[Rambo]

http://news.bbc.co.uk/2/hi/business/7909248.stm


Japan's exports plunged 45.7% in January compared with a year ago to hit the lowest figure in 10 years, official figures have shown.

Imports exceeded exports by 952.6bn yen ($9.9bn; £6.8bn). It is the largest gap since records began in 1980.

Demand for Japanese cars in particular dropped by 69%.

Trade in electronics and other goods has also slumped as global economies and consumer spending contract, pushing Japan deeper into recession.

"Japan is particularly vulnerable to this downturn because trade is so central to the economy," World Trade Organization head Pascal Lamy told reporters on a visit to Tokyo.

[Pops]

Wow!

Who would have guessed?

[ReverseEngineer]

Wow!

Who would have guessed?

Me? LOL.

So anyhow, given the numbers, just how long does Japan's supply of FOREX hold up as they use it to prop up their own economy and buy further US toilet paper?

On a smaller scale, Japan's Overshoot problem is even worse than China. 127,288,416 people jammed onto islands with a total area of 145,840 square miles, for a population density of 872.5 people per square mile. Ouch. China comes in at 350 people per square mile. Without income derived from exports, exactly how they will get enough food onto those islands to keep feeding the population is quite difficult to figure.

Can you IMAGINEwhat happens when Japan goes the way of Iceland. Not a pretty picture.

Reverse Engineer

[copious.abundance]

I've already been reporting all of this here.

[lawnchair]

Without income derived from exports, exactly how they will get enough food onto those islands to keep feeding the population is quite difficult to figure.

In the near-term? They've got T-Bills. We've got food. I know which one I'd rather have. Make a deal?

[shortonoil]

Rambo said:

Japan's exports plunged 45.7% in January compared with a year ago to hit the lowest figure in 10 years, official figures have shown.

Imports exceeded exports by 952.6bn yen ($9.9bn; £6.8bn). It is the largest gap since records began in 1980.

This is not surprising considering the huge leverage that Japan has been long employing. The Yen carry trade has been financing the world for more than a decade. Japan has not actually had the money it has been loaning, it has been printing it.

The world is now entering a 16 year period of declining GDP. The chart below gives the economic contraction that can be expected for the next four years and the world’s decline in net worth that will result:

Code: Select all

Year  GDP Decline %   Net Worth    Net Worth decline
‘08      5.9            423.5            26.5
‘09      6.3            396.8         26.5
‘10      6.7            370.3         26.5
‘11      7.1            343.9         26.5

Net Worth in trillions $


As our debt based fiat currency systems are now running backward, industries and nations that are the most highly leveraged will be hit proportionally according to their leverage positions. We are now seeing the carnage in banking (which is highly leveraged by definition of the fractional reserve banking system) and industries carrying large debt to asset ratios.

Nations that have been exporting currency, which is a debt by definition, will suffer the greatest losses. And yes, the world’s present banking industry is “toast”.

Available Energy

[nobodypanic]

The world is now entering a 16 year period of declining GDP. The chart below gives the economic contraction that can be expected for the next four years and the world’s decline in net worth that will result:

Code: Select all

Year  GDP Decline %   Net Worth    Net Worth decline
‘08      5.9            423.5            26.5
‘09      6.3            396.8         26.5
‘10      6.7            370.3         26.5
‘11      7.1            343.9         26.5

Net Worth in trillions $


how did you arrive at these numbers?

[Cid_Yama]

shortonoil,

Your view of economic collapse is very orderly. I suspect it will not be nearly so orderly or smooth in its transition.

More like you will be FRAKED!!!!! then FRAKED!!!!!! again, then lots of screaming, bleeding, starving, fighting off others trying to take what you have left.

[ReverseEngineer]

shortonoil,

Your view of economic collapse is very orderly. I suspect it will not be nearly so orderly or smooth in its transition.

More like you will be FRAKED!!!!! then FRAKED!!!!!! again, then lots of screaming, bleeding, starving, fighting off others trying to take what you have left.

Short is just running numbers based on his Available Energy model. He's not commenting on the social implications of said model.

Its still unclear just how disorderly the spin down will be. You do see ever increasing demonstations and riots in Europe, and despite the fact the Chinese keep a good lid on it, you know things are starting to get out of hand there. Its still not clear though that its going to devolve to mass anarchy, Zombies and Cannibalism. I can write a half dozen scenarios that don't include those outcomes and are plausible ones.

As it appears to me right now, the USA is heading toward either a Fascist or Communist intermediary solution, which probably goes for another decade. I don't think we will see a complete breakdown of social systems in the USA for a while to come, although it will become progressively worse on many levels.

Relatively speakng, its a Fast Crash in the grand sense that it probably takes less than 50 years to see a huge die off world wide, but its a Slow Crash from the point of view of people in decent Doomstead locations. For the most part, I don't think the City Zombies will be attacking lonesome Doomsteaders and eating their babies. However, there will be increased violent crime everywhere, and there will be vigilantism as a form of Justice, just as there was in the Old West. That is one form of Localism to handle a social spin down and changing moral structure.

If you prepare your mind for this, its stll bad news but its not something you have no options or no defense against. There have been many occassions in human history of very awful times, the Plague years in Europe were no picnic obviously. So now we go through one of these times again, albeit on abigger scale. It still doesn't have to mean the end of civilization though. It might just be a New Beginning, a Rebirth. Painful yes, but you can't make an Omellette without Breaking a Few Eggs.

Reverse Engineer

[bencole]

If you prepare your mind for this, its stll bad news but its not something you have no options or no defense against. There have been many occassions in human history of very awful times, the Plague years in Europe were no picnic obviously. So now we go through one of these times again, albeit on abigger scale. It still doesn't have to mean the end of civilization though. It might just be a New Beginning, a Rebirth. Painful yes, but you can't make an Omellette without Breaking a Few Eggs.

Reverse Engineer]

I think your fogetting the fact that the world has at its disposal a nuclear arsenal that can utterly destroy most of modern day civilization. This fact is differentiates the present age from the past, and is also quite inconvenient for doomers who believe they can survive any large scale breakdown of social order.

[Battle_Scarred_Galactico]

Nuclear war is not certain at all, if you honestly believe it is what are you even doing here posting Bencole ?

[shortonoil]

The chart above is for the US economy, not the world. I meant to post both, but I got blitzed with a bunch of invalid entry errors last night and gave up. I’ll post the world data chart later today.

Cid_Yama said:

Your view of economic collapse is very orderly. I suspect it will not be nearly so orderly or smooth in its transition.

Right on Cid, the monetary system will implode at some point, Most likely long before we come close to the end of the cycle. That will put a big “blip” in the curve!

ReverseEngineer said:

Short is just running numbers based on his Available Energy model. He's not commenting on the social implications of said model.

That’s what I’m doing RE. I wish I could construct a mathematical model for the social implications. Then again --- maybe I don’t!

[rangerone314]

If you prepare your mind for this, its stll bad news but its not something you have no options or no defense against. There have been many occassions in human history of very awful times, the Plague years in Europe were no picnic obviously. So now we go through one of these times again, albeit on abigger scale. It still doesn't have to mean the end of civilization though. It might just be a New Beginning, a Rebirth. Painful yes, but you can't make an Omellette without Breaking a Few Eggs.

Reverse Engineer]

I think your fogetting the fact that the world has at its disposal a nuclear arsenal that can utterly destroy most of modern day civilization. This fact is differentiates the present age from the past, and is also quite inconvenient for doomers who believe they can survive any large scale breakdown of social order.

The nuclear war point is not particularly relevent, nor is the prospect of huge numbers of "zombies" trying to overrun doomsteads.

I can't control whether a nuclear war happens or not, and I have no say on the zombie hordes if any arise. Only have control over my doomstead. When push comes to shove, the people MOST likely to survive are those who are dug in, with ample supplies, food, defense & preparation in general.

There are NEVER any guarantees in life, except for ONE: we ALL become worm food in the end. It is quite probable that several posters on this site will die (accident, disease, old age, etc) before TSHTF peak oil scenario plays out. Does that mean they should not make preparations? NO.

Does the fact there might be a nuclear war or zombie hordes mean they should not make preparations? NO.

When everything goes down, I'm going to either fight and win, or fight and lose. What I'm not going to do is curl up in a fetal position, cry to my momma, and wait to die.

NEWSFLASH! We are ALL going to die, regardless of peak oil preparations. I'd just rather die of old age, then being one of the clueless, wandering zombies who starves to death.

I really don't think that the economy will recover before peak oil effects begin to hit fully. The economies are all connected like mountain climbers on ropes, and if enough mountain climbers fall off the mountain, their weight will take everyone else with them.

Between Japan's export collapse and Europe's potential 25-trillion bank loss, the US's sad shape will not improve. The last depression was aggravated by trade declining due to protectionism. Looks like even without protectionism trade will drop, one reason being Japan exports a lot of items that are not absolute necessities like big flat screen TVs.

[bencole]

Nuclear war is not certain at all, if you honestly believe it is what are you even doing here posting Bencole ?

Not a certainty Galactico, not a belief either. It is merely a factor to consider while constructing hypothetical models of future events that one will try to react to. My suggestion is that there may be no hypothetical "defence" against future events considering the technological level of the present age, therefore a less militant stance than contructing a "doomstead" stocked with "ammo" may be a more prudent course for doomers, in order to achieve there goals.

[bencole]

The nuclear war point is not particularly relevent

Sure it is. It holds the potential of rendering all your defensive preparations moot. I would consider any such scenario relevant, especially if you've invested heavily in preparations.

Only have control over my doomstead. When push comes to shove, the people MOST likely to survive are those who are dug in, with ample supplies, food, defense & preparation in general.

Actually being "dug in" can be a major weakness, as your mobility is often your stongest means to defense. Your survivlal is no more likely if your constrained to a fixed location.

Does the fact there might be a nuclear war or zombie hordes mean they should not make preparations? NO.

For some the answer may be yes, depending on there disposition and reasoning.

When everything goes down, I'm going to either fight and win, or fight and lose.

you would choose to fight in the event that you realized that you were going to lose and your defenses were hopeless? rather than choose a alternative course of action? If your a true survivalist would you not choose a practical means to escape that outcome?

NEWSFLASH! We are ALL going to die, regardless of peak oil preparations. I'd just rather die of old age, then being one of the clueless, wandering zombies who starves to death.

Those clueless wandering zombies are no different than you. Human, flesh and bone, your fellow citizens in your country, even your family. Your fate is tied to theirs despite your belief that you can separate yourself in a fortress with guns and ammo and somehow survive while your people, who made you what you are, perish.

[Leutnant]

Wow!
On a smaller scale, Japan's Overshoot problem is even worse than China. 127,288,416 people jammed onto islands with a total area of 145,840 square miles, for a population density of 872.5 people per square mile. Ouch. China comes in at 350 people per square mile. Without income derived from exports, exactly how they will get enough food onto those islands to keep feeding the population is quite difficult to figure.

Can you IMAGINEwhat happens when Japan goes the way of Iceland. Not a pretty picture.

Reverse Engineer

Japan has one of the lowest birth rates in the world and the population is actually in decline.
A large part of those 127 million people are 60+ years old,
in terms of people between the age of 0-30 it should'nt look to bad with regard to population density.

[sihmei]

Japan is doomed, massively exceeding its carrying capacity, huge overpopulation, little resources. Ultimately the only option will be the option they took in the 30's and 40's - war.

[bencole]

Japan is doomed, massively exceeding its carrying capacity, huge overpopulation, little resources. Ultimately the only option will be the option they took in the 30's and 40's - war.

How will they wage war with no strategic resources? will someone ship them oil so they can prosecute their war of agression? with they fight without mechanized divisions or airpower? Most of their enemies have that I think.

[shortonoil]

Here is the four year chart for world GDP and Net Worth decline:

Code: Select all

World (year end) 

Year      GDP Decline %   Net Worth    Yrly NW Decline
‘08      5.9             1956.5             115.4
‘09      6.3             1841.1             115.4
‘10      6.7             1725.1             115.4
‘11      7.1             1609.5             115.4
* Net Worth in trillion
* All figures at year end


“It’s back to the same old concern,” said John Carey, who oversees $10 billion at Boston-based Pioneer Investment Management. “The jury is still out on whether there’s going to be any equity value in these financial companies.”

Owning debt at this junction is analogous to owning a White Elephant with a bad case of diarrhea. Banks own debt and the Japanese own debt. The FED owns a lot of debt. At the top of that $20 dollar bill it says Federal Reserve Note. A note is a debt.

The debt issuers are going to continue to default (GDP is declining and reducing funds for debt service) and the debt owners are going to continue to show losses. Since the debt owners are leveraged more than the debt issuers, debt owners will disappear first.

Since the US dollar is the world’s reserve currency in the past the FED has been able to print a zero coupon note, which allowed them to borrow money from the rest of the world at zero percent interest. This worked as long as there were unencumbered funds available. Now that the entire world has a declining GDP those funds are no longer there to be borrowed. With no available funds to borrow, printing will just devalue the face value of their notes. This will will push interest rates upward enough to compensate for the devaluation.

The FED, other central banks and banks in general are spirally into the abyss. Their highly leveraged positions in a world of contracting GDP has only one possible outcome. It would behoove the sovereign nations of the world not to go down with someone else's ship. It is time that we admit - fractional reserve banking is dead.


WHERE THE NUMBERS COME FROM:


The column GDP Decline % is derived directly from the Available Energy model. It represents the effect that 100 years of declining ERoEI is having on fossil fuels’ energy contribution to the general economy. From the work of Dr. Cutler Cleveland it has been shown that GDP is directly proportional to the amount of energy input into an economy. This conclusion satisfies common sense; no economic activity is possible without the expenditure of energy.

The column Net Worth (trillions) is determined by using the generally accepted metric that the return on capital over the last three centuries has been 3%. Using that metric on GDP of 13.5 trillion for the US, gives a Net Worth of $450 trillion at year end 2007. This passes the “sniff” test as the World Bank in 2006 gave a book value of $57 trillion to the US. Including land, which is not a depreciable asset, the market value of previously depreciated assets, and intellectual property, $450 trillion appears justified. The same process was used for World Net Worth.