Thursday, August 9, 2012

Jeff Rubin gets Peak Oil wrong

Jeff Rubin gets Peak Oil wrong

By Peter Shawn Taylor  | August 07, 2012

Two hundred and twenty five bucks. In April 2008, Jeff Rubin, chief economist at CIBC World Markets, predicted a barrel of oil would cost $225 by 2012. With oil at $118, it was a controversial call.
But Rubin, the best-known bank economist in Canada at the time, was no stranger to risky predictions. In 1989, he announced that the Toronto real estate market was about to crash. It did. In 1992, he said the Canadian economy was about to boom. It didn’t. In 1997, he tangled with manufacturers and fellow economists by declaring that the Canada-U.S. free trade agreement had not improved our productivity. As it happens, last month the Organization for Economic Co-operation and Development reported that “Canada’s key long-term challenge is to boost productivity growth”—so chalk that up as a win for the provocative Rubin as well.
But back to oil. These days, it’s trading under $90 a barrel. So not only was Rubin off by a huge margin, he got the direction wrong. And for Rubin, the stakes couldn’t be higher.
In 2009, he famously quit CIBC to publish his first book, Why Your World Is About to Get a Whole Lot Smaller. It was a No. 1 bestseller and won the National Business Book Award. Rubin argued peak oil supply and rising prices would push up transportation costs and slam the brakes on globalization. Say goodbye to New Zealand lamb in Canadian fridges. Air travel would also become prohibitively expensive. We’d drive less, shop closer to home and generally live in a smaller world.
You can still get New Zealand lamb, of course, as well as cheap vacation deals in Mexico. But Rubin is undeterred. The End of Growth, his new book, continues his argument that oil is the single most important factor guiding global economic progress, or lack thereof. Because of insatiable energy demand from developing countries, oil will become permanently and prohibitively expensive, Rubin claims. And this will bring our era of cushy First World prosperity to an abrupt end. “Living in the static world will be much different than the world we’ve come to know,” he warns. If there’s a silver lining, expensive oil and no growth should help keep our environment cleaner.
It’s another controversial and arresting point of view from the now 54-year-old provocateur, who has by now fully evolved from corporate economist to public sage. As such, he joins the ranks of such famous Canadian pop experts as demographer David Foot, technology guru Don Tapscott, resource-scarcity worrier Thomas Homer-Dixon and a long list of other self-declared wisemen who make a living telling the nervous masses what the future holds.
Is Rubin right about the supremacy of oil and where the future is headed? His 2008 oil call doesn’t inspire confidence. But then again, for pop experts, being right isn’t nearly as important as getting noticed.
Since the Oracle at Delphi, humans have looked to soothsayers to point the way. While ancient Greek prognosticators were famous for their cryptic suggestions, readers today expect (and are willing to pay for) a substantially clearer message. A certain formula has evolved: Take an expert with established credibility. Reduce the fate of the world to a single, simple concept. Create a suitably grim future to attract plenty of media attention. Then, if possible, add a glimmer of salvation, if only to keep readers’ spirits up enough to buy your next book.
Paul Ehrlich’s 1968 jeremiad, The Population Bomb, was in many ways the first big international pop-expert success, packaging an apocalyptic message for mass consumption. Ehrlich, an entomologist by training, declared we were doomed because too many people were living on too small a planet. He claimed Earth could support only 500 million inhabitants, Britain would cease to exist by 2000 and we’d all become vegetarians out of necessity. None of this came to pass, of course.
David Foot’s mega-selling Boom, Bust & Echo established the Canadian gold standard for the pop expert phenomenon a few decades later. Foot, an economist at the University of Toronto, began with the adage that everyone gets one year older every year. Easy enough to grasp. From there, he built a scary vision of dislocations and changes due to aging baby boomers. The biggest calamity was a looming real estate meltdown. “The real estate boom is over,” Foot and his co-author, Daniel Stoffman, wrote in 1996. Firms that recognized the demographic trends—a shift toward small cities and vacation properties, for example—were poised to reap great rewards. Publicly traded resort operator Intrawest was singled out for attention.
Sixteen years after Boom, Bust & Echo, real estate in Canada is largely defined by massive downtown condo booms and continued strong suburban growth. Inflation-adjusted housing prices in many Canadian cities are double what they were in 1996, except in the vacation market, which hammered Intrawest, now in private hands. You don’t hear much from Foot these days.
Other practitioners of the pop-expert model include Canadian academic Thomas Homer-Dixon, who predicted the world was about to be wracked by cross-border wars fought over basic resources such as water. Don Tapscott's warnings about the “peril and promise” of the Internet era go back to the 1990s, and urban theorist Richard Florida of the Martin Prosperity Institute at the University of Toronto argues the survival of every North American city depends on attracting a “creative class” of artists and thinkers. For every pop expert, there’s a single overarching truth that explains all future success or failure.
For Rubin, it’s oil. While pop experts tend to fade from the spotlight long before their predictions pan out or not, Rubin has the unenviable task of flogging a book in the very year his oil price forecast has been proven dead wrong. The solution? In practised pop-expert fashion, he has simply recast failure as a success. “I made a forecast of oil at $200 based on what the price would be if the economy continued to grow,” he explained in a recent interview. Now, he claims his end-of-growth scenario means the world will find it impossible to keep going like it did in the early 2000s, which will henceforth keep oil prices down. “We’ll never see $200 prices, not because oil has become abundant, but because the world will never grow at a pace that can justify that,” he says. Point proven. Sorta.

Wednesday, August 8, 2012

Economist Richard Duncan: Civilization May Not Survive 'Death Spiral'

The folks at the Money Map Press are pitching one of those “kitchen sink” deals where you pay up front to get all of their newsletters for life — these are usually in the neighborhood of $3,000-5,000 with an “annual maintenance fee” that’s generally around a hundred bucks, and this one is right in line with that (and yes, as many publishers do they give it a twist by saying they’ll “send you a check” — for $2,500 in this case, which is pretty much like a car salesman giving you a “cash back” offer, saying “discount” just doesn’t hit your lust receptors in the same way).

The deal, which they call the “Passport Club,” includes more newsletters and trading services than you’d have time to read, from all the heavily teased editors they promote to our mailboxes every day (Dr. Kent Moors, Shah Gilani, Peter Krauth, etc.), but the big teaser pitch behind the promotion is from another guy, Michael Robinson, who used to work for sister publisher Wealth Daily/Taipan, but whose American Wealth Underground appears to have disappeared. Source

 

 

Economist Richard Duncan: Civilization May Not Survive 'Death Spiral'

 "It's a pattern that's hard to see unless you understand the way a catastrophe like this gains traction," Dr. Moors says. "At first, it's almost impossible to perceive. Everything looks fine, just like in every pyramid scheme. Yet the insidious growth of the virus keeps doubling in size, over and over again - in shorter and shorter periods of time - until it hits unsustainable levels. And it collapses the system."

Martenson points to the U.S. total credit market debt as an example of this unnerving pattern.

By Terry Weiss, Money Morning 


Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America's $16 trillion federal debt has escalated into a "death spiral, "as he told CNBC. 

And it could result in a depression so severe that he doesn't "think our civilization could survive it."

And Duncan is not alone in warning that the U.S. economy may go into a "death spiral." 

Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan's Council of Economic Advisers, have come to similar conclusions. 

Kotlikoff estimates the true fiscal gap is $211 trillion when unfunded entitlements like Social Security and Medicare are included. 

However, while the debt crisis numbers are well known to most Americans, the economy hasn't suffered a major correction for almost 4 years.

So the questions remain: Is the threat of collapse for real? And if so, when? 

A team of scientists, economists, and geopolitical analysts believes they have proof that the threat is indeed real - and the danger imminent. 

One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:

"We found an identical pattern in our debt, total credit market, and money supply that guaranteesthey're going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible. 

Click here to see how banks are escalating the collapse...
"And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."


According to Martenson: "These systems could all implode at the same time. Food, water, energy, money. Everything." 

Another member of this team, Keith Fitz-Gerald, the president of The Fitz-Gerald Group, went on to explain their discoveries. 

"What this pattern represents is a dangerous countdown clock that's quickly approaching zero. And when it does, the resulting chaos is going to crush Americans," Fitz-Gerald says.

Dr. Kent Moors, an adviser to 16 world governments on energy issues as well as a member of two U.S. State Department task forces on energy also voiced concerns over what he and his colleagues uncovered.

"Most frightening of all is how this exact same pattern keeps appearing in virtually every system criticalto our society and way of life," Dr. Moors stated.

Search The Web