OPEC leaves Biden and company sputtering with impotent rage. From Quoth the Raven at zerohedge.com:
Today, you get a two-fer. Since my dear friend Kenny Polcari has released new thoughts on the OPEC debacle – and since that was also the topic of my latest podcast, published yesterday, which you can listen to here – I am bringing you both his thoughts and mine, together.
In short, yesterday OPEC humiliated President Biden on a global stage by cutting oil production after he specifically lobbied them not to. There’s no “nice” way of putting it – they straight-up snubbed the U.S. and have now, in my opinion, made it officially clear that they 1) are not our friends, 2) do not care what we want, 3) do not take us seriously and 4) are not here to help us and/or Biden get re-elected by lowering prices.
To use Biden’s parlance, “Let me tell you something, Jack – we’re not in bed with the Saudis anymore. They are more allied with China and Russia than they have ever been, at arguably the most crucial moment in recent history for our global economy.”
As I pointed out last night on my podcast, there was nothing quite like the “fist bump heard round the world” a couple months ago when President Biden – who spends his time here domestically fighting for “equality” and human rights – decided to embrace the Saudis, and their track record of disapproving of gay rights, murdering journalists and multiple other human rights violations – instead of simply ramping up domestic oil production here in the U.S.
Biden probably went into the meeting he had with MBS months ago thinking we had some type of leverage, like we have had decades ago. The sad reality is that we simply don’t anymore: the Saudis have the oil, they have gold, and now they have allies just as big and powerful as the U.S. when combined. And those allies provide financial and military support at a crucial juncture for geopolitics.
Stupidity has consequences. Debase your currency and the dollar price of a barrel rises towards $100, which gives sellers of oil, like Russia, the upper hand. From MN Gordon at economicprism.com:
The ruling elite loves spending money. But only when it’s your money; not theirs.
Of all modern economic dogmas, the one held dearest by the ruling elite is the belief government can spend the economy to growth using debt. Certainly, government spending redirects economic growth to government preferred industries.
But government stimulus doesn’t grow the economy. How could it? Aside from stacks of legislation, levies, and fees, government doesn’t produce a doggone thing.
To the contrary, government usurps capital and uses it in ways businesses and individuals otherwise wouldn’t. Specifically, the government uses its heavy hand to distribute capital to places that, absent coercion, people wouldn’t pay for. These generally equate to value subtracting endeavors – like bullet trains in California’s Central Valley at a price tag of $105 billion and growing.
The great government giveaway that was executed by the Federal Reserve and the U.S. Treasury to somehow counteract the economic consequences of mandatory lockdown orders has come with its own consequences. Namely, the printing press financed stimulus has propelled consumer price inflation to a 40 year high.
The mechanics of the giveaways were rather crude. If you recall, starting in March 2020, the Treasury issued $3 trillion of new debt. This new debt was bought by the Federal Reserve using $3 trillion of new reserves that were created from thin air. This printing press money was then sent by the Treasury via stimmy checks to people and businesses.
The process was then repeated to the tune of another $2 trillion in printing press money. The U.S. national debt rose over 30 percent in less than 24 months and now tops $30 trillion. Should it be a shocker that inflation’s raging out of control?
Posted in Banking, Business, Currencies, Debt, Economics, Economy, Energy, Foreign Policy, Geopolitics, Governments, Military, War
Tagged Price of oil, Russia's invasion of Ukraine
I don’t recall Donald Trump ever groveling to OPEC to increase their oil production. From Ryan Fitzmaurice at zerohedge.com:
- The White House released a statement on Wednesday pleading with OPEC+ to increase oil production to stem off inflationary pressures from higher domestic gasoline prices
- The world’s biggest oil consumer showed its political vulnerability to higher oil prices this week and more specifically skyrocketing consumer inflation
- The push for “green” energy is also putting upward pressure on commodity price inflation
Oil markets started off the week under pressure as continued speculative “long” liquidation amid delta variant demand concerns weighed on prices. However, in an ironic twist, the oil market got a boost from an unlikely source on Wednesday as the Biden administration announced it was pleading with OPEC+ members to increase oil production to stem inflationary pressures from rising domestic gasoline prices.
The White House announcement was naturally intended to pressure oil prices lower as has worked under past administrations but instead the opposite occurred as the oil market saw right through the veiled attempt (while spurring criticism from all sides including industry lobbyists, “climate scientists”, progressives and conservatives). For starters, OPEC+ and more importantly Saudi Arabia, are unlikely to answer Biden’s calls for more crude oil as they already have a fully agreed to plan in place. Further to that end, the US/Saudi relationship is quite strained as the Biden administration has pivoted towards Iran as it anxiously looks to re-enter the Iran nuclear deal, but so far with little success. As such, the oil market rightly interpreted the desperate plea as coming from a place of weakness and not strength which led to strong gains in the notoriously unforgiving financial oil markets on Wednesday.
The House of Saud is discovering a lesson scores of governments have run up against in the past: war, even against smaller and weaker opponents, can be a costly affair. From Finian Cunningham at strategic-culture.org:
The Saudi rulers are facing a humiliating defeat as the Yemenis take revenge and Uncle Sam washes his hands of blood.
After six years of blowing up Yemen and blockading its southern neighbor, the Saudi rulers are now saying they are committed to finding peace. The move is less about genuine peace than economic survival for the oil kingdom.
The Saudi monarchy say they want “all guns to fall completely silent”. Washington, which has been a crucial enabler of the Saudi war on Yemen, has backed the latest “peace offer”. Secretary of State Antony Blinken this week endorsed the initiative from the Saudi rulers, saying he had spoken with them “on our work together to end the conflict in Yemen, facilitate humanitarian access and aid for the Yemeni people”.
The Saudi foreign ministry stated: “The initiative aims to end the human suffering of the brotherly Yemeni people, and affirms the kingdom’s support for efforts to reach a comprehensive political resolution.”
Can you believe this sickening duplicity from the Saudis and the Americans?
Posted in Energy, Foreign Policy, Geopolitics, Governments, History, Imperialism, Military, Morality, Politics, Propaganda, War
Tagged Price of oil, Saudi Arabia, Yemen