Is Putin Winning the War of Attrition with the U.S.? by Tom Luongo

If Russia and China are at “war” with the US, they probably only have to sit back, wait, and hope the US government continues doing what it’s been doing the last few decades. From Tom Luongo at tomluongo.me:

The news that President Donald Trump offered to hold a meeting with his counterpart in the Kremlin, Vladimir Putin, has the political world in an uproar.

Furiously keyboards are chattering away as laptop bombardiers are worried that perpetual war for perpetual empire will end if Trump and Putin see eye to eye on anything.

From the bowels of MI-6 to the think tanks that line K Street schemes are hatched to make it politically unacceptable for Trump to do what he apparently did, if TASS is to be believed.

If true, the offer represents the biggest shift in U.S./Russian relations since Trump’s election and the subsequent hissy fit thrown by his political opposition in every corner of the political landscape.

Because they know what’s happening even though you could never get them to admit it in public, the U.S. is vulnerable.

We’re not vulnerable in any ultimate weapons sense. The U.S. can certainly lob enough nukes at Russia to wipe them out and vice versa.  No, we are vulnerable where our real power comes from: our dominance of the world’s capital markets backed up by both the political will to isolate anyone who doesn’t toe our line and/or the military might to put down any marginal challenges.

Real Might, Real Power

So, China finally launching an oil futures contract denominated in Yuan, the so-called petroyuan, and convertible to gold is a financial WMD which doesn’t dwarf Putin’s new hypersonic missiles today.  But, over time that weapon will grow in power and destructive capability.

China is the world’s largest importer of oil.  That makes it the source of marginal demand for oil in the world.  Russia is the world’s second largest oil exporter, that makes them one of the suppliers of the marginal barrel of oil on the world market.

While the Saudi Arabians export a lot more oil than Russia, they do so at a much higher all-in-sustaining-cost basis than Russia does (see volatility of the Saudi Budget relative to oil prices below).  At current oil prices Russia’s slowly growing economy is capable of meeting its social needs as measured by the government’s budget, which ran a very modest 1.5% of GDP in 2017 and should contract again this year.

To continue reading: Is Putin Winning the War of Attrition with the U.S.?

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2 responses to “Is Putin Winning the War of Attrition with the U.S.? by Tom Luongo

  1. Reblogged this on The way I see things … and commented:
    Putin’s very prudent means of getting Russia’s own house in order put her in the position to outlast the U.S. who will, over the next few years have to retreat or destroy the world.

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  2. What a joke. Does anyone believe or trust the PRC to covert their currency to gold? How about this just let the PRC pay in gold and see how far that goes. The PRC has a Potemkin village economy just as the Russians had before Reagan called their bluff.

    I’ve seen and heard all this before when “experts” told us the Russians were 12 foot tall. Anyone who saw Russian apartment buildings that were so poorly built that there were steel beams around them to prevent them collapsing knew the truth.

    In China you cannot be sure of the food you buy is either pure or untainted. Building materials are adulterated. Key components are faulty. Yeah its the economy we have to be afraid of. By the way how many of you have noticed that many consumer products from famous brand names, are now manufactured in China. Ever noticed how shoddy they are, how they do not perform as advertised or as expected. I’d estimate, for example something as commonplace as a DVD player, which once were excellent, now function poorly with at least a 20% failure or problem rate. Doubt it, read the reviews of the consumers at Amazon.

    Why do you think that is? Fear the PRC? Maybe when they learn to make a DVD player that works.

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