Overview subsidized renewable energy projects in the Netherlands to the tune of 5.8 billion euro. Half of that amount went to solar projects. The other half mostly to wind, biomass and some geothermal.
[nrc.nl] – Hoe komt Nederland aan 20 procent duurzame energie?
LCOE = Levelised cost of energy [*]
[iea.org] – Technology Roadmap, Solar Photovoltaic Energy – 2014
[*] – The LCOE represents the present value of the total cost (overnight capital cost, fuel cost, fixed and variable operation and maintenance costs, and financing costs) of building and operating a generating plant over an assumed financial life and duty cycle, converted to equal annual payments, given an assumed utilisation, and expressed in terms of real money to remove inflation.
Self-made man Willem Middelkoop is a well known personality in the Netherlands. He has been a peak oil and financial Cassandra for several years and is often invited in the media. He ran a successful online gold business before he sold it. He is very active on twitter and as such one of the most interesting news sources in all things finance, politics and many other areas, mostly in English. His latest book, The Big Reset, is an international bestseller and translated in many languages. It is about the inevitability of the collapse of the international financial fiat money system and the dollar in particular. Unsurprisingly, he is a gold bug and expects that metal to play an important role again in the world of finance after the crash.
In principle fiat money can work, but only if strict discipline is being maintained and the amount of fiat money in circulation is correlated to the size of the economy. If a central bank is truly independent and has the task of keeping inflation low, than it could work. The German Bundesbank or the Dutch Nederlandse Bank can be seen as a positive examples. But the problem is, the central banks are rarely independent. There is always the politician who can’t resist putting pressure on the central bank to ‘help him out’ or the public demanding ‘an end to austerity’.
After a general introduction about the history of money, Middelkoop changes to a Q&A format, until the end of the book and poses and answers some 86 questions, of 1-2 pages each. Questions like: ‘what is fiat money?’, ‘what is quantitative easing?’, ‘how much gold does China really have?’, ‘will Special Drawing Rights become the new world currency?’, ‘what will be the role of gold?’, ‘how the gold price is manipulated?’, ‘possible debt cancellation scenarios?’, ‘can we grow out of debt?’, ‘could the renminbi replace the dollar?’, ‘is the Fed really independent?’, etc., etc. A few of the questions from the book will be discussed here.
[amazon.com] – The Big Reset
Youtube text: On behalf of Matterhorn Asset Management, financial journalist Lars Schall talked with exploration geologist and mining entrepreneur Keith Barron. They’ve discussed, inter alia: the challenges for gold mining companies; the effects of a downward rigged gold price on Third World countries; the “inevitability” of a gold price at 5000 USD per ounce in the future; and Barron’s support for the Swiss gold initiative.
*Peak Gold = a moment in time that gold mining peaks
[goldswitzerland.com] – “I believe we’ve seen Peak Gold”, Keith Barron PhD
Until 1985 the equation was: “gold = South-Africa”. Now China is the largest producer.
China and Russia are still able to increase production, the others are in decline, so the idea of ‘peak gold’ is not far fetched.
[wikipedia.org] – List of countries by gold production (2013)
Editor: Keith Barron is an exploration geologist with over 27 years experience in the mining sector. He thinks that the world has reached the maximum gold production level (“peak gold”). Additionally he believes that the US in particular is not honest about its real gold stockpile and that most has been leased or sold.
End the FED, end the dollar, end US hegemony (or should we say: hegemoney?) and end the world’s prime source of instability.
Get rid of your dollars by buying something of value, preferably precious metals.
New Delhi, March 23: India is likely to grant Iran’s request to be paid fully in euros for oil, against the current practice of partial payment in rupees… Reports quoting Mohsen Qamsari, director for international affairs of the National Iranian Oil Company, said, “Indians are interested in increasing oil imports from Iran and we welcome this matter in the event that it would be possible for us to receive payments in euros in our accounts.”
(Map shows yearly production in kg)
Many doubt the stability of the current financial system and predict a prominent role for gold in any future financial system. Here an overview of who produces how much. A few observations:
– With a current (Nov 2013) gold price of 1000 euro, 1 ton of gold represents 35 million euro.
– One glance at the map reveals why Mali is interesting for France (gold, uranium).
(Country ranking official gold reserves. Source: World Gold Council)
These figures are to be taken with a grain of salt. A lot of western European gold is stored in the US, which refuses to allow verification, not even to members of Congress.
We never heard of Lithuanian president Dalia Grybauskaitė before but we already like her. She is committed to bring her country into the euro area by 2015. She correctly denies that there is any euro crisis but instead a debt crisis, self-inflicted by irresponsible behavior of politicians. Hear, hear! Grybauskaitė rejects an opportunistic wait-and-see attitude and wants to join the euro out of principle and solidarity, because Lithuania is a European country. That’s the spirit! The EU is supported by 70% of the Lithuanians, even after the implementation of draconian measures during the past years, that were even more radical than the ones currently underway in southern Europe. Grybauskaitė wholeheartedly supports the austerity policies of Angela Merkel. We wished we had ten more Lithuanias in the EU and one Greece less. Where power hungry politicians with an eye on a career in Brussels try to sell a local southern European debt crisis as a euro crisis, using it as a pretext to further centralize the EU, this woman from Lithuania tells the truth.
According to Wikipedia: a reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. Being the owner of a reserve currency means you are a top dog; that you are in the middle of where all the action is. During the past six centuries there have been six countries holding the largest reserve currency. Painting with a broad brush you could allocate a century to each of them:
So which currency is going to be the next reserve currency? Who are the candidates?
Current reserve currency situation:
The French president Charles de Gaulle in 1962 rejecting supranationalism and Atlanticism in favour of a Europe of the Fatherlands, including Russia after the demise of communism. The time is ripe for that vision to be realized.
First of all, in the rising multipolar world, there will be no second Bretton Woods, where one entity can impose its currency upon another. There will be several competing currencies and the acceptance of a foreign currency will be proportional to the package of products that economy can provide to the potential holder of that currency. You are from Kenia and you want a car? Forget your local currency, make sure you have dollars or euro’s and then you can come back. You are still from Kenia and now want oil from the Gulf to drive in your newly acquired French car? Bring dollars only, courtesy US army, which occupies the Gulf region, providing ‘security’ to that area. Or try the Russians, maybe they accept euro’s. So how is the graph above going to look like in 10, 20, 30 years time? We could be honest and say we don’t know, but that’s not a billable answer. So our guess would be that, ignoring resource depletion and the possibility of war, the green euro area will increase somewhat and that a small band representing Chinese money will appear, both at the cost of the dollar, but that if the international system remains stable, the dollar could hold out quite some time. But that is a big if. The greatest threat to international financial stability comes from Washington itself, in its unwillingness/inability to cut its spending and moderate its ambitions. Washington could reduce its military budget with 50% without compromising its own security, but it won’t. Washington is up to something, prepares to jump and does not mind if the American launchpad for that jump will get under water because of the jump and the rest of the world knows it and starts to react, putting Washington in dangerous isolation.
But maybe all the talk about the reserve currencies of the past is meaningless for the direct future as the most likely successor for the dollar has not been mentioned in the list above: barter, meaning no currency at all. If everything breaks down and no trust is left, this is going to be the mechanism to keep economic life going, be it on a the back burner. In the thirties the Germans traded locomotives against Argentinian wheat, circumventing financial institutions in Anglosphere, which was not appreciated in London and New York. One thing we do know for certain, namely that the Unipolar Moment of US supremacy is going to be just that: a moment (1991-2003). What is really in store is a chaotic declining world, where modernity is going to be traded in for archaism, where all the peaks will be behind us, except peak hurt:
1914 – Peak Europe (at the eve of the Great War)
1969 – Peak USA (moon landing)
2005 – Peak conventional oil
2008 – Peak West (Lehman crash)
2018 – Peak fossil energy
Bloomberg no longer believes in a euro breakup, if it ever did. The euro gained in comparison to currencies of six top rated nations and “the bonds of Greece, Portugal, Ireland, Spain and Italy — the region’s most indebted-economies– have been the best performers among sovereign debt in that period“. The euro has appreciated 7.1% over the last six months. The currencies of top AAA rated countries like Canada, Australia and Singapore have fallen against the euro by 9.6 % in the past six months.
Erik Townsend discusses the consequences of resource depletion and peak oil for the international monetary system (IMS) and why rising energy prices could very well be the catalyst that will cause the present system to fail. The IMS is basically Bretton Woods, the basis for all international trade. [*] Core element is the elevation of the dollar to world reserve currency status, simplifying international trade. The dollar at the time was still fixed to gold ($35/oz) and was backed by the most credit worthy nation. Countries promised to keep their dollar exchange rates fixed as well. To that end they would be required to hold dollar reserves. That system survived until August 15, 1971, when Nixon abandoned the gold standard.
In 1959 the economist Robert Triffin pointed at a dilemma: “if you choose a currency because it’s a strong credit, and then give the issuing nation a financial incentive to borrow and print money recklessly without penalty, eventually that currency won’t be the strongest credit any more!” Indeed, Nixon proved Triffin right when he ‘temporarily’ had to abandon the gold standard, after a bullion bank run, as the dollar was no longer as good as gold. Especially the French under de Gaulle were notorious for exchanging their surplus dollars against gold. At the same time successful exporting nations had a problem with all these dollars. Changing them back into local currencies would appreciate this currency and result in ever lower returns for export nations. The answer was to not exchange but to invest in US government bonds. The result was that the US government could spend even more, all being a consequence of the reserve currency status of the dollar. The author claims that these exporting nations have little choice but to invest in US bonds. The US can borrow almost against zero cost, a situation described by de Gaulle’s finance minister Valery Giscard d’Estaing as exorbitant privilege.
The big miracle is that the IMS did not fall apart after 1971, when the gold standard was dropped. Sure, the Arabs forced an oil crisis, drastically increasing oil prices, partly because of this. But the system largely kept in place because there was no real alternative and because of the overarching power of the US military (DR: look what happened to Saddam and Khadaffi when they tried to circumvent the dollar).
Now that the U.S.debt-to-GDP ratio now exceeds 100%, and the U.S.has literally doubled its national debt in the last 6 years alone, we see increasingly that trading nations are conduction bilateral trade in their own currencies. Examples China, Brazil, Russiam Turkey and Iran. The author thinks that the Peak Oil energy crisis will be the catalyst to cause a global financial system meltdown, going hand in hand with the dollar losing its reserve status. Key questions: when and how is this going to happen? Answer: the loss of reserve currency status will be the forcing function that begins a self-reinforcing vicious cycle that brings about a U.S. bond and currency crisis. We see that major players like China are openly calling for their own currency to be and alternative to the dollar. The only reason why the US can service its debt is because the FED is able to keep interest rates low… because of the reserve currency status of the dollar. Once that is gone the rates will skyrocket and servicing the debt can become problematic. The author puts great faith in the arguments made by Eric Janszen, or more precisely the Janszen Scenario: the U.S. has reached the point where excessive borrowing and fiscal irresponsibility will eventually cause a catastrophic currency and bond crisis. He believes that all that’s needed at this point is a proximal trigger, or catalyst, to bring about such an outcome. He thinks there are several potential triggers that could bring such a crisis about, and chief among the possibilities is the next Peak Cheap Oil price spike. The crucial thing is that in the seventees the US represented 80% of the world oil market, today that is 20% and growth comes from other countries than the US. This means that it makes ever less sense to price oil in dollar. Once this really happens, trading nations no longer will need so many dollars and will start to dump them.
The author ackowledges that unconventional oil/gas is not a marginal phenomenon, but denies that it will change a lot to the global picture and peak oil. In fact if the US would withdraw from the oil market because it can produce all its oil by itself (a big if), then this would hasten the demise of the dollar as reserve currency as oil exporting countries would no longer have an incentive in charging in dollar. The consequence would be dumping of the dollar and bonds, which would cause US interest rates to go up to a point where the US will be unable to finance its federal budget deficit. If the FED would respond by printing money, the dollar would lose its value and imports would become unaffordable.
The author fears that the US could use its military as a means of last resort to stave off a catastrophe by using (nuclear) blackmail… sell us oil against 50$/barrel or else…
The German MSM newspaper Die Welt published a financial Nachhaltigkeitsranking (sustainability ranking) of EU countries and the US. This not just encompasses national and private debt (dark blue), but also all promises made into the future like pensions and medicare (light blue). A value of zero means you have to do nothing and can continue behaving like before. The higher the value the more drastic the countermeasures need to be to avoid financial ruin. It turns out that the three largest European economies Germany, France and Italy are in relatively good shape and that Greece and the US are worst off, meaning they both have to undergo drastic measures to escape financial ruin/default. Greece can be saved, as proposed by the Deutsche Bank, because of the recent gas and oil finds to the tune of 600+ billion dollar, an amount in the order of total public debt. As far as the US is concerned, it does not mean that the ruin is inescapable, but that very drastic measures need to be taken to avoid a meltdown. Candidate measures: tax increases to European levels, dismantling of all 800+ foreign basis and scutling of all 12 carriers in the mid Atlantic. That would be a start. Ron Paul would have been the right president to implement these measures, but alas. The US triple-A status is dubious, to say the least.
Concentrating for a moment on the situation in Europa, surprisingly it turns out that Italy has the most solid finances. Mind you: not the state, but society as a whole. Reason: real estate. The total amount of Italian mortgage is relatively low in international context. It also shows that the overall financial situation of the Netherlands is hardly better than that of Spain. The Dutch trapped themselves in buying real estate for too high prices, caused by lax too liberal financial rules by the government, which caused a bubble in the housing market, which is deflating now, with 1 million households currently ‘under water’. It is not entirely clear why Spain has financial status BBB and the Netherlands AAA.
Looking at total debt (figures in % GDP), excluding future obligations, than the differences between the states of the western world are not that dramatic, excluding Japan, Ireland and the UK.
In 2010 four windturbines placed near Rønland in NW Denmark were the recordholder in generating energy: 63.2 GWh each since 2003, the year of installation. In market electricity prices at 20 euro cent per kwh, this equals to a yield of 12.6 million euro each to date. Extrapolating this over the total life expectancy of 25 year, this amounts to 45 million euro. These are 2 MW windturbines with an estimated price of 2 million euro, excluding maintenance. In financial terms these figures are fantastic. And after 25 years the cost of the tower and foundation is definitely not written off and they could last centuries, think Eiffel tower, built in 1889. Or this still functioning Dutch windmill, dating from ca. 1630. Expect this record to be broken soon. Considering these figures one cannot escape the conclusion that our energy situation is far from hopeless and that the energy transition is mostly a question of awareness and rethinking old assumptions as well as breaking vested interests of the gas & oil industry.
Turkey is now under threat from the US but is not impressed. Antiwar.com: “Energy Minister Taner Yildiz, fresh off his unsuccessful attempted visit to Iraqi Kurdistan, shrugged off the threat insisting that the US can’t sanction trades of gold for natural gas and that Turkey is just going to keep doing it no matter how much the US complains“.