Book review of Nafeez Mosaddeq Ahmed’s Failing States, Collapsing Systems BioPhysical Triggers of Political Violence

Screen Shot 2017-01-05 at 11.51.54

https://3.bp.blogspot.com

 

“… after 2030, both the Euro-Atlantic core, as well as the fast-rising Indo-Chinese periphery, will begin to experience their own symptoms of systematic state-failure”.

Nafeez Mosaddeq Ahmed

 

This book is a tour de force and a must read for anybody who is interested in the future fate of our industrial civilization.

Stylistically, Nafeez Mosaddeq Ahmed (“Ahmed”) is very different to that other great chronicler of our declining civilization, John Michael Greer (“Greer”), who is an easier read for the layman reader. I have reviewed two books by John Michael Greer, one a near future thriller which posits a rising China defeating America in the 2020’s and a non-fictional book on the impending collapse of the American empire. Both are superb and at times deeply troubling reading experiences.

Ahmed’s book is drier, academic and references a huge array of empirical and scientific studies to back his conclusion that our industrial civilization is heading towards severe trouble within the next 20 years. What it lacks in Greerian narrative and rhetorical flourish is made up by the use of data and scientific research to force the reader to acknowledge that the resource and ecological limits are pressing ever harder on our globalised economic order.

What is striking about Ahmed’s book is that his forecasts for key regions, including Europe, the Middle East, Asia and North America and when their systematic crisis will likely arrive are remarkably close to the 1972 Limits to Growth business as usual modelling shown below.

futurism-got-corn-graph

https://www.commondreams.org

 

I have discussed this prescient report before in my post “winter is coming” which you can read here.

So what did Ahmed forecast in his book? Here are the key points;

The world is seeing a “new normal” of extreme weather events, summer heat waves, wildfires, droughts, floods and extreme rainfall which is increasingly common throughout the world. The climate system is being fundamentally transformed, a “climate departure”, which means that within the next decade in the tropics (e.g. encompassing parts of the Middle East, Asia, Central Asia, South Asia and Africa) this will become the new normal, rendering the vast region uninhabitable by 2030-2040, due to prolonged heat waves and dust-storms.

The rapidly changing climate in this vast tropical zone will imperil the lives of up to 500 million people and will lead to mega-migrations into Europe. The political and demographic implications of this enormous wave of humanity attempting to enter Europe I have explored in a post earlier this year which you can read here.

Saudi Arabia, a pivotal global oil supplier, has seen its oil exports decline by 1.4% every year between 2005 and 2015. According to the net export model, Saudi Arabia net oil exports have been forecast to decline to zero by 2030. The Gulf States will face a systematic crisis within the next decade as the money runs out to keep their populace happy.

Total net oil exports to Europe by the former Soviet Union countries including Russia, Azerbaijan and Kazakhstan will decline to virtually zero by 2030 as production declines and China captures a growing share of oil production for its own requirements.

The south-western region of North America is facing severe water scarcity and climatic disruption, which could lead to Lake Mead running out of water by 2021. Lake Mead is the main water supply for the mega-city of Los Angeles and 90% of southern Nevada. The looming crisis is so great that in the medium term it threatens the viability of Californian agriculture and a substantial chunk of the global foodstuff exports which will lead to global food price rises.

American unconventional oil and gas shale’s will likely peak around 2025 which will ensure that the United States is relatively energy self-sufficient compared to Europe in the short-term. After that America will become increasingly dependent on oil imports by 2030 when these supplies will be drying up around the world.

The impending peaks in oil production and net export decline by key producers will lead to another global oil supply shock by 2020, something that I have warned recently in my review of crypto-currencies.

The core regions of our industrial civilization, Europe and North America (“Euro-Atlantic core”), will sustain the neo-liberal status quo by continued debt-money quantitative easing policies. However, after 2030 both the Euro-Atlantic core and the rising giants, India and China, will experience their own symptoms of systematic state failure.

Greer has recently commented on his blog that he expects to see another economic shock at some point in the foreseeable future which China will emerge, after the hit, as the dominant hegemonic power on the world stage at some point next decade, supplanting the United States. This strikes me as eminently plausible given the above trends outlined in Nafeez’s book.

Whilst Nafeez’s forecasts and dates are hypothetical and may be proven wrong, the overwhelming conclusion from reading this book is that readers would be foolish to ignore the rising alert signs emanating from different corners of the world. When visiting Granada last month, the local people mentioned the drought and the extreme heat wave in the summer of 2017, when temperatures hit 47 degrees in the shade! If this “abnormal” climate continues, parts of southern Spain could become uninhabitable within a decade. Indeed, the tour guides mentioned that the locals fled the city during the summer months to escape the extreme heat as it was so intense.

To conclude, if you are interested in learning more about the systematic challenges facing the world in the coming generation, Nafeez’s book is required reading.

Book review of Nafeez Mosaddeq Ahmed’s Failing States, Collapsing Systems BioPhysical Triggers of Political Violence

The suited crypto-currency virgins are coming…

Bitcoin-860x450_c

thedailyharrison.com

 

“… some of the cryptocurrency experts I’ve talked to believe that a single share of bitcoin will someday be worth over $1 million”.

Teeka Tiwari – crypto-currency expert

“I see them (crypto-currencies) as yet another speculative vehicle in the middle of a bubble that will end with a very, very messy bust.”

John Michael Greer 

 

In a new series of posts on FI, I will be exploring the potential impact and future of series of new technologies, starting with crypto-currencies. I will be exploring whether technology can mitigate or even resolve the broader challenges of resource scarcity, which I refer to as the Limits to Growth mega-trend.

Readers, can you hear that distant but growing roar across the horizon? That is an army of suited and booted crypto-currency virgins scrambling to purchase their first bitcoin and ether in the coming months… Wall Street is going to be deflowered and fortunes will likely be made in the coming years.

Crypto-currencies have attracted a huge amount of interest in the last year with the most well known crypto, bitcoin, surging to new heights on the global exchanges. For a long time as I was a sceptic, convinced that it was a 21st century version of the tulip craze and not based on any fundamentals. However, in the last few months, I have been engrossed in this exciting new sector and am now cautiously optimistic that it has a promising future.

 

Bitcoin chart

Coindance

 

What are crypto-currencies? According to Wikipedia, “…a crypto currency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets”. Different crypto-currencies have different uses and one is not the same as the other.  Bitcoin should be considered the reserve currency of the crypto space, to be used as a store of value and as a gateway to buy lesser known cryptos like dash, ethereum classic and ripple. Think of bitcoin as digital gold.

Ethereum, which has a very efficient payment transaction time and is already being used for hundreds of apps, should be considered the Microsoft of the crypto-space. Big banks are already exploring how to integrate ethereum into their banking systems and it is already the favourite within the tech world which are major movers and shakers within the emerging crypto eco-system.

Dash, a little known crypto, is also emerging as a crypto of choice for making payments and has rocketed in value in the last few months as a result. There are hundreds of cryptos out there and the sector is at the same point in the cycle as the tech industry was in the 1990’s when Amazon, Microsoft and other tech companies were just starting to emerge.

Cryptos should be considered digital equities and as the crypto world grows, these blue-chip digital equities will grow in value. The trick is investing in the right digital equities, in other words, the Amazon, Facebook and Microsoft of the next decade.

With cryptos you can transfer them around the world through wallets beyond the control of national governments. This has already proven immensely useful for citizens of Zimbabwe or Venezuela where the economy is collapsing. The developing world has embraced the mobile phone revolution and it is probably only a matter of time before the masses discover the benefits of app based digital currencies held through their smart phones.

Even in the relatively stable developed world, putting a fraction of your net wealth into the blue-chip cryptos is worth considering should capital controls return under a Corbyn led British government in the future, as an example.  For those who think such talk is absurd, I would remind you that banking holidays, capital controls and other mechanisms to control your money has already been experienced by the Cypriot people in 2013. It is no coincidence that bitcoin surged in value by 87% in 2013 after the imposition of draconian banking controls in Cyprus.

Cryptos are a natural response to the shift of our economy into the digital space and it was probably only a matter of time before a digital currency would emerge for the internet. As the digitalisation of the economy increases it is likely that cryptos will become increasingly mainstream as a means of payment in the coming years. Surveys indicate that younger consumers are interested and comfortable with the concept of using and holding digital currencies. For the digital native generation, bitcoin and other cryptos are natural extensions of their tech infused lives.

The 2008/2009 Great Recession led to a gigantic money printing exercise by the central bankers as a consequence the real value of fiat currencies like the dollar, pound and yen have continued to shrink. Whilst the doomster warnings of hyperinflation has not been realized, the year by year grind of declining living standards for the bottom 80% of the population in the developed world has led to growing populist revolts at the ballot box. Cryptos offer the possibility of escaping this vicious circle into an appreciating world of digital currencies.

Many commentators have compared cryptos to a bubble which is destined to collapse. Whilst these warnings should not be totally dismissed and at times the market has appeared bubbly and overly speculative, I have attempted to show why the crypto space is here to stay and will likely grow in the coming few years. The first wave of adopters were the tech geeks and highly adventurous individual investors and the second wave is about to break soon. These are the institutional, family office and hedge fund “smart money” which are ready to pour billions into this space.

A key catalyst for this institutional “wall of money” to invest into bitcoin and later on the smaller cryptos is the announcement by the financial firm CME Group that investors will be able to purchase bitcoin future derivatives starting from 18 December 2017. Wall Street, if they wish to invest into cryptos, require the ability to hedge against the risk by using future options as a risk management tool. The decision by CME clears the way for a second wave of investors to take their chances in the crypto sector.

The announcement by the CME Group is a game changing moment and will likely lead to the approval by the American regulator of a bitcoin etf in 2018. Anecdotally I am personally aware that wealthy clients are requesting their relationship managers to purchase hundreds of thousands of bitcoin in family offices and the clamor is growing on a literally daily basis.

It is only a matter of time before an ethereum (also known as ether) future derivative is approved, opening the way for the institutional “wall of money” to invest into the second largest crypto, ethereum. Europe already has tracker funds dedicated to ethereum and bitcoin which provides a safe and regulated way of purchasing the top two crypto currency plays and America will follow within the next 12 to 18 months.

I would finish this post with a warning. Whilst I don’t think that the crypto currency space is a purely speculative bubble, there are dangerous headwinds which could shatter the future growth of this sector next decade. Bitcoin mining alone takes up a considerable amount of electricity usage and according to the UK energy comparison site Power Compare, “…bitcoin mining is currently using more electricity than 159 individual countries.”

In the context of a likely looming oil supply shock by the end of this decade, it strikes me as unlikely that countries will continue to increase their grid usage to the manufacturing of digital currencies as prices rise, the poor struggle to heat and light their homes and power outages arise. The limits to growth megatrend, which I discussed in my article “winter is coming”, would suggest that the explosive growth in cryptos is unsustainable and will decline next decade as these supply challenges become more apparent to the world.

However, to summarise, with oil prices relatively low and a supply shock at least 18 months away, 2018 and probably 2019 will continue to see explosive returns in the crypto currency space. The medium-longer term prognosis for the crypto sector is a darker picture and it remains to be seen if John Greer’s warning of a speculative implosion of the crypto-currency sector comes true.

I will be completing my 2017 review at the end of this month and will be publishing in the New Year my 2018 forecasting predictions.

I encourage anyone who has read this post to subscribe to my blog if you haven’t already at the bottom of the page.

The suited crypto-currency virgins are coming…