A Networked World

Ringing the changes here

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There's a reason that "Everything in your house is getting cheaper to buy"

The prices of durable goods have been falling pretty steadily since peaking in 1997, and now they are as cheap as they were in 1988, after adjusting for the constant improvements manufacturers have been making to their products.

What’s striking is how pervasive the price declines are. It’s not just a few items that are pulling down the average; prices are falling for almost every sort of durable good that consumers buy.

via www.marketwatch.com

There are 2 reasons that prices fall.

In times where efficiency or productivity or new processes or newly discovered, easily accessible resources are having their major effect, the prices of the products or services they provide will fall because the absolute cost of making them is being actually reduced, but this study accounts for those improvements. There are no new processes or massive new resources being discovered and put into service, especially not across the board.

And the lastest survey of American productivity show that it is falling, not rising.

There is another reason that prices fall and that is when the incomes of the customers fall. And in real terms, American incomes, except for the 1%, are about the same as they were in the 1980's. So prices have to fall to match them.

The reason they have not fallen earlier is that the difference has been made up with debt. But consumers have finally reached the point where they can no longer fool themselves into taking on more debt, or they are just plain maxed out, even by the corrupt standards of the banking system.

The second case has another facet; it is the indicator of a deflationary economy.

As wages fall, prices have to chase them down, but because each seller is still trying to maximise their profit, then their income, then finally their survival. Because they try to brake their fall, the prices always remain higher than the customer can actually afford so they inch down some more, preceded by the wages that companies pay their workers who are then supposed to be able to keep buying the products they make.

This is a deflationary spiral and the next phase is the failure of the companies that make this stuff. People like The Automatic Earth, Steve Keen, Chris Martenson etc have been predicting this for over a decade and the process is playing out pretty much according to their models. But those who are terrified of deflation, and that should be all of us, WILL NOT talk about it honestly.

If we refuse to talk about it, we can't even attempt to deal with it. So will will have to face it alone. NOT a good scene.

The Coming Global Generational Adjustment

Although I don't always agree with his politics, I like a lot of the thinking of Charles Hugh Smith. This, for example.

But the global reality is the Baby Boom generation is so large that it dwarfs the younger generations. Regardless of any other conditions, this reality negates all the promises issued to retirees: as the ratio of workers paying substantial taxes on their full-time earnings to retirees slips below two workers to one retiree, there is no way the workers can support the lavish costs of healthcare and old age pensions without becoming impoverished themselves.

via charleshughsmith.blogspot.nl

In a word, yes.

A few years ago my very smart SIL said to me at dinner one night, "our generation may not be willing to support yours in the way you might like when you retire".

My reply to Adam and my darling daughter was that it would not matter whether they were willing or not, with a shrinking population, the size of the economy would prohibit it. The only possible way to do it would be for their generation to have 4 homes, 12 cars, 24 big-screen TV's, 11 fridges and freezers, 234 computers etc etc etc, you get the picture; and to do it all on borroweed money.

I sincerely hope that nobody in their generation could be quite that stupid. 

The reality is also that my generation cannot, and will not retire, because the money those who were saving assiduously think they have set aside is not there. It has been wasted, gambled, lost, stolen or burned in any number of scams, schemes and  frauds and what was left is even now being punted on the highest share market "valuations" in history in a vain attempt to recover the losses and be able to pay the stated funds when due. And when that time comes we will discover that we can't afford to retire, we will have to keep on working, further depriving our kids of the ability to earn enough to support themselves, let alone us.

At some point, as the boomers flood past 65 full of expectations that they get to take it easy on the backs of their kids and grandchildren, the said offspring are going to get seriously pissed off.

No, SERIOUSLY pissed off. As in, "well mama and papa, you had a great time living it up and wrecking the planet and using all the wealth for yourselves and leaving us with depleted resources and polluted landscapes and no energy, so now we can't afford to feed and house both you and my kids, so you need to find another solution".

The healthiest, longest lived generation in history is going to be faced with their own kids demanding to know how soon they can die so the next generation can have anything like a reasonable life. Quelle paradox, quelle ironie, quelle horreur.

The only question is how close that moment is. Try this.

The Internet of Things is a REALLY Stupid Idea

It doesn't take a genius to realise that connecting a lethal device to a network that can be hacked is not a great idea. This piece from Marketwatch has an example.

Chris Valasek, director of security intelligence at the computer security company IOActive, spent about a year researching how to hack cars and found that “unfortunately, these things were designed a long time ago” and there’s often no authentication process to supervise who can access a car’s controls. He took control of the wheels, brakes, accelerations and displays in a Toyota Prius and a Ford Escape. 

via www.marketwatch.com

But the biggest problem is that cheap connected devices produced in their hundreds of millions provide exactly zero reason for the manufacturer to make it, or keep it, safe.

They are, and will be, made with highly standardised chips that are programmed once for whatever function they should perform and will niot even have the capability for the software to be upgraded, prtoected or enhanced. Lets face it, even computer makers don't support their products forever, XP anyone? But at least they have a case for provisding some ongoing protection. If you pay $50 for the device and maybe $1 for the chip, you will get what you pay for in protection - none.

It will take just one hacker to find the way in and every device using the chip will be at risk and you will never know it has been hacked until whatever shit hits whatever fan. It may even be the fan itself.

You wont know what chip is in the device, let alone how to access it yourself and it wont matter because there will be nothing you can do. The chips will be replaced in the production line at least once a year so your 2 year-old device will we all but forgotten by its maker who will have no interest in it at all.

I'm a huge fan of this stuff, but after nearly 20 years of being closely involved with it, I'm also aware of its limitations. I will NOT be buying connected devices and I will NOT be allowing those devices I can't avoid buying to connect to my network. Since I live far enough from any community/free/4G access points, the device will be isolated. You may not be so lucky.

In the old days we talked about what would happen when we reached critical mass of adoption. We are well past that but another critical mass may be coming up, the connected device. That is a step too far. We, of course, WILL take it. It will be a very bad idea.

The end of climate

One of the reasons for coming back to NZ from Australia is that we believed those meteorologists who, for a decade, had been saying that climate change would hit Australia harder than almost anywhere else in the world. So, while American denialists are crowing about how cold its been so "global warming is a lie", we get this;

Heat pushing farmers beyond limit

Vast tracts of central and northern Australia are gripped by an unrelenting drought that is decimating cattle herds and threatening to force pastoralists off their land.

Scattered rain has fallen over the past two days across some dehydrated parts of Queensland, and a searing heatwave that drove temperatures into the high 40s is now easing.

But weather forecasters see little chance of drought-breaking rains before autumn, with temperatures expected to remain above-average until March at least.

The heatwave pushed the mercury to more than 48C in the hottest parts of the state, dropping birds from the sky and killing thousands of fruit bats in Queensland and New South Wales.

via www.nzherald.co.nz

Some climate bloggers are still casting around for more appropriate terms than global warming, even if that is literally the truth and the simplest statement of what is happening, "climate change" doesn't seem to cut it as conveying enough urgency and the other day I saw someone trying "climate disruption" as well.

I'm tending towards "the end of climate". The whole point of even discussing climate is that it gives us a framework for making decisions about water management, what to grow and where etc. Its a statistical, backwards-looking tool that has depended on the inertia of the global weather systems that have reliably cycled over years and decades, producing similar series of warm, wet, windy, cold days that we have called seasons and on which we have come to rely.

I say we can';t rely any more on the past being a predictor because the global heat management system has become chaotic, all the patterns are breaking down. Last year at this time we were entering the worst NZ drought in 70 years while people were drowning in Australian floods and catchment dams were being spilled to stop them over topping. Since then we have had the wettest May on record around our place, followed by a mini winter drought, some rain, then another dry stretch in spring.

This year the Aussies have returned to relentless drought, Chicago has been colder than Antarctica and we are having the perfect summer with a few days of fine warm weather followed by a day or so with rain. It couldn't be better, even the temperatures have been in a range that has kept mildews and moulds at bay, although the insect pests are a bit higher than before, I think.

Like most people around here, I was expecting another drought, which is why we sold off 3 of our 5 cows and had several dams and ponds dug. We didn't expect them to fill till next winter and when I bought a bag of grass seed to get some cover on the bare earth, the guy at the store said it was a waste of time, that I'd be back for more in Autumn. I agreed with him, but I also said that, although I was expecting a drought, nowhere is it written that we have to have one. I sowed the grass and a lot of it is growing well. It will need more in autumn, but for now it was worth the bet.

And the dams are nearly full.

Pacific weather systems are driven by the southern oscillation index which, for a couple of years now, has been in neutral, neither pushing one thing nor another. I saw it called "La Nada" rather than El Nino or La Nina. The bad news is that La Nada predicts nothing at all, any kind of weather is possible.

Which means we have to farm and garden for every eventuality, expecting some of the bets to fail. That is going to drive up the cost of food even more because for every spud or apple we harvest, maybe 3 other bets will have failed. That is food insecurity.

Just don't look for anyone in the public eye even beginning to broach that conversation, let alone talking about the end of climate. 

Gotta love the Swedes

From OilPrice.com comes this delicious headline, "Sweden has Run out of Rubbish for Waste-to-Energy Industry"

As a result of overzealous recycling, the nation of 9.5 million citizens must now import rubbish from other countries in order to feed its waste-to-energy incineration power plants. Each year the Scandinavian country imports 80,000 tonnes of garbage, mostly from Norway, to fuel homes and businesses.

via oilprice.com

While at one level its amusing and we can admire the Swedes' intelligence and ability to stick with an idea, it raises a problem that I have been harping on about for a long time. Right now we have a lot of people trying to figure out how to turn the vast amounts of waste we create into something useful, from insulation and other building materials to methane and other forms of energy.

In the medium term, however, that is a dead-end strategy because the waste stream itself is dependent on excessive, unsustainable consumption. As the Global Financial Crisis continues to roll out and become an increasingly economic one, our ability to generate waste streams will diminish; we will buy less stuff and that we do buy will have less packaging and we will throw out less of it.

Anyone trying to create a busines based on that waste is NOT an environmentalist nor have they thought through the whole process, they are every bit as invested in our failing waste-producing economy as the worst waste creator, literally.

Its a good way to start cleaning up the environmental damage that landfill is doing, but its also creating an even more concetratedly toxic material in the contaminated ash that is being shipped back to Norway. If all the Norwegians do is bury the stuff, they are lining up for an even worse problem down the track. At the very least it needs to be baked into building materials in a form that wont leach the heavy metals etc, or vitrified.

And then there's the energy budget. Right now its trucks burning diesel carting this stuff back and forth, they are talking about shipping stuff to and from the Italy, Romania and the Baltic states, much, much more diesel and then the energy costs of making the ash safe. I'm betting that quite soon we will reach a point where burning the diesel to make electricity will be financially better than moving the waste, so the only net benefit will be environmental, and that will be limited. If the sending nation has to pay dfor the transport they will very quickly decide that trading even more of their environmental standards will not only be preferable, it will be the only affordable option.

We are now in the phase of the process where we will reach the limits of every economic and energy strategy very quickly. This is just more evidence that the Club of Rome was right, we have reached the limits to growth and now we are trying to stave off the collapse instead of reorganising ourselves around the new reality.

Hell, we aren't even starting the public conversation about that.

Not an Arab Spring - More Like a Winter

I've been a fan of Gail Tverberg's stuff since I first came across it on the late Oil Drum. Gail is not an oil expert, she's an actuary, she specialises in statistics and data and demographics and she sees stuff that most of us miss.

Like this little ball of dynamite from Syria

Syria’s oil production is dropping. The drop between 1996 and 2010 reflects primarily the effect of depletion. The especially steep drop in the last two years reflects the disruption of civil war and international sanctions, in addition to the effect of depletion.

When oil exports drop, the government finds itself suddenly less able to pay for programs that people have been expecting, such as food subsidies and new irrigation programs to support agriculture. If revenue from oil exports is sufficient, desalination of sea water is even a possibility. In Syria, wheat prices doubled between 2010 and 2011, for a combination of reasons, including drought and a cutback in subsidies. When basic commodities become too high priced, citizens tend to become very unhappy with the status quo. Civil war is not unlikely. Thus, oil depletion is likely a significant contributor to the current unrest.

via ourfiniteworld.com

In 30 years, Syria's population nearly trebled but its ability to provide for that population has been shrinking for exactly half of that time. That makes reral sense as a driver of unrest and civil war. 

Further down the piece she applies the same analysis to Egypt and Yemen and Saudi Arabia. In February 2004 I posted a piece (Now apparently missing from the blog) called "Did we just go over the hump" about why I thought we had reach global peak oil as Saudi Arabia gave all the political signs of no longer being able to pump the stuff at will. 

I've had no reason since then to change my opinion and endless yapping about fracking being a game changer etc is just that; you don't spend billions squeezing out every last drop if you could spend millions to get buckets-full.

Oh, and Norway is about to get a right wing government in part because they have been able to blame the current one for "wasting the oil opportunity", just as the UK did in the 80's.

In every case, countries that find significant oil piss away the opportunity, they talk and act as if this finite resource is unlimited and time after time, within a single lifetime, it proves not to be the case. But apparently we have zero ability to learn from the mistakes of others, we have to do it all over again for ourselves.

And then we refuse to acept the reality so we elect fantasists, our own current shower of "not quite-free market" true believers, now in Australia, and Norway and so on. We elect "conservatives" because, having changed everything about the way we live, we suddenly don't want to change away from the good times and we are suckered into believing that they can, somehow, magically as it happens, be prolonged forever.

They can't. We are living through the early phase of how that "can't" turns into "didn't". And if you aren't, right now, taking substantive action to wrap up, you will be naked in the cold; probably praying for more global warming.

Consumers switch off as costs soar - Business - NZ Herald News

Its not just the fact that the market is driving more and more people into poverty, its that we are moving into a world where energy poverty is the norm and those who are not in a position to generate their own energy will suffer. (I also expect that those who CAN generate their own will be taxed to death for the benefit of the companies that sell it, but that's another discussion)

This bit has it right

"What's happening is the cartel that's been pushing prices up for the last decade is still operating. The big companies are essentially able to raise their prices without consequences and consumers simply have to pay or get disconnected," he said.

The reality is that they wont notice until so many of us are disconnected that their profits finally dip, permanently.

Contact Energy said the survey did not provide the complete picture.

"We have a range of pricing plans and highly competitive offers in the market along with a range of payment options that help customers meet their energy needs," it said.

What we don't have is the smart people from these companies trying to live in the same conditions on the same income and pay the same prices for the same amount of power. And don't expect it any time soon. The sooner we stop this idiotic experiment in running critical human infrastructure through profit-oriented organisations and understand that the people's resources are there for the benefit of the people, not the few, the better.

What we will also need is a people much more aware that the people's resources belong not to them, but to their great grandchildren and we are the guardians of those resources for their benefit.

Yet another Private enterprise mess

Another data point.

The head of private security giant G4S admitted the company's failure to provide enough guards for the Olympics was "a humiliating shambles" as he faced a grilling from British lawmakers on Tuesday.

Chief executive Nick Buckles said he expected the company would eventually be able to supply 7000 of the 10,000 staff it had promised. An extra 3500 troops have already been drafted in by the British government to plug the gap.

Day by day we started to realise that the pipeline and the people we thought we were going to be able to deliver we couldn't. 

But he insisted he would not resign over the scandal and said G4S, one of the world's biggest security firms, would still claim its £57 million ($86.5 million) management fee for the Olympics contract.

via www.smh.com.au

Frankly, I don't think he should be in the gun for this. He is doing what he is paid to do, maximise his company's profits by minimising his costs. If that includes being paid for work that is not done, so what? His ONLY interest is to maximise profits. Nothing else. Even better if he can do it at public expense rather than actually having to compete to actually deliver on his agreements.

The people who need to be in the gun are those who let and supposedly oversee the contract, and those politicians and "economists" who mindlessly, endlessly, relentlessly assert that private enterprise is more effective, efficient and smart than any publicly owned entity is or could be.

We have had the fiascos of NZ Rail and Air NZ being privatised and rescued at public expense, SERCO's running of our prisons is a crime in itself, British water supplies in a mess from privatisation, the insane cost overruns in any number of Military supply contracts from the US to Australia to fiascos with the latest NZ navy vessels. Boeing's Dreamliner is a nightmare of delays and inefficiencies, the Airbus 380 still a mess; everywhere you look, scams, incompetence, greed, corruption and stupidity masquerading as innovation and private enterprise superiority.

It has taken 3 bastions of private enterprise to repair my compouter. It failed in November 2011; I STILL don't have it back. 

Are public entities any better? Difficult to tell since so many of them are now being run as "Business units" with financial goals rather than service goals, ACC for example. But running to the rescue in the UK are the cops and the military. Organsiations that, apparently, actually train people for service and have them available when needed.

It would be nice to think that, some day, far in the future perhaps, that the evidence might lead to a conclusion that Private enterprise is not only NOT the answer to all things, it is barely the answer to anything. But I'd settle for all the private enterprise boosters to just STFU

/rant.

Time to do some actual work that produces something useful, edible and tasty. cape gooseberry jam for example.

Google reports 'alarming' rise in censorship by governments | Technology | The Guardian

Dorothy Chou, Google's senior policy analyst, wrote: "Unfortunately, what we've seen over the past couple years has been troubling, and today is no different. When we started releasing this data, in 2010, we noticed that government agencies from different countries would sometimes ask us to remove political content that our users had posted on our services. We hoped this was an aberration. But now we know it's not.

"This is the fifth data set that we've released. Just like every other time, we've been asked to take down political speech. It's alarming not only because free expression is at risk, but because some of these requests come from countries you might not suspect – western democracies not typically associated with censorship."

via www.guardian.co.uk

Get used to it, there is so much to cover up already, and as the GFC plays out, there will be much, much more that TPTB don't want in the public domain.

leading indicators

€700 million was withdrawn from Greek banks on Monday, according to remarks made by Greek President Karolos Papoulias and reported in the Wall Street Journal. The Journal reports that between €2 and €3 billion in deposits have been withdrawn from the Greek banking system each month for the past two years. January was a high point, with €5 billion.

via www.dailyreckoning.com.au

While the guys at DR can be pretty right wing, this piece has it on the nail. But what interests me even more is that the ordinary Greeks have been on to the game for a long time. back when the alternative thinkers were saying PIIGS are the problem, and being mocked or ignored by the terribly serious people who think they run the world, Greeks were steadily stashing away hard cash against the certainty that sometime within a reasonable frame, they would be screwed totally by their Government and the banking system.

I wonder how many of the rest of us are that far ahead of the game? Of course, people in NZ, Aus, the US and UK for example, have no history of their societies collapsing into chaos and anarchy. The Greeks have been there within the lifetime of many people still alive; they know the smell and they are taking action.