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?

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.

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.

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.

99ers SET TO TAKE OFF !

In the United States, unemployment benefits are only paid for a maximum of 99 weeks or just less than 2 years.

After that period, that's it. You're on your own.

After the banking crisis of Autumn 2008, unemployment began to soar. Every week the number of unemployed rose. These job losses continued for 55 weeks at a weekly increase of between 50,000 and 200,000 per week.

The worst period was from November 2008 to October 2009. But even since October 2009, the number of new jobs created has never exceeded 50,000 per week.

The net effect of all of the above statistics is that from December 2010 there are likely to be around 50,000 people losing their benefits every week. This figure will get significantly worse up tom around April 2011 when around 200,000 people will lose their benefits every single week.

It remains to be seen what such large numbers of disenfranchised people will do about this over the coming months.

Keep 'em peeled!

FOOD PRICE RIOTS

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More food riots have broken out in recent weeks.

The latest has been in Egypt where food prices have more than doubled during the last 12 months.

Since February, when 40 people were killed in Cameroon, riots have spread to Mauretania, Mozambique, Senegal, Mexico, Haiti, Ivory Coast, Morocco, Uzbekistan, Yemen, Bolivia, West Bengal and Indonesia.

The media coverage of these events is poor.

The driving force behind the price riots and the people's reactions to the price rises, with the exception of perhaps Haiti, is Commodity price bubbles driven by finacial speculators who currently struggle to make money in convential bond and equity markets.

This situation can only get worse as more and more financial institions accross the globe switch their dealing strategies from stocks, shares and bonds to food and metal based commodoties and derivitives thereof.

How will governments around the globe coordinate a response to this looming ethical and financial disaster. After all, you can't print food!

Comments welcome.