Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)

[Note: This item comes from reader Randall Head. DLH]

Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)
By Gail Tverberg
May 6 2015

The Wall Street Journal recently ran an article called, Glut of Capital and Labor Challenge Policy Makers: Global oversupply extends beyond commodities, elevating deflation risk. To me, this is a very serious issue, quite likely signaling that we are reaching what has been called Limits to Growth, a situation modeled in 1972 in a book by that name.

What happens is that economic growth eventually runs into limits. Many people have assumed that these limits would be marked by high prices and excessive demand for goods. In my view, the issue is precisely the opposite one: Limits to growth are instead marked by low prices and inadequate demand. Common workers can no longer afford to buy the goods and services that the economy produces, because of inadequate wage growth. The price of all commodities drops, because of lower demand by workers. Furthermore, investors can no longer find investments that provide an adequate return on capital, because prices for finished goods are pulled down by the low demand of workers with inadequate wages.

Evidence Regarding the Connection Between Energy Consumption and GDP Growth

We can see the close connection between world energy consumption and world GDP using historical data.

This chart gives a clue regarding what is wrong with the economy. The slope of the line implies that adding one percentage point of growth in energy usage tends to add less and less GDP growth over time, as I have shown in Figure 2. This means that if we want to have, for example, a constant 4% growth in world GDP for the period 1969 to 2013, we would need to gradually increase the rate of growth in energy consumption from about 1.8% = (4.0% – 2.2%) growth in energy consumption in 1969 to 2.8% = (4.0% – 1.2%) growth in energy consumption in 2013. This need for more and more growth in energy use to produce the same amount of economic growth is taking place despite all of our efforts toward efficiency, and despite all of our efforts toward becoming more of a “service” economy, using less energy products!

To make matters worse, growth in world energy supply is generally trending downward as well. (This is not just oil supply whose growth is trending downward; this is oil plus everything else, including “renewables”.)

There would be no problem, if economic growth were something that we could simply walk away from with no harmful consequences. Unfortunately, we live in a world where there are only two options–win or lose. We can win in our contest against other species (especially microbes), or we can lose. Winning looks like economic growth; losing looks like financial collapse with huge loss of human population, perhaps to epidemics, because we cannot maintain our current economic system.

The symptoms of losing the game are the symptoms we are seeing today–low commodity prices (temporarily higher, but nowhere nearly high enough to maintain production), not enough good paying jobs for common workers, and lack of investment opportunities, because workers cannot afford the high prices of goods that would be required to provide adequate return on investment.


How Comcast lost friends, its influence, and the bid for Time Warner Cable

How Comcast lost friends, its influence, and the bid for Time Warner Cable
The inside story of how a company management so sure of victory drove nearly all of its allies to the other side.
By Michal Lev-Ram
May 20 2015

“Life is like a box of chocolates,” Brian Roberts tells the crowd. Avuncular and bespectacled, the 55-year-old CEO looks like he might begin dispensing some homespun Hollywood wisdom any second now to the cable-industry folk gathered in Chicago’s McCormick Place convention center in early May. But he is demonstrating a cool new piece of technology instead: a voice-activated remote designed for Comcast’s CMCSA 0.57% Internet-connected set-top box, the X1. The moment he says the words aloud, a scene from the movie Forrest Gump pops onto the twin oversize screens on either side of him. The Siri-like remote, says the clearly tickled CEO, is capable of understanding some 3 million voice commands, from asking a movie star’s age to finding a specific scene in a favorite movie—to breaking the ice, it seems.

“Show me the Comcast–Time Warner Cable merger,” he says. Suddenly Vin Diesel is onscreen. His Fast and the Furious character shouts for someone to “Get down!”—then a house explodes. The audience erupts in laughter.

“That pretty much sums it up,” says Roberts. “So we really are moving on.”

“We’re moving on” is a phrase that Roberts has been saying a lot lately. He said it the day before, when Comcast announced its blowout first-quarter earnings (a 10% rise, to $2.06 billion), and he said it on April 24, when the company walked away from its failed $45 billion bid for TWC TWC 3.42% . It’s no wonder why. The experience was a traumatic one for the company—or should have been.

It wasn’t just that the merger fizzled. Lots of proposed unions don’t end up being consummated. It was how it failed. The deal’s demise and the years leading up to it present a case study in corporate solipsism. Comcast, say many, has long acted like the company that never needed anybody—seeming to alienate networks on its cable system, Silicon Valley partners, and countless numbers of its own customers—to the point where it found itself with few allies when the merger was being reviewed. The Philadelphia company, indeed, might offer a rare lesson in whether having a reputation for good corporate community-ship actually matters in today’s hypercompetitive world.

More than two dozen interviews with industry insiders and a trail of government filings reveal a striking array of parties that were apparently hostile to both Comcast itself and to its proposed coupling with TWC—from programmers like the Tennis Channel to Netflix NFLX -0.18% , whose CEO at one point told investors his main goal was to squelch the Comcast merger. Joining the ad hoc army against the deal were organizations as varied as Dish Network DISH 0.26% ; the Writers Guild of America, West; and a fan site called the Harry Potter Alliance. So broad was the coalition that it made bedfellows of Tea Party TV talker Glenn Beck and über-liberal Minnesota Senator Al Franken.

“I was a little lonely at first,” Franken tells Fortune. “But then others started stepping out. In the end, when word got out that things were turning against the deal, it all accelerated.”

The movement to stop the merger gained momentum in the final weeks of the government’s evaluation as more and more people and companies—even entire municipalities, such as the town of Moultonborough, N.H.—stepped forward to voice their opposition. In all, an unprecedented 300,800 comments were filed with the Federal Communications Commission, which with the Justice Department was one of the two government bodies tasked with evaluating the proposed merger’s effect on consumers and competition. The vast majority of comments were against the deal. By contrast, AT&T’s T -1.03% proposed merger with T-Mobile TMUS 1.19% in 2011 elicited 40,526 comments before the parties abandoned the idea.

As it happens, Roberts couldn’t have picked a better movie scene in his Chicago talk to capture the deal’s implosion: It was fast and furious.


Obama Takes Unexpected Setback On Trade Agenda As Fast Track Passes Senate

Obama Takes Unexpected Setback On Trade Agenda As Fast Track Passes Senate
By Zach Carter, Ryan Grim & Laura Barron-Lopez
May 22 2015

WASHINGTON — President Barack Obama’s trade agenda suffered a setback Friday evening during a series of last-minute maneuvers in the Senate. While the upper chamber eventually passed a bill that would help Obama streamline a trade pact with 11 Pacific nations, the final product threw a wrench into the president’s plans.

The Senate approved a bill to “fast-track” trade agreements negotiated by the president. The agreement will prevent Congress from amending or filibustering Obama’s controversial Trans-Pacific Partnership agreement. The TPP deal would have a hard time surviving without fast-track authority.

But a key crackdown on human trafficking survived the legislative jujitsu. The White House considers the provision a deal-breaker, as it would force one of the nations involved in the TPP talks — Malaysia — out of the agreement. An immigration-related amendment authored by Sen. Ted Cruz (R-Texas) never got a vote, making it far more difficult for Obama to win over skeptical tea party Republicans in the House.

The slavery provision’s survival means that the House will either need to amend the bill and send it back to the Senate, which would cause a delay and complicate the House debate, or pass a bill and go to conference with the Senate, also causing a delay. It also potentially could be fixed in separate legislation otherwise moving through Congress.

But time is not on the side of advocates of the trade agenda, as summer recess is approaching, followed by a heated presidential campaign season. “It leaves a substantial problem that no one’s sure how will be addressed,” said one senator. If fast-track is ultimately approved, 60 days would need to pass before the TPP could be voted on.

Sen. Bob Menendez (D-N.J.) authored the provision that would effectively bar Malaysia from the agreement, but settled with GOP leaders over modified language that would allow Malaysia to stay in the deal as long as it made progress toward reducing its dependence on slave labor. The modification, however, never made it into the bill.

“It’s an interesting thing, isn’t it, about Menendez — it didn’t get fixed,” Sen. Sherrod Brown (D-Ohio), a staunch opponent of the trade bill, said Friday night after the final vote.

“So it means, if nothing changes, Malaysia should not be in this agreement,” Brown said. “And if the president relaxes or un-designates Malaysia as a tier 3 designation, it would be a tragedy. So either Congress changes it or the House changes it.” Tier 3 is the lowest possible ranking in an annual report the U.S. issues gauging a country’s actions against human trafficking.

Ironically, it was Senate Republicans, or at least one Republican, who enabled the provision to stay. The Senate needed unanimous consent to move forward on votes on a series of amendments, including the Menendez modification, but was denied when a Republican senator objected.

Brown was pleased the provision snuck through, and looked forward to the battle in the House.

“I’m absolutely happy, because no country should get in with that designation,” Brown said. “I’ll be working with [the House]. We had some victories here that surprised people. Everybody thought the Senate would be so easy to get it through and they were surprised that it isn’t. I think they got more trouble in the House.”

Over the past two weeks, Obama has been engaged in a bitter public feud with Senate Democrats over the fast-track bill, which would bar Congress from amending or filibustering the final TPP agreement that Obama negotiates. Senate Majority Leader Mitch McConnell (Ky.) and other Republican leaders have celebrated Obama’s trade agenda as a tool to boost economic growth. But Democrats have decried it, saying it will exacerbate income inequality and undermine key financial and environmental regulations. Labor unions, environmentalists and Internet freedom advocates oppose TPP, while corporate lobbyists, including the U.S. Chamber of Commerce, support it.


Re: How Society Will Be Transformed By CryptoEconomics

[Note: This comment comes from friend David Rosenthal. DLH]

From: “David S. H. Rosenthal” <dshr@abitare.org>
Subject: Re: [Dewayne-Net] How Society Will Be Transformed By CryptoEconomics
Date: May 20, 2015 at 07:53:12 EDT
To: dewayne@warpspeed.com

Disintermediating Banking and User Accounts

The revolution in progress can generally be described as “disintermediation”. It is the transference of trust, data, and ownership infrastructure from banks and businesses into distributed peer to peer network protocols.

A distributed “world wide ledger” is one of several technologies transforming our highly centralized structures. This technology, cryptically named the “block chain” is embodied in several distributed networks such as Bitcoin, Eris Industries DB, and Ethereum.

Through an encrypted world wide ledger built on a block chain, trust in the systems maintained by third party human institutions can be replaced by trust in math. In block chain systems, account identity and transactions are cryptographically verified by network “consensus” rather than by trust in a single third party.

These techno-optimists never seem to ask “what could possibly go wrong”?

To quote from this blog post:


“Since then, there has been a flood of proposals to base other P2P storage systems, election voting, even a replacement for the Internet on blockchain technology. Every one of these proposals for using the blockchain as a Solution for Everything I’ve looked at appears to make three highly questionable assumptions:

* The blockchain guarantees anonymity.

* The blockchain is automatically and permanently decentralized.

* Providing adequate mining power is someone else’s problem.”

There have been times in the past when a single mining pool controlled
more than 50% of the mining power, and thus the blockchain. That pool
is known to have abused their control of the blockchain.

As I write this, 3 pools control 57% of the mining power. Thus a
conspiracy between three parties would control the blockchain.

What could possibly go wrong? Don’t get me started …


The Internetest safety video on the Internet


The Internetest safety video on the Internet
By Delta Air Lines
May 20 2015


We see you’re on the Internet. That’s great, because we made a safety video starring the Internet. Now, there’s a lot of Internet out there, and, as such, you might not be familiar with every character in our film. That’s why we’ve included the list below to help you figure out what’s what.

0:03 Keyboard Cat
0:18 Double Rainbow Guy
0:26 Annoying Orange
0:30 Roomba Cat
0:45 Rahat’s Prank
1:05 Evolution of Dance
1:25 Slow Mo Guy
1:43 Harlem Shake
1:51 Deltalina
1:52 Screaming Goat
2:02 Internet Browser
2:23 Peanut Butter Jelly Time
2:31 Dramatic Chipmunk
2:48 Charlie Bit My Finger
3:23 Clicking Finger
3:51 Overly Attached Girlfriend
4:02 Ice Bucket Challenge
4:09 Dancing Baby (Dancing Baby Animation provided courtesy of Autodesk, Inc. © 1999)
4:15 Hamsters Eating Burritos
4:25 Nyan Cat
4:32 Doge
4:48 Mentos & Coke


Video: 6:07 min

The GOP Is Dying Off. Literally.

[Note: This item comes from friend Ed DeWath. DLH]

The GOP Is Dying Off. Literally.
May 17 2015

It turns out that one of the Grand Old Party’s biggest—and least discussed—challenges going into 2016 is lying in plain sight, written right into the party’s own nickname. The Republican Party voter is old—and getting older, and as the adage goes, there are two certainties in life: Death and taxes. Right now, both are enemies of the GOP and they might want to worry more about the former than the latter.

There’s been much written about how millennials are becoming a reliable voting bloc for Democrats, but there’s been much less attention paid to one of the biggest get-out-the-vote challenges for the Republican Party heading into the next presidential election: Hundreds of thousands of their traditional core supporters won’t be able to turn out to vote at all.

The party’s core is dying off by the day.

Since the average Republican is significantly older than the average Democrat, far more Republicans than Democrats have died since the 2012 elections. To make matters worse, the GOP is attracting fewer first-time voters. Unless the party is able to make inroads with new voters, or discover a fountain of youth, the GOP’s slow demographic slide will continue election to election. Actuarial tables make that part clear, but just how much of a problem for the GOP is this?

Since it appears that no political data geek keeps track of voters who die between elections, I took it upon myself to do some basic math. And that quick back-of-the-napkin math shows that the trend could have a real effect in certain states, and make a battleground states like Florida and Ohio even harder for the Republican Party to capture.

By combining presidential election exit polls with mortality rates per age group from the U.S. Census Bureau, I calculated that, of the 61 million who voted for Mitt Romney in 2012, about 2.75 million will be dead by the 2016 election. President Barack Obama’s voters, of course, will have died too—about 2.3 million of the 66 million who voted for the president won’t make it to 2016 either. That leaves a big gap in between, a difference of roughly 453,000 in favor of the Democrats.

Here is the methodology, using one age group as an example: According to exit polls, 5,488,091 voters aged 60 to 64 years old supported Romney in 2012. The mortality rate for that age group is 1,047.3 deaths per 100,000, which means that 57,475 of those voters died by the end of 2013. Multiply that number by four, and you get 229,900 Romney voters aged 60-to-64 who will be deceased by Election Day 2016. Doing the same calculation across the range of demographic slices pulled from exit polls and census numbers allows one to calculate the total voter deaths. It’s a rough calculation, to be sure, and there are perhaps ways to move the numbers a few thousand this way or that, but by and large, this methodology at least establishes the rough scale of the problem for the Republicans—a problem measured in the mid-hundreds of thousands of lost voters by November 2016. To the best of my knowledge, no one has calculated or published better voter death data before.

“I’ve never seen anyone doing any studies on how many dead people can’t vote,” laughs William Frey, senior fellow at the Brookings Institution who specializes in demographic studies. “I’ve seen studies on how many dead people do vote. The old Daley Administration in Chicago was very good at that.”


Read This Before You Take Pictures on a Plane

Read This Before You Take Pictures on a Plane
By Christopher Elliott
May 17 2015

Next time you’re tempted to take a snapshot of an interesting cloud formation or your seatmate sprawling into your personal space on a plane, remember Arash Shirazi and Steven Leslie.

Both of them are law-abiding citizens and air travelers. And both recently ran afoul of the airline industry’s confusing photography rules.

With only days before the busy summer travel season unleashes millions of shutterbugs on America’s airports, it’s helpful to know about the airline industry’s little problem with cameras so that your own camera doesn’t become hung up on it.

Shirazi, a music agent, was recently waiting in the Reagan National terminal for a flight from Washington to Los Angeles when he decided to take a picture of an American Airlines aircraft with his smartphone. He wanted to share it with his friends on social media.

A gate agent saw him snapping photos, stopped Shirazi and “demanded to know why I was taking a picture of airport equipment,” he remembers. “I showed her the picture and offered to delete it, but she became even more combative, accusing me of being a security threat. She made it a point to tell me that she was going to document this security breach in my travel record.”

Shirazi said he apologized, adding that even as a frequent flier he was unaware of any prohibitions against taking photos of planes. “But she was curt and told me to either get on the plane or take the next one,” he recalls.

He’s right. American Airlines doesn’t publish any prohibitions against taking photos of its aircraft. But late last year it updated its internal policies to allow employees at the airport, including ticket counters, gates, cargo, baggage, and onboard, to stop passengers from taking pictures.

“The policy is in place to protect employees and customers,” says Andrea Huguely, an American Airlines spokeswoman.

Steven Leslie faced a similar reaction from an airline employee when he started filming a passenger boarding a JetBlue flight. Leslie, a soft-spoken pharmacist flying from Albuquerque to New York, noticed a family with a sick child. The crew looked worried about the boy’s health. His family said he had cancer and had been medically cleared to fly.

The incident occurred only a few days after another cancer patient was expelled from an Alaska Airlines flight under similar circumstances, and Leslie decided to tape the conversation on his phone.

“It was my original intent to record this uncomfortable situation because I felt it was wrong,” he says.

Apparently, JetBlue felt something was wrong, too. After the family was removed from the aircraft, an airline employee ordered that Leslie delete the video. He politely refused, and then he, too, was escorted from the aircraft.

The reason? A crew member told him he didn’t “feel safe” being recorded.