The Chinese contraction is now so obvious that even Russia is fretting!

Russia is freaking out about China's slowdown

Readers here have been tuned into this issue for quite awhile. The problem stems from the fact that the progressive model has finally begun  to eat itself in the first world. The US economy is on extreme low simmer, Europe is only on extreme low simmer in a few of the best performing countries like Germany, while most of the rest are either room temperature, or in the ice box! The BRICS were knocked out by a solid shot on the chin, although India is only now sliding out into hard times. The rest of the world is puttering along, but there is not enough oomph to motivate anything like the world economy. 

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The result is China is faced with economic doldrums. In the past it might have simply juiced its economy with a bolus of construction spending, but that has been overdone, and the amount of bad debt now so large that additional infusions are unproductive. 

Russia is starving, demand for oil is low, supply is high, and Russia's economy is showing the recessionary pressures. 

Maddog has predicted low and declining oil prices because of these economic factors. The oil bulls have been buying on even the most remote or minor supply problems. Even so, supply still outstrips demand. This has driven up the price of oil. 

Right now China is continuing to buy oil, but this is burning foreign currency reserves. And China cannot afford to continue to burn these reserves. This is exacerbated by the asset buying spree the wealthy Chinese are on, especially the foreign assets, and homes in the US, Australia, Canada, etcetera. 

Russia has recently been able to ink oil deals with China, however, if China heads into a low growth economic period, the oil purchases will have to decline. China has been buying up supply sans demand for quite a while assuming that world demand for Chinese products would spring back. It hasn't. 

Once China has to cut oil purchases, Russia, and Saudi are in for a serious shock. The Russian economy is in bad shape today, that will likely accelerate if China seriously cuts oil purchases. Same goes for Saudi, but it has the ancillary problem of being in an existential war with Iran vis-a-vis the Islamic Reformation.

Shocking as it sounds, this is playing out perfectly! Well, except for the US economic doldrums which are driven by the dying progressive socioeconomic model. 

One cannot have everything!

Expect oil prices to weaken, and expect the oil bulls to view every minor tribulation in the oil industry as proof of the next boom. It may take bankrupting these folks before they will learn this lesson. Sigh.

Don't forget fracking lowers global carbon output, and is by any calculation "green." Alternative energy is at best useless, or more commonly increases carbon output, and is not "green." 

Fussy environmentalists/progressives will not accept this reality and so will continue to fight for the wrong side. Regardless, we will continue to reduce carbon from our energy, just as we have done since time immemorial. The "greens" will slow this process but cannot stop it.