ENERGY IS RECOVERY
It's clear that importing fossil energy equals exporting wealth. In times of economic head wind is a energy model that structural exporting wealth not a very wise concept. As energy is technology, national industries and national sectors certainly would like to have the purchase power spend by them. This way the capital doesn't drain away (gone is gone), but 'stays in the house'. Capital that stays in the economy multiplies gradually further. Letting capital drain away by fossil imports is not only about that certain percentage leak, but is also about not having the 'further birth giving' facets of that capital. The only why to economic recovery is heading for a low energy / high prosperity economy, otherwise energy/resources prices will drain further wealth out of our economies (on top of all the other already present head winds like greying demographics and increasing competition of emerging markets). First we need to see that the old models have become outdated. This is crucial. We must stop any subsidizing of models of the past. The reason this done, is not understanding the current situation. This is not a normal recession. Things are changed. We have faced PeakCredit, PeakEnergy and PeakGlobalization. Subsiding old models is the wrong answer based on outdated analysis. The only way out is stopping subsidizing old models and building a future based on actual influential developments. This is no cloud that passes and than it's sunshine again. This is the 21th century, with new realities. The main ingredients of the second half of the 20th century were cheap energy, cheap resources, cheap credit, western superiority sovereign debt stability, currency stability and global stability. The main ingredients of the first half of the 21th century will be expensive energy, expensive resources, expensive credit, declining western influence, sovereign debt instability, currency instability and global instability. Quite a different setting. Thinking that the solutions of yesterday will adequate answers to the situation of today is not understanding the difference between the current and past situation. In this perspective is funding banks out of governmental budgets not very wise: our current banking system is based on a too high leveraged model and is on the moment the economic growth stalls in the red zone. Our current fractional reserves based banking system (often called the 'money growth based on debt growth' system) can't handle zero growth situations, as money creation is done by loan issuing and no new loans are issued and therefore with mathematical certainty defaults are occurring. This is why the banks has gone collective into over-crediting: to insure the creation of money for the interest payments. Till the system failed at this night of the Lehman collapse. So giving banks money to cover their loses is not something governments should do: they will be collapse themselves due the debts they must go into to this this. Bank problems must be handled by the Central Banks. That's the system we choose in the 20th century. We must not mix this. Than we get into the ambiance we're now into: privatizing profits and socializing loses: a system that has not much support in all nations. So we see things have changed (like banks that collapse), but we react if nothing is changed. We need to see that the basics are quite changed and we need to define new answers to this new situations. What we need to do? We need to save our banks (that are under hard stress), we need to save our governmental funding (that's under hard stress) and we need to save our currencies (that are under hard stress). We only can do these tree all together by the market. So economic growth is out of the question due PeakX and the market must solve everything? Is that contrary? No. We gone use a massive energy transition wave as tool to realize all these three recovery goals. The energy transition investment wave will give the banks an income. Not for continuing their 20th century business model, but for giving them time to find their 21st century business model (as in: contract in size and become or geographical or functional specialists again). See the Energy Finance paper for all the models that could be used by the banks (and giving them turnover and income) regarding energy transition investment finance. Even in times of Credit Crisis/Crunch these tools/methods will work: they are specially designed to perform in such times. The by these finance tools generating massive energy investment wave will re unload the governments from their bank rescue task they have given themselves. That is important because otherwise their own funding would collapse under the weight of this beyond their strength going and therefore no wise task. If governmental leaders would understand finance, than a) it was never come this far (due solid bank regulation that would have prevented this mash) and b) they will have responded differently (as in: not interfere, let the central banks sort it out and demand total openness/transparency on this of them). This massive income boost of the banks will last for 5 years and give them time to adjust to the new economic and legislation realities with defaulting. The last thing we need right now is more defaulting banks., that would postpone recovery severely as it opens news roads to lower depths. To be clear: the money is gone, that can not changed, but do we work it out by new income or laissez faire. This bring us from the financials to generic economic recovery. This massive energy transition investment wave will give the economy a very intensive new boost. This boost will last for 5 years and give companies, households and individuals the time to adjust to the new realities of expensive energy/resources with defaulting. Otherwise we will face not a V curve, but a Vvv curve in economics due to the complex of factors describe in Energy is Confrontation. This massive energy investment wave give us the time to change our companies/economies without defaulting. By this the energy transition investment wave will also will give the governments severe new tax income for a period of 5 years and by this give them also the time to adjust to new (as in: growthless) economic realities. The times of unlimited growth of governmental layers/spending are over. Governments has done the same the accuse banks/household of: gambling on more growth in the future, with no knowledge of PeakX, greying demographics and the (both supply and demand) world market competition of the Emerging Nations. We thought we were smarter, wiser, better and they will never develop. This all was a misconception. Is the future dark? If we don't act: Yes. If we choose the recovery road possible by massive energy transition investment wave: No. Than we will have a world without inflation that erodes our savings and pensions. A world without the casino gambling global capital model. The believe that there were no risk abroad (too stupid for words) and capital gives birth to new capital without control (even more stupid). The whole globalization of capital was in facto a dumb childish experiment: capital with control gets lost in risk, domestic and for sure abroad. Everything that isn't transparent and/or can not be easy audited will disappear. Too big risks will become just too big to take. We will have a world with less loses due to better regulation. We will control the use of our savings/pensions more: the financial industry will shrink to only 10% of its current size, as we will increasingly manage our own investments. The professionals has robbed us, by telling us that their were better, but they that was just sales talk. We will have governments that will produce budget surpluses and will not by default calculate in yearly budget deficits. We all (companies, banks, governments, households) have hit our head to the PeakX ceiling. Nobody is clean. This will be sometimes hard, but we will give ourselves a stable prosperity future and really take care of the future of our children. We will no longer export wealthy import of fossil energy, but change energy for economic leak (imported) to an economic power (domestic harvested). Sustainable Prosperity. Who will not like that? Energy is Recovery is a very valid statement.
Author: Gijs Graafland
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