segunda-feira, fevereiro 16, 2015

Os limites do otimismo

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Não haverá milagre na Grécia, mas destruir as classes médias não é solução

O notável artigo de Michael Pettis, que abordámos em post anterior, dedicado ao pensamento efeverscente e maniqueísta sobre as responsabilidades pelas crises grega, cipriota, portuguesa, espanhola, italiana, e em geral da maioria dos países europeus, demonstrando que o capitalismo global é um sistema de vasos comunicantes onde as crises financeiras tendem a assumir natureza sistémica, exigindo, por esta razão, remédios permanentemente concertados, precisa talvez de uma contextualização económica mais ampla.

Recomendo, por isso, a leitura de um outro artigo recente, não menos notável, de Gail Tverberg, analista de risco, editora do extinto e célebre The Oil Drum, e autora do blogue Our Finite World.

Gail Tverberg considera, como eu e um número crescente de observadores, que nos aproximamos ou estamos já no quadro energético previsto por M. King Hubbert [1956, “Nuclear Energy and the Fossil Fuels”—pdf], conhecido como Pico do Petróleo. Este quadro casa, aliás, com um outro mais recente, traçado em 1972 pela equipa do relatório The Limits to Growth, que analisa os limites do paradigma de crescimento em que ainda vivemos, do qual temos que sair, mas ninguém sabe como.

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Os quadros estatísitcos têm vindo a confluir na perceção de que estamos no fim de uma longa era de prosperidade e crescimento explosivo, único na história humana, cujos motores principais foram o carvão mineral, o petróleo e o gás natural, a par de descobertas e invenções tão extraordinárias quando a eletricidade, a energia nuclear, a higiene e o saneamento básico, ou as vacinas e os antibióticos.

Sem energia abundante e barata o paradigma civilizacional em que nascemos e nos habituámos a perceber como natural há três coisas que desaparecerão depois de sucessivas e dolorosas crises:
  • taxas de crescimento demográfico e económico acima dos 2%
  • crescimento baseado na utilização de capital intensivo e em endividamento
  • boa parte da atividade discricionária não produtiva, nomeadamente o consumo conspícuo de massas.

Esta versão inesperada de The Tragedy of the Commons [Garrett Hardin, 1968] parece já estar, de facto, em cena num qualquer smartphone, ou televisão perto de si. O aparente triunfo argumentativo de Yanis Varoufakis face à inércia burocrática de Bruxelas e Berlim, e face ao defensismo atávico do BCE e do sistema financeiro em geral, espelha bem que o problema que temos entre mãos é um daqueles problemas a que Hardin chamou “a no technical solution problem”.

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Recomendando desde já a leitura integral do artigo em três partes de Gail Tverberg reproduzi a modo de convite alguns extratos e alguns gráficos esclarecedores. Quem quer que seja que pretenda chegar ao poder, nomeadamente para mtigar a contínua má direção que temos seguido, deverá, antes de mais, ler atentamente os três artigos aqui citados—o de Gail Tverberg, o de Michael Pettis, e o célebre artigo de Garrett Hardin, publicado pela Science em 1968.

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A new theory of energy and the economy, Part 1
Generating economic growth
By Gail Tverberg
Posted on January 21, 2015


What if oil prices are artificially low, on a temporary basis? The catch is that not all costs of oil producing companies can be paid at such low prices. Perhaps the cost of operating oil fields still in existence will be fine, and the day-to-day expenses of extracting Middle Eastern oil can be covered. The parts of the chain that get squeezed first seem to be least essential on a day to day basis–taxes to governments, funds for new exploration, funds for debt repayments, and funds for dividends to policyholders.

Unfortunately, we cannot run the oil business on such a partial system. Businesses need to cover both their direct and indirect costs. Low oil prices create a system ready to crash, as oil production drops and the ability to leverage human labor with cheaper sources of energy decreases. Raising oil prices back to the full required level is likely to be a problem in the future, because oil companies require debt to finance new oil production. (This new production is required to offset declines in existing fields.) With low oil prices–or even with highly variable oil prices–the amount that can be borrowed drops and interest costs rise. This combination makes new investment impossible.

If the rising cost of energy products, due to diminishing returns, tends to eliminate economic growth, how do we work around the problem? In order to produce economic growth, it is necessary to produce goods in such a way that goods become cheaper and cheaper over time, relative to wages. Clearly this has not been happening recently.

The temptation businesses face in trying to produce this effect is to eliminate workers completely–just automate the process. This doesn’t work, because it is workers who need to be able to buy the products. Governments need to become huge, to manage transfer payments to all of the unemployed workers. And who will pay all of these taxes?

The popular answer to our diminishing returns problem is more efficiency, but efficiency rarely adds more than 1% to 2% to economic growth. We have been working hard on efficiency in recent years, but overall economic growth results have not been very good in the US, Europe, and Japan.

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A new theory of energy and the economy, Part 2
Charts showing the long-term GDP-energy tie
By Gail Tverberg
Posted on February 5, 2015

The high oil prices–around $100 per barrel–continued until United States QE was tapered down and stopped in 2014. About the same time, China made changes that made debt more difficult to obtain. Both of these factors, as well as the long-term adverse impact of $100 per barrel oil prices on the economy, brought oil price down to its current level, which is around $50 per barrel (Figure 10). The $50 per barrel price is still very high relative to the cost of oil when our infrastructure was built, but low relative to the current cost of oil production.


Where Does the World Economy Go From Here?

In Part 1, I described the world’s economy as one that is based on energy. The design of the system is such that the economy can only grow; shrinkage tends to cause collapse. If my view of the situation is correct, then we need an ever-rising amount of  inexpensive energy to keep the system going. We have gone from trying to grow the world economy on oil, to trying to grow the world economy on coal. Both of these approaches have “hit walls”. There are other low-income countries that might increase industrial production, such as in Africa, but they are lacking coal or other cheap fuels to fuel their production.

Now we have practically nowhere to go. Natural gas cannot be scaled up quickly enough, or to large enough quantities. If such a large scale up were done, natural gas would be expensive as well. Part of the high cost is the cost of the change-over in infrastructure, including huge amounts of new natural gas pipeline and new natural gas powered vehicles.

New renewables, such as wind and solar photovoltaic panels, aren’t solutions either. They tend to be high cost when indirect costs, such as the cost of long distance transmission and the cost of mitigating intermittency, are considered. It is hard to create large enough quantities of new renewables: China has been rapidly adding wind capacity, but the impact of these additions can barely can be seen at the top of Figure 14. Without supporting systems, such as roads and electricity transmission lines (which depend on oil), we cannot operate the electric systems that these devices are part of for the long term, either.

We truly live in interesting times.

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A new theory of energy and the economy, Part 3
The Problem of Debt as We Reach Oil Limits
By Gail Tverberg
Posted on February 11, 2015

Many readers have asked me to explain debt. They also wonder, “Why can’t we just cancel debt and start over?” if we are reaching oil limits, and these limits threaten to destabilize the system. To answer these questions, I need to talk about the subject of promises in general, not just what we would call debt.

In some sense, debt and other promises are what hold together our networked economy. Debt and other promises allow division of labor, because each person can “pay” the others in the group for their labor with a promise of some sort, rather than with an immediate payment in goods. The existence of debt allows us to have many convenient forms of payment, such as dollar bills, credit cards, and checks. Indirectly, the many convenient forms of payment allow trade and even international trade.

Each debt, and in fact each promise of any sort, involves two parties. From the point of view of one party, the commitment is to pay a certain amount (or certain amount plus interest). From the point of view of the other party, it is a future benefit–an amount available in a bank account, or a paycheck, or a commitment from a government to pay unemployment benefits. The two parties are in a sense bound together by these commitments, in a way similar to the way atoms are bound together into molecules. We can’t get rid of debt without getting rid of the benefits that debt provides–something that is a huge problem.

There has been much written about past debt bubbles and collapses. The situation we are facing today is different. In the past, the world economy was growing, even if a particular area was reaching limits, such as too much population relative to agricultural land. Even if a local area collapsed, the rest of the world could go on without them. Now, the world economy is much more networked, so a collapse in one area affects other areas as well. There is much more danger of a widespread collapse.

Our economy is built on economic growth. If the amount of goods and services produced each year starts falling, then we have a huge problem. Repaying loans becomes much more difficult.

In fact, in an economic contraction, promises that aren’t debt, such as promises to pay pensions and medical costs of the elderly as part of our taxes, become harder to pay as well. The amount we have left over for discretionary expenditures becomes much less. These pressures tend to push an economy further toward contraction, and make new promises even harder to repay.


Governments of “advanced” countries now have debt levels that are high by historical standards. If there is another major financial crisis, the plan seems to be to use Cyprus-like bail-ins of banks, instead of bailing out banks using government debt. In a bail-in, bank deposits are exchanged for equity in the failing bank. For example, in Cyprus, 37.5% of deposits in excess of 100,000 euros were converted to Class A shares in the bank.


The economy, as it exists today, has been made possible by countries working together. With sanctions against Iran and Russia, we are already moving away from this situation. Low oil prices are now putting the economies of oil exporters at risk. As countries try different approaches on interest rates, this adds yet another force, pulling economies apart.



If the current economic system crashes and it becomes necessary to create a new one, the new system will have to deal with having an ever-smaller amount of goods and services available for a fairly long transition time. This is one chart I have shown in the past of how the growth in energy products, and thus growth in goods and services, might look.

Because of this, the new system will have to be very different from the current one. Most promises will need to be of short duration.  Transfers among people living in a particular area might still be facilitated by a financial system, but it would be hard to have long-term or long-distance contracts. As a result, the new economy will likely need to be much simpler than our current economy. It is doubtful it could include fossil fuels.

Many people ask why we can’t just cancel all debt, and start over again. To do so would probably mean canceling all bank accounts as well. Most of our current jobs would probably disappear. We would probably be without grid electricity and without oil for cars. It would be very difficult to start over from such a situation. We would truly have to start over from scratch.

I have not talked about a distinction between “borrowed funds” and “accumulated equity”. Such a distinction is important in terms of the rate of return investors expect, but it is not as important in a crash situation. Similarly, the difference between stocks, bonds, pension plans, and insurance contracts becomes less important as well. If there are real problems, anything that is not physical ends up in the general category of “paper wealth”.

We cannot count on paper wealth (or for that matter, any wealth) for the long term. Each year, the amount of goods and services the economy can produce is limited by how the economy is performing, given limits we are reaching. If the quantity of these goods and services starts falling rapidly, governments may fail in addition to our problems with debts defaulting. Those holding paper wealth can’t count on getting very much. Workers producing whatever goods and services are actually being produced will likely need to be paid first.

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