Ministers ask who will pay for Irish teachers, nurses – indeed, parliamentarians and ministers – if “Europe”, including the ECB, calls back its loans. But “Europe” is not so foolish. The costs to the ECB and member states would far exceed the benefits. As Keynes once said, if you owe the bank one million, it’s your problem – if you owe them 100 billion, it’s their problem. And even if foreign financing were completely cut off, the current-account deficit is now only 2%, so adjustment should not be too difficult, and no more public servants need be sacked (or go unpaid) than currently planned. The restructuring of the Irish banking system would have to go beyond what is currently planned, but that would not be a disaster either.’

The second international expert, who again is no average Irish celebrity economist, that I will quote from is Joseph Stiglitz, who as far as capitalist Nobel Prize winners go, is fairly refreshing in his uncompromising analysis. A few weeks back in the Irish Times(Source 3: [ Joe said along with Michale Cragg on Government and Diktat policy and I quote: ‘With those still in office entering into international lending agreements that benefit the Irish banks and their debt holders but not necessarily the Irish citizens, fundamental questions arise about how to move forward.

Today, those fundamentals that created the Celtic Tiger are still there, but the real resources, the most important of which are its people, are increasingly sitting idle. Unless the right policies are put into place, matters are likely to get worse.’ He went on to call the EU-IMF-ECB diktat a ‘noose’ to Ireland, and rightly so. The thing that strikes me is that the government and their cheerleaders(most notably Garret Fitzgerald, who like Richard Bruton and Alan Dukes is another FG economist with little life experience outside of politics, and the Sunday Independent, which is Gene Kerrigan apart, an establishment rag) have all shut up about celebrity economists being wrong as undeniably, the international experts have backed up the celebrity experts in force. Even Brian Lenihan realizes how stupid and wrong he and his successor and predecessors have been and is now trying to race into the Morgan Kelly camp(Source 4: ). All of this undeniably puts to bed the fact that politicians(especially but not exclusively in Ireland) who enter public life too early know anything about economics.

So, what of the Marxists? Well there are no Marxist celebrity economists in Ireland yet. My Economics lecturer stated last year, a diehard Marxist to the last, that as far as he and others can make out that the guarantee and the NAMA slush fund were just based on some shady deal with the Government’s mates, because in the World of Marxism or Capitalism, Ireland makes no sense. We are an imperialist society, not dictated by the right and left but by a vichy Government. Our only hope, for the next 2 years until we default most probably in chaos due to the Government’s fiddling, is from the referendum campaign a small honest opposition of SF/ULA and colorful left and right independents who are rightfully lambasting this government for their collaboration with the troika and FF.

The ULA are the ones championing such a campaign. As much hope as they undoubtedly give me, they haven’t exactly got down to the required detail yet. However, they and the right are in agreement on one thing. Not only is a major banking default(of the 100% variety) most likely, it will happen disorderly due to this government’s and the last one’s supreme idiocy. Indeed, Professor Portes in the same article given above, goes on to say that sovereign debt MUST now be restructured. The ULA predicted it entirely right before the election ( Source 5: ) THE FINE Gael-Labour coalition will be “as despised” in time as the outgoing Government, according to Socialist Party TD Joe Higgins. He said yesterday the incoming government would implement “the programme essentially of the bondholders and bankers as represented by the EU-IMF”’ The ULA knew, and rightly so, that there was no difference. Joe Higgins is now being quoted by Max Keiser of all people  (Source 6, watch on that most famous of all diehard capitalist journalists and traders.

It’s a funny auld world where Marxists and capitalists agree on the need for default on the sovereign and the banking debt. It’s even funnier that they come together to demand a referendum for the people. Personally, the only hope I see in the medium term-because this government will not last 2 years-is a ULA government led by Joe Higgins with possibly SF if miniscule differences like accessing markets and Gerry Adam’s leadership can be resolved. Oh and I agree with Max K-we should bring back the guillotine. Heads must roll. The reality is this: Our economy owes almost 250 bn euro of national debt under the guarantee, another 35 bn euro of banking debt not required even in the diktat, is being forced on us by the fools in office and Frankfurt. We have 260 bn euro of private sector debt. Our economy generates 160 bn euro atm. 1’000 people are leaving a week and the so called booming ‘export sector’ creates very few jobs in Ireland as well as the fact that when China, Canada and Australia crash very soon, our exports will suffer very badly. Ireland cannot afford any of this debt and we will default, orderly or disorderly- the latter of which the troika and the Govt. are hell bent on ensuring to preserve themselves. As one young economist told me recently ‘technically we have already defaulted. The problem is the Europeans insist on paying all their and our banking debts and us picking up the tab, and our politicians insist on letting them’. Watch this space – it’s early days yet.

Apjp 27.4.2011

Source 6:

That Was The Week That Was …
April 26, 2011

To introduce myself.   My name is Louise Hannon and this week past saw the first successful constructive dismissal case by a transgender person in Ireland, where I was awarded €35,000 against my former employer.  I have been totally astounded by the level of media interest, and the level of positive support, which is extremely encouraging for transgendered people.  I’ve been swamped with messages of congratulations and support, which encourages me to think that Ireland is becoming a much more tolerant society, slowly but surely.

I never set out consciously to be in most national papers or radio stations.  I set out I suppose to highlight the need to treat transgender people with sensitivity in the employment transition process, and possibly to raise awarenes of the problems faced by those in that process.

I was enormously hurt by the treatment I received especially from my employers with whom I’d had a great respect and a very good working relationship until the point that I was in the office every day as myself, for the first time in my life.  I was looking forward to being my true self and helping the company expand and prosper.  Unfortunately it didn’t happen as you may know. Normalisation of transgender people is a side effect which will go hand in hand with this higher more visible profile.  Gender is a very difficult issue to deal with, on a personal level. In the early stages while different from the sexuality issues of being gay has much the same problems; isolation, self doubt, families who are potentially non supportive.

Societies lack of knowledge on gender issues is just one of the problems facing us.  I hope the media attention this week has stirred people to think, and perhaps to be a little more tolerant and understanding of diversity. People deal with their issues in many different ways..  Some become dependent on alcohol to bury the pain, some end up with stress related health issues around depression, some in relationships become violent with the stress and anger, and some unfortunately commit suicide, particularly in rural areas where isolation is a major factor. This loss of life and loss of human skills at all levels is a tragedy for Irish society.

As transgender people we should be allowed to live and be treated as normal human beings and this will bring enormous advantages to our society in terms of productivity and the talents which not only transgender people have but also those who are gay and lesbian can bring to the working environment. Before we even get to a working environment though, our schools need to address homophobia and transphobia as in the early formative school years bullying can do enormous mental and educational damage to the future prospects of our bright young people.

I had the enormous privilege of helping to organise the annual Dublin Pride Festival for four very fulfilling years, with some of the most talented and inspiring young people it is my pleasure to know. Their support and understanding if spread throughout the population would wipe out bigotry tomorrow. I also hope that employers will now take transgender people seriously and put into place a policy dealing with those who wish to live in their correct gender in the working environment.  If they do it has been proven by many of the multi-nationals working here in Ireland that diversity and inclusion are ultimately good for the financial bottom line. In the current tough economic climate that makes total sense, don’t you agree?

LouiseHannon   25.4.2011

Read more by Louise Hannon at her blog journal here –

Ireland’s Magdalene Laundries: Time To Put An End to the Continued Abuse
April 25, 2011

Almost six months ago the Irish Human Rights Commission (IHRC) published its Assessment of Justice for Magdalenes’ (JFM) inquiry application documenting human rights violations in Ireland’s Magdalene Laundries.  The IHRC recommended that the State should “establish a statutory mechanism to investigate the matters advanced by Justice For Magdalenes and in appropriate cases to grant redress where warranted.”
The IHRC Assessment details the state’s historic failure to adequately protect the women and young girls from abusive conditions, specifically from wrongful and unlawful detention, inhuman and degrading treatment, and forced labour and servitude.  It also recognizes the importance of restorative justice for aging and elderly women.
No one in Irish society has apologized to these institutional abuse survivors.  The Laundries were not included in the Residential Institutional Redress Act 2002.  These women, as a result, were excluded from the Residential Institutions Redress Board.  They are, simply put, the Nation’s disappeared—abandoned and forgotten in the present as in the past.What will it take for our Nation’s politicians to act on the IHRC’s conclusions and provide restorative justice for some of Ireland’s most marginalized citizens?
On 11 November 2010, then Taoiseach, Brian Cowen, referred the IHRC Assessment to the Attorney General’s office for review.  On 23 March 2011, Minister for Justice, Alan Shatter, announced in the Dáil that he is considering “a draft submission for the government” on the matter.   Back in December 2009, it was Deputy Shatter calling on Mr. Cowen to introduce legislation for “those who suffered barbaric cruelty in the Magdalen laundries,” for women whose “lives have been permanently blighted” by abuse.   Two governments, the same result: no apology, no redress, and no reparation.

Justice For Magdalenes worked with various Government departments in advocating for survivors’ needs.  In September 2009, then Minister for Education, Batt O’Keeffe, rejected our group’s initial proposal for a distinct redress scheme. He asserted that the State “did not refer individuals, nor was it complicit, in referring individuals to the laundries.”   The Government’s bottom line remains that the Laundries were privately owned and operated and did not come within the responsibility of the State.

Justice For Magdalenes refutes such assertions.  It is now a matter of public record that the Courts entered into arrangements whereby women given a suspended sentence were sent to a Magdalene Laundry rather than prison. Likewise, members of the judiciary placed women “on probation” and “on remand” at these same institutions.

The Department of Education knew in 1970 that there were at least “70 girls between the age of 13 and 19 years confined in this way who should properly be dealt with under the Reformatory Schools’ system.”   Meanwhile, the Department of Health was paying a capitation grant for young “problem” girls sent to these convent institutions, well into the 1980s.

As late as 1982, the Department of Defence met with the religious congregations to discuss the insertion of a “fair wage clause” in Laundry contracts, contracts that were issued without such a clause since at least 1941.  Again, the State stood on the sidelines while generations of Irish women continued to experience abuse and exploitation.

At no time did the State licence, regulate or inspect the Magdalene laundries, which always operated on a for-profit basis.  Consequently, survivors do not receive a pension for the compulsory yet unpaid work they were forced to endure.  After 1953 there was a statutory obligation governing employers’ withholding of pension contributions.  The nuns made no contributions on behalf of the workers in the Laundries. The Department of Social Protection did not enforce the law.

The women do not receive health care or education to assist them in overcoming the physical and psychological effects of abuse suffered in the Laundries.  Many of the women continue to feel constrained and silenced by a deep sense of stigma and shame.  They experience the Government’s unwillingness to take meaningful political action as tantamount to pursuing a policy of “deny ’til they die.”

Faced with this lack of political conviction at home, Justice For Magdalenes is now seeking support for its campaign in the global Human Rights arena.  Our group recently made a formal submission to the United Nations Committee Against Torture, which is due to examine Ireland, for the first time, on the extent to which it is meeting its human rights obligations, on 23rd and 24th May 2011.  JFM’s submission draws attention to Ireland’s legal duties promptly and impartially to investigate allegations of torture or cruel, inhuman or degrading treatment and to ensure redress for the victims of such treatment.

We have also made a formal submission to the United Nations Universal Periodic Review, as part of the Twelfth Session of the Working Group on the UPR Human Rights Council, due in October 2011.  It is our hope that international scrutiny will bring the State to task for its unwillingness and inattention to these disturbing and significant claims.

The State and Catholic Church, both, need to acknowledge that the women who spent time in the Nation’s Magdalene Laundries are survivors of institutional abuse—that they were not at fault, but instead had a grave injustice perpetrated upon them. Doing so would represent a significant signal that Ireland, as a democratic Republic, is finally prepared to make right on past injustices.

James M. Smith (“Smithsligo”) 25.4.2011

James M. Smith is an associate professor in the English Department and Irish Studies Program at Boston College.   He is the author of Ireland’s Magdalene Laundries and the Nation’s Architecture of Containment (2008) and serves on JFM’s Advisory Committee.

You’re welcome to join our discussion of this topic at –

A Verse for the Royal Wedding
April 22, 2011

Oak trees are common around the family’s Berkshire home village of Bucklebury, reputedly since Nelson’s colleague Admiral Collingwood passed that way after Trafalgar, scattering acorns so that the Royal Navy should never be short of ships’ timber.

Acorns proud, planted by hand
So that never short of oak may be
The Empire of whom Collingwood was proud
Thinking it last forever maybe
It was not to be, and now these two
A commoner princess swept by his charms
To be joined in a union maybe as weak
As his parents: a new drawn coat of arms

With union colours and Collinwood’s acorns
So that England never be short of oak
Now they took all Ireland’s, a world looks on
And media provides a glossy cloak
A royal pageant, celebration a show
As history by the second is carved
And watching somewhere a drug addicts child
Its parents strung out, the baby half starved

Such is reality, such is progress
Democracy is the systems name
Some have too little, others too much
Like ages past, it is the same…

tomasocarthaigh   22.4.2011

Peak Oil, Oil Prices and their Role in the Great Recession.
April 16, 2011

Everyone is now familiar with the concept of climate change; however, its effects are likely to be minor in scale in comparison to the havoc that declining oil and associated fossil fuel resources will wreak on our economies and our lives over the next forty years. Fossil fuels underpin almost every aspect of our existence. Approximately 90% of our electrical needs are met using non-renewable resources, while road transport, commercial shipping and air travel are entirely dependent on oil.

 Electricity Generation by Fuel, Ireland

Let’s first consider modern food production. Prior to the invention of mechanised steam and later, the internal combustion engine, a farmer would put in one calorie of labour (on average) for 3 calories “return on investment”; his/her harvest.

Now, we burn 10 calories of fuel to obtain 3 calories of food.  How does this work??  Well, we plant our crops (agricultural machinery uses diesel), then we fertilise them (oil is used to make chemically based fertilisers), then we harvest them (more agricultural machinery and diesel), then we use refrigerated, fossil fuel powered transport to get them, sometimes thousands of miles, to the refrigerated supermarket.

Basically, if we were to wake up tomorrow morning to find out that no more fossil fuels were available, it is highly probable that most non-farmers would starve to death. But just in case anyone was under the impression that fossil fuel shortages can  be entirely solved by changing our wicked ways, giving up the Range Rover, the holidays in Honolulu and conscientiously digging that allotment, think again. This entirely ignores the effects of concomittant economic contraction on the fractional reserve banking system, which is entirely dependent on economic growth.

Energy and the economy

Cheap energy is the shaky foundation underpinning the grand high altar of capitalism; Economic Growth. Studies carried out by a Nobel Prize winning economist, Robert Solow, starting in the 1950s, identified many of the forces behind economic growth; expanding labour forces, favourable demographics, growth in savings and therefore investable capital, technological advances, and so on.  A factor initially unidentified, dubbed the Solow differential, accounted for 50% of economic growth.  Interestingly, the Solow differential has since been identified as resulting from the ever-expanding cheap energy provided to us by fossil fuels since coal was first used to power steam engines.

Protest at Anglo Irish Bank

So, the million dollar, no, correction, the SEVERAL TRILLION dollar question is; what happens to economic growth if fifty percent of its motive force is not only removed, but reversed? Energy, far from cheap and plentiful, is now becoming increasingly scarce and expensive. One can confidently expect, moreover, that net exporters of fossil fuels will make ever increasing profit margins on the fuel that remains, meaning that they need to sell less of it to maintain their incomes.  One can also confidently expect many of the more unscrupulous exporters to use their newfound clout to hold the rest of the world to ransom.  This process is likely to make pre-First World War diplomacy (referred to then as “the Great Game”) look like a Snakes and Ladders tournament for Junior Infants, by comparison.

One notes with interest that control of more and more of the world’s fossil fuel resources has been appropriated by the nation states in whose territories those resources are located. It is likely that attempts have been already been made to seize control of such resources by military means (Alan Greenspan, chairman of the US Federal Reserve under Presidents Clinton and George W. Bush, has admitted that the Iraq war was all about oil, and has expressed surprise that this comment of his caused such a furore).  Ireland, a neutral country, has no means with which to ensure continuity of supply via military means, either real or threatened.

Moreover, military action has been shown to be somewhat ineffective even when used by the well armed; oil production in Iraq does not yet exceed by much, the volumes exported under Saddam Hussein.  Meanwhile, the war in Iraq has cost the UK and US in excess of one trillion dollars by 2007.  They should have spent it on renewables! A further complication of oil supply involves the instability and poor human rights records of many of the larger exporters.  Uneven distribution of petrodollars amongst ruling elites has left many poorer Middle-Eastern consumers very much at the mercy of rising grain prices (a consequence of both global warming and speculation, see Golem XIV’s blog), leaving the regimes at the mercy of restive populations.  The evacuation of foreign oil workers from civil war ridden countries such as Libya has not been conducive to the stable supply of oil to the West.  This disruption looks likely to spread to larger oil producers, possibly leading shortly to the mother of all price hikes.

Victims of US bombing of Iraq 2003 “Shock and awe”

Oil, the property boom and the credit crunch; why oil has been a significant contributor to  the worst financial crisis this century.  What is the evidence that declining oil reserves (and rocketing prices) actually affect the economy??  Concrete evidence dates back to the 1970s, where tripling of oil prices within a matter of months caused shortages, severe recessions, unemployment and rampant stagflation. Many commentators thought that this link might have been broken; from 1999-2007, when oil prices increased from approximately $10 per barrel to above $80, economic growth was not obviously impacted. However, as we now know, banks were awash with liquidity and what consumers, businesses and governments could no longer afford, they borrowed.

The 1990s had been a period of low energy prices, spectacular technological innovation, demographic growth and opening up of many “closed” economies to foreign investment following the fall of the Berlin Wall (the perfect conditions for optimal economic growth). This boom continued into the “noughties”, now fuelled by Eastern savings, delinquent bankers and a population inured to “I cannot die” style optimism by a protracted period of runaway economic expansion.

The result was a collective sense of entitlement and blasé attitudes to ever increasing leverage; in other words, we were drowning in debt without realising it. The temporary economic technical hitch otherwise known as the bursting of the .com bubble merely resulted in loss of trust in stocks and shares; people retreated to a more traditional investment they thought they could understand. Property. In relatively underpopulated countries such as the US, Canada, Ireland and Australia, where public transport was relatively uneconomic in many areas (owing to low population density) and planning laws were lax, given no major shortages of space, building booms ensued, along with spiralling price increases. Low population densities, poor planning and low levels of public transport also meant an increase in car usage in many suburbs and exurbs, one of the many factors that drove oil demand much closer to oil supply (thereby exerting an upward momentum on the price).  Note the rise in oil consumption for Ireland over the Celtic Tiger period (below).  This pattern was mirrored over most of the Anglozone.

Statistics on the Web:  Consumption of oil products; Ireland.

Construction is also a tremendous consumer of energy and raw materials. Commodity prices soared, but banks were awash with money and construction created jobs and put money in the pockets of the relatively unskilled. People borrowed and bought, many with subprime loans. In the US, these were sold with teaser rates that increased to much higher levels after two years, which coincided with an escalation in the oil price that was felt much more keenly in the US than in Europe. Higher oil prices also led, belatedly, to higher interest rates on both sides of the Atlantic. So, your US subprime mortgage holders were suddenly faced with astronomically higher repayments after the expiry of teaser rates, while oil price driven inflation led to base rate increases and rocketing transport, food, and utility bills. The result was to stall, then reverse, house price increases, first in the US, then elsewhere. Then the AAA rated subprime mortgage bonds (which had cleverly managed to disguise the real risk of these investments) failed, resulting eventually in the “domino effect” banking collapse we continue to experience today.

Those economies benefitting from the soaring commodity prices, which increased until July 2008, got a reprieve until early 2009 (confidence and stellar commodity profits take a while to deflate).  A glorious example of people’s inability to join the fossil fuel linked dots was the praise meted out by the financial markets with respect to the lack of bank bailouts in Australia and Canada in late 2008. For them, the boom had just ended; they were raking in profits related to $147/barrel oil prices and related rises in other commodity prices until July 2008. Both countries experienced real estate booms similar in scope to those in the US and UK; the price/income ratio in Australia is now higher than most other places in the world. However, thanks to the commodity price cushion, banks in these countries have been, to date, relatively protected. Given the resumption in fossil fuel price escalation, they will probably remain so.

The real truth of the matter is this; increases in the oil price feed into everything that we buy; commodity prices are a major driver of both inflation and deflation. Oil is used for ALL heavy goods transport (air, road, rail and shipping), and is also a major ingredient in plastics, pharmaceuticals and building materials. The price of oil is linked to that of the other fossil fuels, gas and coal, which are largely used to generate our electricity and heat our homes. Oil price increases therefore feed inflation, which, in the absence of real wage increases, eats away at living standards. With stringent financial regulation and tightly controlled availability of credit, this is felt in the real economy immediately. When the banks are awash with cheap cash and false confidence, the effect is delayed by the easy availability of loans. But as we have seen since 2007, delaying the inevitable only makes things worse.

Egyptian bread protest 2008

The price of fossil fuels was far from the only factor in causing the housing bust that led to the credit crunch. But if massive levels of indebtedness were a loaded machine gun, oil prices increased the pressure on the indebted sufficiently to pull the trigger. We (taxpayers, businesses, financial institutions and governments) are still massively over-leveraged, and oil hovers near $120 per barrel. Furthermore, rising oil prices (the overall trend will move inexorably upward) means that more of decreasing family incomes will have to be spent on food and fuel, less on luxuries, property and servicing what are now unmanageable debts. This means that the process of deleveraging (a.k.a. the banking crash) will proceed apace; those relying on the sale of non-essential items and services, property transactions, construction, travel etc will find themselves either unemployed or with vastly reduced incomes, leading to falling tax revenues and rocketing unemployment levels.

Meanwhile, public purses that are emptied to “treat the symptoms, not the disease”, to bail out and/or recapitalise the banks, will be pressurised to increase public wages and social welfare when no money is available.

A decline in available oil output of 1-6% per annum is likely at some stage after the peak (which may already have passed; production figures in May and December 2005 have yet to be exceeded), prices may be volatile; high during intermittent periods of global growth, then plunging as another wave of inflation induced job losses and asset depreciation leads to further writedowns and recapitalisations, and temporarily lower energy consumption. Energy consumption in OECD countries is indeed down since the peak of the boom in 2006-7. However, for every barrel we fail to consume, economies such  as India and China be willing and able to take up the slack, thus keeping prices high.

Statistics on the Web: Consumption of oil products; People’s Republic of China.

Ensuing low lending levels by the banks will ensure the failure of further small businesses as this progresses. As increasing consumption of cheap energy led to 50+ year of expansionary prosperity, so forced declines in consumption of scarce and expensive energy will lead to 50 years of contraction; declining living standards, inability to maintain healthcare at current levels, lower lifespans, increased levels of hunger and so on. Unfortunately, the “animal spirits” that govern both “irrational exuberance” and the fear and despair associated with recessions will only exacerbate the problems associated with the Great Decline that will occur as energy resources dwindle. In the worst case scenario, where power outages become common in net energy importers such as ourselves, the knowledge economy could collapse; those servers need constant power to operate! We will become better acquainted with the four horsemen of the apocalypse, or, maybe for the modern era, we should make that  eight; Unemployment, Pollution, Resource Depletion, Climatic Instability, Famine, Pestilence, War and Death. Not necessarily in that order!

It is therefore of huge importance that public awareness of this issue is raised. The general public has been bombarded with climate change propaganda; however, as soon as everyone realised that cutting back on energy use voluntarily meant a drop in living standards and risks to economic growth, scepticism towards this issue has risen inexorably, despite the occurrence of phenomena such as hurricanes Katrina, Rita and Wilma or the multiple “once in 100 year” floods in the last 5 years in these islands (RoI + UK). We need to get over the idea that cuts in energy usage are voluntary. If we don’t make them by choice, they will be enforced by the ultimate global dictator; Mother Nature. At current rates of usage, oil reserves will be largely exhausted in 40 years. That means a complete overhaul of every aspect of our society within that time frame. Or, alternatively, near extinction.

The current state of oil reserves

Many have argued that increasing oil prices will result in Herculean efforts to source more oil, gas and coal (which can, at some expense and with vastly polluting effect, be converted to transport fuel using the Fischer-Tropsch process, a chemical reaction used to convert coal to transport fuel). However, two geological studies, one of British coal production over the last 150 years, and another tracking the rise and fall of US oil production, suggest that the effects of “looking harder” on declining production are minimal. Geology rules absolutely, and it is not ruling in our favour .

A graph of UK coal production since 1855 (from David Strahan, the Great Coal Hole). shows a triangle, pretty much, production goes up steeply until about 1915, while decline is similarly pretty inexorable thereafter, reaching less than 1/5 peak by about 1990. No doubt the decline would have been even more steep, were it not for the intervention of foreign supplies and the switch to oil as transport fuel of choice from the 1940s onwards (with British Rail switching from steam to diesel in the 1960’s).

David Strahan’s Blog

(For anyone who STILL thinks we have 250 years of coal…, we DON’T).

Similarly, oil supplies are unlikely to react substantially to demand.We burn at least 3 barrels of oil for every one we now discover. The last supergiant oil field was located more than forty years ago. A graph of US oil production also shows that the effects of 1970’s oil shortages have little effect on production rates. Again, the triangle shaped graph goes steeply up on one side, and down on the other. M.King Hubbert’s original prediction that US oil production would peak in 1969-1970 was off by a mere 3 months, despite the fact that prior to 1970, his viewpoint was not respected by either the US Geological Survey or the majority of other commentators (Graph: Jean Laherrere, 2005).

Peak gas and coal may also be closer than we think; meanwhile, the process of sourcing new oil is being repeatedly stymied by legitimate concerns regarding climate change, difficulty of physical access to reserves such as those recently identified in the deep ocean off Brazil, and, believe it or not, water. For example, the Albertan tar sands, the largest reserves of oil (potentially) outside Saudi Arabia have a maximum theoretical output per day of 3-5 million barrels, owing to the fact that refining tar sand currently requires 10-12 barrels of water, in the form of steam, for each barrel of oil produced, and there’s only one North Saskatchewan river.

Globally, we use between 85-87 million barrels of oil per day (Ireland imported 3.411 million tonnes of oil in 2007-IEA). Furthermore, producing the steam for refining requires natural gas, which is under pressure as a result of North American domestic demand. This latter problem can be solved with the planned building of a nuclear reactor or two, but this will take at least a decade.  Recent and ongoing events in Fukushima will ensure a renewed public panic with regard to the safety of nuclear facilities (although concerns about those NOT situated near subduction zones may be seriously logically misplaced).  To add to the difficulties, the current wild fluctuations in oil price (high, $147/barrel, July 2008, low < $40, December 2008) are not helping; what is economic at a sustained price of >$80 may not be so at lower prices; moreover, this applies to more costly alternative energy just as much as it applies to piping oil from thousands of metres under the sea bed. With such uncertainty, investors are collectively not investing in ventures which are, individually, risky.

Methods developed by M. King Hubbert, which successfully predicted the real peak in oil production in the US in 1970, extrapolated to world oil supply, suggest a peak in 2015 (although figures of production reached in 2005 have yet to be exceeded). We can expect supply to be contracting rapidly after 2015 at the latest. That is a mere 4 years away. Graph available from The Oil Depletion Resource Page. Gas is projected to peak in 2025.

Finally, there is the thorny issue of the accuracy of reserves reported by individual nation states and therefore by the IEA.  Companies, countries and the IEA have many motives that would favour looking on the optimistic side when reporting reserves. The stability of oil company profits (and therefore share price) is determined by looking at the size of reserves, meanwhile in the days of oil surplus back in the 1980s, when OPEC countries were allowed to pump oil in proportion to their stated reserves. Now, if you had an economy to keep afloat and there were legitimate doubts as to the exact size of reserves, the tendency would be to err on the optimistic side. Furthermore, if you were an unstable Middle Eastern state partially dependent on foreign powers for national security (take Saudi Arabia for example), you might be somewhat disinclined to caution if your influence on the world stage (and defence capability) was dependent on enormous stated reserves.

Meanwhile, gas and coal reserves, which look healthy on paper, may also be somewhat shaky for similar reasons. Remember how successful the banks were at hiding risk (until 2007)? Well, world energy reserves may be as overinflated as estimates of risk were underinflated. Regardless, even if the oil producers can keep production stable until 2030 (highly unlikely), the rate of demand increase from the BRIC counties in particular means that supply will still be unable to meet demand. Meanwhile, the abject panic that real shortages would cause on world financial markets is likely to be a reason for unfounded optimism in projecting energy supplies, going forward.

In summary, every Government and private sector decision and expenditure, going forward, MUST be considered through the lens of declining energy reserves, rocketing energy prices and global instability, both financial and political. However, to date, there is little evidence that much planning is being carried out. Rather, governments seem to have a blind faith that the norms of the 20th century (the resumption of economic growth) will be re-established if only they could gather the resources to bail out the banking sector some more. Meanwhile, higher oil prices are regarded as a factor behind inflation, and not as part of the source of the problem. Many economists, especially those currently at the ECB, are refusing to recognize that, rather than being amenable to correction by interest rate increases, energy led inflation will remove money from the pockets of consumers and enterprises, thereby increasing the likelihood of inability to service debt. Raising interest rates when society is chronically indebted will have the same effect. These factors together will, in turn, result in further destabilisation of the banking system, leading to demands for more bailouts. None of this will solve any problems, including those of the banks. The solution is to spend our remaining resources in stabilising and increasing our available non-fossil fuel based energy sources (including nuclear power in areas which are seismically inert), thus allowing some degree of stability and enabling economic activity. Recognition of this by the powers that be, however, is sadly lacking.

Morticia  16.4.2011

 Sources for the above, bibliography, relevant websites:


Energy Bulletin:

The Oil Drum:

The Oil Depletion Resource Page:

David Strahan, Homepage:

International Energy Agency:

WTRG economics:

Middle EastBusiness Intelligence:

The Irish Times:

Time Magazine:

New Scientist:

The Guardian:

The Observer:

The Irish Independent:

The Independent:

The Financial Times:



1) David Strahan (2007) The last oil shock: survival guide to the imminent extinction of petroleum man.  (John Murray)

2) Jeremy Leggett (2005) Half gone; oil, gas, hot air and the global energy crisis

(Portobello Books)

3) Alan Greenspan (2008) The Age of Turbulence (Penguin Books).

4) Colin Campbell. (2010) Energy supply: from expansion to contraction.

5) Jeff Rubin (2009) Why your world is about to get a whole lot smaller. (Random House)

6) George R. Akerloff and Robert J. Schiller (2009) Animal Spirits (Princeton University Press)

7) Jared Diamond (2005) Collapse! (Penguin Books)

8 )  David Craig (2008) Squandered! (Constable)

9) Tom Bower (2009). The squeeze; oil, money and greed in the 21st century (Harper Press)

10) George Monbiot (2008) Bring on the Apocalypse; six arguments for global justice. (Atlantic Books).

11) Geraint Anderson(2008) City Boy: Beer and Loathing in the Square Mile (Headline Books).

12) David Strahan: (2008) The Great Coal Hole. New Scientist 17th Jan 2008.

13) Frank MacDonald and James Nix (2005) Chaos at the Crossroads (Gandon Books).

14) Jean H. Laherrere. (1998) The end of cheap oil. Scientific American March 1998.

there’s a riot goin’ on – Books by Peter Doggett and Patti Smith
April 13, 2011

This week I’m back the late sixties looking at the links between music, politics, and activism.

Peter Doggett’s
Theres a riot goin on: Revolutionaries, Rock Stars and the Rise and Fall of the 60s

Theres a riot goin on is really interesting so far and it been good comparing it to today and noticing just how many if not all of those hopes have not yet been realised.
Or to be honest most of their problems seem to have got worse from a 2011 perspective.  Interesting parallels anyway.

Civil rights, feminism, socialism, anti war all had their heroes and anthems, all overlapping and crossing each other.
I’ll always take James Brown over Dylan myself. But I’ve found plenty of new music and unearthed a few gems along the way.

I’ve never been a huge fan of ‘the sixties’ because I always get the impression the way older generations go on like it was the only decade where people let their hair down everything after is completely unacceptable and we should behave ourselves but there are some interesting insights into why the ‘revolution’ never really happened and its been inspirational at least to see how people managed to get so organised and least try to stick up for themselves and others while having some fun along the way.

FIVE  13.4.20

Just Kids by Patti Smith

Patti Smith’s album “Horses” was one of the best buys of my teenage years. I can still recall the electrifying effect of hearing the opening lines of Gloria for the first time. But other than she was also a poet and a painter and that Bruce Springsteen had a major hit with one of her songs (Because the Night) I knew little about Patti Smith and her life and work. So I picked up her recent book “Just Kids” on the basis of wanting to learn more about the person who produced a record which meant so much to me as a young person, as well as on foot of some rave reviews in the USA.

“Just Kids” is presented as an account of the relationship between Smith and her mentor and inspiration in art, Robert Mapplethorpe, but it is really a memoir of her early life in which this relationship figured prominently. There are sections of the book in which Mapplethorpe does not appear much at all. They were not actually together as a couple for that long, and in different spells (including one living in the famous Chelsea Hotel) for Mapplethorpe would turn out to be a homosexual and follow that path; but a pure, loving and artistic relationship endured and overarched their physical relationship. It is a unique connection and one wonders if it would be possible in anything other than a homosexual male and a female. Smith is remarkably magnanimous about the men in her life; her one true love abandons her for men but her love remains resolute; she has an intense affair with the Playwright and director Sam Shepherd and though he runs back to his wife she has nothing but kind words; she becomes involved in a long relationship with Allen Lanier of the Blue Oyster Cult and even though one gets the impression that he slept with ever groupie available on the BCO’s lengthy tours again Smith has nothing but praise, apart from noting that his behavior “endangered” them both. I was relieved to have her finally settle down with the guitarist Fred “Sonic” Smith and raise a family … though he would die at a tragically young age.

It took me a while to get into the book for I was irritated by Smith’s method of establishing herself as an “artist” (i.e. listing all the poets she read, all the albums she listened to, etc.) and I did not find the writing particularly special. I think I was negatively affected because I was reading at the same time the Jamaican poet Lorna Goodison’s beautiful family memoir “Beyond Harvey River” in which every sentence screamed “poet” without Goodison having to mention Rimbaud a million times and make a pilgrimage to his grave. But as “Just Kids” unfolded I was more and more sucked in and gripped by the Patti Smith voice. It is a voice which stayed with me long after I finished the book, always a sign of good writing.

Just Kids is essentially the story of Smith’s (with Mapplethorpe as an inspiration) dedication to becoming a successful artist and her single minded pursuit of this is entirely admirable. She leaves home at an early age and lives on the street (where she meets Mapplethorpe) to follow her muse and works at all sorts of menial jobs to support them in their art. There is never really any doubt that they will become hugely successful and he eventually does as a photographer (the famous photo on the cover of Horses is his) while she takes the spotlight as a performing artist. But nothing is fortutious, it all comes from immense dedication to their choosen path in life and surrounding themselves with people of like mind.  Lennye Kaye, for example, the guitarist who will play such an important role in her band, she meets because she reads an article that he has written and goes to the trouble of seeking him out to introduce herself.

I played Horses for the first time in decades after reading the book and it was even better than I remembered. Can’t say I thought much of the poetry in the book though.

And the book is supposed to centre on the great love of her life, Robert Mapplethorpe, but one constantly suspects that the great love of Patti’s life might be Patti. But that wouldn’t be unusual in artists .. Patti’s description of going to Mapplethorpe’s funeral:

“On the twenty-second of May, Fred and I attended the service at the Whitney Museum.  Fred wore a suit of indigo gabardine with a burgandy tie.  I wore my Easter dress of black silk velvet with a white lace collar.”

The criticism of the book I would have is that while it is embued with an “art for art sakes” philosophy the intellectual underpinnings of this are never elaborated and the major events of a very tumultuous political period breeze right past Smith.  She herself writes that she can never find anything to say about them .. but the question remains “what makes what she does have to say important?”  This is never addressed.  But for all that it is book I recommend.

Memorial Poem

As there is strength
in blackness
a deep control
a calla flare
grace corporeal
there is a steady hand
adjusting child lace
and bravery’s face
in veil inviolate
there is a steady hand
adept in heavens skin
spending into black
where pure hearts
are kin

Patti Smith

Sam Lord 13.4.2011

More recommendations for April reading, and book chat,  on our Political World thread here –


FIVE and Sam Lord 13.4.2011

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