The chain represents the limits of petroleum and the dog represents capitalism.
Stage two: Dog runs for a while then hits the end of the chain.
Capitalism grows as long as it can keep exploiting natural resources like petroleum.
Stage three: Dog stains against chain
The strain between supply and demand causes the "supply cushion" A.K.A. "spare capacity" (which is oil beyond the needs of the market which can be deployed to bring down prices) to shrink causing run away prices.
Stage Four: Dog passes out due to choking self with chain.
This represents the economy which was not designed to function with oil at or above $100/barrel goes into recession.
Stage Five: Owner comes out and says "not again" and promptly shortens the chain hoping that will help. Other chain-shortening events which are "acts of nature" would do as well.
The chain represents that petroleum production is still falling for geophysical reasons without regard to capitalism's issues.
Stage Six: Dog regains consciousness in a weakened state with shorter chain but dogs will be dogs.
This represents that future partial economic recoveries will run into the same issue as the current one. This sequence repeats while going downhill overall.
Back in 2003, Richard Heinberg explained the same thing in his own words:
[flash width=425 height=344]http://www.youtube.com/v/cqIFiPwOBPw[/flash]
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