big news from (Henshaw, Grantham &) the earth

My article in New European Economy describes the 10 year global price spiral in natural resource markets as a true “Decisive Moment for Investing in Sustainability” (local PDF copy).  It shows the world is now pressing natural limits for affordable resources, in a way as potentially explosive and dangerous to a growth economy as a global financial bubble, with more lasting effects.

The long expected “big crunch” at the end of growth has a surprising shape.


For a growth economy shifting from having ever cheaper to ever more unaffordable resources is the long expected “big crunch” at the end of growth.   We just didn’t know what it would look like, or that it would be a bigger and more urgent dilemma for prosperity than climate change.

A major business leader, Jeremy Grantham, recently issued confirming report on the future of natural resources from his view Wake Up! The Age Of Cheap Natural Resources Is Over (200k) .   It’s a critical new issue, marking conclusive evidence of a change in the natural environment’s response to us.  How people respond now matters a great deal.

The popular effort is likely to be to accelerate our depletion of resources rather than relieve our growing demands 

In responding to resource crises it matters whether people learn to imitate how nature sheds burdens to make systems sustainable, rather than start panics and contractions leading to wars, as people have more often done before. How to do it is hard to convey to people.

The barrier is not realizing that natures systems work, because they work by themselves. That’s why her economic systems can serve as examples of how our economic system could smoothly and sustainably work by itself too.

It’s not impossible, but takes appreciating how the parts of natural systems actively learn how to work together to remain profitable over time, as learning parts not controlled parts, making her kind of mechanisms work.

We will pay dearly for not discovering a considerate and effective societal response to this natural change of course for the economies. There are a variety of popular assumptions for how economies should work that stopped being true some time ago, so we need to be thoughtful, and avoid making the tempting unprofitable choices.

Notes and discussion

-2005 from Resources for the Future, Jeffrey A. Krautkraeme writes Economics of Natural Resource Scarcity: The State of the Debate suggesting the dispute over whether limits to resource substitution exist is complicated by the lack of
scarcity signals until substitutions are found lacking.

-2/9 Geopolitical Monitor, good discussion of the Food Price Spiral: Causes and Consequences, though unaware that a price escallatiuon process that is also shared with other kinds of resources, both indicate the separate events are connected, and not just isolated interruptions of supply and speculation, like those that never mattered before.

-4/18 PFH Guest Post on The Capital Institute blog, on how emerging systemic behavior like the price spiral indicating lagging supply relative to demand for resources, can solve the complex systems modeling problem identified at the INET Bretton Woods conference. Speakers said we have the concept, the data, and the computers, but not the ideas for what to model yet. Updated on 4/21 to link with “What Soros Said” about the 7 great changes in the economy, fitting with the world commodity bubble.

-4/26 Joe Weisenthal’s report on Barry B. Bannister’s “Anti-Grantham” argument
-4/26 Climateer Investing’s counterpoint, using Banaster’s own data showing it’s not a passing bump.
-4/26 Climateer Investing’s “The End of Cheap Commodities (or not)”
-4/26 Daily Kos – by Pollwatcher, a good summary of the Grantham newsletter

-4/29 The OilDrum – Post Peak Decline Slope – the seemingly best of many threads on the problem, finding less and less & using it faster and faster. From André Angelantoni ofPost Peak Living


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