Brilliant episode.
Do yourself a favour and get a half-hour heads up on the shape of where we are going
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…and adapt expectations accordingly
…I thought of the above episode while watching Starmer on the news, at the lectern today with Takaichi.
Here’s a relevant lightly edited excerpt:
1/3
“Japan is a country that has run on increasing its financial claims on reality for a long time… held together for decades by low yields, converting natural resources into exportable tech, central bank interventions, associated credibility and a shared belief that the plumbing will continue to work at this top level of the biophysical pyramid…
2/3
…“Japanese government bond yields have been pushing higher [and when] they start spiking as they are now, it matters not because Japan is about to blow up tomorrow, but because the entire modern system is built on the assumption that debt can be carried cheaply and continually rolled forward, smoothly…
3/3
…“Higher yields are gonna be biophysical gravity reasserting itself because they increase the cost of serving an already large stock of obligations. They pressure [Japanese] government budgets and they force investors to reprice risk across portfolios that were built for a much different interest rate regime.”
…To come back to Starmer trying to do his bit to glue Anglo-Japanese relations. Trouble is his entire economics is BS. He and Takaichi seem peas in a pod in that respect. It cannot possibly hold. At some point it won’t
…In a month-old JP Morgan report they show that, at $80, silver is 30% of the cost of a solar panel.
At yesterday’s $115, silver is 45 to 50% of the cost”
“The March silver contract alone… is almost double the amount of the actual silver in the Chicago Mercantile Exchange warehouse.”
”Silver is just a tiny reminder that the energy transition is also a materials transition, and materials are not infinitely substitutable.”
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…Robert Friedland, a copper investor, says:
“We’re consuming 30 mn tons of copper a year, only 4 mn tons of which is recycled.
That means to maintain 3% GDP growth with no further electrification, we have to mine the same amount of copper in the next 18 years as in the last 10,000 years combined.
This is without any new electrification, without data centers, without solar and wind and the greening of the world economy, you people have no idea whatsoever what we’re facing. You are dreaming.”
…From 16 minutes in, Nate looks at what’s going on with the US’s Venezuela oil fetish. He points out that:
“15 to 20 years ago, Venezuela increased their reported reserves, which are oil recovery at a price, to nearly fourfold from under 80 billion barrels to nearly 300 billion barrels. Without any corresponding surge in discoveries or production. This was a statistical transformation, not a physical one. So there’s far less oil available in Venezuela, at least now, than most people think.”
…The important point being that how much oil there is to recover is a function of the price that oil is trading at.
As oil prices goes up, there is more that is technically economically obtainable.
But of course oil prices going up has *drastic* effects on economies built entirely on it…
…“Last week, billionaire Harold Ham announced he’s stopping drilling in the shale plays because at $60 they can’t make a profit. So to me, the oil situation was always a net energy story. There is plenty of oil, sure, and too much for a livable biosphere, but each successive tranche becomes *more expensive and delivers less* to society.”
…There’s a lot more, including a fascinating segment about the early 20th Century Technocracy movement that Elon Musk’s grandfather was a part of, and reflections on the UK’s December report on ecosystem collapse.
“Finance can and did stretch reality for a while, and politics can in turn delay recognition for a while, but neither can repel energy costs, material limits, or ecological feedbacks.”
I could quote the whole episode but instead, have a listen:
…If nothing else, it will help you calibrate the utter bullshit coming out of the mouths of western governments of all stripes, and out of the heads of the executive and management classes fuelling impossible expectations.
And maybe help us understand that we have to actively build what comes next outside of the world of commerce, because that world mostly does not give a fuck about what’s real