ZOMBIE END GAME - The financial undead continue to drag us down.

The disjointed musings of the financial media support groups and the politicians desperation to patch up the emperor's new clothes again, serve notice that the final act has begun.

The banks have sucked the blood from their governments through a series of bailouts.
The governments have sucked away the lives of their peoples through ongoing and expanding programs of austerity.
They have stolen from multiple generations of the unborn through bond issuance and leveraging so called "stability funds".
Financial institutions are stealing from their depositors as they begin to panic at the glimmer of the bottom of the shiny trough.

The managed retreat has begun.
Treaties are hastily being re-written. Doubtless constitutions, bills of rights and human rights legislations will go a similar way.

All areas of the economy have been fatally wounded. And even the most optimistic commentators are now describing the future misery in terms of decades.

It's a zombie paradise.

WHO ARE THE ANTI CAPITALISTS ? - And who are the bad guys ?

Regardless of your opinions about the rights or wrongs of the capitalist system, it is the capitalists themselves that are behaving in an anti capitalist manner. Far more so than the so called anti capitalist protesters.

It's ANTI CAPITALIST to rig markets and pretend that we are living in a free market system.

It's ANTI CAPITALIST to save banks that are to big to fail.

It's ANTI CAPITALIST to allow banks to become too big to fail.

It's ANTI CAPITALIST to allow banks to create money out of thin air under the cover of the fractional reserve banking system.

It's ANTI CAPITALIST to have a shadow banking system that is unregulated and causes other parts of the financial system to behave chaotically.

It's ANTI CAPITALIST to have targeted import tariffs and limits.

It's ANTI CAPITALIST to set artificially lower interest rates.

It's ANTI CAPITALIST to deliberately allow inflation to take off in order to reduce the impact of commercial and sovereign debts.

It's ANTI CAPITALIST to effectively buy your own bonds through a convoluted system of central banks, shadow banks, monetary funds and rescue/stability funds.

Capitalism in its purest form could just work. The trading of goods and services equitably for other goods and services serve many barter only communities well.

Its time to think about just who the anti capitalists are.

99ers UPDATE - Maybe they'll all get on a bus to occupy Wall Street and join in the fun

About a year ago I posted a blog about the 99ers in the USA. In a nutshell, in the USA, unemployment benefits only pay out for 26 weeks. Then you're on your own with no state support.

Because of the 2008 financial crisis and the huge increase in unemployment numbers, the American government passed an emergency law to increase these benefit payments by a further 73 weeks in order to limit the number of visible destitutes that would end up on the streets of U.S. cities.

That emergency legislation was only allowed to be passed on the basis of a concession to the political right. And that concession was that the new arrangement would be time limited. That time limit is about to expire.

To make matters worse, there is an election coming up soon so it is unlikely that this extension will be kept via a new version of that legislation.

Further details can be seen in my previous blog entry - http://subsister.blogspot.com/2010/12/99ers-set-to-take-off.html

Now then.

If that extension is not forthcoming by the end of this year (about 10 weeks time), the number of 99ers is set to increase on a rapid scale.

By February 2012, the number of new 99ers with no state support will increase by a staggering 2,153,700 people.



What will these 2 million new disenfranchised people decide to do about it?

HOW MUCH DEBT IS OUT THERE? - How big will the crash be?

I've been looking at all of the debt figures that are floating around and one thing has become clear to me. Nobody actually knows how big it is. And that is exactly why the so called political experts cannot agree on how big any bailouts should be.

Here are just a few examples of the type of debt that is now out there.

Personal debt. i.e. debt that is tangible and that we actually know about. For instance mortgage plus loans plus student debt plus credit cards plus overdraught. This averages out to about £25,000 ($40,000) per person in the UK.

National debt. i.e. the amount a country owes. This amount is largely in the form of government paper (or bonds). That is to say money borrowed (or stolen) from the unborn. For the UK this currently stands at about $9,000,000,000,000 (9 trillion dollars). If you divide that by the population it equates to around $150,000 per person.

Global debt is the amount that the world owes. That is to say, the sum of all the national debts of sovereign nations. That figure is about $100,000,000,000,000 (100 trillion dollars). If you divide that by the entire human population it equates to about $15,000 per person on the planet. Seeing as the significant majority of the planet could not even imagine that amount of money or have any chance of ever paying back that amount, the debt share will have to be absorbed by 'wealthier' first world people.

Now, there is one more chunk of money that could be owed. It's a kind of insurance scheme known as the derivatives market. These debts never really come into being unless things start to go wrong.

Derivative global debt is thought to have been transacted at a nett value of $1,000,000,000,000,000 (1000 trillion dollars or 1 quadrillion dollars). If (or when) the bubble bursts this debt burden will be repatriated back down along the line to nation states and ultimately individuals.

This is where it gets scary. The sum of all the debts contained within the financial system divided by the world's economically active population is $1,000,000 per head (1 million dollars).

QE2 - In other words, You are being conned again.

Last week, the UK government announced a second phase of quantitative easing. Or to give it it's real name "printing lots more digital money."

It was publicised by the Bank of England as a mechanism to kick start the UKs flagging economy. The idea was that this new money would trickle down from the central bank, to the investment banks, then to the high street banks, then to small businesses as loans and finally to facilitating new jobs and new wages.

What a load of bollocks.

This new money will never trickle down. The sum announced was £75 billion. That equates to about £1,300 for each person in the UK. That new money is yet another lot of new money that will have to be paid back at some future date by you and me.

My guess is that if you are lucky and the usual 90% to 10% rule applies, then you might see about £115 of that new money in your pocket over the next year or two. The other £1,200 will disappear much further up the food chain. It might even be used to save a bank from collapse or just be gambled to zero by hapless city traders.

The point is, the only way to get people spending again, is to put real cash directly into the pockets of real people. Most people (the 90%) have to spend all of their income on basic living expenses plus a few luxuries once in a while. If the new money were directed to the poorest 10%, that money would be spent in the blink of an eye and would continue sloshing around in the lower economy for some time. This would create demand, jobs and compounding VAT revenues.

Either the people at the top just don't get it, because they are so far removed from the realities of ordinary peoples daily lives or they are just plain evil and are pursuing a deliberate program of enslavement.

I'll leave you to decide.

DEBT, DEBT AND MORE DEBT - Your enslavement by numbers.

Here is a list of the top 20 countries in order of their debt to GDP ratios. I have also added a couple of columns showing the average wage in each country and the payback time required if we all worked full time and paid all of our earnings in tax.

Click table to enlarge

Nearly all mainstream political and economic commentators have been making a big fuss about Portugal, Ireland, Italy, Greece and Spain (collectively known as the PIIGS).

Why this focus on these countries in particular. Is it a form of Northern European economic fascism?

Sure, Ireland is in big trouble. However there are some big players up there too. Why are they so quiet about UK, Switzerland, Holland, Sweden and even Germany to name a few.

Going back to the repayment terms, lets take the UK as an example.

George Osbournes austerity measures have caused an increase in tax take and a decrease in jobs and wages equivalent to about 6% (which is a lot for people to deal with). Therefore instead of the 3.34 years payback time the actual payback time is more like 55.7 years.

That 55 year target is coincidentaly the same period of time that people will have to work according the a recent independent actuarial audit on UK pensions. Mmmm! retirement at 73 years old.

The reason why the focus is not on the major Northern European countries is because the credit ratings agencies like Moody's, Fitch, Standard and Poors are in bed with their neo-con paymasters. Its just an illusion.

The war has started and it's almost over before we've even noticed.
Time to reset the clock.  Abandon all forms of capitalism now.

WHERE HAS ALL YOUR MONEY GONE ?

Just a quick graph showing 25 years of international economic growth and how the money has been distributed.

Who is stealing from who ?

HOW ARE YOU DOING ?

Just a quick graph showing an overview of what has happened to us during the first decade of the new millenium.

Pretty good if you're a corporation or a banker or a speculator or an oil company. Not so good if you're an average Joe who needs a job and uses a car.

A smaller number of employees drawing 5% less wages than 10 years ago has produced a 118% increase in corporate profits.

That's just greedy. Is it any wonder people are beginning to copy the fat cats and just take whatever they want whenever they can?

What's the difference between a politician making multiple expense claims for flat screen TVs and somebody looting a TV shop during a riot?

Answer : The politician gets delivery included.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 4 : DEBT

Debt is among the most common words used in the English language today. But what exactly is debt?

That is a harder question than you might imagine.

Most people think of debt as an amount of money that is owed to another person or company. However, over recent decades the new reality of debt has permeated all aspects of our lives through a complex process of financial wheeling and dealings.

Because governments around the world decided to move away from the 'gold standard', all currencies around the world are now 'fiat currencies'. That is to say that the notes in your wallets are no longer backed by a promise to pay the bearers in gold. Currencies have become detached from real assets like precious metals and allowed to fluctuate in perceived value as 'the market' dictates.

This means that ultimately, the value of money only carries a worth equivalent to the confidence that every participant has in the scheme at any particular time.

After the gold standard was abandoned, currencies were allowed to float freely and competitively against each other. Over time, this detachment has caused a psychological disconnection between the value of money and the value of real things. This detachment process has been exacerbated by the introduction of digital money transactions and time stretched credit options.

We all know how easy it is to buy something using a credit card or a bank transfer or paypal. The detachment process has made everyone buy and sell in a new way. The reality only reappears periodically when we get statements, or letters from our banks or overdraft repayment requests or defaults or bankruptcies or credit crunches or sovereign debt crises or world economic meltdowns.

You see, what we were convinced was money is actually now being realised for what it is. Debt. This new reality is true for every layer of the world economy. From the IMF right down to the peasant in Mozambique.

Because we have all participated in the scheme (actively or in some contrived secondary processes), we have all fallen into the same trap. The trap that enslaves us all.

From the federal reserve bankers that print new money (both digitally and on paper) to the idiot buying the latest Justin Bieber merchandise on eBay, we have all just been participating in some form of ponzi scheme based on fractional reserve banking and fractional reserve spending.

Since the 1930's when the gold standard was abandoned the financial processes that have brought us to where we are today, have created a financial system where nobody can begin to calculate how much money is out there (real and digital) or how much debt is out there.

It is estimated that about 99% of all money is actually really debt. That would also account for why prices have increased about 100 fold since 1930. In other words, we are no richer, only 100 times more in debt.

The tipping point is so close now. The curve can go in one of two directions. Either fiat currencies will collapse under their own weight of debt or a rapid consolidation of debt repatriation demands will cause an equal and opposite degree of hyperinflation.

Which way will it go?

It matters not. Either scenario will be a disaster.

CROSSING THE RUBICON - A Paradigm Shift and The Engineer in Me.

Here are a few reasons as to why the world might be entering a permanent new economic reality that will not be pretty.

1. Up until sometime around the year 1800, all species (particularly ours) had little margin for error. Like all other animals we lived up to the limit of the food supply. The populations ebbed and flowed following simple differential equations bounded by the limits of supply of food and numbers of humans.

2. From around the year 1800, fossil fuel exploitation enabled us to rig the market through advances in mechanisation, production and fertilisation. This positive trend could only ever be a temporary one. It was inevitable that the population would increase to exploit this step change in maximum demand possibilities. All that has happened is that the ebbing and flowing wave has a higher amplitude and a shorter wavelength. In other words, things just happen harder and faster. Markets are exaggerated and rich/poor disparities are exacerbated to insane and ugly degrees.

3. Since around the year 1800, the population has increased from 0.8 billion to nearly 8.0 billion.

4. The high demands of 2 centuries of wealthy countries exploitative folly and the recent extraordinary demands of large, fast developing countries have applied a number of ramping functions and a number of extreme pulses to the system. Anybody who knows anything about control systems design or mathematical modelling fears such pulses.

5. Since 1960 the annualised growth in crop yields has fallen from 3.5% per year to 1.2% per year despite the use of oil based fertilisers having been increased significantly. All of this intense farming is clearly destroying the land's potential to re-mineralise itself through natural irrigation and precipitation processes.

6. Politicians and money-markets will never face up to any of the above truths.

7. From now on, price pressures and resource shortages will be a permanent feature of our lives.


All of the above contributed to the financial crisis of 2008 and the subsequent spikes in commodity prices like oil, energy, metals and foods.

Add the following list of potential tipping points to this and we could be looking at the perfect storm.


1. Events in Syria could be the most likely scenario to inflame a full scale war against Israel, in turn, dragging the whole of the middle east into turmoil.

2. It is highly likely that Israel or the USA will wage a war against Iran if Iran escalates its nuclear program.

3. Libya. Does it need an explaination?

4. As the weather warms in other middle eastern countries, more tensions, protests and revolutions are bound to occur. The tipping points have been attributed to democratic awakenings by western media groups. It is more likely to have manifested itself due to spikes in food prices. Spending on food in second and third world counties forms a much more significant share of a family's budget.

5. The tragic events in Japan and subsequent annihilation of the Fukushima nuclear industry has changed world energy policy forever. The abandoning of existing and future fission projects will add massively to the demand for hydrocarbon based fuels for energy conversion needs. The impact on one of the worlds largest economies is sending out financial shock waves across the globe. Economists will un-forget about peak-oil once more.

6. Energy expenditure in the USA has just exceeded 9% of GDP for the second time. The first time was in the summer of 2008, just before the 'global financial crisis'.

7. Austerity programs (you ain't seen nothin' yet) around the globe both nationally and locally are beginning to impact on the jobs economy. This will accelerate as the story unfolds.

8. The much talked about sovereign debt crisis is about to materialise in spectacular fashion. Who will be the first 'fall guy'? Almost certainly Greece, but much bigger names will be in the frame soon after. A tower of cards teetering. The fallout will be truly shocking.

9. The demise of the U.S dollar seems unlikely to most people but watch this space. China bought massive amounts of US treasuries over the last decade. It is now trying to dump these investments on unsuspecting world bond markets at a faster rate than it accumulated them and that was pretty damn quick.


The next few years (or months even) will be very interesting to say the least.

See you all on the other side.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 3 : MONEY

Money or currency is one of the most misunderstood ideas.

It used to be that money had an intrinsic value. It contained a specific quantity of a rare earth metal like gold or silver. Even paper money carried a written promise such that the issuer could exchange that banknote for a prescribed amount of gold on demand. This was known as 'specie money'.

However, printed money now carries no such promise. Not since 1971 anyway. It is now known as a 'fiat currency'. That is to say, it has no intrinsic value and its worth can only be determined relativistically with a view to how much of it is in circulation and what demand there is for it.

All sovereign countries now use fiat money. It is printed and issued by 'central banks' like the US Federal reserve or the Bank Of England etc. Of course, these organisation sound very official and they also sound like they are owned by the governments of their host countries. However, nothing could be further from the truth.

They are private banks and they always have been.

The Bank of England was founded in 1694. Even though it was nationalised in 1946, it is still a privately owned company with Directors. This anomaly was formed in 1977 by creating a wholly owned subsidiary company called Bank of England Nominees Limited. This company was granted a special exemption by the Secretary of State for Trade such that it could trade without declaring who the Directors are and using the Official Secrets Act to protect their anonymity. This is wholly unique and a special case when considering the normal legal requirements of The Companies Act.

According to their website, the US Federal Reserve Bank is a government body. However, all of its shareholders (Directors) are private banks. None of its stock is owned by the US government.

These central banks have the ability to print money whenever they see fit. A private company creating money from thin air. They also provide money to their governments in order to make up their revenue shortfall or spending excesses. The government pays interest on these debts. This interests is guaranteed to compound and spiral with time.

The last time the USA balanced its books was in 1835.

A couple of quotes from the past that resonate profoundly today:

Paper money eventually returns to its true intrinsic value - ZERO ! (Voltaire 1694-1778).

If the American people ever allow private banks to control the issue of their currency, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered - (Thomas Jefferson 1743-1826)

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 2 : STIMULUS

Various Western governments have introduced stimulus plans. These measures have also been called 'quantitative easing' (QE) among other things but basically they amount to printing money.

The mirage created with QE is that the central banks created electronic money out of thin air and used that to buy their own government's bonds. These bonds are basically IOUs and in time the governments will have to repay those debts to the central banks with interest. When the payments are recovered the central banks will then electronically destroy the imaginary money.

This process of printing money causes a devaluation of the 'fiat currency' due to the laws of supply and demand. If you make more of it, each piece of it is worth less.

As the majority of all money 'exists' only in a digital form, it can also be argued that what is actually being printed is digital debt.

The problem with introducing a stimulus is that you have to maintain that stimulus for a significant period as global markets take time to react to the change in the economic system. By maintaining that stimulus, the system can become dependent on it. This happens when a sick person is treated with stimulus drugs. They can soon become addicted to the stimulus and side effects appear. The side effects can be harmful. Even more harmful than the original disease.

These unorthodox processes are hitherto untried and untested, and it is only because it is mathematicians offering these 'solutions' to governments and banks that any credibility at all can be given to the process.

WARNING !!! These are the same breed of mathematicians that sold the financial services industry the ideas of complex derivatives including 'securitization of mortgages' and 'credit default swaps'. Watch out for Global Banking Crisis II, coming to a town near you soon.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 1 : INTEREST

This post will be the first in a series of posts that looks at how the use and perception of economic and political language have been changed over time.

INTEREST is a concept that we are all familiar with. Usually because we have to pay interest to banks, credit card companies, shops etc. Sometimes we receive interest on savings or other investments. The word interest comes from the notion that if you borrow for, say a house, your lender will charge you interest in order that you get to buy a house and the lender makes a profit. The lender also has an interest in your property. That is to say that he is interested because if you fail to complete the transaction at any point, that property may be sold. It may be sold for less than the outstanding value of the loan in which case the lender would make a loss. So it is no surprise that he is interested.

Compound interest means that interest is applied on an ongoing basis with respect to time. This causes problems for entities like governments where situations can occur such that the amount repaid in a given year is less than the interest due. In this case the interest will not only apply to the original debt, but it will also be applied to the interest too. Interest on interest.

Compound interest looks like this. If left unchecked, it runs away very quickly. This is due to the effect that compound interest has a mathematical function known as positive feedback.

It works in the same way as acoustic feedback. For instance if a microphone is placed too close to a speaker, the sound from the speaker goes back into the microphone, gets amplified and then comes out of the speaker a little louder. This new louder sound, goes back into the microphone and is amplified again and comes out of the speaker even louder. Effectively the amplifier adds compound interest to the sound each time. After a period if these repetitions, the noise becomes so chaotic and unbearable at which point somebody usually cuts the power to the system.

Another natural phenomenon that follows the same mathematical principle is sickness (i.e. diseases like cancers and viral infections).

As all financial services rely on the concept of interest to make profits, it is advisable to remember the analogies above.

Who's interested now?

It is interesting to note that the texts of the Christian, Jewish and Islamic faiths all expressly forbid the use of interest as the concept is seen as a levy on God's time. However, over time these ideas have been relaxed through a series of reinterpretations.

Nobody can be free of paying interest even if you save up for things before you buy them. Currently, due to the way interest has permeated through all aspects of the world economy via credit markets and commodities markets, about 45% of the price of all goods is used to service the interest on debt held in the supply chain.

Because of the invisible interest that has attached itself to the sales price of everything, most people are nett interest payers. In fact 85% of people are nett interest payers, about 5% of people are interest neutral and about 10% of people are nett interest receivers. In other words 10% of the people receive 90% of the interest that everyone else pays. Doesn't that sound like another more well known statistic. Yes, it is interest that is entirely responsible for the massively uneven distribution of wealth. How can you become a nett interest receiver. Well you just need to have a spare £500,000 hanging around that you don't need but you could invest.

Notwithstanding all of the above, the whole notion of interest is totally flawed. As an example, say that Jesus had deposited 1 penny into a bank account in the year 32AD with an account that would yield a typical long term interest rate of 5% per year. If he had returned in the year 2011 and gone to the bank to withdraw all of his money with interest, that amount would be

£8,582,678,794,222,570,000,000,000,000,000,000,000,000

That amount is difficult to imagine. However if the bank paid out in gold balls at today's gold value, it would amount to 44 trillion gold balls. Each gold ball would be the same weight as planet earth.

A great investment? Yes, but this financial model (INTEREST) cannot work in the long term.

THE PRICE OF OIL vs THE COST OF OIL

.
Even though the price of a barrel of oil is fixed by just a couple of commodity exchanges around the world, the actual cost of oil extraction varies greatly from country to country.

It is much easier to extract oil from land based drilling platforms than it is from offshore rigs.

It is much easier to extract oil when it is close to the surface.

It is much harder to extract oil from tar and shale deposits.

In essence, the harder it is to extract, the more expensive the production costs.

The above is a simplification but other cost factors like local wages, distance from markets also contribute to costs.

I have spent some time researching these costs from various sources and the results are shown below.

Crude prices on the open market currently range from £100 to £120 US dollars per barrel.

The following is a list of average extraction costs by country (in US dollars per barrel).

Saudi Arabia - $1.50
Kuwait - $2.00
Iraq - $5.00

Libya - $5.50

UAE - $7.00
Canada - $8.50
Russia - $12.00
Iran - $12.50
Nigeria - $22.50
Venezuela $25.00
UK - $50.00

With profit margins this big, it is easy to see why western governments and businesses cosy up to non democratic middle eastern regimes.

IT'S OIL IN THE WRONG PLACE - Watch out for thieves !

I've just spent a couple of hours researching where all the oil is, who needs it the most, how much we all use and how long it will last.

I have listed the results in a table.

The table shows the top 10 oil producing countries with the most proven reserves. Please note that these 'proven' reserve figures are usually exaggerated by each country in order to reduce 'the fear' in the commodities markets and to insulate their respective domestic economies.

The table also shows how long each country's reserves would last if the world were dependent entirely on that country.

It also shows the top 10 oil consuming countries and how long they could survive if they had to rely on only their own oil, for instance if the world went all protectionist due to a world war or an extreme economic fear event.

You can click on the table to get a better view.

I think that you will agree that the results are startling.

It really does demonstrate the frailty of western oil guzzling economies. Look how vulnerable Japan, South Korea, Germany, France and Italy are.

Looks like the best places to be (in terms of prosperity and energy security) are Canada and Brazil.

You can also see why Iraq was so important to the Western forces and why the U.S. have built the largest embassy complex in the world.

http://en.wikipedia.org/wiki/U.S._Embassy,_Baghdad

FOOD MADNESS - Counting the calories

Chasing the calorie trail.

It takes 10 fossil fuel calories to produce 1 food calorie on a first world table.

An oil burning machine is used to plough a field.
That ploughing machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.

An oil burning machine is used to plant seeds.



That seed drilling machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.



The seeds are treated in a factory with germination products derived from oil.
The factory uses oil, coal and gas based energies to run.

The factory uses oil burning machines to bring raw materials to it and oil burning machines to deliver seeds to distribution centres.

These distribution centres consume oil, gas and coal based energies.


They use oil burning machines to transport their seed products to farms.

An oil burning machine is used to apply a high yielding fertiliser.



That fertiliser is derived from oil.


That fertiliser is produced in a factory that uses oil, gas and coal based energy sources.
That factory uses transportation methods and energy sources to distribute its product as the seed company.

The farms often rely on irrigated water systems.
Oil, gas and coal based energies are used to extract water from aquifers and pumped large distances using pumps that consume oil, gas and coal based energy sources.
Pesticides are used throughout the growing period.
These pesticides are derived from oil.
Like the seeds and the fertilisers, these pesticides are made in factories using oil, gas and coal based energies and are transported and distributed using oil burning machines.

The crops are harvested using a multitude of oil burning machines.

The crops are transported to distribution centres using oil burning machines.

The distribution centres use oil, gas and coal based energies.

The goods are packaged in plastics and cardboard.

The plastics are oil derived products.
Cardboard use huge amounts of oil, gas and coal based energies for their extraction, production, transportation and distribution needs.
These packaged products are transported to distribution centres using oil burning machines.
They are then redistributed to supermarkets using oil burning machines.
Millions of people collect their food from supermarkets each day using oil burning machines.














To reiterate then. For each calorie of food on a first world table, another 10 calories of fossil fuel derived energy has been used to put it there.

And finally to put this in perspective.

Each person requires around 2000 food based calories per day to maintain themselves. In power terms this equates to 2.326 KWh; about the same as an electric kettle running for 1 hour or 15 TV sets running for an hour. And given that it takes 10 calories of fossil fuel to produce and transport 1 calorie of food to your table, each person uses the equivalent of 23.26 KWh of fossil fuel energy per day. That is about twice the amount of fossil fuel energy that the average family uses each day for their domestic electricity requirements.

OIL IS THE KEY.

EVERYTHING DEPENDS ON IT AND IT'S RUNNING OUT FAST.

FOOD FOR THOUGHT - The commodity conundrum

Data just released by the World Bank shows that 44 million more people in developing countries have been pushed into extreme poverty in the 8 months since June 2010. They say that food commodity prices have hit 'dangerous' levels.

Reasons why global food prices are heading out of control.

Droughts, storms and fires - These have impacted on rising food prices. However, these events happen every year and are not responsible for the current spikes in commodity prices.

Emerging markets - Rapidly developing central Asian countries are seeing phenomenal economic growth activity. Corporations are exploiting their rising disposable incomes and these countries are now sucking in a diversification of 'en vogue' agricultural products. These are being sourced on the world commodity exchanges and driving prices higher.

Bio fuels - Developed countries, particularly those who have signed up for multinational climate change mitigation agreements, are chasing every megawatt from every possible area. Vast tracts of land have been turned over to produce bio crops. This leaves a significant reduction in the available acreage required to produce sugar and cereals in these cash crop producing regions. Lack of supply pushes prices higher.

Commodity speculation - Investment bankers have switched their strategies in light of the financial crisis and the post crisis equity fear expeienced in dealing rooms around the world. Commodities and complex commodity derivatives are now being transacted with the fury once reserved for stocks, shares, options and futures. With all of these new middle men taking their cut, offloading prices have soared.

Globalisation - This has facilitated a tsunami of commodity exchange possibilities. These new 'panaceas' will realise themselves as speculative bubbles followed by spectacular and chaotic collapses.

Currency wars - Because of the financial crisis and the subsequent debt hangover and austerity programs, Governments around the world are doing their damnedest to reduce the value of their fiat currencies in order to inflate away their structural sovereign debts. This only facilitates a race to the bottom. The result of low currency values is higher import prices.

Crude oil price - For a whole raft of reasons previously discussed, crude oil prices will only be heading in one direction and that is not down. Many pesticides, animal feeds and crop fertilisers are derived from oil based products. Most commodities also attract vast fuel miles and transportation costs.


The Tunisian, Egyptian and future middle eastern, central Asian and African stories all have rising food prices as a catalysing process. In the short term a welcome regime change may come. However it is unlikely that regime changes will curtail the longer term future of escalating food prices.

MASTERS & SERVANTS - Say goodbye to hope

Our cabinet ministers and their totally humble beginnings:

David Cameron - Private education at Eton , PPE at Oxford. He is a direct descendent of William IV and cousin of Queen Elizabeth II. He is married to the daughter of the 8th Baronet of Sheffield.

George Osborne - Real name Gideon George Osborne. Private education and studied modern history at Oxford. He is the sole heir to the title and estates of the 17th Baronet of the Irish Ascendancy. Married to the daughter of Lord Howell of Guildford.

Nick Clegg - Private education at Westminster School, Social anthropology at Cambridge. He is a direct descendent of the Imperial Russian Baronecy.

William Hague - Studied PPE at Oxford. President of the Oxford Union.

Ken Clarke - Studied law at Cambridge.

Theresa May - Studied Gegraphy at Oxford.

Liam Fox - Studied medicine at Glasgow.

Vince Cable - Studied natural scieces and economics at Cambridge.

Chris Huhne - Privately educated at Westminster school. Studied French at La Sorbonne and PPE at Oxford.

Andrew Lansley - Privately educated at Brentwood. Studied politics at Exeter.

Michael Gove - Studied English at Oxford.

Philip Hammond - Privately educated at Brentwood. Studied PPE at Oxford.

Andrew Mitchell - Privately educated at Rugby. Studied history at Cambridge.

Owen Paterson - Privately educated at Radley. Married to the daughter of the $th Viscount Ridley.

Michael Moore - Privately educated at Strathallan. Studied politiocs and history at Edinburgh.

Cheryl Gillan - Privately educated at Cheltenham ladies college.

Jeremy Hunt - Privately educated at Charterhouse. Studied PPE at Oxford.

Danny Alexander - Studied PPE at Oxford.

Francis Maude - Privately educated at Abingdon School. Studied law at Cambridge.

Oliver Letwin - Privately educated at Eton. Studied at Cambridge and London Business school.

David Willetts - Privately educated at King Edwards. Studied PPE at Oxford.

George Young - Privately educated at Eton. Studied PPE at Oxford. He is the 6th Baronet.

Dominic Grieve - Privately educated at Westminster School. Studied modern history at Oxford.

These people are clearly able to empathise with thier electorate.

SECOND DARK AGE - Reasons to be fearful Part 3

They're closing in at a phenomenal pace now.

Dogma fueled and ideologically regressive, the class and connections based elite ruling class are back in town and it's only taken 6 months or so to get to where we are now.

It is beginning to look like the last 20 years never happened.

All of those little victories culminating in a more understanding if maybe dumbed-down society now being slashed and burned through an 'oxymoron process' of stealth based shock and awe.

Smoke and mirrors. It hasn't taken long to remove the heat from the bankers and financial centres hangers-on to be forgiven or should that be forgotten.

The new demon is the old demon. Blaming previous administrations for ALL of the WORLDS ills. Spinning a web of confusion as the beast lurches from its slumber towards its sociopathic destiny, our social predestination. And all of this occurring while we sleepwalk into our futures of serfdom and systematic bondage.

We have crossed the rubicon without any knowledge of its identity or existence.

What will the resistance look like this time around? Will it even come?

More fearful than 1984, we look backward and see our futures writ large with capital Cs.

Like an intern in a national stargazey pie, we stare expresionless at death and decay in equal measure, caught at the margins of a Venn diagram, squeezed by the perpetual machine, into the void, into the vast expanse that is the 2nd dark age.

FOOD DEMAND = FOOD PRICES = FOOD RIOTS = CHAOS

Food prices and other commodity values have been rising considerably during the last few years and particularly since the 2008 global financial crisis.


There are several structural reasons for this which have been discussed in earlier blogs.

While in the West, we find these inflationary food prices annoying or worrying or stressful (depending on which social level you exist), it is becoming a far more desperate story for others around the world.

Here in the UK, an individuals food budget is not too significant, and we can always cut down on other things, shop around, find offers and bargains etc.

When food begins to take significant proportions of a family's budget, people begin to attach a political dimension to their concerns and this may result in protests, riots and even regime change.

Here is a list of 25 countries that like Egypt and Tunisia are finding that their food budget is getting out of control. The list shows the percentage of household income that is spent on food:

Venezuela 32.6 %
Lebanon 34.1 %
Latvia 34.3 %
Tunisia 36.0 %
Libya 37.2 %
Dominican Republic 38.3 %
Sri Lanka 39.6 %
China 39.8 %

Romania 45.4 %
Philippines 45.6 %
Kenya 45.8 %
Angola 46.1 %
Pakistan 47.6 %
Egypt 48.1 %
India 49.5 %
Bulgaria 49.5 %
Vietnam 50.7 %
Sudan 52.9 %
Algeria 53.0 %
Bangladesh 53.8%
Azerbaijan 60.2 %
Ukraine 61.0 %
Morocco 63.0 %
Nigeria 73.0 %

It's not just armies that march on their stomachs.

UK TODAY - Where is the good news?

Unemployment rising :
means less tax revenue to the exchequer.
means rising social security benefit bill for the exchequer.
means larger budget deficit.
means social decay / disorder.

Inflation rising:
means reduced economic activity.
means risks to businesses.
means unemployment.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

Taxes rising:
VAT at its highest ever level at 20%. It never comes down.
National insurance rising in April.
means reduced economic activity.

means risks to businesses.

means unemployment.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

Public Services being cut:
means less services.
means unemployment.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

.

Rising education costs:

means high debt for young adults.

means less graduates.

means less skilled workforce.

means lower wages.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

Vicious Circle = Vicious Government