Mosaic Adventure

 

 

“The fact that conventional non-OPEC oil production has rolled over is a huge problem that has received little attention by oil analysts. To put this in perspective, conventional non-OPEC oil production still represents 45% of global oil production and now appears to be in sustained decline.

Furthermore, if you include other sources of non-OPEC production, such as Canadian Oil Sands (which is not considered “conventional”), biofuels, refinery gains, and OPEC NGLs (which are not part of the OPEC quota systems), the US shales still represent an enormous 75% of the total non-OPEC liquids growth over the last decade. Now that the Bakken and Eagle Ford are facing exhaustion issues that are readily becoming apparent, nearly all of non-OPEC’s production growth will have to come from just one play in West Texas–the Permian.

Never before has the global oil industry been so dependent on one field in such a concentrated geographic area for all of its future growth.”

Goehring & Rozencwajg, “Shale Oil: A Startling Prediction Using The Latest Statistical Techniques”

 

“A spate of new scientific research released through 2019 has thrown light on nearer-term risks of a global food crisis in coming decades, such as a multi-breadbasket failure — due not just to climate change, but a combination of factors including population growth, industrial soil degradation, rising energy costs, groundwater depletion, among other trends.

Taken in context with a number of climate change models produced over the last decade, the heightened risk of droughts in the 2020s means that a global food crisis could be imminent.”

Insurge Intelligence, “West’s ‘dust bowl’ future now ‘locked in’, as world risks imminent food crisis”

 

 

If our global industrial civilisation was a mountain, we are likely to be at or very close to the peak.

If this is correct, our collective future will be a story of the decline and eventual collapse of our industrial civilisation.

A core purpose of this blog is to circulate to a wider audience my view that the limits to Growth business-as-usual (BAU) modelling is the most likely future fate of our industrial civilisation. And that modelling, which has proved broadly accurate over the past 40 years, suggests that we are hitting global per capita peaks in food and services as at now.

Dirk Bruere Limits to Growth 

 

As you can see from the above chart, the 2020’s are, if the modelling continues to prove broadly accurate, a tipping point when industrial production slumps, global population peaks and death rates start to soar.

Interestingly, Bloomberg today noted that top market strategists are referring to the 2020’s as the “Peak Decade” for demographics, globalisation and oil demand. The reality of our global predicament is starting to permutate among the financial elites of the Western world.

The idea that, as we enter the 2020’s, global key metrics are peaking and will rollover may still be a shocking idea for many. We are likely to have to get used to this new paradigm soon. At the top I included a quote from the Insurge Intelligence website which is one of the few online sources that takes resource scarcity seriously. They argue, based on the latest scientific evidence, that various factors, which I have previously referred to as the Limits to Growth mega-trend, are colliding to make a global food crisis a rising probability in the coming years.

I’m not convinced that a global food crisis is imminent – far too much food is wasted across the developed world – however the prospects of future shortages, price hikes and climate triggered droughts is likely in the coming decades.

Peak oil concerns have faded since the surge in US shale production over the last decade. A recent report by Goehring & Rozencwajg suggests that the bulk of non-OPEC production growth this decade will come from “…one just play in West Texas- the Permian”.

Given that conventional oil fields are declining on an annual basis, global oil demand is still rising (for now) and the US shale miracle is slowing, the prospects of another oil supply shock this decade are high. That will likely prove to have major repercussions on a global economy still recovering from the 2008/2009 financial crisis.

So that’s the big picture on where we are and where we are heading as we enter this potentially momentous decade. Now it is time to review how my predictions for the year 2019 fared.

I predicted that Britain would leave the EU in 2019 and that there would be an 11^th hour amendment to May’s deal, possibly relating to concessions on the Irish backstop. In fact, Britain is not leaving the EU until 31^st January 2020 but Boris Johnson did manage to secure changes to the Irish backstop which enabled a revised deal to be agreed between the UK Government and the EU in October 2019. It wasn’t in the direction of a softer Brexit either as I thought at the beginning of last year.

Overall, I will probably give myself more of a fail than a pass on that prediction but I was not wholly wrong. The timing of our leaving the EU was technically wrong but de facto correct in the sense that the Tories victory in the December general election insured Brexit was happening as a political fact prior to the New Year. Similarly, the key to unlocking a revised Brexit deal was eventually done by concessions on both sides on the issue of the Irish border.

My second forecast, which I only placed a 30% probabilistic chance of happening, was an Arab style insurrection in France. This didn’t happen in the end and was my wildcard scenario for the year.

My final forecast was a bulls eye. I predicted that Trump, as part of a wider attempt to withdraw from the US empire business, would order the withdrawal of the majority of US troops from Syria. That occurred amid chaotic scenes in northern Syria, in November 2019.

So overall, a reasonably decent performance but not the best compared to my now vintage inaugural forecasting attempt back in 2016 when I successfully predicted both Trump and Brexit.

In terms of my predictions for 2020, here is what expect is likely to happen, with a probabilistic rating attached.

UK will agree to a shallow goods-based trade deal by 31^st December 2020 (70% probability)

Britain, led by Prime Minister Boris Johnson, will achieve a shallow trade deal with the EU facilitating the free flow of goods by the end of 2020. Other areas will be concluded in 2021 and 2022 but the overall thrust of the final settlement with the EU will be a hard Brexit e.g. low alignment with EU standards which allows the UK to diverge on regulation and laws.

Despite much commentary in the European media I don’t think there will be an extension to the trade talks although it is possible that a very short-term technical extension to approve the new deal might occur in January or February 2021.

Sir Keir Starmer will win the Labour leadership contest (75% probability)

The crushing defeat of Jeremy Corbyn’s Labour party in the 13^th December British general election triggered a new leadership race. There are currently 5 candidates still in the running although that is likely to be reduced given the need for trade union endorsements. The three candidates who are most likely to go to the wider membership are Sir Keir Starmer, Rebecca Long Bailey (RLB) and Lisa Nandy.

The Yougov polling of Labour members and the political betting markets suggest that Sir Keir Starmer is the overwhelming favourite to win the race. RLB is the preferred candidate of Corbyn’s circle but has lacked any spark so far. Anecdotally the membership, still shaken by the defeat, seem to be prioritising Starmer who is seen as the most prime ministerial of all the candidates.

Whilst I have placed a small wager on Lisa Nandy, who has impressed me so far and could surge now that the hustings have started (allowing me to exit with a profit), my forecast is that Sir Keir Starmer is the most likely candidate to win the Labour leadership contest.

The result will be announced on 4th April 2020.

Donald Trump will win the US presidential election (60% probability)

This has proved a difficult one to call. Whilst Trump’s rating vs v vs Joe Biden, who remains the most likely Democratic candidate to win the primaries, remains poor, he has significantly narrowed a once big lead.

Compared to Elizabeth Warren and Bernie Sanders, who are on the left of the Democratic spectrum, Trump is leading in key battlefield states. Should either Warren or Sanders win the Democratic primaries Trump is likely to win the US presidential election, possibly by a landslide.

Joe Biden, who appeals to soft Republicans and conservative Democrats worried about the tax-and-spend socialism of Sanders and Warrens, has a better chance of defeating Trump.

One figure to watch for is Mayor Pete Buttigieg, who would be my wildcard candidate to win the Democratic primaries. Conservative, ex-military veteran and homosexual; he reminds me of the relatively unknown Emmanuel Macron who ended up winning the French presidential elections in 2017. Buttigieg has horrendous ratings among the key African-American demographic who form Biden’s Southern firewall and therefore has a difficult, if not impossible, path to victory.

Should Biden become the Democratic Party candidate the prospects of a Democratic victory in November increases (at least compared to his rivals), however, on the balance of probabilities I would predict that President Trump is more likely than not to get re-elected for a second term in office.

The reason for my call is that Trump has managed to erase much of the once mighty Biden lead in battlefield states and we are still in the early days of this presidential campaign. The booming economy in the “flyover states” and the wider cultural weaknesses of the Democratic Party suggest that enough voters will hold their noses and vote for the Donald again.

Please note that prediction is predicated on the assumption that President Trump is not impeached in the Senate.

Well, that’s it for my set of forecasts for 2020. We will see how I perform at the beginning of 2021!

As always, I appreciate any feedback and comments you have to my blog posts.

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Sky News Exit Poll

 

“Like Trump, Johnson realized that his nation’s leftward party had abandoned its working-class voters in order to pander to the comfortable classes. He went to the working class voters Labour had abandoned and spoke to them about the issues that concerned them—above all, an end to the open borders and free trade agreements that drove down working class wages in order to boost middle class salaries and investment class profits—and found them more than willing to listen.”

John Michael Greer, “To the shores of a surging ocean”

““I have absolutely no doubt that if you have a right-wing populism against a left-wing populism in this country, the right-wing will win.”

Former Prime Minister Tony Blair (April 2019), “Tony Blair says Corbyn would lose next general election if Boris Johnson becomes Tory leader”

 

The last Labour Prime Minister, Gordon Brown, was reported to have warned during the dying days of Labour government that if they let the Tories into power the Labour party would never get back in. Disappointed Labour supporters might feel that this prophecy is coming true after another shattering defeat on 13^th December 2019.

The Tories made sweeping gains across the Red Wall, the old Labour Leave voting strongholds across Wales, Midlands and the North. The eventual vote tally surpassed my baseline prediction of a comfortable Tory majority and pushed it closer to a 1987 scenario which I warned could happen in my last post.

Overall, despite the poor performance of the Scottish Conservatives, I am reasonably happy with my forecast. It captured, unlike some commentators, the sizable Tory majority and I never ruled out the possibility that the Tories could be heading towards a larger majority along the lines of Thatcher’s 1987 victory.

The Scottish Conservatives fiasco is an interesting one. Up to a week or so before the election, all the signs, including from within the SNP camp, was that the Scottish Conservatives were making inroads into keeping the bulk of their seats. The SNP strategy to focus on independence over Brexit was proving a mistake among Unionist voters.

What I didn’t fully realise was that Nicola Sturgeon decision to pivot from indyref2 to prioritising stopping Brexit in the last week of the campaign probably did enough to ensure that left-wing Unionist Labour voters would swing to the SNP over the Tories. The lesson from that is not to under-estimate the SNP leader Nicola Sturgeon!

So, what was the main lesson from this election? I would argue that it was the electoral revenge of the so-called gammon voters. The term gammon has become popularised by a rather toxic set of upper-middle class social justice warriors to describe working to lower-middle class white middle-aged men with slightly reddish complexion.

These voters tend not to have a university education, have worked in manual jobs or are self-employed and have socially conservative views. They historically have voted Labour but have been drifting away since the early 2000s to the Tories, UKIP/Brexit Party or not voting at all. This key voting demographic, who tend to live in the Red Wall, was referred to by a Tory think-tank as Workington Man and provided Boris with his stunning majority.

There has been a ferocious post-election debate within the Labour party on what was to blame for Labour’s defeat. Some have argued that neither Corbyn or his policies were at fault but rather Labour’s Brexit position.

The problem with that argument is that Corbyn’s personal ratings had been consistently grim for months prior to the election. Popular perceptions of his fitness to run the country, manage the economy or keep Britain safe were abysmal. As I noted in my last post elections are inherently presidential affairs and the majority of the public had concluded Corbyn was not up to the job.

As for Labour’s super-radical manifesto, the reaction in focus groups was dismissive laughter when Labour’s policies were read out. People simple didn’t take it seriously. Labour would have been far better keeping to a more centre-left (albeit still radical) 2017 policy manifesto with a few key pledges that sounded vaguely feasible should they get into office.

Labour’s defeat had its roots in the aftermath of that June 2017 campaign. Despite the fact that the Tories clung onto office, the Tories underwent the political equivalent of a near-death experience. The recriminations were brutal and a forensic process started in Tory HQ on what went wrong. Yet, it must be stressed that Theresa May managed, despite the abysmal campaign, to get over 40% of the vote and gain marginal seats like Mansfield.

The Times

 

Labour, on the other hand, had a very different reaction to another electoral defeat against the worst Tory leader in living memory. They went on a political equivalent of a 24 hour cultish party where Jeremy Corbyn became a secular Messiah to the chants of “Oh Jeremy Corbyn”. There were no tough questions on why Labour failed to get more votes and what they needed to do to give them a better chance of converting some of those Tory voters into Labour at the next general election.

In an alternative history, Corbyn might have moved to neutralise his historical “baggage” – e.g. the historic associations with IRA, Islamists and so on – through an apology or acknowledging that he had made mistakes in the past. Along with a tougher position on law-and order, national security and Brexit, that might have been enough to persuade some voters to give him a chance. It was those “gammon” voters who were most suspicious of Corbyn. The failure of Labour to deal with their weaknesses proved fatal in the winter of 2019.

There is no doubt that Labour’s flip-flopping over Brexit irritated both Remain and Leave Labour voters across the country. Still, I would argue that by shifting to an official second referendum position, Labour lost the support of Leave voters (those “gammon” voters) across their traditional heartlands which proved fatal in the December election. Brexit was only one, admittedly big issue, which encapsulated a deeper sense among Leave voters that Corbyn’s Labour party did not share their values, their patriotic love of the country or their economic interests.

Now, the Tories have the opportunity to convert this new cross-class electoral coalition of the small shires, suburbs and towns across England and Wales (outside the big urban cities) into a new era of Tory hegemony. Already, it is looking likely that the Tories will rule for the entirely of the 2020’s given the scale of the swing needed for Labour to get into power.

 This article brilliantly explains how the Tories have transformed their position and what a dire position Labour is now in. As the writer notes, “Brexit is a sign of the times, a glimpse of the future but the progressive mind can only see it as reactionary, nostalgic and backward looking. The decisive role of the working class in asserting national sovereignty through its democratic vote in order to renew the ancient institutions of Parliament and the common law is incomprehensible to the left.”

By embracing a hard Brexit, with the clear commitment to ending free movement, the Tories signalled to the working classes that they could be entrusted with their vote. As Greer notes, Brexit was driven by the bottom 80% of voters who had been economically hit by the impact of mass movement of EU workers into the UK which effectively capped their wages over the preceding 15 years. It’s not a coincidence that real wage growth for the working classes has only picked up since 2016 as the supply of foreign workers dropped after the referendum result.

I will be writing my 2020 forecasts soon but one thing is clear, the shock waves of Boris stunning political victory will have ramifications for America. Should the Democrats run on a left-wing “woke” policy platform they will struggle to win over Middle America in November 2020. However, much voters wince at President Trump’s tweets, his vulgar and at times unpresidential behaviour, they will be unlikely to turn over the White House to a far-left Democrat radical.

The Tories crushing victory in 2019 may prove, as Michael Bloomberg warned his fellow Democrats, a canary in the mine for the Democrats this year.

I will be posting my 2020 forecasts soon and look forward to any feedback you might have.

All the best and a Happy New Year to all my readers.