Thursday, December 31, 2009
USA, a deeper look from inside...
Obama is certainly a more able liar than G. W Bush, if not a more ruthless killer....
There are always disagreements in a society, differences of opinion, and contested ideas, but I don't remember any period in my own longish life, even the Vietnam uproar, when the collective sense of purpose, intent, and self-confidence was so muddled in this country, so detached from reality. Obviously, in saying this I'm assuming that I have some reliable notion of what's real. I admit the possibility that I'm as mistaken as anyone else. But for the purpose of this exercise I'll ask you to regard me as a reliable narrator. Forecasting is a nasty job, usually thankless, often disappointing - but somebody's got to do it. There are so many variables in motion, and so much of that motion is driven by randomness, and the best one can do in forecasting amounts to offering up some guesses for whatever they are worth.
I begin by restating my central theme of recent months: that we're doing a poor job of constructing a coherent consensus about what is happening to us and what we are going to do about it. http://www.cnas.org/node/3927
There is a great clamor for "solutions" out there. I've noticed that what's being clamored for is a set of rescue remedies - miracles even - that will allow us to keep living exactly the way we're accustomed to in the USA, with all the trappings of comfort and convenience now taken as entitlements. I don't believe that this will be remotely possible, so I avoid the term "solutions" entirely and suggest that we speak instead of "intelligent responses" to our changing circumstances. This implies that our well-being depends on our own behavior and the choices that we make, not on the lucky arrival of just-in-time miracles. It is an active stance, not a passive one. What will we do?
The great muddlement out there, this inability to form a coherent consensus about what's happening, is especially frightening when, as is the case today, even the intelligent elites appear clueless or patently dishonest, in any case unreliable, in their relations with reality. President Obama, for instance - a charming, articulate man, with a winning smile, pectorals like Kansas City strip steaks, and a mandate for "change" - who speaks incessantly and implausibly of "the recovery" when all the economic vital signs tell a different story except for some obviously manipulated stock market indexes. You hear this enough times and you can't help but regard it as lying, and even if it is lying ostensibly for the good of the nation, it is still lying about what is actually going on and does much harm to the project of building a coherent consensus. I submit that we would benefit more if we acknowledged what is really happening to us because only that will allow us to respond intelligently. What prior state does Mr. Obama suppose we're recovering to? A Potemkin housing boom and an endless credit card spending orgy? The lying spreads downward from the White House and broadly across the fruited plain and the corporate office landscape and through the campuses and the editorial floors and the suites of absolutely everyone in charge of everything until all leadership in every field of endeavor has been given permission to speak untruth and to reinforce each others lies and illusions.
How dysfunctional is our nation? These days, we lie to ourselves perhaps as badly the Soviets did, and in a worse way, because where information is concerned we really are a freer people than they were, so our failure is far less excusable, far more disgraceful. That you are reading this blog is proof that we still enjoy free speech in this country, whatever state of captivity or foolishness the so-called "mainstream media" may be in. By submitting to lies and illusions, therefore, we are discrediting the idea that freedom of speech and action has any value. How dangerous is that?
Where We Are Now....
2009 was the Year of the Zombie. The system for capital formation and allocation basically died but there was no funeral. A great national voodoo spell has kept the banks and related entities like Fannie Mae and the dead insurance giant AIG lurching around the graveyard with arms outstretched and yellowed eyes bugged out, howling for fresh infusions of blood... er, bailout cash, which is delivered in truckloads by the Federal Reserve, which is itself a zombie in the sense that it is probably insolvent. The government and the banks (including the Fed) have been playing very complicated games with each other, and the public, trying to pretend that they can all still function, shifting and shuffling losses, cooking their books, hiding losses, and doing everything possible to detach the relation of "money" to the reality of productive activity.
But nothing has been fixed, not even a little. Nothing has been enforced. No one has been held responsible for massive fraud. The underlying reality is that we are a much less affluent society than we pretend to be, or, to put it bluntly, that we are functionally bankrupt at every level: household, corporate enterprise, and government (all levels of that, too).
The difference between appearance and reality can be easily seen in the everyday facts of American economic life: soaring federal deficits, real unemployment above 15 percent, steeply falling tax revenues, massive state budget crises, continuing high rates of mortgage defaults and foreclosures, business and personal bankruptcies galore, cratering commercial real estate, dying retail, crumbling infrastructure, dwindling trade, runaway medical expense, soaring food stamp applications. Meanwhile, the major stock indices rallied. What's not clear is whether money is actually going somewhere or only the idea of "money" is appearing to go somewhere. After all, if a company like Goldman Sachs can borrow gigantic sums of "money" from the Federal Reserve at zero interest, why would it not shovel that money into the burning furnace of a fake stock market rally? Of course, none of this behavior has anything to do with productive activity.
The theme for 2009 - well put by Chris Martenson - was "extend and pretend," to use all the complex trickery that can be marshaled in the finance tool bag to keep up the appearance of a revolving debt economy that produces profits, interest, and dividends, in spite of the fact that debt is not being "serviced," i.e. repaid. There is an awful lot in the machinations of Wall Street and Washington that is designed deliberately to be as incomprehensible as possible to even educated people, but this part is really simple: if money is created out of lending, then the failure to pay back loaned money with interest kills the system. That is the situation we are in.
The inertia displayed by our system - especially its manifest ability to keep stock markets levitating in the absence of value creation - is strictly a function of its size and complexity. It is running on fumes. I thought it would finally crash and burn in 2009. The Dow Jones industrial average certainly fell on its ass last March, bottoming in the mid-6000 range. But then it picked its sorry ass off the ground and rallied back up again thanks to bail-outs and ZIRPs and really no other place to look for returns on the accumulated wealth of the past two hundred years, especially for large institutions like pension funds that need income to function. I'd called for a Dow at 4000. A lot of readers ridiculed that call. Was it really that far off?
A feature of 2009 easily overlooked is what a generally placid year it was around the world. Apart from the election uproar in Iran, there were few events of any size or potency to shove all the various wobbly things - central banks, markets, governments, etc - into failure mode. So things just kept wobbling. I don't think that state of affairs is likely to continue. With that, on to the particulars.
The Year Ahead
Just about everything which evaded fate via gamed numbers, budgets, and balance sheets in 2009 seems destined to hit a wall in 2010. To pick an arbitrary starting point, it is hard to see how states like California and New York can keep staving off monumental changes in their scale of operations with further budget trickery. Those cans they've been kicking down the street have fallen through the sewer grate. What will they do? They can massively raise taxes or massively lay off employees and default on obligations - or they can do all these things. The net result will be populations with less income, arguably impoverished, suffering, and perhaps very angry about it. Welcome to reality. Will Washington bail the states out, too? I wouldn't be surprised to see them pretend to do so, but not without immense collateral damage in everybody's legitimacy and surely an increase in US treasury interest rates.
But backing up a moment, I'm writing between Christmas and New Year's Eve. The frenzied distractions of the holidays ongoing for much of Q4-2009 are still in force. In a week or so, when the Christmas trees are hauled out to the curbs (and it turns out that municipal garbage pickup has been curtailed for lack of funds) a picture will start to emerge of exactly how retail sales went leading up to the big climax. My guess is that sales were dismal. Reports of such will start a train of events that sends many retail companies careening into bankruptcy, including some national chains, leading to lost leases in malls and strip malls, leading to a final push off the cliff for commercial real estate, leading to the failure of many local and regional banks, leading to the bankrupt FDIC having to go to congress directly to get more money to bail out the depositors, leading again to rising interest rates for US treasuries, leading to higher mortgage interest rates for whoever out there is crazy enough to venture to buy a house with borrowed money, leading to the probability that there are few of the foregoing, leading to another hard leg down in house values because so few are now crazy enough to buy a house in the face of falling prices - all of this leading to the recognition that we have entered a serious depression, which is only a facet of the greater period of hardship we have also entered, which I call The Long Emergency.
This depression will be a classic deleveraging, or resolution of debt. Debt will either be paid back or defaulted on. Since a lot can't be paid back, a lot of it will have to be defaulted on, which will make a lot of money disappear, which will make many people a lot poorer. President Obama will be faced with a basic choice. He can either make the situation worse by offering more bailouts and similar moves aimed at stopping the deleveraging process - that is, continue what he has been doing, only perhaps twice as much, which may crash the system more rapidly - or he can recognize the larger trends in The Long Emergency and begin marshalling our remaining collective resources to restructure the economy along less complex and more local lines. Don't count on that.
Of course, this downscaling will happen whether we want it or not. It's really a matter of whether we go along with it consciously and intelligently - or just let things slide. Paradoxically and unfortunately in this situation, the federal government is apt to become ever more ineffectual in its ability to manage anything, no matter how many times Mr. Obama comes on television. Does this leave him as a kind of national camp counselor trying to offer consolation to the suffering American people, without being able to really affect the way the "workout" works out? Was Franklin Roosevelt really much more than an affable presence on the radio in a dark time that had to take its course and was only resolved by a global convulsion that left the USA standing in a smoldering field of prostrate losers?
One wild card is how angry the American people might get. Unlike the 1930s, we are no longer a nation who call each other "Mister" and "Ma'am," where even the down-and-out wear neckties and speak a discernible variant of regular English, where hoboes say "thank you," and where, in short, there is something like a common culture of shared values. We're a nation of thugs and louts with flames tattooed on our necks, who call each other "motherfucker" and are skilled only in playing video games based on mass murder. The masses of Roosevelt's time were coming off decades of programmed, regimented work, where people showed up in well-run factories and schools and pretty much behaved themselves. In my view, that's one of the reasons that the US didn't explode in political violence during the Great Depression of the 1930s - the discipline and fortitude of the citizenry. The sheer weight of demoralization now is so titanic that it is very hard to imagine the people of the USA pulling together for anything beyond the most superficial ceremonies - placing teddy bears on a crash site. And forget about discipline and fortitude in a nation of ADD victims and self-esteem seekers.
I believe we will see the outbreak of civil disturbance at many levels in 2010. One will be plain old crime against property and persons, especially where the sense of community is flimsy-to-nonexistent, and that includes most of suburban America. The automobile is a fabulous aid to crime. People can commit crimes in Skokie and be back home in Racine before supper (if supper is anything besides a pepperoni stick and some Hostess Ho-Hos in the car). Fewer police will be on guard due to budget shortfalls.
I think we'll see a variety-pack of political disturbance led first by people who are just plain pissed off at government and corporations and seek to damage property belonging to these entities. The ideologically-driven will offer up "revolutionary" action to redefine some lost national sense of purpose. Some of the most dangerous players such as the political racialists, the posse comitatus types, the totalitarian populists, have been out-of-sight for years. They'll come out of the woodwork and join the contest over dwindling resources. Both the Left and the Right are capable of violence. But since the Left is ostensibly already in power, the Right is in a better position to mount a real challenge to office-holders. Their ideas may be savage and ridiculous, but they could easily sweep the 2010 elections - unless we see the rise of a third party (or perhaps several parties). No sign of that yet. Personally, I'd like to see figures like Christopher Dodd and Barney Frank sent packing, though I'm a registered Democrat. In the year ahead, the sense of contraction will be palpable and huge. Losses will be obvious. No amount of jive-talking will convince the public that they are experiencing "recovery." Everything familiar and comforting will begin receding toward the horizon.
Markets and Money
I'll take another leap of faith and say that 6600 was not the bottom for the Dow. I've said Dow 4000 for three years in a row. Okay, my timing has been off. But I still believe this is its destination. Given the currency situation, and the dilemma of no-growth Ponzi economies, I'll call it again for this year: Dow 4000. There, I said it. Laugh if you will....
I'm with those who see the dollar strengthening for at least the first half of 2010, and other assets falling in value, especially the stock markets. The dollar could wither later on in the year and maybe take a turn into high inflation as US treasury interest rates shoot up in an environment of a global bond glut. That doesn't mean the stock markets will bounce back because the US economy will only sink into greater disorder when interest rates rise.
Right now there are ample signs of trouble with the Euro. It made a stunning downward move the past two weeks. European banks took the biggest hit in the Dubai default. Now they face the prospect of sovereign default in Greece, the Baltic nations (Estonia, Latvia, Lithuania), the Balkan nations (Serbia, et al), Spain, Portugal, Italy, Ireland, Iceland and the former soviet bloc of Eastern Europe. England is a train wreck of its own (though not tied into the Euro), and even France may be in trouble. That leaves very few European nations standing. Namely Germany and Scandanavia (and I just plain don't know about Austria). What will Europe do? Really, what will Germany do? Probably reconstruct something like the German Deutschmark only call it something else... the Alt.Euro? As one wag said on the Net: sovereign debt is the new sub-prime! The Euro is in a deeper slog right now than the US dollar (even with our fantastic problems), so I see the dollar rising in relation to the Euro, at least for a while. I'd park cash in three month treasury bills - don't expect any return - for safety in the first half of 2010. I wouldn't touch long-term US debt paper with a carbon-fiber sixty foot pole.
I'm still not among those who see China rising into a position of supremacy. In fact, they have many reasons of their own to tank, including the loss of the major market for their manufactured goods, vast ecological problems, de-stabilizing demographic shifts within the nation, and probably a food crisis in 2010 (more about this later).
Though a seemingly more stable nation than the US, with a disciplined population and a strong common culture with shared values, Japan's financial disarray runs so deep that it could crash its government even before ours. It has no fossil fuels of its own whatsoever. And in a de-industrializing world, how can an industrial economy sustain itself? Japan might become a showcase for The Long Emergency. On the other hand, if it gets there first and makes the necessary adjustments, which is possible given their discipline and common culture, they may become THE society to emulate!
I'm also not convinced that so-called "emerging markets" are places where money will dependably earn interest, profits, or dividends. Contraction will be everywhere. I even think the price of gold will retrace somewhere between $750 and $1000 for a while, though precious metals will hold substantial value under any conditions short of Hobbesian chaos. People flock to gold out of uncertainty, not just a bet on inflation. My guess is that gold and silver will eventually head back up in value to heights previously never imagined, and it would be wise to own some. I do not believe that the federal government could confiscate personal gold again the way it did in 1933. There are too many pissed off people with too many guns out there - and I'm sure there is a correlation between owners of guns with owners of gold and levels of pissed-offness. A botched attempt to take gold away from citizens would only emphasize the impotence of the federal government, leading to further erosion of legitimacy.
Bottom line for markets and money in 2010: so many things will be out of whack that making money work via the traditional routes of compound interest or dividends will be nearly impossible. There's money to be made in shorting and arbitrage and speculation, but that requires nerves of steel and lots and lots of luck. Those dependent on income from regular investment will be hurt badly. For most of us, capital preservation will be as good as it gets - and there's always the chance the dollar will enter the hyper-inflationary twilight zone and wipe out everything and everyone connected with it.
It's still out there, very much out there, a huge unseen presence in the story, the true ghost-in-the-machine, eating away at economies every day. It slipped offstage in 2009 after the oil spike of 2008 ($147/barrel) over-corrected in early 2009 to the low $30s/barrel. Now it's retraced about halfway back to the mid-$70s. One way of looking at the situation is as follows. Oil priced above $75 begins to squeeze the US economy; oil priced over $85 tends to crush the US economy. You can see where we are now with oil prices closing on Christmas Eve at $78/barrel.
Among the many wishful delusions operating currently is the idea that the Bakken oil play in Dakota / Montana will save Happy Motoring for America, and that the Appalachian shale gas plays will kick in to make us energy independent for a century to come. Americans are likely to be disappointed by these things.
Both Bakken and the shale gas are based on techniques for using horizontal drilling through "tight" rock strata that is fractured with pressurized water. It works, but it's not at all cheap, creates plenty of environmental mischief, and may end up being only marginally productive. At best, Bakken is predicted to produce around 400,000 barrels of oil a day. That's not much in a nation that uses close to 20 million barrels a day. Shale gas works too, though the wells deplete shockingly fast and will require the massive deployment of new drilling rigs (do we even have the steel for this?). I doubt it can be produced for under $10 a unit (mm/BTUs) and currently the price of gas is in the $5 range. In any case, we're not going to run the US motor vehicle fleet on natural gas, despite wishful thinking.
Several other story elements in the oil drama have remained on track to make our lives more difficult. Oil export rates continue to decline more steeply than oil field depletion rates. Exporters like Iran, Mexico, Saudi Arabia, Venezuela, are using evermore of the oil they produce (often as state-subsidized cheap gasoline), even as their production rates go down. So, they have less oil to sell to importers like the USA - and we import more than 60 percent of the oil we use. Mexico's Pemex is in such a sorry state, with its principal Cantarell field production falling off a cliff, that the USA's number three source of imported oil may be able to sell us nothing whatsoever in just 24 months. Is there any public discussion about this in the USA? No. Do we have a plan? No.
A new wrinkle in the story developing especially since the financial crisis happened, is the shortage of capital for new oil exploration and production - meaning that we have even poorer prospects of offsetting world-wide oil depletion. The capital shortage will also affect development in the Bakken play and the Marcellus shale gas range.
Industrial economies are still at the mercy of peak oil. This basic fact of life means that we can't expect the regular cyclical growth in productive activity that formed the baseline parameters for modern capital finance - meaning that we can't run on revolving credit anymore because growth simply isn't there to create real surplus wealth to pay down debt. The past 20 years we've seen the institutions of capital finance pretend to create growth where there is no growth by expanding financial casino games of chance and extracting profits, commissions, and bonuses from the management of these games - mortgage backed securities, collateralized debt obligations, credit default swaps, and all the rest of the tricks dreamed up as America's industrial economy was shipped off to the Third World. But that set of rackets had a limited life span and they ran into a wall in October 2008. Since then it's all come down to a shell game: hide the giant pea of defaulted debt under a giant walnut shell.
Yet another part of the story is the wish that the failing fossil fuel industrial economy would segue seamlessly into an alt-energy industrial economy. This just isn't happening, despite the warm, fuzzy TV commercials about electric cars and "green" technology. The sad truth of the matter is that we face the need to fundamentally restructure the way we live and what we do in North America, and probably along the lines of much more modest expectations, and with very different practical arrangements in everything from the very nature of work to household configurations, transportation, farming, capital formation, and the shape-and-scale of our settlements. This is not just a matter of re-tuning what we have now. It means letting go of much of it, especially our investments in suburbia and motoring - something that the American public still isn't ready to face. They may never be ready to face this and that is why we may never make a successful transition to whatever the next economy is. Rather, we will undertake a campaign to sustain the unsustainable and sink into poverty and disorder as we fight over the table scraps of the old economy... and when the smoke clears nothing new will have been built.
President Obama has spent his first year in office, and billions of dollars, trying to prop up the floundering car-makers and more generally the motoring system with "stimulus" for "shovel-ready" highway projects. This is exactly the kind of campaign to sustain the unsustainable that I mean. Motoring is in the process of failing and now for reasons that even we peak oilers didn't anticipate a year ago. It's no longer just about the price of gasoline. The crisis of capital is making car loans much harder to get, and if Americans can't buy cars on installment loans, they are not going to buy cars, and eventually they will not be driving cars they can't buy. The same crisis of capital is now depriving the states, counties, and municipalities of the means to maintain the massive paved highway and street system in this country. Just a few years of not attending to that will leave the system unworkable.
Meanwhile President Obama has given next-to-zero money or attention to public transit, to repairing the passenger railroad system in particular. I maintain that if we don't repair this system, Americans will not be traveling very far from home in a decade or so. Therefore, Mr. Obama's actions vis-à-vis transportation are not an intelligent response to our situation. And for very similar reasons, the proposal for a totally electric motor vehicle fleet, as a so-called "solution" to the liquid fuels problem, is equally unintelligent and tragic. Of course something else that Mr. Obama has barely paid lip-service to is the desperate need to retool our living places as walkable communities. The government now, at all levels, virtually mandates suburban arrangements of the most extremely car-dependent kind. Changing this has to move near the top of a national emergency priority list, if we have one.
Even with somewhat lower oil prices in 2009, the airlines still hemorrhaged losses in the billions, and if the oil price remains in the current zone some of them will fall back into bankruptcy in 2010. Oil prices may go down again in response to crippled economies, but then so will passengers looking to fly anywhere, especially the business fliers that the airlines have depended on to fill the higher-priced seats. I believe United will be the first one to go down in 2010, a hateful moron of a company that deserves to die.
My forecast for oil prices this year is extreme volatility. A strengthening dollar might send oil prices down (though that relationship has temporarily broken down this December as both oil prices and the dollar went up in tandem for the first time in memory). So could the cratering of the stock markets, or a general apprehension of a floundering economy. But the oil export situation also means there is less and less wiggle room every month for supply to keep pace with demand, even in struggling economies if they are dependent on foreign imports. Another part of the story that we don't pay attention to is the potential for oil scarcities, shortages, and hoarding. We may see the reemergence of those trends in 2010 for the first times since 1979.....
Welcome to Orwell’s World 2010:
Barack Obama is the leader of a contemporary Oceania. In two speeches at the close of the decade, the Nobel Peace Prize winner affirmed that peace was no longer peace, but rather a permanent war that “extends well beyond Afghanistan and Pakistan” to “disorderly regions and diffuse enemies”. He called this “global security” and invited our gratitude. To the people of Afghanistan, which America has invaded and occupied, he said wittily: “We have no interest in occupying your country.”
In Oceania, truth and lies are indivisible. .....
Will Americans reclaim their nation or stay heads down and subservient?
In the 2000 presidential election the Supreme Court stopped the count and declared Bush (probably the loser) the winner. A stake was put through the heart of American democracy.
Few gave a shit, not even democrats.
Although the event passed like a silent whimper, it was probably the most significant indication of American apathy in relation to their fragile democracy.
I think it will be safe to assume, the powers that be, can rest safe in the knowledge they have done a fine job on the minds, imaginations and wallets of the desensitized and poorly informed plebs.
Like sheep to the slaughter...
It was all tooo easy.
2010 will chronicle America's continued cosy relationship between government and chosen corporations that will in turn control the masses and continue to have them believe that up is down and war is peace.
"Democracy... while it lasts is more bloody than either aristocracy or monarchy. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide." John Adams.
On December 12, 2000 American democracy committed suicide, its corpse now carries that nasty smell of fascism.
- Conspiracy Theory: SECRET SOCIETIES Episode 4 Part 1/6
- Conspiracy Theory: SECRET SOCIETIES Episode 4 Part 2/6
- Conspiracy Theory: SECRET SOCIETIES Episode 4 Part 3/6
- Conspiracy Theory: SECRET SOCIETIES Episode 4 Part 4/6
- Conspiracy Theory: SECRET SOCIETIES Episode 4 Part 5/6
- Conspiracy Theory: SECRET SOCIETIES Episode 4 Part 6/6
Tuesday, December 29, 2009
Russia’s Espo Blend crude is just starting to hit the market, but as output ramps up it is expected to change the rules of the oil game in Asia at the expense of Middle East rivals.
Exports of the diesel-rich, medium-heavy sweet grade could rise to 600,000 barrels per day (bpd) in the next few years from 250,000 bpd in the first quarter, targeting refineries in China, Japan and South Korea, traders and analysts say.
The crude will move by pipeline to the Russian Far East coast, placing it close to Asian markets for shipment by tanker, fitting into Asia’s aim to diversify oil imports and limit dependence on the Middle East.
Provided refiners are content with the grade’s quality, the new supply may force Gulf producers to review their export strategies, crude pricing and even consider offering a competing grade blended from different crudes to match the Espo quality.
“It could change the demographics of the region’s crude buying. I mean how can Venezuelan crudes compete with an Espo that is directly pumped in when they have to be shipped halfway across the world?” said Al Troner, President of Asia Pacific Energy Consulting.
“It could force Gulf producers to lower their prices to Asia to stay competitive and not lose market share.” Asia is struggling with declining domestic output of lower-sulphur crude while supplies of sour grades from Opec producers have been curbed since end-2008.
This has helped Russia to boost its oil exports, led by cheaper Urals crude, as the country seeks to secure markets in the energy-hungry region and rely less on the West amid often frosty relations with the European Union.
The East Siberian-Pacific Ocean (Espo) pipeline offers the perfect vehicle for Russia to further increase oil exports to the growing economies in Asia, especially when the link to China comes online within two years.
“China particularly values crude that does not require waterborne transit as this has certain logistical advantages as well as better supply security attributes,” said John Vautrain, Senior Vice President of Purvin & Gertz Inc.
Competitive, but rough edges remain
Espo Blend, named after the pipeline, flows from East Siberian oilfields to a new terminal in the sea port of Kozmino, near Vladivostok, where it can be exported tax-free to Asia.
Russia, the world’s top oil producer as Saudi Arabia keeps to Opec-led supply curbs, plans to export 3.1 million tonnes (250,000 bpd) of Espo Blend via Kozmino in the first quarter of 2010.
Espo’s initial API gravity is around 34 degrees, with sulphur content of up to 0.6 percent, lighter than Urals and similar to Middle East benchmark Oman crude, traders say.
Its quality is still evolving as more Russian producers pump oil via the pipeline, making the grade unstable for some time, which could initially limit its popularity among Asian refiners.
“Nobody knows the final quality. The only known factor is that it will not be stable for a while,” said a Western trader.
Analysts say Espo Blend will eventually be ideal for Asian refiners because of their ability to handle higher amounts of sulphur and for the grade’s exceptional yield of middle distillates, based on initial assessments.
Medium-heavy sweet crude is not available in large volumes on the spot market. So, any new market share carved out by Espo Blend could force Gulf producers to blend their existing crudes to match the grade so as not to lose out, analysts said.
“These qualities, combined with the pipeline to China and the fact that Asian buyers are looking to diversify their crudes, mean Espo could be a game-changer for the region,” Troner said.
China has loaned $25 billion to Russia in return for supplies of Siberian oil for the next two decades.
The first stage of the pipeline has the capacity to move 30 million tonnes a year (600,000 bpd) from the town of Taishet to Skovorodino, from which a spur will run to the Chinese border, where half of the oil is projected to go by 2012.
The other half will be sent to Kozmino, where the second phase is due for completion in 2014. Till then, the oil will be moved by rail to the Pacific coast before being put on tankers for Northeast Asian ports.
Russia’s top oil producer Rosneft last month sold the first cargo of Espo Blend for late-December loading to Finnish trader IPP Oy at a premium of 50 cents a barrel to regional benchmark Dubai crude. New crudes often trade at discounts to entice buyers to test them, and some traders said the Espo premium was good compared with rivals such as Oman. But for now, Espo’s unstable quality may not yet attract refiners as the first cargo might had been resold at a discount to Trafigura, traders said.
The European trader also bought a January cargo from TNK-BP after taking another from Gunvor, bringing its total to 300,000 tonnes, stirring talk that Trafigura is building up a big stockpile of the new crude. But the brunt of the eventual impact could be felt by Oman – a medium-heavy grade like Espo – and Abu Dhabi’s Murban crude, as well as arbitrage barrels of African and Mediterranean crudes that are increasingly shipped to Asia.
China is a big buyer of Oman, which is among the most actively traded on the spot market in Northeast Asia, where an average 389,000 bpd of the crude has been shipped this year.
Lower demand for Oman would send sellers such as equity holder Shell scrambling for new markets. Big traders such as Vitol, Total, Sinopec and Chinaoil who are active buyers and sellers of Oman would also be affected.
Perhaps to meet this competition, which will affect its Arab Light crude markets, Saudi Arabia will put “millions of barrels” in commercial storage in Japan, in a deal that will place its oil near its major customers in Northeast Asia.
Exports from Kozmino are set to leap to 900,000 tonnes in January, a loading schedule showed this month, primed to make the Pacific port Russia’s No.3 seaborne oil outlet.“Long term, when in full flow, it will displace the most expensive arbitraged barrels of Urals, then Oman, and possibly lighter barrels depending on quality,” said the Western trader.
Sunday, December 20, 2009
The sum of US$57,077.60. That's what the United States is paying per minute. Keep that in mind - just for a minute or so.
After all, the surge is already on. By the end of December, the first 1,500 of 30,000 additional US troops will have landed in Afghanistan, a nation roughly the size of Texas, ranked by the United Nations as second-worst in the world in terms of human development.
Women and men from Camp Lejeune, North Carolina, will be among the first to head out. It takes an estimated $1 million to send each of them surging into Afghanistan for one year. So a 30,000-person surge will be at least $30 billion, which brings us to that $57,077.60. That's how much it will cost the US taxpayer, for one minute of that surge.
By the way, add up the yearly salary of one US Marine Corps soldier from Camp Lejeune with four years of service, throw in his or her housing allowance, additional pay for dependents, and bonus pay for hazardous duty, imminent danger, and family separation, and you'll still be many thousands of dollars short of that single minute's sum.
But perhaps this isn't a time to quibble. After all, a job is a job, especially in the United States, which has lost seven million jobs since December 2007, while reporting record-high numbers of people seeking assistance to feed themselves and/or their families. According to the US Department of Agriculture, 36 million Americans, including one out of every four children, are currently on food stamps.
On the other hand, given the woeful inadequacy of that "safety net", we might have chosen to direct the $30 billion in surge expenditures toward raising the average individual monthly Food Stamp allotment by $70 for the next year; that's roughly an additional trip to the grocery store, every month, for 36 million people. Alternatively, we could have dedicated that $30 billion to job-creation. According to a recent report issued by the Political Economy Research Institute, that sum could generate a whopping 537,810 construction jobs, 541,080 positions in healthcare, fund 742,740 teachers or employ 831,390 mass transit workers.
For purposes of comparison, $30 billion - remember, just the Pentagon-estimated cost of a 30,000-person troop surge - is equal to 80% of the total US 2010 budget for international affairs, which includes monies for development and humanitarian assistance. On the domestic front, $30 billion could double the funding (at 2010 levels) for the Children's Health Insurance Program and the Low Income Home Energy Assistance Program.
Or think of the surge this way: if the US decided to send just 29,900 extra soldiers to Afghanistan, 100 short of the present official total, it could double the amount of money - $100 million - it has allocated to assist refugees and returnees from Afghanistan through the State Department's Bureau of Population, Refugees and Migration.
Leaving aside the fact that the US already accounts for 45% of total global military spending, the $30 billion surge cost alone would place us in the top 10 for global military spending, sandwiched between Italy and Saudi Arabia. Spent instead on "soft security" measures within Afghanistan, $30 billion could easily build, furnish and equip enough schools for the entire nation.
Continuing this nod to the absurd for just one more moment, if you received a silver dollar every second, it would take you 960 years to haul in that $30 billion. Not that anyone could hold so much money. Together, the coins would weigh nearly 120,000 tons, or more than the poundage of 21,000 Asian elephants, an aircraft carrier, or the Washington Monument. Converted to dollar bills and laid end-to-end, $30 billion would reach 2.9 million miles (4.7 million kilometers) or 120 times around the Earth.
One more thing, that $30 billion isn't even the real cost of President Barack Obama's surge. It's just a minimum, through-the-basement estimate. If you were to throw in all the bases being built, private contractors hired, extra civilians sent in, and the staggering costs of training a larger Afghan army and police force (a key goal of the surge), the figure would surely be startlingly higher.
In fact, total Afghanistan war spending for 2010 is now expected to exceed $102.9 billion, doubling last year's spending. Thought of another way, it breaks down to $12 million per hour in taxpayer dollars for one year. That's equal to total annual US spending on all veteran's benefits, from hospital stays to education.
In Afghan terms, the US's upcoming single year of war costs represents nearly five times that country's gross domestic product, or $3,623.70 for every Afghan woman, man and child. Given that the average annual salary for an Afghan soldier is $2,880 and many Afghans seek employment in the military purely out of economic desperation, this might be a wise investment - especially since the Taliban are able to pay considerably more for their new recruits. In fact, recent increases in much-needed Afghan recruits appear to correlate with the promise of a pay raise.
All of this is, so much fantasy, since we know just where that $30-plus billion will be going. In 2010, total Afghanistan war spending since November 2001 will exceed $325 billion, which equals the combined annual military spending of Great Britain, China, France, Japan, Germany, Russia and Saudi Arabia. If we had never launched an invasion of Afghanistan or stayed on fighting all these years, those war costs, evenly distributed in this country, would have meant a $2,298.80 dividend per US taxpayer.
Even as we calculate the annual cost of war, the tens of thousands of Asian elephants in the room are all pointing to $1 trillion in total war costs for Iraq and Afghanistan. The current escalation in Afghanistan coincides with that rapidly approaching milestone. In fact, thanks to Peter Baker's recent New York Times report on the presidential deliberations that led to the surge announcement, we know that the trillion-dollar number for both wars may be a gross underestimate. The Office of Management and Budget sent Obama a memo, Baker tells us, suggesting that adding General Stanley McChrystal's surge to ongoing war costs, over the next 10 years, could mean - forget Iraq - a trillion dollar Afghan war.
At just under one-third of the 2010 US federal budget, $1 trillion essentially defies per-hour-per-soldier calculations. It dwarfs all other nations' military spending, let alone their spending on war. It makes a mockery of food stamps and schools. To make sense of this cost, we need to leave civilian life behind entirely and turn to another war. We have to reach back to the Vietnam War, which in today's dollars cost $709.9 billion - or $300 billion less than the total cost of the two wars the US is still fighting, with no end in sight, or even $300 billion less than the long war that may yet be fought in Afghanistan.
Tuesday, December 15, 2009
After at least US$2 trillion spent by Washington and arguably more than a million dead Iraqis, it has come to this: a pipe dream definitely buried this past weekend in Baghdad with round two of bids to exploit a number of vast and immensely profitable oil fields.
The bids, supervised by the Oil Ministry, were presented on a live TV game show. Instead of American Idol, Iraqis got "Oil Idol". In a raucous carpet bazaar atmosphere, the ministry played "my way or the highway" and forced 44 foreign Big Oil corporations to cut to the max the fee they collect on every barrel extracted in Iraq and submit to 20-year contracts. These multinationals were not given a share in Iraqi oil production; they will be paid a $2 fee per barrel for raising output above a mutually agreed level.
Still, for Big Oil, the possibility of having a crack at all those mega-giant fields in Shi'ite-controlled southeast Iraq - the largest concentration of its kind in the world - led all players to yell , "It's raining oil!" Once you've paid the ticket, you're inside the theater. And what a theatre ... The Iraqi government may end up paying foreign Big Oil as much as $50 billion for its know-how. All these "service" deals will dodge Iraq's parliament - which might throw a wrench in the works. And Big Oil will still get $2 for each barrel of extra crude above a minimum production target.
In June, Iraq held its first oil auction, offering foreign companies the chance to increase production at already-pumping fields. The latest auction was the first time foreign firms could bid on untapped fields. Of the 10 groups of fields available, seven were awarded.
Win-win for Russia and China
Cheney's and Rumsfeld's script was never supposed to develop like this. Instead of US Big Oil getting the lion's share, strategic competitors Russia and China turned out to be big winners. Dick Cheney's "consolation prize" was an Exxon-Mobil-Shell alliance getting the phase 1 of West Qurna in early November. Exxon-Mobil had been the favorite to also win Rumaila (17.8 billion barrels of reserves). But a BP-CNPC (China National Petroleum Corporation) alliance got it in the end because unlike Exxon-Mobil they agreed to cut their fee per barrel down to the Oil Ministry-enforced $2.
CNPC (50%), along with partners Total from France (25%) and Petronas from Malaysia (25%), was also a big winner for Halfaya (4.1 billion barrels of reserves, projected output of 535,000 barrels per day (bpd)), southeast of Amara.
Petronas again (with 60%), and the Japan Petroleum Exploration Company (Japex), with 40%, will invest a cool $7 billion to develop Gharaf (reserves of around 860 million barrels, projected output of 230,000 bpd). Bidding was fierce. Losers were a joint Turkish-Indian bid, a Kazakh/South Korean/Italian consortium, and Pertamina from Indonesia.
A Petronas-Shell alliance got the highly coveted Majnoon (reserves of more than 12 billion barrels, projected output of 1.8 million bpd), near the Iranian border. Russia's Lukoil (85%), with junior partner Statoil (15%), got phase 2 of the immense West Qurna (located 65 kilometers northwest of Basra; about 12 billion barrels of reserves; projected production of 1.8 million bpd) - which in theory it had already bagged under Saddam Hussein. When Lukoil was stripped of its contract by Saddam, it blamed US-instigated United Nations sanctions, while Saddam blamed Lukoil itself.
West Qurna's phase 1 (8.7 billion barrels of reserves, with a projection to increase output from 300,000 bpd to 2.3 million bpd before 2016) was won in November by the aforementioned Exxon Mobil-Shell alliance. Losers were Total from France, a consortium of Petronas, Pertamina and Petrovietnam, and a BP-CNPC alliance.
Gazprom (40%), with junior partners TPAO, Kogas and Petronas, got Badra (projected production of 170,000 bpd). Unlike the mad scramble for the southern fields, no one even bid for the East Baghdad field, for obvious reasons: it's located in a virtual war zone. 
The Shi'ites are coming!
Iraq nationalized its oil industry in 1972. Now Big Oil is back with a vengeance. Iraqi Oil Minister Hussain al-Shahristani made no bones about Iraq's ambitions, saying, "Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years." Iraq is at present exporting less oil than under Saddam, but it aims to export seven million barrels a day by 2016. Shahristani also insists "our country will have total control over production".
That is enormously debatable.
For the moment, Prime Minister Nuri al-Maliki's government in Baghdad is obviously a winner. Iraq currently gets only $60 billion a year in oil revenues. It's not enough to rebuild a country destroyed by the Iran-Iraq war of the 1980s, UN sanctions and the American occupation. Arguably, Iraq's oil industry would not have sufficient funds, equipment and technical people to get back on its feet alone.
Whether with more oil revenues Baghdad will be able to impose law and order - starting with the capital - and fully equip its 275,000 military plus police forces, that's an open question. No one knows for sure who will be in control of Iraq in the near future, with parliamentary elections due early next year. A new government may be tempted to renegotiate these contracts, or even invalidate them.
In the next few years, with Iraq being able to reach the target of producing at least four million barrels a day, it's fair to argue this won't substantially influence the price of oil; but it will prevent it from shooting up out of proportion. China is now importing over four million bpd - and this will continue to rise. China by itself will be gobbling up any output increase in the global oil market.
What the early 2010s will definitely see is the rise of a relatively wealthy, Shi'ite-controlled Iraq friendly with Iran and Lebanon's Hezbollah. Essentially, Shi'ite Islam on the rise. The US-friendly autocracies and dictatorships in the Gulf will cry again, "It's the return of the Shi'ite crescent!" United States think-tanks may be tempted to define Maliki as the new Saddam. The only difference is that by then, Cheney and company will be safely ensconced in the dustbin of history.
1. To see which companies got what in detail, go here
That development came only two days after the British company BP and China's CNPC (China National Petroleum Corporation) signed terms for the development of the huge Rumaila oil field, at 17.8 billion barrels (Bbbl) over twice the size of West Qurna 1, which holds at least 7 Bbbl of recoverable oil, and only three days after Italy's Eni signed to develop the 4.1-Bbbl Zubair oil field along with Korea Gas and Occidental Petroleum.
It looked, then, that there was a slight tipping in favor of US and British companies, historically over the last century the ones with the greatest influence on the pace of development of Iraq's hydrocarbon energy resources. (See The Rise of Rimland?, Asia Times Online, November 13, 2009).
The results of the latest round of bidding, in which 10 more fields were offered, show a different pattern. Out of over 40 companies constellated in various consortia, only seven firms present at the auction were American and only one actually entered a bid.
For West Qurna Stage 2, out of four consortia submitting bids, the winners were Russia's Lukoil and Norway's Statoil, which will split shares respectively of 63.75% and 11.25% after an Iraqi state partner comes on board as intended with a 25% share. Soviet state companies had planned to develop West Qurna in the late 1980s and Lukoil inherited the agreement, only to have it nullified, along with all of Saddam Hussein's other contracts, after his fall.
While West Qurna 1 went to ExxonMobil and Royal Dutch Shell, West Qurna 2 is the larger resource, with estimated reserves of over 12 Bbbl. Lukoil had lost West Qurna 1 in a consortium with ConocoPhillips; a third independent bidder was CNPC.
That's not all. The largest field on offer in the round just concluded, Majnoon, with 12.8 Bbbl estimated reserves, went to a consortium bringing together Shell with Malaysia's Petronas. Outbidding a consortium formed by CNPC with France's Total, they will share respectively 45% and 30%, with the other 25% going to an Iraqi state company. Halfaya, the third-largest field on offer with 4.1 Bbbl, went to a consortium also formed by CNPC (one-half share) with Total and Petronas (one-quarter each) also participating.
There is no comprehensive legal framework for foreign direct investment in energy resource development in Iraq, partly due to the failure to hold a referendum (provided for in Article 140 of the Iraqi constitution and overdue by more than two years) on the status of Kurdish regions within four Iraqi governates, specifically to decide whether they become part of the Iraqi Kurdistan region.
As the northern city of Kirkuk and the region around it are included in this process, energy resources and the division of revenues between the federal regions and the political center in Baghdad is an issue. Due to the failure of Iraq's government to get parliament to approve such a law governing oil and gas development, the legal framework for the ventures assigned in the auction just concluded is set up in the form of service contracts.
Nevertheless, the present developments bode well for political stability in Iraq if the security situation remains also stabilized as a precondition for that. The more revenue that there is to divide among the center and regions, the easier it will be to divide this revenue; and the easier it is to divide increasing revenue, the easier it will be to resolve acute political issues. Still, the fields recently auctioned are mainly in the south of the country, rather than in the Kurdish region.
An interesting exception is the Qaiyarah and Najmah fields, adjacent to one another in the northern province of Nineveh, where the Angolan company Sonangol won with a revised bid. This would be a good sign for cooperation between the Kurdish region and the political center in Baghdad for future energy exploration and development in Iraqi Kurdistan, and for an eventual political settlement of thorny issues, including reversal of Saddam's Arabization policy in the north, which altered the ethnic balance there and hence also contemporary electoral rolls.
Running down the list of fields for the sake of completeness, Gharaf with 900 million barrels (Mbbl) went to a Petronas-Japex (Japan Petroleum Exploration Co) consortium and Badrah (100 Mbbl) to Russia's Gazprom. Other fields (East Baghdad, the four "Eastern Fields", and the three Middle Furat cluster) received no bids in part due to the fluid security situation in the country.
A third of a century ago, the legendary Seven Sisters of the global oil industry would have had these fields to themselves, but since then there has been an enormous diffusion of expertise and know-how to other companies. These have the technology necessary for less complicated developments, are able form partnerships for access to more complex technology when necessary, and are able to compete on a cost basis.
So despite the earlier award of West Qurna 1, it is turning into an energy bonanza in Iraq for almost everyone except the Americans, whose erstwhile vice president, Dick Cheney, is widely reported to have been one of the driving forces of the military intervention following energy task-force meetings with US energy companies where maps of Iraqi oil deposits were closely examined.
The country's proven natural gas deposits are meanwhile estimated at slightly over 100 billion cubic meters (bcm), with probable reserves up to nearly three times that figure. At the end of September, Turkey signed an agreement to take 8 bcm per year from deposits in Iraqi Kurdistan to help kickstart the Nabucco pipeline long under negotiation to channel gas from the Caspian Sea region to Europe. This story is far from over.
Sunday, December 6, 2009
The economic elite have escalated their attack on the U.S. public by surging military operations in Afghanistan and Pakistan.
As Obama announced plans for escalating the war effort, it has become clear that the Obama Illusion has taken yet another horrifying turn. Before explaining how the Af-Pak surge is a direct attack on the US public, let’s peer through the illusion and look at the reality of the situation.
Now that the much despised George W. Bush is out of the way and a more popular figurehead is doing PR for Dick Cheney’s right-hand military leader Gen. Stanley McChrystal, who is leading his second AF-Pak surge now, and with long time Bush family confidant Robert Gates still running the Defense Department, the masters of war have never had it so good.
Barack Obama, the anti-war candidate, has proven to be a perfect decoy for the military industrial complex. Consider all the opposition and bad press Bush received when he announced the surge in
The Bush surge in
Where opposition was fierce to Bush’s surge, barely any opposition was expressed during Obama’s surge. Part of the reason for so little political and public backlash was the cleverly orchestrated psychological operation to announce the beginning of
When Obama casts the illusion of a 2011 withdrawal from
Now, with Obama’s latest surge announcement he will again be adding a minimum of another 30,000 US soldiers. This means that Obama has now led a bigger surge than Bush… on two separate occasions within the past nine months of his new administration.
Obama has now escalated deployments in the Af-Pak region to 98,000
PRIVATE MILITARY AND NATO DEPLOYMENTS
The amount of private military contractors deployed in
Although the administration is yet to disclose how many private mercenaries will be deployed in the latest surge, it is believed that the 69% ratio will remain in tact.
The Pentagon released a report showing that Obama already had , as of June 30th. 119,706 of them in
Back in June, Jeremy Scahill reported on these findings: “According to new statistics released by the Pentagon, with Barack Obama as commander in chief, there has been a 23% increase in the number of ‘Private Security Contractors’ working for the Department of Defense in Iraq in the second quarter of 2009 and a 29% increase in Afghanistan….”
Plus, we must mention, the immense dangers of having private military contractors as 69% of our fighting force. For those of you unaware, private military contractors are hired from all over the world. Any former soldier, from any country, is welcome to come and fight for a salary - a salary that is often significantly more than what we pay our own
These mercenaries have a vested interest in prolonging the war, for as long as there is a war, they have a well paying job. So it is easy to infer that a significant percentage of these contractors will not have the US soldiers, or US taxpayers, best interests at heart.
Obama continues to feed this out of control private army by pouring billions of taxpayer dollars into shady and scandalous companies like Blackwater, who recently changed their name to Xe Services, because they destroyed their reputation by committing numerous war crimes in
A federal investigation by the Commission on Wartime Contracting in Iraq and Afghanistan, revealed in June: “More than 240,000 contractor employees, about 80 percent of them foreign nationals, are working in
Before this latest surge, there were over 123,000 US and NATO troops in the Af-Pak region, and 200,000 Afghan security forces, supporting the
When you add in estimated private soldiers, you get an approximate minimum of a 17 to 1 advantage.
Although Obama opened his war speech by mentioning al-Qaida as the main justification for this war, consider this AP report: “national security adviser James Jones said last weekend that the al-Qaida presence has diminished, and he does not ‘foresee the return of the Taliban’ to power. He said that according to the maximum estimate, al-Qaida has fewer than 100 fighters operating in
Does it seriously take a surge of hundreds of thousands of troops to contain what amounts to “less than 100″ al-Qaida members?
Any serious war strategist will tell you that the most effective way to combat the remains of the al-Qaida network, is through an intelligence operation, and statistics prove that escalating more troops into the region will only fuel further acts of terrorism.
Speaking of fueling hatred toward the
The unmanned drones have caused major controversy due to the high number of civilian causalities they cause. However, as the study stated, the Obama Administration continues to increasingly rely upon them.
So summing up these statistics, we have the most fierce and technologically advanced military force in history, vastly outnumbering what amounts to be a ragtag army of peasant farmers with guns, and our best option is supposed to be an increase in troop levels?
Obviously, something doesn’t add up.
After thinking about all of this, you begin to see through the smokescreen of what this war is said to be about and get a glimpse of some of the sinister forces at play here.
OVER EXTENDED TROOPS
With the rise in deployments, the
As this war enters its 9th year, many soldiers are forced into deploying on their 3rd or 4th combat tours, and morale is fading fast.
The past year has seen a dramatic increase in
AP reports that “nearly four times as many troops were injured in October as a year ago. Amputations, burns, brain injuries and shrapnel wounds proliferate in
McClatchy recently reported: “An Army task force has found that a growing number of soldiers serving in
As wounded soldiers return from
Despite all of this, in another devastating example of how the economy is unraveling US society, military enlistment levels have reached a high. In a report by the Washington Post headlined: “A Historic Success In Military Recruiting” they reveal:
“For the first time in more than 35 years, the
The Pentagon… said the economic downturn and rising joblessness, as well as bonuses and other factors, had led more qualified youths to enlist. The military has not seen such across-the-board successes since the all-volunteer force was established.…
‘We delivered beyond anything the framers of the all-volunteer force would have anticipated,’ Bill Carr, deputy undersecretary of defense for military personnel policy, said at a Pentagon news conference.
Overall, the Defense Department brought in 168,900 active-duty troops, or 103 percent of the goal for the fiscal year….”
What we are witnessing here with such high enlistment levels during this economic crisis has many parallels to
“Such a perfect democracy constructs its own inconceivable foe, terrorism. Its wish is to be judged by its enemies rather than by its results.”
– Guy DeBord, Comments On the Society of the Spectacle, 1988
The amount of money necessary to keep the US military machine growing has reached astonishing levels. Considering the increasing amount of troops and contractors, the White House estimates that it spends one million dollars per soldier, per year in
According to these calculations, 30,000 troops for this latest surge will add an additional $30 billion to the annual budget, just in troop related costs. Also consider the price of moving fuel around, AFP reports: “Moving soldiers and supplies across the rugged Afghan landscape costs more than in
Other than in
There was public outcry when Bush drastically raised an already bloated military budget to record highs. But in comes the admired anti-war candidate Obama, in the middle of a severe economic crisis, and what happens? Obama drastically increased Bush’s record budget to $651 billion in 2009. Yes, during a severe economic crisis, Obama actually increased Bush’s budget.
However, these budget numbers are deceiving because the Obama Administration has been getting better at hiding extra spending in other budget items. The actual total 2009 budget was over $1 trillion.
And much like the staggering giveaway to the economic elite in the Wall Street banker bailout, no one is really sure where a significant percentage of this money is actually going. On September 10, 2001, Donald Rumsfeld announced that $2.3 trillion in military spending was unaccounted for. As CBS News reported: “$2.3 trillion - that’s $8,000 for every man, woman and child in
At that time, Pentagon auditors admitted that they couldn’t account for a staggering 25% of all military spending. And the budget has exploded since then, with fewer people accounting for where this money is going.
Once again, just like the $23.7 trillion that went into propping up the Wall Street elite - which totals $80,000 for every American - you have trillions more in taxpayer money vanishing and very few regulating and accounting for it.
Other than this staggering loss of taxpayer money, any serious economist will tell you “that military spending increases unemployment and decreases economic growth.”
Economists Joseph E. Stiglitz and Linda J. Bilmes, in their book “The Three Trillion Dollar War,” report that military spending on the war in
On top of all the looting of taxpayer money that is occurring, “several powerful House committee chairmen have proposed a surtax on Americans to pay the future military costs.”
With the country already operating at a record $12 trillion deficit, members of congress don’t know how we can afford increasing an already huge war expenditure.
In this struggling economy, weapon sales have become one of
“In fiscal year 2008, the foreign military sales program sold $36 billion in weapons and defense articles, an increase of more than 50% over 2007. Sales for the first half of 2009 reached $27 billion, and could top out at $40 billion by the end of the year. In contrast, through the early 2000s, arms sales averaged between $8-13 billion per year….
But last year, the
… the majority of
Selling all these weapons, especially during the biggest global financial crisis, will lead to one thing… terrorism.
Given these statistics, it shouldn’t be a surprise to hear how US taxpayer dollars are still funding the Taliban. Prior to the 9/11 attacks, the Taliban government was funded by the
As former CIA Station Chief John Stockwell explained: “Enemies are necessary for the wheels of the
However, they all seem to be missing the point, before explaining this in more detail, let me start by referring you to a quote from a journalist who had firsthand experience operating inside a militaristic empire:
“The war is not supposed to be winnable, it is supposed to be continuous… all for the hierarchy of society… The essential act of war is destruction, not necessarily of human lives, but of the products of human labor. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent… it helps to preserve the special mental atmosphere that a hierarchical society needs. War… is now a purely internal affair.” — George Orwell
“Come you masters of war
You that build all the guns
You that build the death planes
You that hide behind walls
You that hide behind desks
I just want you to know,
I can see through your mask…”
Many of the weapons manufactures and private military contractors are seen as the primary war profiteers. For an example of grotesque war profiteering, let’s look at Dick Cheney’s former company Halliburton. In a report headlined: “U.S. War Privatization Results in Billions Lost in Fraud, Waste and Abuse,” Jeremy Scahill reports on KBR, a Halliburton subsidiary.
“KBR has been paid nearly $32 billion since 2001. In May, April Stephenson, director of the Defense Contract Audit Agency, testified that KBR was linked to ‘the vast majority’ of war-zone fraud cases and a majority of the $13 billion in ‘questioned’ or ‘unsupported’ costs. According to Agency, it sent the inspector general ‘a total of 32 cases of suspected overbilling, bribery and other violations since 2004.
According to the Associated Press, which obtained an early copy of the commission’s report, ‘billions of dollars’ of the total paid to KBR ‘ended up wasted due to poorly defined work orders, inadequate oversight and contractor inefficiencies.’
KBR is at the center of a lethal scandal involving the electrocution deaths of more than a dozen
With numerous scandals over KBR operations, Halliburton ended it’s relationship with the company. However, “Halliburton reported $4 billion in operating profits in 2008, while KBR recently said its first quarter revenues in 2009 were up 27%, for a total of $3.2 billion. Its sales in 2008 were up 33%, and according to the Financial Times, the company had $1 billion in cash, no debt, and was looking for acquisitions.”
Beyond these blatant examples of war profiteering, there are more insidious forces at play that most people don’t see. These war profiteering companies are funded by the same banks that have destroyed the
Consider this example concerning Alliant Techsystems and Textron, two manufactures of cluster bombs, the controversial civilian killing WMDs. The Guardian reported:
“The deadly trade in cluster bombs is funded by the world’s biggest banks who have loaned or arranged finance worth $20bn to firms producing the controversial weapons, despite growing international efforts to ban them…
Goldman Sachs, the
Last December 90 countries, including the
Before going into further detail on how these banks make a lion’s share of war profits, let’s look back at the origins of these wars.
GEO-STRATEGIC OIL OPERATIONS
With all due respect to people who have been force-fed Pentagon propaganda by the US mainstream media, any serious observer of the
ORIGINS OF THE IRAQ OCCUPATION: CHENEY ENERGY TASK FORCE
As an AlterNet report put it: “In January 2000, 10 days into President George W. Bush’s first term, representatives of the largest oil and energy companies joined the new administration to form the Cheney Energy Task Force.”
Secret Task Force documents that were dated March 2001, which were obtained by Judical Watch in 2003 after a Freedom of Information Act lawsuit, contained “a map of Iraqi oilfields, pipelines, refineries and terminals, as well as two charts detailing Iraqi oil and gas projects…” They also had:
“… a series of lists titled ‘Foreign Suitors for Iraqi Oilfield Contracts‘ naming more than 60 companies from some 30 countries with contracts in various stages of negotiation.
None of contracts were with American nor major British companies, and none could take effect while the U.N. Security Council sanctions against
Were Saddam to remain in power and the sanctions to be removed, these contracts would take effect, and the
Project Censored highlighted a Judicial Watch report that stated: “Documented plans of occupation and exploitation predating September 11 confirm heightened suspicion that
ORIGINS OF THE AFGHANISTAN OCCUPATION: “STRATEGY OF THE SILK ROUTE”
Up until 9/11, oil companies, with the help of the Bush administration, were desperately trying to work out a deal with the Taliban to build an oil pipeline through
The policy was designed to lock out
Focusing on the creation of the Taliban, let’s read an excerpt from a 2003 book, “,” by Loretta Napoleoni:
“The alliance between American capitalism and Islamist fundamentalism is not limited to the creation of the Taliban; it also produced business ventures designed to extract favours from the new regime. To strengthen its bargaining power with the newly formed Islamist state, Unocal joined the Saudi Delta Oil Corporation to create a consortium called CentGas. Delta Oil is owned by the bin Mahfouz and al-Amoudi families [pivotal BCCI players], Saudi clans which have strong links with Osama bin Laden’s family…. Mahfouz has been sponsoring charitable institutions used as fronts for bin Laden’s associates through the National Commercial Bank, which his family controls….
Naturally, as soon as George W. Bush was elected president, Unocal and [
While negotiations were underway, the
Paradoxically, 11 September provided
In November 2001… Hamid Karzai was elected [
So it is not all that surprising to see recent reports revealing that Hamid Karzai’s drug kingpin brother, Ahmed Wali Karzai, is also on the CIA payroll.
With this, a new Senate investigation just revealed evidence that Donald Rumsfeld made a conscious strategic decision to let Bin Laden escape. AFP reports:
“Osama bin Laden was within the grasp of US forces in late 2001 and could have been caught if then-defense secretary Donald Rumsfeld hadn’t rejected calls for reinforcements, a hard-hitting US Senate report says….
It points the finger directly at Rumsfeld for turning down requests for reinforcements as Bin Laden was trapped in caves and tunnels in a mountainous section of eastern
‘The vast array of American military power, from sniper teams to the most mobile divisions of the marine corps and the army, was kept on the sidelines,’ the report said.”
So now that we see how these wars are driven by oil, let’s look at how the oil industry is benefiting from them. Since the invasion, the industry has experienced record profits across the board, setting new profit records quarter after quarter, year after year, as these wars rage on.
IRAQI OIL DEALS
With Exxon and Shell just signing new oil contracts in
“Exxon-Mobil and Royal Dutch Shell won the development rights of a massive oil field — West Qurna near
Last month, British Petroleum (BP) and the China National Petroleum Corporation (CNPC) won a contract to develop another oil field. The invitation to
Let’s look back over the years since the start of the War on Terror, here’s a 2005 MSNBC report:
“By just about any measure, the past three years have produced one of the biggest cash gushers in the oil industry’s history. Since January of 2002, the price of crude has tripled, leaving oil producers awash in profits. During that period, the top 10 major public oil companies have sold some $1.5 trillion worth of crude, pocketing profits of more than $125 billion.
“This is the mother of all booms,” said Oppenheimer & Co. oil analyst Fadel Gheit. “They have so much profit, it’s almost an embarrassment of riches. They don’t know what to do with it.
So an oil field that was profitable with oil selling for $20 a barrel is much more profitable with oil trading around $60…. Since January 2002, stocks of major oil companies have gained 88 percent; during that period the Standard and Poor’s 500 index has gained less than half as much.
Oil producers have also given investors a raise by gradually increasing the dividends paid out to shareholders.”
Here’s a 2007 Public Citizen report summing up oil company wartime profits:
“Since George Bush became President in 2001, the top five oil companies in the United States have recorded profits of $464 billion through the first quarter of 2007:
ExxonMobil: $158.5 billion
Shell: $108.5 billion
BP: $89.2 billion
ChevronTexaco: $60.9 billion
ConocoPhillips: $46.9 billion”
In Febuary 2008, CNN reported:
“Exxon shatters profit records
Oil giant makes corporate history by booking $11.7 billion in quarterly profit; earns $1,300 a second in 2007.
Exxon Mobil made history on Friday by reporting the highest quarterly and annual profits ever for a
Exxon, the world’s largest publicly traded oil company, said fourth-quarter net income rose 14% to $11.66 billion, or $2.13 per share. The company earned $10.25 billion, or $1.76 per share, in the year-ago period.
The profit topped Exxon’s previous quarterly record of $10.7 billion, set in the fourth quarter of 2005, which also was an all-time high for a
In January 2009, during a severe economic crisis, the Washington Post reported:
“Exxon Mobil finished a roller-coaster year in the oil markets with an all-time record $45.2 billion in profits…
The world’s most far-flung oil giant broke its own record for corporate profits in a year that saw oil prices climb to $147 a barrel in July… Exxon Mobil still beat analysts’ expectations by registering $7.82 billion in profits, or $1.55 a share, for the final quarter of the year. Exxon Mobil and Chevron’s revenue combined for 2008 exceeded the gross domestic product of all but 16 of the world’s nations, according to Bloomberg.
Royal Dutch Shell,
Once again, beyond these blatant examples of war profiteering, there are more insidious forces at play that most people don’t see. When you take a closer look at the oil profits, you see the true driver and ultimate beneficiary of these profits are none other than the same people who benefited the most from the stock market collapse and the ensuing $23.7 trillion taxpayer “bailout.”
As the Washington Post reported, the huge oil profit margins were the result of the soaring price of a barrel of oil, reaching “$147 a barrel in July.”
The InterContinental Exchange (ICE)
In 2000, Goldman Sachs, Morgan Stanley and several oil companies “founded the InterContinental Exchange (ICE)…. ICE is an online commodities and futures marketplace. It is outside the
A Congressional investigation into this exchange found that these companies were fraudulently inflating the price of oil by executing “round-trip” trades where one company would sell shares in oil to another company who would then sell the shares right back. This would drive the price of oil to however high they wanted it to go to. “No commodity ever changes hands. But when done on an exchange, these transactions send a price signal to the market and they artificially boost revenue for the company. This is nothing more than a massive fraud, pure and simple.”
So when oil was selling at $147 a barrel, the actual worth was most likely closer to half that price. Phil’s Stock World summed up the situation:
“How widespread are ’round-trip’ trades? The Congressional Research Service looked at trading patterns in the energy sector and this is what they reported: This pattern of trading suggests a market environment in which a significant volume of fictitious trading could have taken place. Yet since most of the trading is unregulated by the Government, we have only a slim idea of the illusion being perpetrated in the energy sector.
DMS Energy, when investigated by Congress, admitted that 80 percent of its trades in 2001 were ’round-trip’ trades. That means 80 percent of all of their trades that year were bogus trades where no commodity changed hands, and yet the balance sheets reflect added revenue…
…the InterContinental Exchange; that is, the online, nonregulated, nonaudited, nonoversight for manipulation and fraud entity run by banks in this country….
Under investigation, a lawyer for J.P. Morgan Chase admitted the bank engineered a series of ’round-trip’ trades with Enron….
ICE… turned commodity trading into a speculative casino game where pricing was notional and contracts could be sold by people who never produced a thing, to people who didn’t need the things that were not produced. And in just 5 years after commencing operations, Goldman Sachs and their partners managed to TRIPLE the price of commodities.
Goldman Sachs Commodity Index funds accounted for $60Bn out of $100Bn of all formula-managed funds in 2007 and investors in the GSCI lost 15% in 2006 while Goldman had a record year. John Dizard, of the Financial Times calls this process ‘date rape’ by Goldman Sachs…
It is not surprising that a commodity scam would be the cornerstone of Goldman Sach’s strategy. CEO Lloyd Blankfein, rose to the top through Goldman’s commodity trading arm J Aron, starting his career at J Aron before Goldman Sachs bought them over 25 years ago. With his colleague Gary Cohn, Blankfein oversaw the key energy trading portfolio. According to Chris Cook: ‘It appears clear that BP and Goldman Sachs have been working collaboratively – at least at a strategic level - for maybe 15 years now. Their trading strategy has evolved over time as the global market has developed and become ever more financialised. Moreover, they have been well placed to steer the development of the key global energy market trading platform, and the legal and regulatory framework within which it operates….
Before ICE, the average American family spent 7% of their income on food and fuel. Last year, that number topped 20%. That’s 13% of the incomes of every man, woman and child in the
The congressional investigation into ICE concluded that they couldn’t do anything about it because the exchange was set up offshore.
So here we can see, that behind almost all of our societal problems and suffering, you have this small elite group profiting on destruction and misery at record highs.
When Goldman Sachs CEO Llyod Blankfien says that he is doing “God’s work,” one has to wonder, who is the God he is praying to?
Famed two-time Congressional Medal of Honor recipient US Brigadier General Smedley D.
WHAT IT ALL COMES DOWN TO…
In the global economy, the economic elite don’t need the
As the IMF would say, there has been a structural adjustment program in place, and the
When you understand this, you can understand how the wars in
In the overall picture, the technocratic elite see everyone as a number on a spreadsheet. To them you are what your economic net worth says you are. Considering this perspective, most in the
Common sense and statistics demonstrate that the more troops you send into war, the higher the causality count will be, and the more costs will rise, leading, of course, to higher profits.
So as the Obama illusion and the motives behind this war become exposed, and the massive theft by the economic elite becomes known to a critical mass, the elite are ramping up their psychological operations on the
With the healthcare debate losing steam, and the people starting to understand that the final bill will do little to create much needed change, and as “health care reform” is exposed as another gift to insurance company executives, and as unemployment rates remain high, the Economic Death Squad vitally needs some new distractions.
Never mind the criminals on Wall Street: It’s time to… Wag the Dog and Shake the Mohammed
By Wag the Dog, I am of course referring to the old political trick of distracting public consciousness away from a crisis by starting, or in this case drastically escalating, a war.
Don’t worry about the $23.7 trillion of public wealth that was given to Wall Street as a reward for destroying the economy, we are at war and it’s time for you to support our troops.
Ah, yes, another racket to pile up more of the economic poor.
Barack W. Obama, once again, bows to… the elite… and serves up yet another gift by sending more
50 million US citizens are already living in dire straights, so what’s the big deal if you just throw another 220,000
But a war in a distant land just isn’t enough, is it?
American public opinion has long been saturated in the distraction of war, and given the severity of the economic crisis, the elite policy makers figured another surge in
So the psychological operations PR department has decided to also Shake the Muhammad. Yes, bring the 9/11 “mastermind,” Khalid Sheikh Mohammed, back to the scene of the crime and create a
Not only will it cause a media frenzy, it will also reaffirm public opinion in the war effort… win, win!
I don’t know about you, but as someone who grew up a New Yorker and spent the last five years of my life living three blocks from Ground Zero, I have to say, take your psychological operations to a different location.
You are going to have the “9/11 mastermind” in a courtroom right around the corner from the biggest terrorists of all… Wall Street.
Khalid Sheikh Mohammed, Llyod Blankfien, Jamie Dimon and John Mack are all going to be in one place, at the same time! We will have the “9/11 mastermind,” Goldman Sachs, JP Morgan and Morgan Stanley all in the same zip code… HELLO!
Can you say here comes the next Timothy McVeigh?
Will there be a violent insurgency within the
As a growing number of American lives are directly negatively impacted, media propaganda operations will lose their ability to confuse and distract. Studies of societal breakdowns prove that having such a large population experiencing severe and prolonged economic decline will result in violent outbrakes.
Other than the 50 million US civilians living in dire straights, what will happen as thousands of bitter soldiers and US intelligence agents — who have given their lives to these wars, only to return home to find an economy in ruins and a healthcare system that has thrown them overboard — begin to make these connections and understand that a small group of men on Wall Street are at the root of their suffering?
Well, some former military and intelligence agents, including a growing number of current serving members, have already made this connection, and they are organizing, training and strategizing tactical operations. They are factions inside a quickly growing - heavily armed - militia movement that now numbers over 200 active cells, within the
The mainstream press gives some passing attention to the fringe factions that make threats against Obama, but the more experienced soldiers understand that he is just a figurehead and they have connected all these dots and have come to the conclusion that this war is actually a war to create profits for the economic elite at the expense of the US public.
Llyod Blankfein, Jamie Dimon and John Mack can arm themselves and hire all the security they can get, but will it actually keep them safe when you have a population of millions living in dire straights as a direct result of their actions? At this point, even their own security members may be conspiring against them.
The Obama illusion is fading fast. Every time you see through it, you get a glimpse of them. The Economic Death Squad is exposed under the bright light of inspection and investigation.
Take a look at many of the major problems facing us today, as a country and as a species, and then you will understand that these problems exist because the economic elite are profiting off of them.
Obama is just their mask, an illusion to pacify the masses. The economic crisis and the wars have now shattered this illusion - it has come crashing down… upon us.
It has become clear that an opinion has emerged among a growing segment of the
And the question that arises after that: Can it be done non-violently?
I certainly hope it can.
However, this growing segment of the population uses strong rhetoric and is prepared to take up arms.
With over 200 active militia cells, who are equipped with weapons, training and strategizing, the government must take swift action to rein in the economic elite. Otherwise, we are heading to war, not in a distant foreign land, within the
The economic elite are well aware of the threat of a violent uprising within US borders. US Army documents have revealed that strategic plans are already formed for this situation. Chris Hedges explains:
“The military must be prepared, the document warned, for a ‘violent, strategic dislocation inside the United States,’ which could be provoked by ‘unforeseen economic collapse,’ ‘purposeful domestic resistance,’ ‘pervasive public health emergencies’ or ‘loss of functioning political and legal order.’ The ‘widespread civil violence,’ the document said, ‘would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.’
‘An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,’ it went on.
‘… this might include use of military force against hostile groups inside the
In plain English… this translates into the imposition of martial law and a de facto government being run out of the Department of Defense. They are considering it. So should you.”
We could have a situation where the government deploys private soldiers, mostly foreign nationals, on
LOSS OF FAITH IN POLITICAL PROCESS
An irate majority of the responses have consistently stated that they have repeatedly contacted their representative through multiple forms of communication, and no action was taken. A growing segment of the
Personally, I believe that non-violent action is a much more strategic and effective move. We are 99% of the population, and the enemy is less than 1%. We are a sleeping giant; they are a small group of clueless greed-addicted people who desperately cling to the Administration, Treasury, Fed and a few other firms like Goldman Sachs and JP Morgan.
If we can take action on a mass non-violent scale, the rule of law and economic justice can be obtained. In our nation’s history, the stakes have never been higher. If we cannot organize a mass movement to non-violently oppose outright theft, then violence will ultimately tear our nation apart.
The question on my mind: Can we swiftly mobilize such a heavily propagandized population to take mass non-violent action?
A growing population does not believe we can do so, and is on the verge of launching a heavily armed insurgency.
So in the months ahead, while they are Wagging the Dog and Shaking the Mohammed, the
And the clock is ticking . . .....TRUST is History everyone.....!!!
Trust? OMFG! For those people stupid enough to still have a mortgage on a house that's worth maybe, -on an almost impossibly good day- 40% of what they still owe on it, -gauging trust is simple. - Just call your banker, and ask them to trust you -that you'll catch-up on your mortgage after a few months, -you know- when the economy turns back around!
You all can trust in this: electing some black community organizing -mobster- with a forty-carat diamond inlaid into one of his front teeth -from South Side Chicago, is hardly going to provide anything -anyone might consider trust.
Mr. Obama's handlers are daily trying desperately to figure out how to sell -decriminalizing illegal immigration- to the Congress -so they can consolidate their tenuous hold on the voter-roll-reins of this reckless runaway Republic.
The aging and increasingly feeble Reverend Jesse Jackson said it best -when he was heard through an open mike to say of Barack Obama, "I'd like to cut his nuts off." -Thank you, Jesse.- I hope we all can trust that is not another one of your own -Buckleyisms-.
Trust in history.
Neither has a freight train ever been caught in mid-air after it went off a railroad bridge, nor, has any effort in the economic sphere ever even slowed-down the forty-story plunge of a full-blown economic depression, like we are living through today.
This is the BIG ONE. It was long over-due.
A lot of people in our Republic get rich through graft, corruption and crime syndicates though. That's what we're increasingly seeing. It's called a -bailout.
There's also a lot of money floating around looking to get doubled, -ostensibly to replace what got lost in the first wave of financial implosion-swindles.
Most people, -never learn. You can take that to the bank, but even that's not a safe bet today.
-Trust- is what makes the current atmospheric phenomenon so dangerous and so profitable for those people with deep voices, persistence and an anonymity of character. The common financial adviser today doesn't just -look and sound- like a used car salesman saying, "You own it, buddy. The warranty ended the moment you drove it off the lot."
Those people who trust in anything, -are the source of the funds that are doubling the money of so many of these con men.
Bernie Madoff even took Zsa Zsa Gabor's money. Poor Zsa Zsa. She'll have to go back to turning -tricks-.
I do not think more than a very small handful of people on the planet actually understand the extent of the depression-related-devastation that has occurred and continues to occur.
A depression is not merely an economic phenomenon.
A depression is much more of an epistemological implosion of all the wrongly assumed and the all too commonly untenable beliefs in society that have been built up through decades of puffing.
If your own beliefs are getting a little wobbly around the knees, -you can trust in this about government, and how the recovery-hype is going.
When you are told to do something, -you should do it, -because those orders when given by government -are ultimately backed up by some low-browed cretin with a very limited vocabulary and an even smaller cogent use of it, -most often wielding a side arm.
Just be thankful, even hopeful, you understood what it is he's telling you to do. That pistol quite often has dumdums in it, -and his Taser gun is set on "FULL CARDIAC ARREST".
The best quote I read recently was Lewis Mumford quoting Herman Melville. "Trust not good luck is judgment and discretion."
It's an able statement about the infinite complexity of reality, the backdrop against which -all our most cherished assumptions must be placed....