Tuesday, June 17, 2008

Future History – an oxymoron? Cycles

We talked about past events and the consequences so now to

Future Events

A Rider - The world has a funny way of turning predictions on its head like the apocryphal story of how a writer/economist in 19th century London predicted that, if the horse traffic increased at the previous rate, the streets of London would be 8 feet deep in horse manure by 1900.

Peak Oil -
Dr Colin Campbell – who incidentally lives in Co Cork in Ireland-, has been a major proponent of the “theory” of Peak Oil. His seminal work* – published in 1997 - sets out the groundwork for the belief that the era of rising oil production in the world has ended.

He may be right and certainly growing acceptance that his beliefs, and those of others, may indicate that we are heading that way.

- The world has gone crazy for alternative energy sources
- The price of oil and related products have latterly, gone through the roof
- Inflation, always present but unrecognized, has risen worldwide
- Car and truck manufactures have had to redesign their gas guzzling
- With the craze for ethanol this has impacted on global climate (through
Burning forests to release land for cultivation) and on inflation (due to
higher prices for many grains)
- The contra is that alternative sources of energy for nuclear to thermal to
Photovoltaic and wind will impact, albeit slowly, on fossil fuel usage.
- Improved deep water technology will bring with it the prospect that
deep ocean sources will be discovered and exploited. Brazil, China
Seas, offshore Ireland etc
and the laws of supply and demand will apply once again.

Climate Change

Having been around for quite some time I reckon I have gone through at least 5 climate changes since boyhood! This is not all a joke as some fantastic work has been done on Climate and its Cycles. Much of what I have read is empirical research done long before the giga computers now available to meteorologists who analyze trends way out into the future, based on historical data.

One of the works I have read, and reread, was based on the research of Prof. Raymond H Wheeler and on the cycles research of Edward R Dewey - long regarded as the father of Cycles Research.

The clear implications of the Wheeler papers were that climate was the key to understanding human behaviour and the relationship to Business Cycles.**

The brief outline of this research was

• The existence of three long-term climatic cycles each a multiple of 100 years.
• Important turning points in history, whether, cultural, political, military or
demographic can be timed by these climate cycles and vice versa.
• Periods of economic prosperity have regularly alternated with period of
depression since recorded history began.
• Measured by decades, climate and business conditions correlate closely.

– Might it be that the extreme climate changes forecast will in fact not
come to pass but are just reflections of the cycles of the past, albeit with stronger short term impact?
- Is the world literally “getting its knickers in a twist” just like the fears of the
Millennium Bug?
- What are the investment consequences if that particular experience is repeated?
- Can the world afford the cost of the programmes outlined to save the planet or will the cost bring about just as certain a destructive outcome?

* The Coming Oil Crisis – C J Campbell 1997
** Climate: The Key to Understanding Business Cycles (With a Forecast of Trends Into the Twenty-First Century) – Michael Zahorchak

Other reading:
Cycles: The Science Of Prediction
Climate, the key to understanding business cycles: With a forecast of trends into the 21st century (The Raymond H. Wheeler papers)

Robert Mooney, contributor to Zignals.com the free stock alerts, market alerts, and stock charts website