This is another in a series of articles on the crisis in Russia and why I think it will end badly.
First up is a vid from CNN...
I don't know the guys name but the Brit gives the best and simplest overview of the economic troubles in Russia. Did you notice that he said it was both political and economic? Remember that.
Next is this report from Business Insider note that the date is August of this year...
As-Safir said Prince Bandar pledged to safeguard Russia's naval base in Syria if the Assad regime is toppled, but he also hinted at Chechen terrorist attacks on Russia's Winter Olympics in Sochi if there is no accord.
''I can give you a guarantee to protect the Winter Olympics next year. The Chechen groups that threaten the security of the Games are controlled by us,'' he allegedly said.
Prince Bandar went on to say that Chechens operating in Syria were a pressure tool that could be switched on and off.
''We use them in the face of the Syrian regime but they will have no role in Syria's political future.''
President Putin has long been pushing for a global gas cartel, issuing the ''Moscow Declaration'' last month to ''defend suppliers and resist unfair pressure''.
Mr Skrebowski said it is unclear what the Saudis can really offer the Russians on gas, beyond using leverage over Qatar and others to cut output of liquefied natural gas.
Prince Bandar is an old skool operator.
Whats new is that the a global commodity is being manipulated by governments (ok, its not really new at all but this is the most overt example of it...remember the American people have been sold the bill of goods that its a free market) and in this case a small country that is dealing with a regional problem!
I liken this to the United States suddenly throwing the entire world into turmoil and affecting another nation because, for example, Mexico isn't help stem illegal migration across the border.
Its just that crazy!
Whats even more troubling and should immediately be verified by major news is the claim that Saudi Arabia is sponsoring Chechen terrorists.
If thats the case then sanctions should be slapped on Saudi Arabia not only by Russia but by the US and EU.
Saudi Arabia putting on this price squeeze. The US must have given its blessing. The EU must be involved in allowing it to proceed....and a Russian Bear being pushed into a corner. And all this has been in motion since August of this year!
Do you really think this will end well?
UPDATE (special hat tip to Bayou Man for the links): Some have expressed the idea that the Saudi action is aimed at the US. I've come to the conclusion that its bullshit. Don't believe me? Check out whats happening to emerging markets,
via the Telegraph...
The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.
They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.
Much of the debt was taken out at real interest rates of 1pc on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are "short dollars", in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots.
The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a "considerable time" has gone, and so has the market's security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.
You want that barney style? Whoever bet on a weak dollar is about to screwed...royally screwed.
Want more?
Check this out from the BBC on North Sea Oil....
The UK's oil industry is in "crisis" as prices drop, a senior industry leader has told the BBC.
Oil companies and service providers are cutting staff and investment to save money.
Robin Allan, chairman of the independent explorers' association Brindex, told the BBC that the industry was "close to collapse".
Almost no new projects in the North Sea are profitable with oil below $60 a barrel, he claims.
'Everyone is retreating'
"It's almost impossible to make money at these oil prices", Mr Allan, who is a director of Premier Oil in addition to chairing Brindex, told the BBC. "It's a huge crisis."
I never took the time to add one other fact to my theory about globalization being a contraption built to fail.
It depends on a weak dollar.
Any move that strengthens the dollar pulls another thread on the globalization scheme. Any real effort to lower the debt? Globalization takes a hit. Any effort to become energy independent? Globalization is in trouble.
But back to the original subject. With all these moving parts do you really believe that this will end well? Do you think that they will be able to "get things" back to normal now that prices have been allowed to fall? Do you think that people are spending more or just maybe they're using the breathing space to get down debt and maybe frugality isn't in fashion but neither is extravagant spending....and that's in developed countries. BRIC nations are in a hurt locker. Developed nations are in full panic mode.
We'll be lucky to avoid a war.
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