Opec’s days as economic force are ‘over’ - FT.com
. . . but the Yergin seems to misunderstand why. "Opec’s economic power is broken, says the unofficial historian of the oil industry, who has argued that the association of oil exporting countries has become irretrievably divided and is unable to reverse the current slump in crude prices. Daniel Yergin, whose Pulitzer-prize winning book The Prize provides a comprehensive history of oil and power, said he believes the association’s economic prowess has been undone by its inability to agree on how to stop the oil crisis. In an interview with the Financial Times, Mr Yergin, who is also vice-chairman of data provider IHS, said the recent disagreements among Opec members have revealed how weak the organization now is. Mr Yergin said: “The era of Opec as a decisive force in the world economy is over. It is clearly a very divided organization.” Mr Bergen’s book, first published in 1990, dedicates several chapters to the rise and domination of Opec, the 13-member organisation that has caused sharp swings in the oil price by restricting or raising supplies since it was set up in 1960. But the 69-year-old argues the current oil slump has exposed the organization’s inability to act in a unified way." Ok, correct as far as it goes, but it does not go anywhere near far enough. The reason for the lack of unity is the existential war between the Shia, represented by Iran, and the Sunni, represented by the House of Saud. "Mohammed bin Salman, Saudi Arabia’s powerful deputy crown prince, said earlier this month a deal would only happen if Iran also signed up. But Iran wants to increase its output after sanctions were lifted in January as part of a nuclear deal with world powers. Mr Yergin said he did not think a freeze was possible until Iran clarified how much it could export. As for Saudi Arabia, Mr Yergin said it was thinking differently about oil. “I remember when the operating code was: save the oil for our grandchildren. Now the grandchildren are in charge and they are looking at it in a very different way,” he said. “They are not looking at it as precious resource . . . but rather asking how do you monetize it?'" Right Saudi wants to tie up Iran so it has no money to fight this existential war. Iran will have none of it, and so will pump oil, in order to build its more integrated economy back from the recent sanctions, and seek to fight proxy wars in the meantime. Saudi has very little economy outside of oil, and what it has, is nearly completely reliant on oil money transfers from the House of Saud. It is not that the House of Saud is thinking differently about oil, it is thinking about an existential war, and it needs as much oil money as possible to ward off economic unrest from its people, and fight expensive proxy wars. Remember in this fight the House of Saud is the banker to the Sunni proxy wars, while the Iranians are not, they train, and provide some arms assistance but do not do the majority of the bankrolling. The reason the House of Saud recently left Yemen, is to cut the costs of the proxy war there. The House of Saud is deeply concerned, and panic is just setting in. OPEC's days as oil hegemon are over. Not because "Kids these days!" But because Iran wishes to reduce the kingdom. Optimistically, this will be the warfare at the beginning of the Islamic Reformation, which will lead to an Islamic Enlightenment. But lets not get ahead of ourselves. Al-Saud is our enemy. The Shia, represented by Iran are the only real hope today for an Islamic Reformation. We need to make this work. We need to trade with Iran, and promote the full reintegration of Iran with the world economy. This will allow Iran to pressure the House of Saud, and allow Iranian businesses, and the people of Iran to build relations with America, and the West. Only this will result in the diminishment of the Iranian hardliners, and the ultimate democratization, and free marketization of Iran. Something the world needs dearly. Let's do it!
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Refugees Flooding Italy Surge 80%; Italy Seeks Greek-Style Returns; Proposed Solution in Single Picture | MishTalk
. . . and ends up wondering where Saudi Arabia is in all of this. Good question. The House of Saud is the enemy of the West, and civilization. Tt has no interest in helping these refugees or paying for their assistance. We need to begin treating the House of Saud for what it is not for what it represented during the Cold War. Oil’s Decline Takes Toll on Saudi Conglomerate
. . . the son of a son of a contractor, or something. Best line in the piece, "'It’s too big to fail,” said a creditor at a Persian Gulf bank company who is close to SBG. “It’s an integral part of the Saudi system so they will find a solution,” the person said." Dude, it's not too late to pick up a large jug of Vasoline. You are gonna need it. Unless the price of oil take a sudden, sustained hike, large companies in Saudi will unquestionably fail, as the entire nation is an economic bankruptcy case without oil above $80-100 per bbl. The Saudi's can likely cut enough "welfare" to make ends meet at around $100, but at $50? Nope! I stand by my estimates that oil will end in the $30 range or perhaps a bit less. But even at $50, Saudi is in serious trouble, and will not be able to pay the bills. There is a reason why the House of Saud is leaving the Yemeni's on their own to fight the Iranian supported Shia factions. No money. Couldn't happen to a nicer House! How Saudi Arabia Turned Its Greatest Weapon on Itself
"The oil wars of the 21st century are underway. In recent years, the Saudis have made clear that they regard the oil markets as a critical front line in the Sunni Muslim-majority kingdom’s battle against its Shiite-dominated rival, Iran. Their favored tactic of “flooding,” pumping surplus crude into a soft market, is tantamount to war by economic means: the oil trade’s equivalent of dropping the bomb on a rival. In 2006, Nawaf Obaid, a Saudi security adviser, warned that Riyadh was prepared to force prices down to “strangle” Iran’s economy. Two years later, the Saudis did just that, with the aim of hampering Tehran’s ability to support Shiite militia groups in Iraq, Lebanon and elsewhere." This is a comedy routine, the House of Saud has no substantive economy outside of oil, while Iran does, and is already rebuilding that economy after the elimination of international sanctions. ". . . [I]n 2011, Prince Turki al-Faisal, the former chief of Saudi intelligence, told NATO officials that Riyadh was prepared to flood the market to stir unrest inside Iran. Three years later, the Saudis struck again, turning on the spigot. But this time, they overplayed their hand. When Saudi officials made their move in the fall of 2014, taking advantage of an already glutted market, they no doubt hoped that lower prices would undercut the American shale industry, which was challenging the kingdom’s market dominance. But their main purpose was to make life difficult for Tehran: “Iran will come under unprecedented economic and financial pressure as it tries to sustain an economy already battered by international sanctions,” argued Mr. Obaid." There is a reason Lawrence of Arabia was necessary, it is not because the Arabs are great strategists. The elimination of the international sanctions allow Iran to begin quickly rebuilding their economy. The House of Saud, on the other hand is faced with oil prices which do not pay the bills. The Saudi's are in talks with various business consultants on developing and building their economy, to create an economy outside of oil. This is far too little, far too late. And who will be manning these industries, Saudis? What a joke. Saudis only want a position of authority in the company, the actual work must be done by others. It was not Iran which came under "unprecedented economic and financial pressure," but Saudi Arabia. "And then there is Saudi Arabia itself. All the evidence suggests that Saudi officials never expected oil prices to fall below $60 a barrel. But then they never expected to lose their sway as the swing producer within the Organization of the Petroleum Exporting Countries, or OPEC. Despite wishful statements from Saudi ministers, the kingdom’s efforts last month to make a deal with Russia, Venezuela and Qatar to restrict supply and push up prices collapsed. The I.M.F. has warned that if government spending is not reined in, the Saudis will be bankrupt by 2020. Suddenly, the world’s reserve bank of black gold is looking to borrow billions of dollars from foreign lenders. King Salman’s response has been to promise austerity, higher taxes and subsidy cuts to a people who have grown used to state largess and handouts. That raises questions about the kingdom’s internal cohesion — even as the king decided to shoulder the burden of regional security in the Middle East, fighting wars on two fronts. Has there ever been an oil state as overleveraged at home and overextended abroad? Meanwhile, by concluding the historic nuclear agreement, Iran is getting out from under the burden of economic sanctions. It will not be lost on Riyadh that this adds another oil producer to the world market that it can no longer control. The instability and economic misery for smaller oil-producing states like Nigeria and Azerbaijan look set to continue. But that’s collateral damage. The real story is how the Saudis have been hurt by their own weapon." This article is a primer on how low oil prices are helping peace loving democracies, and throttling the more malignant oil tyrants. The author makes a serious foot fault early in the article writing, "In the West, we have largely forgotten the lessons of 1974, partly because our economies have changed and are less vulnerable, but mainly because we are not the Saudis’ principal target." This misunderstands the relationship between the House of Saud and Wahhabism. The US, and the West are the target, the principal target. Iran is only a regional target, and is considered only a religious pretender, which the House of Saud believes it can swat like a fly. The House of Saud is not an ally, just as the USSR was not an ally during, and then after WWII. After we gave the USSR massive support of food, weapons, train cars, fuel, airplanes, trucks, jeeps, pretty much everything but tanks, rifles, bullets, and men, Stalin turned agains the US, and the West, and opened a new front, the Cold War. If the House of Saud ever though the US were weak enough, it would do something similar. It is not an ally. While Iran is also not an ally, it could be, if we cultivate economic prosperity, and adopt a more rational Middle East policy. I am not holding my breath on either. For now, our primary policy in the Middle East needs to be the continuation of low oil prices. The House of Saud needs to be broken, and the Islamic Reformation needs to move apace. This will only happen if the House of Saud is placed under serious economic pressure to the point it fracture sufficiently to separate from the canker of Wahhabism/Salafism. The resulting loss of funding for Wahhabism/Salafism would impoverish this terror funding entity, and allow the Shia to pressure for actual reformation. Just as the Catholic Church needed reformation prior to 1500, so does the Wahhabist/Salafist Islam. This is not a war we need be involved in, but it is a war we should monitor closely. It would be nice if we were not saddled with the worst political class in history, but we are, and we will need to force them to do what is necessary, not what is expedient, nor what is most beneficial to the political class. The destruction of the cancerous oil tyrannies, and the Islamic Reformation will be built on the back of low oil prices, which is in major part due to shale oil, and fracking. We should be expanding this not limit available, drillable reserves. This will ensure low oil prices for a very long time, perhaps well past the time we leave oil as a primary energy source. It Begins
Walther Russell Mead is a favorite, a liberal with a clarion understanding of international relations. If you do not, you should read every one if his posts. Go ahead, I'm married with family, I am nothing if not patient, I'll wait right here. Back, good, right?! The Obama Doctrine The article starts, "Friday, august 30, 2013, the day the feckless Barack Obama brought to a premature end America’s reign as the world’s sole indispensable superpower—or, alternatively, the day the sagacious Barack Obama peered into the Middle Eastern abyss and stepped back from the consuming void . . . " This artfully points out the comedic nature of the chosen headline. The last word the knowledgable use to describe President Feckless ODither would be "sagacious." Obama, if not sagacious, is a mid-19th Century Cold Warrior. "Obama, unlike liberal interventionists, is an admirer of the foreign-policy realism of President George H. W. Bush and, in particular, of Bush’s national-security adviser, Brent Scowcroft (“I love that guy,” Obama once told me). Bush and Scowcroft removed Saddam Hussein’s army from Kuwait in 1991, and they deftly managed the disintegration of the Soviet Union; Scowcroft also, on Bush’s behalf, toasted the leaders of China shortly after the slaughter in Tiananmen Square. As Obama was writing his campaign manifesto, The Audacity of Hope, in 2006, Susan Rice, then an informal adviser, felt it necessary to remind him to include at least one line of praise for the foreign policy of President Bill Clinton, to partially balance the praise he showered on Bush and Scowcroft." It is difficult to place Bush since his Presidency spanned the fall of the USSR, and the end of the Cold War. Bush seemed to misunderstand what that meant. It is easy to understand Bush's problem here, he was a WWII vet who lived and fought before the Cold War, way back when the US and the USSR were putative allies. He then spent his entire career working politically to undermine and overthrow the evil empire responsible for the Cold War. Once it came, he was at a loss. President Feckless ODither has no such excuse, he never had any involvement in fighting the Cold War, instead, he seems nothing more than a Cold War romantic. And what is a Cold War Romantic to do in the face of modern chaos, and warfare? "'The message Obama telegraphed in speeches and interviews was clear: He would not end up like the second President Bush—a president who became tragically overextended in the Middle East, whose decisions filled the wards of Walter Reed with grievously wounded soldiers, who was helpless to stop the obliteration of his reputation, even when he recalibrated his policies in his second term. Obama would say privately that the first task of an American president in the post-Bush international arena was “Don’t do stupid shit.” A doctrine this simple should have been easy to follow, but President Feckless ODither failed right out of the box, but his failures are unlike the Bush père failures, his failures are of the naif, inexperienced in all, who does not understand both action, and inaction pose equal danger. But then Obama, a man without even a hint of military experience, had the hubris to believe he was a greater adviser than his advisers. He has one position in the bag, he is without a doubt a greater fool than his Administration's Fool, that's a White House job, right? The article is long but worth your time. Obama plays the feckless prat, Hillary shows up as the interventionist , and Old Joe Biden plays the old sage forcefully arguing that "big nations don't bluff." Obama, invigorated, mans the ramparts, and orders the military to stand ready. And with the cold light of day, becomes "queasy" and takes a powder. Classic Obama, feckless, and dithering to the bitter end. Jellyfish have more spine. "The Only Thing Necessary for the Triumph of Evil is that Good Men Do Nothing." Although appending the phrase "good man" to President Obama is a bit of a stretch. At best, he could be considered a neutral. He seems a man with no discernible moral, or ethical compass. The Obama Doctrine, "don't do stupid shit, " is more a CYA self protection device than it is a doctrine. But this is all one should expect from a man whose sole drive to become President of the United States was to have "President of the United States" at the top of his resume. Obama puts to rest the argument that the first half of the Boomer cohort, which the Clinton's represent, are somehow more venal, and self serving than the second half, which the Obama's represent. Walter Russell Mead weighs in on another important topic within the article. "The fallout from President Obama’s indiscreet remarks in Jeffrey Goldberg’s landmark Atlantic article has begun. One day after the article dropped, reports of the President dissing major world leaders and close allies fill the London papers, which highlight Obama’s belittling of David Cameron. The Times of London‘s headline blares, “Obama Lays Blame for Libya Mess on Cameron,” and continues: In highly unusual criticism of a serving British prime minister from his American ally, Mr Obama claimed that Mr Cameron stopped paying attention soon after the 2011 military operation because he was “distracted by a range of other things”. Mr Obama also made clear that he forced Mr Cameron to sign up to Nato’s benchmark of spending 2 per cent of GDP on defence. “Free riders aggravate me,” he told The Atlantic magazine, which reported that he instructed Mr Cameron “to pay your fair share” during a G7 summit last year. The Financial Times (“Obama Criticizes ‘Free Riding’ Allies in 2011 Libya Campaign”) notes that the French came in for a beating too: Mr Obama said that British prime minister David Cameron was “distracted” in the months after the death of Mr Gaddafi and suggested that then French president Nicolas Sarkozy was more interested in trying to “trumpet” his country’s involvement in air strikes in Libya than ensuring a peaceful transition to a new government.[..] In an interview in which the president already appeared to be letting down his guard with 10 months still left in office, some of Mr Obama’s most pointed comments were directed at Mr Cameron.[..] On the French role in the Libyan campaign, Mr Obama said that “Sarkozy wanted to trumpet the flights he was taking in the air campaign, despite the fact that we had wiped out all the air defences and essentially set up the entire infrastructure” for the intervention. Expect more shoes to drop—and the anger in London and Paris will be less damaging than the fallout in other parts of the world. For instance, the Iranians are starting to weigh in: (Laura Rosen tweet:) Adviser to Iran president citing Obama on Iran/KSA need to share Middle East, work out a cold peace … The Iranian trumpeting of Obama’s position will almost certainly not be warmly received in Riyadh, Dubai, and Amman." An American President, a feckless, dithering, decisionally impaired fool, has the temerity to blame other leaders for his incompetence?! But of course, President Feckless ODither has been blaming anyone, and everyone for his incompetence since taking the oath of office. This is his seminal accomplishment, blaming others, and whinging about how hard his job is while only making vague attempts to perform the duties, then going golfing, or spending tens of millions of taxpayer dollars vacationing. We should have simply bought an island, and ship him off for the duration. Even that idiot pretender Biden could not have done worse. One thing we need to do post haste is to begin pressuring the calcified cankers which remain in the Middle East, primarily Saudi Arabia, and its Salafist/Wahhabist supporters to begin an Islamic "protestant reformation." The Saudi/Wahhabist association has become as horrible, and deadly as the Catholic church prior to the Protestant Reformation. The cure for this is for the US to begin to create better relations with Iran, while politically pressuring the House of Saud for reform. If that does not happen, we may need to support Iran and the Shite factions in what appears to be a building war of reformation. While this is not a significant point made in the Atlantic article, it is necessary, post haste. Mead ends his piece: "This sets up an odd duality: the President in the interview is reflective, thoughtful, making a strong case for why he is wiser and more far seeing than other people. But on the other hand, running your mouth and being openly contemptuous and dismissive of fellow leaders to a journalist is the mark of a careless and clumsy amateur. As so often is the case with this President, there’s a wide gap between the cerebral processes and the ill-considered actions. This would be somewhat explicable in the rookie year of a presidency, but it’s very hard to understand in the final year of an Administration." The answer to this enigma is that the actions are Obama's own, clumsy, amateurish, the naif in over his head. The later reflective, thoughtful is the spin his handlers/advisers feed him to respond to the accurate claims of incompetence. Obama is not stupid by any account, he is inexperienced, and he was Peter Principled years ago, and once PP'ed no one can learn, or gain experience, this is like the child who missed out on 4th - 7th grade math, unquestionably lost. The the only solution to this problem is to return to the experiences missed and gain the experiences the old fashioned way, by crucible. Obama emotionally cannot do this, and will never go back. He is terminally incompetent. But looking back at the Obama Presidency is valueless. What we must do now is look forward, and determine what we, as a nation need going forward. We need to leave the hoary old Cold War mentality once and for all, and we need to seriously rethink our goals in the Middle East, and our strategy to achieve those goals. Obama cannot do this, it will be up to the next President. The time of choosing is at hand. Choose wisely. |
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