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.?