2020: The year we lost the plot!

 “A time is coming when men will go mad, and when they see someone who is not mad, they will attack him, saying, ‘You are mad; you are not like us.’”

Authored by Rob Slane via TheBlogMire.com,

“Our Government, along with Governments around the world will shortly announce the quarantining of whole populations for a seasonal respiratory virus which leaves 99.8-99.9% of those who get it in the land of the living. What is more, they will also announce a shutdown of the entire economy for months and then, when the epidemic has actually gone, will mandate that you cover the lower half of your face with a bit of cloth. They will do this by frightening people into compliance with a barrage of propaganda, slogans, data entirely taken out of context, and the threat of massive fines.”

Anyone making this claim at the beginning of the year would rightly have been thought to have mislaid the plot and their marbles, long ago. But here we are, at the end of that same year, and it is precisely what has happened.

Only it is much worse than that.

Had you somehow been persuaded to give credence to this insane prophecy, you would probably have been comforted by the following thought: “They’ll never get away with it. The people will never stand for it.”

Not a bit of it. Somehow, millions of people across the country, and in fact across the world, were persuaded to accept it. By far the majority somehow thought that quarantining whole nations of healthy people for a virus, for the first time in history, was a good idea. Well, actually the second time in history to be precise. It was tried in 2009 by the Mexican Government during the Swine Flu outbreak, but they had the good sense to end it after a couple of weeks after realising how much it would devastate the country.

Yet not only do we have our imaginary conspiracy loon’s mad ravings come true, but those same people who have accepted it look upon those of us who have been pointing out the madness of it all as if we were those who had taken leave of our senses. Oh irony, thou hast had a field day in 2020. As St. Antony the Great put it:

“A time is coming when men will go mad, and when they see someone who is not mad, they will attack him, saying, ‘You are mad; you are not like us.’”

To cut to the chase, we have gone and thrown out reason, rationality and proportionality this year. A coronavirus, which posed a danger to a very small proportion of our society, but which actually has an Infection Fatality Rate of around 0.2% – 0.26% (not too dissimilar to a bad seasonal flu), and which could thus have been dealt with proportionality, somehow became the catalyst for the biggest mass hysteria in the history of the human race. Indeed, many were so taken in by the great hypnotic spell set in motion by charlatans with their “hard-hitting emotional messaging,” that they adopted practices so irrational and disproportionate to the threat, one wonders how they managed to live before this year.

The history books tell of one of our great Kings, Canute, demonstrating to his courtiers that contrary to their supposition, he could not in fact control the waves. In our day, it’s like King Canute has gone rogue, telling his subjects that he can control the waves and viruses, and his subjects have responded by not only believing him, but by taking any action he tells them they must do to stop the waves or the virus, including confining themselves to their homes, closing their businesses, wearing cloths on their faces, along with umpteen other truly bizarre and wholly useless diktats. Then, when the waves or the virus continue doing what waves and viruses do, a wave of Covidian Logic bursts over us and we find it is our fault that they have not been controlled. We didn’t shut down hard enough or long enough, or we played board games at Christmas.

In the real world, the only thing that got controlled this year was not a virus, but people. That all went off spiffingly, or spaffingly as Comrade Johnson might put it. People were suppressed, people were controlled, people were — you might say — owned. And by and large they acquiesced in putting their hand to this National Suicide Plan.

Of course, the reply that comes the way of anyone who points this out is:

“Ah, but if we hadn’t locked down and masked up, the deaths would have been in the hundreds of thousands.”

To which the answer is simply:

“Nope. Lockdown cannot be shown to have saved a single life.”

Sweden, by not turning itself into a basketcase, failed to have the anything like wave of mass deaths predicted by the Enthusiasts for Lockdown. Nor did other nations that took a similar approach. A recent peer-reviewed study from France, looking at 188 countries, has confirmed what should have been obvious all along:

“Stringency of the measures settled to fight pandemia, including lockdown, did not appear to be linked with death rate.”

Then of course there was the Danish RCT study, which showed no significant statistical difference between infection rates of those wearing surgical masks, and those with no masks.

Imagine that!

Imagine that we were put under house arrest for months, made to cover our respiratory passages with bits of cloth, forced to alter our lives, and threatened with fines for non-compliance — and none of it made any difference to mortality.

Imagine that this Government and Parliament caused the complete shutdown of the economy for months, putting millions on the dole, wrecking 1,000s of businesses, causing the worst recession for 300 years, and piling up a future of debt, poverty, mental health issues and reduced life expectancy — and none of it saved any lives.

Imagine that we are still in this situation, with people still acquiescing in the destruction of their own country, the Government and media still feeding us lies, and with no real plausible end to this madness.

Actually, you have no need to imagine it. Even though it is so outlandish that even the most unhinged, basement-dwelling “conspiracy nut” on the planet could not have come up with this, it is indeed the year you just lived through. We lost the plot in 2020, and the most pressing question is: will we get it back in 2021?

That all went off spiffingly, or spaffingly as Comrade Johnson might put it. People were suppressed, people were controlled, people were — you might say — owned. And by and large they acquiesced in putting their hand to this National Suicide Plan.

Of course, the reply that comes the way of anyone who points this out is:

“Ah, but if we hadn’t locked down and masked up, the deaths would have been in the hundreds of thousands.”

To which the answer is simply:

“Nope. Lockdown cannot be shown to have saved a single life.”

Sweden, by not turning itself into a basketcase, failed to have the anything like wave of mass deaths predicted by the Enthusiasts for Lockdown. Nor did other nations that took a similar approach. A recent peer-reviewed study from France, looking at 188 countries, has confirmed what should have been obvious all along:

“Stringency of the measures settled to fight pandemia, including lockdown, did not appear to be linked with death rate.”

Then of course there was the Danish RCT study, which showed no significant statistical difference between infection rates of those wearing surgical masks, and those with no masks.

Imagine that!

Imagine that we were put under house arrest for months, made to cover our respiratory passages with bits of cloth, forced to alter our lives, and threatened with fines for non-compliance — and none of it made any difference to mortality.

Imagine that this Government and Parliament caused the complete shutdown of the economy for months, putting millions on the dole, wrecking 1,000s of businesses, causing the worst recession for 300 years, and piling up a future of debt, poverty, mental health issues and reduced life expectancy — and none of it saved any lives.

Imagine that we are still in this situation, with people still acquiescing in the destruction of their own country, the Government and media still feeding us lies, and with no real plausible end to this madness.

Actually, you have no need to imagine it. Even though it is so outlandish that even the most unhinged, basement-dwelling “conspiracy nut” on the planet could not have come up with this, it is indeed the year you just lived through. We lost the plot in 2020, and the most pressing question is: will we get it back in 2021?

The Internet Is For Porn

This is on the outer edge of data but a growing Internet field nevertheless thanks to Covid and all the lockdowns...

 

Via The Margins substack,

This post is written by a friend of Margins, who happens to be a product executive at a public tech company. He wrote this initially in September 2020, but we were hesitant to publish it anonymously. Nevertheless, our friend turned out to be very insightful and we thought it’d be a shame (hah!) not to share his wisdom. It’s not like we’ve never written about it before. Enjoy!

One of the biggest and most interesting things happening in the consumer web right now is running almost completely under the radar. It has virtually zero Silicon Valley involvement. There are no boastful VCs getting rich. It is utterly absent from tech’s plethora of twitters, fora and media (at least, as they say, “on main”). Indeed, the true extent of its incredible success has gone almost completely unnoticed, even by its many, many, many customers.

I’m talking, of course, about OnlyFans.

OnlyFans, the content subscription service that has come to be dominated by sex workers, has only been around since 2016. It works a bit like Instagram-meets-Patreon, or perhaps Twitch - for porn. Users pay to follow content creators and unlock exclusive material. The applications to porn are pretty obvious, and unlike its more prudish cousins, OnlyFans has openly embraced adult content creators. “OF” gives creators an array of tools for monetizing their audiences, with not only different subscription tiers, but ways to allow paying customers to directly interact with creators. 

OnlyFans was already growing steadily before COVID, but the platform has absolutely exploded during the pandemic in a manner of “hypergrowth” fantasy. According to their CEO, they were adding nearly 200,000 new users and 8,000 new content creators a day back in May, and have only continued to grow since. The platform now has north of 700,000 content creators (!) serving a customer base of over 50 million registered users (!!). Hard stats are hard to come by, but one figure pegged the cumulative total paid out to creators at $725 million as of May. Cardi B joined the platform in May.

In short, OnlyFans is for real. It’s becoming not just the next generation of porn, but it might just represent a quantum leap in fixing one of the world’s most popular industries. 

And Silicon Valley has almost nothing to do with it. The reasons why are worth reflecting on.

No, really - the internet is for porn

Let me stop here and say: if you’re uncomfortable with pornography, it’s better to just stop reading right here.

I am unashamed to be a casual porn consumer. In this, I am extremely normal. Volumes of research show that nearly all men - old and young, married and single, straight, gay and everywhere along the spectrum - consume porn on occasion. While a majority of porn consumers are men, a huge number of women are watching, too. Pornhub reports that about a third of its American audience are women.

Giggles, eye-rolls and the occasional moral scold aside, porn is a gigantic industry that serves an equally enormous popular demand. The cavernous disparity between the demonstrably massive popularity of porn and our popular unwillingness to even acknowledge it exists is a truly bizarre facet of American puritanical culture.

While the oft-cited stat that porn is a third of all internet traffic is probably a myth, search engine companies say it represents about 10-15% of all queries. That’s a lot! Pornhub alone received about 120 million unique visitors a day even before COVID forced everyone indoors. By comparison, CNN reported a record-breaking 148 million uniques in the month of January. (Fox News had only 104 million.) No one’s quite sure how large the entire porn industry is, but it’s safely assumed to be in the $5 billion range at least - around a third the size of the global video game industry.

In other words, porn is a huge, popular and extremely mainstream industry - which people insist on not talking about and enjoying in private. (Or maybe in a private browser window.)

The porn industry itself has long been famously problematic. Like many industries that rely on talent that is often young and naive, greedy middlemen (almost always men) who control production and channels of distribution take all the upside for themselves. A perfect example is porn mega-name Mia Khalifa, who was paid a grand total of $12,000 for only a handful of shoots - a tiny, tiny fraction of the value her content has generated for distributors like Pornhub.

Free porn sites - Pornhub chief among them - have done to the porn industry what Facebook and Google did to ad-supported media. By aggregating demand for “free” porn, they vacuumed up all the ad revenue that had once kept studios and distributors (not to mention the stars) in business while demolishing any reason to pay for their content. You can buy a subscription to sites like Pornhub, of course, but that doesn’t really solve the problem; it’s a bit like buying a subscription to Facebook to read the newspaper. While some porn actors/actresses have been able to build personal brands to monetize their content, this is an extremely difficult process. For sex workers must not only face all the normal challenges to creating unique identities online, but they must do it with an openly hostile Silicon Valley fighting them at every step.

That isn’t hyperbole. At almost every turn, the tech industry has gone out of its way to penalize, marginalize and - yes - “cancel” sex workers, the overwhelming majority of whom are women responding to ravenous male demand. PayPal, Venmo, Stripe, Square and almost every other payments service shuts down their accounts. Twitter shadowbans them while Tumblr, Instagram and Snapchat either over-enforce rules or ban adult content accounts entirely. The Big Blue App, of course, doesn’t permit adult content at all - and neither does Apple or Google’s App Stores.

An observer might note that all of these companies are dominated by men, in an industry dominated by men, tightly interwoven with a venture capital industry that is super-dominated by men. So it’s curious why none of these men have shown any interest in addressing the massive and lucrative sex work industry that overwhelmingly serves, well, men; until you consider who pays the real costs of that industry’s brokenness: women.

Silicon Valley’s blind spots

Would more women in positions of power in Silicon Valley’s tech giants and top VC firms ever have funded an OnlyFans service or its like? It’s hard to say. The cultural taboos around porn are powerful - so powerful that they’ve kept an American redoubt of hyper-capitalism from even sniffing at a gigantic industry badly in need of innovation. Also, part of the sexist constructs of femininity that women operate in include ideas of purity and moral rectitude that might have discouraged them from even broaching the topic. Or maybe not. We don’t really know.

Here’s what we do know: plenty of the men who have waged war on sex workers’ livelihoods from positions of enormous power in tech also consume porn and even personally hire those same sex workers. Yet when you combine American prudishness with the tech industry’s obsession with polishing mostly-male personal brands, the Valley’s refusal to consider legitimate sex worker needs becomes easier to understand. It’s unlikely that the engineers, product managers and executives who made those product decisions that upended sex workers’ lives ever understood, or perhaps even considered, their impacts. Or if they did, it seems that sex workers are considered expendable users. (Again, at least in public.)

This has created a large digital underclass of sex workers - including, but far from limited to, adult performers - who live in fear of being banned by the big tech platforms while simply doing their jobs. The vast majority are women serving a heterosexual male audience. Most of them do nothing illegal at all, but they operate in the long shadow of those powerful (and powerfully sexist) cultural taboos and their resulting hypocritical popularity.

It would not have taken a market strategy genius to spot an opening for OnlyFans here: a high-quality digital platform where adult performers can capture the lion’s share of value for their own content. And indeed, there have been other similar attempts to do this (again, ignored by mainstream tech). But what OnlyFans figured out was that to pry open consumers’ willingness to pay for porn again, they needed to offer exclusive content and the ability to interact with performers, as well as a way for creators to brand-build on their platform. 

The popular performer Aella, who makes something on the order of $100,000 a month on OnlyFans, discussed some of her specific monetization strategies in this fascinating (and SFW) interview:

OnlyFans takes off

OnlyFans’ 20% cut of its creators’ revenues might be most usefully compared to Patreon’s 10% take-rate. Despite that big bite (which OnlyFans says really amounts to 12% after merchant fees and processing), OnlyFans has nevertheless scaled to roughly three-quarters of a billion in payouts in not quite 4 years, with no evident external funding. (OnlyFans is not even listed on Crunchbase). By contrast, it took Patreon 6 years, and $166 million (!) in venture funding, to reach $1 billion from 4 million “patrons.” 

Which of these two companies sounds more successful?

To be sure, OnlyFans is not perfect. They are dealing with growth pains like subscriber churn, spam, creators who have trouble getting their payouts and a back tax problem. There are also the usual creator discovery problems that almost all influencer platforms encounter. It can be difficult for adult performers in particular to market themselves, given the strict rules about their content on many social platforms discussed above.

Nevertheless, OnlyFans has distinguished itself not only by helping a very large number of sex workers make an honest living, but by treating them like first-class citizens rather than a scourge. In doing so, it’s not only saving the porn industry, but demonstrating how to make it a better, safer and more equitable place by aligning incentives for consumers and creators.

The breakout success of OnlyFans is laudable, but should prompt some soul-searching in the power centers of Silicon Valley. Why did it take this long? Why would no one else have the courage to address sex work? Why does the same industry that exalts such morally ruinous firms as Palantir, Facebook and Palmer Lucky’s actual next-gen weapons startup get queasy about consenting adults wanting to see naked bodies?

And if they missed this market opportunity, think about how many more are out there - invisible only to the affluent men who run “tech.”

Footnote: Pornhub’s excellent Insights blog (SFW) is chock-full of incredible insights about global porn interests that their analytics team puts together. Yes, people are searching for “coronavirus porn”.

 

The Danger Of A "Digital Assistant"

I currently spend over 50% of my time on AI and I believe that those who are not scared yet do not understand the issues!

AI is unstoppable. It will first be used as a tool to help / control us then will quickly acquire useful but black box capabilities which will quickly become extremely dangerous. In an ideal world, we would think twice before implementing some technologies but we do not live in an ideal world. Whatever advantage can be acquired by using AI will overwhelm any resistance to further improvements. I agree with this article: Now would be the time to think... but we won't. 

When we talk about AI. people think "consciousness". This not the issue! The machine will outsmart and therefore control our lives long before they become conscious. In a "smart" city, the only dangerous element left is a free human being!

 

Authored by Bruce Wilds via Advancing Time blog,

When one of those so-called personal digital assistants started to babble the other day I cursed it and told it to "shut the f**k up." That is when it happened, to my surprise the damn thing told me something to the effect, "I may only be an AI but you should choose your words wisely." Whether you define this as a warning or stern rebuke, to me it highlighted the danger of AI and the whole tech industry that is slowly putting a chokehold on the freedom of the human race. A digital device being impertinent to its owner is the canary in the coal mine of something very sinister.

Rude or impertinent remarks made in reply to someone in authority is backtalk and different from talk-back. When a mechanical device has a talk-back option it is generally to provide spoken feedback to help the user. A personal digital assistant (PDA) is a portable electronic device used for personal organization and communication. Over the years these devices have expanded their ability as predictive chat-bots. They do this by utilizing advanced computer programs that simulate a conversation with the people who use it. 

Each year more and more companies are using such features in robocalls and for such things as answering phones and for customers to pay a bill or get general information. On the internet, you can find companies that will design for your company a bot in minutes claiming it can start acquiring leads for you and automate several other parts of your communication needs. They tout these Bots' ability to work for you 24/7 delivering qualified leads, speeding up customer resolutions, providing faster answers, and improving customer experience.

For years concern has been growing over the ability of such devices to spy on us in the privacy of our homes and offices. Most of us have read or seen stories of how they listen in on our conversations and hijack even our most private moments. The new alliance between AWS this morning and Twitter only goes to underscore my point of concentrated power. This intersects with censorship and propaganda. The whole idea that we as a society gain by allowing ourselves to be watched for the greater good throws freedom under the bus. It also opens the door the those watching us to blackmail and coerce us into doing their bidding.  

The crux of this article is to clarify and point out this trend towards Orwellian totalitarianism is rapidly accelerating. This expanding surveillance of our every move is not just coming from the digital object sitting on our tables but a slew of other places as well. We are being watched by drones, cameras as we shop, and pictures are being taken of us in our vehicles as we drive. Many of these are being stored away for future reference.

If anyone reading this feels these products or the people developing them have feelings that should be respected. That person is far more politically correct than I chose to be. As far as their feeling are concerned, quoting the words of Rhett Butler in Gone With the Wind, "frankly my dear I don't give a damn." I'm not interested in being told what to do or think by a machine controlled by some entity hidden behind a curtain. 

Before his death, famed physicist Stephen Hawking left us with a warning the Earth is headed for a “catastrophic ending” in the near future as a result of rising inequality fueled by robots that grow increasingly smarter by the day. Hawking's dire prediction came as robots and artificial intelligence increasingly take over human jobs.

Two years ago I wrote a five-part series focused on this important issue that impacts all our lives. The links to these articles are listed below. If you have concerns about the direction society is taking us I urge you to read one or all of them and even share the information with a friend or those you love.

https://brucewilds.blogspot.com/2018/12/liberals-and-conservatives-both-buy.html

https://brucewilds.blogspot.com/2018/12/surveillance-justified-expands-grip-of.html

https://brucewilds.blogspot.com/2019/01/propaganda-convinces-us-its-all-for.html

https://brucewilds.blogspot.com/2019/01/orwellian-government-employing-robots.html

https://brucewilds.blogspot.com/2019/01/power-of-orwellian-state-almost.html

The best time to kill a monster is when it is still small. Unfortunately, this monster is growing at a tremendous rate. This monster is the child of governments and technology and its goal is to grow more powerful. By convincing us that technology and robots will add quality to our lives they are seducing a weak-minded population into submission. When we surrender control of our lives to those and the forces that gain from our compliance we would be wise to remember we are at their mercy. Because of technology many factors have changed over the years, this means if and when people attempt to take back control over their lives it will be almost impossible.

 

The EU Continues To Wobble While France Holds It Ransom

I normally do not post political articles since I could not care less. But this one is an exception for personal use. What is going on in Europe, concerning Brexit and other subjects, is a catastrophe. The political project which started with good intentions to unite diverse European countries has degenerated into a terrible, mostly unelected bureaucracy at the mercy of lobbies and "external forces" and rendered inoperative. But at the same time, instead of creating a diverse and democratic grouping on the Swiss model as many expected, it has followed the centralist and autocratic model of the worst members, such as France. On this path, it will fail sooner than later. But not without a bang which will rattle the continent for decades. The worst is that it didn't have to be like this.   

Authored by Martin Jay via The Strategic Culture Foundation,

Too many signs have shown us that the EU is in real trouble. The worst one possibly is that its own outdated idea about governance is replicated by a French leader facing defeat. What losers!

In practical terms, it is clear to see that the EU as a viable project is not only in a panic mode currently, but actually going backwards in its desire to model itself on a United States of Europe federal model. And there can be no better examples than Brexit negotiations, Covid and France’s current malaise.

At the eleventh hour we have seen how, despite Britain remaining steadfast to its demands at the negotiations for a departure from the European Union, the EU itself shoots itself in both feet and looks even to its own supporters to be a loser of the highest order. Last minute demands are thrown into the negotiations by France’s Macron who is fearful of his own presidency hopes being scuppered if he has to deal with the wrath of thousands of French fishermen who will be out of a living by January 1st – if Britain is to get back full control of her own waters. To counter this with new demands about how the UK, as a non-member of the EU, goes about its business internally is both hilarious and desperate. Of course as a non-member of the bloc the UK will have its own ideas about how government interacts with business and state aid rules. How did a desperate French president threw this into the negotiations at really the eleventh hour demonstrates how weak the EU is and when it is presented with important matters, how it plays the role of a cheap girlfriend to its real masters. The fact that France could be allowed to do this is shocking. But the truth is that Macron is not playing for a deal. He prefers a no deal which he can use as political capital for his own fishermen. And the EU almost fell for it. Clearly there are divisions within the EU as to how to go about getting a Brexit. Many member states, like Germany, for example, are happy to give back fishing rights to the UK in exchange for a Brexit deal. Doesn’t the EU have billions of euros at its disposal to compensate and retrain out of work citizens? Of course it does. Structural funds run into billions and there is no viable reason why the existing EU rules would not favour out of work French fisherman.

But this cheap shot by the EU, to be hijacked by France, makes it look weak and ineffective, which will cost it dearly at the polls, when it has its own elections in 2024.

But it’s not only Brexit which is dividing this bloc which has ambitions about being a superpower with its own army. You don’t need to look very far to see that there is a distinct lack of unity in the organisation which is causing it to haemorrhage. In mid-November, it couldn’t sign off an agreement to put aside almost 2 trillion dollars for a rescue plan for member states which were hit hardest by the Covid-19 pandemic, namely Italy and to some extent Spain. The six-year budget, which is supposed to be approved now, will not include this package, which will be seen as a major blow to Italy and will almost certainly lead to a growth there of an anti-EU sentiment, marking out Italy as ripe for a massive swing of far right votes in the European parliament, if not a campaign for Italy to leave the EU all together. Poland and Hungary blocked the proposal as a way of showing France and Germany – the real owners of the entire EU project – that it wouldn’t be bullied on other contentious areas like immigration.

This is the real worry for eastern European countries. Their elites could not face an influx of immigrants from troubled hotspots in Africa – which coincidentally are also the same recipients of hundreds of millions of euros of aid. There is a link between the cataclysmic human rights abuses from these regimes and the outflow of middle class citizens who borrow money to pay snake heads to transport them to Libya and then onto Europe.

But the EU itself can’t join up the dots and see this. Just as journalists aren’t making the link between Macron’s problems in France – an economy struggling to cope with cheaper imports which are supposed to respect EU directives (but invariably don’t) – and immigration, which is leading to the far right taking more of his votes. France, a founding member of the EU, can’t find a single journalist in the entire republic to make these links, and yet citizens themselves see it clearly. The appalling video footage of the black music producer being beaten up shocked the entire world.

But Macron’s thinking behind new laws which he is pushing for – to make it illegal to film police officers – comes straight out of any Middle Eastern dictator’s handbook on how to profit from creating a police state. Macron needs to deal with immigration and the police, to save himself at the polls. And no one is kidding themselves about the new law and its purposes. The EU has always been a dictatorship which uses the auspices of a democracy to cover its real intentions. Its creation was really about being a greater power to supersede democracies which couldn’t get things done. But now, what we are experiencing is a full circle where individual member states are reacting with such vitriol towards the project, that they are indulging themselves at the same font. Macron is becoming a third world dictator who will happily strip France of its democratic credentials, if it means he can stay in power. Clinging on to power, in fact, is the shared theme of both his presidency and the EU itself. Inevitably, it will be the EU which will give him a top paid job, when he fails at the polls as the EU loves tradition above everything else.

The Curse of Oil meets the Paradox of Debt

 

This is a profound and important article by Charles Hugh Smith which combines skillfully the Curse of Oil and the Paradox of Debt to explain why Covid has opened the door to a new era of instability and consequently why there is no going back to the long gone world of 2019. Oil will from now on move from too cheap to pump to too expensive to buy for marginal players, while debt will crush both consumers and companies. We simply cannot expend again out of this rut without breaking the economic cart. The Romans and all the civilizations that came before once faced this conundrum and none found the exit. Complexity also entails deep systemic fragility so in spite of our more advanced technologies it is unlikely that we will find a workable solution to the intractable web of challenges we will be facing in the coming years. Artificial Intelligence may help us find solutions we could not think for ourselves but social rules which we do not yet fully grasp will likely prevent swift adoption of unlikely and unpopular ideas. Conversely, as we are seeing on a daily basis, "more of the same" seems to be the preferred policy almost everywhere...

One Little Problem with the "All-Electric" Auto Fleet: What Do We Do with all the "Waste" Gasoline?

December 14, 2020

Regardless of what happens with vaccines and Covid-19, debt and energy--inextricably bound as debt funds consumption-- will destabilize the global economy in a self-reinforcing feedback.

Back in the early days of the oil industry (1880s and 1890s), the product that the industry could sell at a profit was kerosene for lighting and heating. Since there was no automobile industry yet, gasoline was a waste product that was dumped into streams. Why couldn't the refiners produce only kerosene? Why did they end up with "worthless" gasoline? The answer is a barrel of oil produces a variety of products. While there is some "wiggle room" to produce more diesel and less gasoline, etc., it isn't possible to turn a barrel of oil into only one product. John D. Rockefeller became very wealthy by cornering much of the oil market in the 19th century. But he didn't become fabulously wealthy until the 20th century, when the rise of automobiles created a market for all the "waste" gasoline. Rockefeller became super-wealthy when all the products of each barrel of oil could be sold at a premium rather than just a portion of the products. This reality has been forgotten: the price that can be fetched for a barrel of oil depends on the demand for all the products, not just a few of the products. Those demanding an all-electric auto-truck fleet as a "green" alternative will re-create the dilemma of what to do with the "waste" gasoline. The world will still want fuel for all those container ships bringing all the goodies of a consumerist society, all those cruise ships visiting ports of call, jet fuel for all those exotic vacations enabled by 550 mile-per-hour aircraft, and oil-based lubricants, plastics and petro-chemicals, and so oil will still be pumped and refined, and almost half of it will be gasoline. We can either use it or throw it away but we can't magically turn a barrel of oil into only one product. This is a topic worthy of your understanding, so grab a vat of your favorite beverage and turn off all distractions. Longtime readers know I've focused on energy-oil markets for 15 years. Despite ups and downs in price, the oil market has been remarkably stable. This stability is about to transition to chronic instability: wild swings in price, shortages, and social chaos in both producing and consumer nations. Let's start with the most basic dynamics in the cost of producing oil, refining it and selling the products at a profit. 1. As a general rule, a barrel of oil (42 gallons, 196 liters) yields a range of heavier and lighter products. The price the producers can charge for each product--gasoline, diesel fuel, heating oil, jet fuel, propane, etc.-- depends on demand for each product. If the price for one product falls drastically, the oil producer can't increase the price of some other product to compensate for the loss of income unless demand for the other products will support higher prices. Consider the huge decline in demand for jet fuel as a result of global air travel dropping in the pandemic. Oil producers can't just raise the price of gasoline to compensate for the drop in the price of jet fuel. If gasoline demand continues declining (due to fewer commutes, etc.) then producers can't charge more for diesel to make up the drop in the price of gasoline. In other words, there has to be strong demand for all the products in a barrel of oil for producers to get enough money to extract, refine and transport the products globally. Unlike the old days when producers could afford to throw away some petroleum products because their costs of extraction and refining were so low, now producers need more than $45/barrel just to break even. This is what I'm calling Oil Paradox #1: if demand for any of the primary products is weak, producers can't afford to continue extracting and refining oil, even if there is strong demand for some products. 2. Transportation is the primary use of oil: 68% of all petroleum products are consumed by transport, 26% by industrial and 6% residential/commercial. (These are U.S. statistics, but the global demand is roughly the same.) If demand for gasoline, diesel and jet fuel remains weak, the value of each barrel of oil will remain below break-even, even if the industrial need for some products (lubricants, etc.) is strong because these industrial products are essential to the world's industrial economy. 3. Much of the consumption of the past 20 years was funded by debt, which is now $277 trillion globally and accelerating. Humanity has borrowed and spent trillions on consumption, and what remains is the interest due on the debt. This interest constrains future borrowing. The "solution" to interest is inflation, which devalues the interest due. But it also devalues the purchasing power of the currencies being inflated, and so everyone's money buys fewer goods and services. This is the Debt-Inflation Paradox: the more interest you owe, the greater your need to inflate away the burden of interest. But inflation destroys the purchasing power of money, impoverishing everyone who needs the money to live. There is no way out of this paradox: either the global economy defaults on its debts, destroying trillions in phantom wealth, or its currencies lose value, impoverishing everyone. Since so much consumption is funded by debt, any reduction in borrowing, no matter how modest, will destroy demand for petroleum, triggering the Oil Paradox (producers can't charge enough to justify pumping and refining oil). 4. The pandemic has accelerated consumption trends that reduce demand for fuels. Remote work is here to stay, regardless of what you may read. Corporations can no longer afford to staff centralized offices in costly cities. Making everyone commute to offices is no longer financially viable. Corporate travel is also no longer financially viable. As profit margins fall, the luxury of jetting to physical meetings is no longer justifiable except for senior management-- a few dozen people, not hundreds or thousands. Tourism thrived in an economy of easy, low-cost credit and secure incomes. Lenders can no longer afford to lend to those with poor credit--notice how credit card limits have been drastically reduced--and incomes are no longer secure. If the pandemic were the only issue, it would be possible to see a return to 2019-level consumption. But unsustainable debt loads will only get more unsustainable, so much of the consumption that was funded by debt will go away and not come back: the interest on all the existing debt remains to be paid, one way or another. This decline in consumption has lowered the price of oil far below break-even for most producers. As the article below explains, there are two break-even prices for petroleum: one to get it out of the ground, refine it and deliver it to market, and the second for the social costs the oil pays for. This is the famous Oil Curse: nations with oil reserves end up depending on selling oil for virtually all their revenues because it doesn't make sense to invest in less reliable, less profitable sectors. As a result, Saudi Arabia can pump the oil for $45/barrel, but it needs a price of $85/barrel to pay all the social welfare costs it has promised its people. If you glance at the charts in this article, you'll see the full break-even price of oil for OPEC nations is extremely high. Breakeven crude oil prices are one metric of the economic constraints facing OPEC+ members This generates Oil Paradox #2: low demand/low prices for oil may be financially viable in terms of extracting the oil, but the societies that depend on vast oil revenues will unravel if oil prices stay low, and that will disrupt production. Roughly half of U.S. petroleum production is from tight shale and other unconventional oil sources. Many of these wells are no longer profitable and will be shut down once the producers' credit lines dry up. (This is already happening, triggering mass bankruptcies in the fracking industry). The oil producing nations are basically surviving on $40/barrel oil by borrowing against future revenues. This is a dangerous game because if oil prices remain low their credit lines will eventually be withdrawn. The oil producers need supply to fall drastically enough to raise prices back to the $80/barrel or higher level. But nobody can afford to cut their own production enough to reduce global supply enough to matter. This introduces Oil Paradox #3: should petroleum producers succeed to slashing supply so oil goes to $85/barrel, the higher cost will push the fragile consuming nations into recession or depression, which will slash demand even more, which will require even deeper production cuts to maintain prices. If we put all these paradoxes together, we see that oil markets are now intrinsically unstable and cannot return to stability because the mix of high break-even prices, declining demand and the end of debt-funded consumption cannot be resolved: high prices crush demand, low prices crush producers, and debt is crushing both consumers and producers. Much hope is being placed on so-called renewable energy, most of which is not renewable but replaceable, as I've learned from Nate Hagens. A forest is renewable, a solar panel or windmill must be replaced every 20 years at enormous expense. Right now all alternative energy sources--wind, solar, etc.-- generate no more than 4% of global energy consumption. (see chart below) Despite hundreds of billions of dollars invested, all the alternative energy sources are a tiny fraction of global consumption, and their supposed fantastic rates of growth is revealed on this chart as inconsequential: all this new energy doesn't replace a single drop of oil, it simply fuels additional consumption. It will take a monumental investment and many years to get this to 10%. The reality is the vast majority of the global economy still depends entirely on petroleum for transport and industrial essentials such as lubricants. How (Not) to Run a Modern Society on Solar and Wind Power Alone Petroleum is now an unstable system and for all the reasons outlined above it cannot be restored to stability: just as time is a one-way arrow, so is the loss of stability. What can we expect? Unstable systems are prone to wild swings to extremes and unpredictable collapses. So we may see collapses in the price of oil as we saw in March, and then rapid ascents in price above $100/barrel, which then crash once demand declines. This unpredictability complicates projections and generates uncertainty. This is the final paradox (#4): the unpredictability of oil markets is itself a destabilizing force. Decisions on future production and consumption cannot be long-term, and this constrains investment in future production. Regardless of what happens with vaccines and Covid-19, debt and energy--inextricably bound as debt funds consumption-- will destabilize the global economy in a self-reinforcing feedback.

 

About Those Vaccine ID Cards...

 

It is getting harder and harder not to see what is going on with Covid around the world and that vaccination will be used to control the movement of people.

I was recently discussing with a doctor who told me that a true vaccine against Covid-19 would take at least 10 years to develop and would probably be useless since the mutability of this virus is very high. In other words, we will have a different strain of the virus by the time the vaccine is available. Which is why a vaccine has never been developed against Corona until now and also why so many laboratories were studying this particular virus... in the US, France, Canada, or China!

But why bother with such details? 

You will soon have the choice to get your non compulsory vaccine if you what to travel, work or go out of your home or else...  or so believes the British Government.

Fortunately, as Charles Hugh Smith explains below, it won't be so easy...  

  About Those Vaccine ID Cards...

December 3, 2020

An idea that's simple as an abstraction--vaccine ID cards--turns out to be extremely difficult once real-world operational realities must be dealt with.

Authorities around the world have made it clear that they will do "whatever it takes" to vaccinate their citizenry with one of the first available vaccines. Authoritarian states may mandate universal vaccinations while less authoritarian states will favor a "carrot and stick" approach of offering benefits to the vaccinated and exclusions from employment, education, travel and most of everyday life for those who refuse to be vaccinated.

To identify the vaccinated and unvaccinated, many nations are planning to issue ID cards or "vaccine passports." As an abstraction, this seems straightforward, but if we start digging into the actual operational requirements of this mass ID card issuance and distribution, a number of common-sense issues arise.

Vaccination cards will be issued to everyone getting Covid-19 vaccine, health officials say (CNN)

First and foremost, it's unknown how long the immunity offered by the vaccines will last. It's still early days, so there is conflicting evidence: some claim the vaccines will be longer-lasting than the natural immunity of those who caught the virus and recovered, while other evidence suggests the immunity might decay after six months. Despite claims that natural immunity is long-lasting, a non-trivial number of people who had Covid have been re-infected.

Nobody knows how long either natural or vaccine immunity will last because not enough time has elapsed to collect sufficient data.

Given these intrinsic unknowns, how long will the ID card be valid? It's easy to imagine variations in individual responses such that the vaccines' effectiveness decays more rapidly in 20% of the vaccinated. This variability would introduce tremendous unknowns that no ID card could reflect: is the holder of the card at Month 10 still immune or not?

If the duration of the vaccine's effectiveness is variable, then an ID card could be misleading. In other words, being vaccinated with a variable-duration vaccine tells us nothing about the individual's actual immunity down the road.

Given these unknowns, the vaccinated may need booster shots in the future, and the ID cards would have to be re-issued. The task of keeping track of hundreds of millions of vaccination records, identities and then issuing ID cards is a non-trivial task.

To thwart black-market fake-ID cards, the security measures will have to be equivalent to a driver's license or passport. Have you applied recently for either of these forms of ID? The process is painfully slow. The systems in place to process state drivers' licenses and U.S. passports are already strained, and which agency is prepared to verify the identity of 280 million adult citizens, confirm the validity of their vaccine and then issue ID cards--and then repeat this process in a year?

If the procedures for issuing vaccine ID cards are slapdash due to time constraints--for example, downloading a digital record from the vaccine distributor or a printed card--these will likely be vulnerable to being duplicated or spoofed. Fake vaccine distributors will pop up issuing bogus digital records, hackers might download and sell digital records from trusted sources, and so on.

Then there's the extra burdens being placed on the staff of airlines, cruise lines, etc. to scan these documents and deal with rejected cards. Who will have the legal authority to deal with claims that a rejected card is actually valid? How many smaller establishments simply won't have to staff to do more than glance at the card?

Do authorities have the means to issue hundreds of millions of absolutely secure vaccine ID cards and then monitor all the attempts to find loopholes and weaknesses in the process? If authorities think that strict penalties will limit this activity, they underestimate the difficulty in getting such penalties enforced by overloaded court systems.

In nations with strong traditions of civil liberties, there will be pushback against mandatory vaccinations with essentially untested vaccines and against national databases tying identity to vaccination cards--a situation ripe with potential for abuse.

Authorities don't seem to grasp that many of those hesitating to get vaccinated are not anti-vaxxers; they simply see the vaccine approval process as deeply flawed for common-sense reasons: for example, there is simply not enough data on safety, duration and real-world efficacy.

Authorities are counting on the "carrot" of air travel, cruises and concerts to persuade skeptics to get vaccinated despite their concerns. What authorities don't seem to realize is that a great many people value their health, privacy and agency far more than they crave air travel, cruises or concerts. They will gladly forego all these activities until more reliable data is collected, peer-reviewed and distributed for analysis.

The more draconian the measures designed to pressure people into getting the vaccines, the greater the reluctance of skeptics who see the draconian measures as additional evidence the vaccines are half-measures being forced on the populace as a means of imposing a false assurance that all is well and "normal" will return as soon as the skeptics cave in and get vaccinated.

There's also the possibility that the virus could mutate in ways that moot the vaccines' effectiveness. While this is widely considered unlikely, it's not impossible, either. If a mutated virus arises that evades the vaccine, then what value will the vaccine ID card have?

An idea that's simple as an abstraction--vaccine ID cards--turns out to be extremely difficult once real-world operational realities must be dealt with. The fact is the first vaccines have been rushed to approval with virtually none of the testing demanded of previous vaccines raises common-sense concerns which cannot be dissolved with force or carrots and sticks.