Geopolitics/Geoeconomics Thread - June 2015
Re: Geopolitics/Geoeconomics Thread- June 2015
Yes In your own alternate universe miltary power to enforce its rules does not matter and people automatically follow the law laid by US. The truth it is the Miltary strength, backed by Technological Know how and systems in place which gives the US the ability to enforce its rules.
Re: Geopolitics/Geoeconomics Thread- June 2015
Looking at the events, it appears that Ukraine was a diversion put in to limit Russian involvement in ME, which might have been expected by US. If Russia had taken the bait and entered Ukraine, it would not have been in a position to influence ME. And radical Islam piercing in from South via Caucasus region would put an Afghanistan like insurgency at its door step.kmkraoind wrote:Putin has warded off attempts to isolate Russia - Kanwal Sibal in Dailymail.co.uk
The Syrian intervention shows that Vladimir Putin does not feel that his margin of geopolitical manoeuvre has shrunk after the confrontation with the West over Ukraine, and the annexation of Crimea.
The US has tried to isolate Russia politically and impose economic costs on it through sanctions. Instead of being put on the defensive, Russia is defending its interests with confidence. It has coordinated its intervention with Iran and Iraq, demonstrating that it is not isolated even in this highly-sensitive region hitherto largely dominated by the US and its allies.
Re: Geopolitics/Geoeconomics Thread- June 2015
Russian intervention in Syria is a tipping point in modern geopolitics. It has tipped the scales between Atlantic Ocean powers and Eurasian land based powers. Its a Mackinder moment.
France has understood and jumped into attacking ISIS.
ISIS is creation of Sunni Arab states with US support to hold down Persia.
If it happens then Eurabia is next.
And who know about India?
France has understood and jumped into attacking ISIS.
ISIS is creation of Sunni Arab states with US support to hold down Persia.
If it happens then Eurabia is next.
And who know about India?
Re: Geopolitics/Geoeconomics Thread- June 2015
When they got off the gold standard they quickly switched over to backing dollar with oil trade. All their special attention and meddling in the Middle East isn't because of love for humanity. Military has allowed for the continued relevance of the petrodollar. Everyone from Kissinger to Kerry have admitted this.panduranghari wrote:RoyG,
US has held that gun to the head of world for about 70 years. They ran down the gold standard by 1971, even though it was their idea. The world stayed with dollar as there was no 'go to' currency. After 1971, the number of economic crisis has increased in number and intensity.
OPEC crisis -1973
Latin American debt crisis -1980
Japanese asset price bubble -1986
Black Monday-1987
Nordic economic crisis-1988
Indian economic crisis-1991
Mexican crisis-1994
Asian financial crisis-1997
Russian economic crisis-1998
Dot com crash-2000
Housing bubble in the west-2003
Sub prime mortgage crisis-2007
Anglo-saxon financial crisis-2008
All are directly related to the dollar. The role of dollar in all these crisis is what we need to understand.Today the world does not need the dollar as it did in 1971. The world has changed and we are still playing by the old rules. That just cannot go on. The USA probably also knows this. So it has now held the gun to its own head and they are trying to instigate wars all over the world.von Mises wrote:There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
If you say, the US army is also responsible for the use of the international use of the dollar- then why did USA so hastily get the pacific rimland countries to sign the TPP? They even included Vietnam in the TPP. Surely greatly powerful army of the USA is not scared of Vietnam?
Re: Geopolitics/Geoeconomics Thread- June 2015
He's only partially right. One of the major pillars of the dollar is oil transactions which are routed through the IPE or NYMEX. Any country that even hints at doing things differently will get reduced to rubble and their leaders knifed up the a** or hung.mohanty wrote:I think Panduranghari is right...US is not a superpower due to it's military but it is the dollar. Military is a parasite, it is the economy that feeds it. If that was not the case USSR would still be around. Chinese know this very well. That is why Chinese want Yuan in IMF SDR and are building massive gold reserve while our "modernizer" Mr. Modi calls gold a dead-asset trying to scam the citizens into his Ponzi gold-deposit scheme.
Re: Geopolitics/Geoeconomics Thread- June 2015
Correct. Now this is being challenged by the combined strength of Russia and China.Aditya_V wrote:Yes In your own alternate universe miltary power to enforce its rules does not matter and people automatically follow the law laid by US. The truth it is the Miltary strength, backed by Technological Know how and systems in place which gives the US the ability to enforce its rules.
Re: Geopolitics/Geoeconomics Thread- June 2015
Russian int'l arms sales surge while western defense firms lose market share
http://news.yahoo.com/lightbox/sales-ru ... nance.html
http://news.yahoo.com/lightbox/sales-ru ... nance.html
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Re: Geopolitics/Geoeconomics Thread- June 2015
http://www.al-monitor.com/pulse/origina ... -east.html
Important article detailing the geopolitical fallout of Erdogan`s stupidity in Central and West Asia.
Important article detailing the geopolitical fallout of Erdogan`s stupidity in Central and West Asia.
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Re: Geopolitics/Geoeconomics Thread- June 2015
More developments in the Caucasus
http://www.todayszaman.com/op-ed_toward ... 09718.html
http://www.todayszaman.com/op-ed_toward ... 09718.html
Re: Geopolitics/Geoeconomics Thread- June 2015
We need to step back and look at world events and how they impact India in say next decade 2016 to 2026.
Instead of long essays I want to post some thoughts as they come to mind.
Feel free to add.
Instead of long essays I want to post some thoughts as they come to mind.
Feel free to add.
Re: Geopolitics/Geoeconomics Thread- June 2015
Russia in an attempt to increase it's influence in Eastern Europe and Eurasia will prop up China militarily to protect itself from US forces in the Pacific. This ultimately means that there will be a thaw in relations between Russia and Pakistan and Tibet will be off limits for us in the foreseeable future.ramana wrote:We need to step back and look at world events and how they impact India in say next decade 2016 to 2026.
Instead of long essays I want to post some thoughts as they come to mind.
Feel free to add.
Re: Geopolitics/Geoeconomics Thread- June 2015
Don't forget the latest front created by Unkil: http://www.avaaz.org/en/
Re: Geopolitics/Geoeconomics Thread- June 2015
^^^^
Even since Green Pi$$ was boxed by the GoI, this new front has picked up the baton in Bharat.
Even since Green Pi$$ was boxed by the GoI, this new front has picked up the baton in Bharat.
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Re: Geopolitics/Geoeconomics Thread- June 2015
BRF ahead of the curve yet again
https://soundcloud.com/ecfr/ecfrs-world ... for-europe
The ECFR people are finally recognising Geo-economics as critical as geo-politics.
https://soundcloud.com/ecfr/ecfrs-world ... for-europe
The ECFR people are finally recognising Geo-economics as critical as geo-politics.
Re: Geopolitics/Geoeconomics Thread- June 2015
disha wrote:A very apt question., let me attempt to answer.Austin wrote: And if Chinese Debt is corporate debt which companies have borrowed during to ZIRP due to their own business reason then why should Chinese government worry , I mean of Chinese government itself has borred say in USD from US banks then they would have to pay back in USD but of the government itself has borrowed in Renminbi like India did in Rupee then they may not worry as well
Question is always, what is the company doing with borrowed money? The borrowed money is utilized in several ways, but primarily it is to expand business. That means either invest in R&D to create new markets for different products or address demand in existing markets or raise your productivity to make your products/services cheaper and enhance your margins.
Of course there is significant overlap on those areas, for example setting up an airline with latest boeing airplanes for reduced operating costs and service standards matching or exceeding singapore airlines may ensure that you are on path to profitability. But doing exactly the reverse will ensure that your debt goes to naught. For example: ordos. Large cities that are unoccupied!
Second is debt servicing. How much of the revenue is spent to pay back the interest on the debt. With falling margins (shrinking or stalling economy for eg), the amount left for debt servicing is less and then corporate enters into a debt spiral., that is they borrow more to pay the previous debt.
In effect, it is like the desi student who keeps on opening credit cards (lines) and takes money from new line to pay for the previous line, till either the desi student gets a job or declares bankruptcy.
Chinese corporate debt is in that spiral. As chinese companies start going into bankruptcy (in china there is no real bankruptcy)., they clog up the money supply route. Basically they owe a debt to say the bank, but are not paying back and the bank stops giving credit to others. This creates demand destruction and asset deflation we enter into 'deflation'.
Since nothing is real in Chinese numbers., there is real fear of China entering into a deflationary cycle and pulling the rest with them (commodities).
In US, the frackers borrowed some US $400 Billion from banks., and now with fall in oil prices, their margins are squeezed (waay squeezed) which means when they are pumping more oil to meet their revenue targets and debt servicing. When the oil runs out (eventually it will be costly to get the oil out), they will go bankrupt and clog up some $400 Billion of bank debt. Of course there are others who will buy their asset at the cheap and the banks (or the current creditors to the frackers) will have to eat up the loss. And this is what is roiling the US markets.
Of course there is a silver lining somewhere.
If India grows at 7.5/8 per year for next 10-15 years., it becomes the next growth engine of the world. That is, India will need oil, gas, coal, copper, iron, cement, sand, rice, wheat, coffee... (commodities)..., planes, trains, automobiles, (infrastructure)..., banking, financial, IT, transportation services ... .
And with low commodity prices, India is at an advantage to grow and grow fast. Another feather is that Indian economy itself has internal demand. That is lot of what India produces is consumed within India (pulses for eg!)., which China does not have. The good part with internal demand is that the country does not have to depend upon an external factor to goose up the demand and also Internal demand is more equitable.
So coming back to your question, yes China can write off all the debt of its chorporates. But without internal demand (or external demand)., it will lead to stagflation. That is stagnant growth and high inflation. Something India was at (or skirted around) in 2010. And the problem persists, since there is not much demand or tepid demand and increased money flow - any shock to the economy will lead to hyper inflation (which several S. American countries are familiar with). Asian economies going into hyperinflation is unlikely (that is because of the unique indic culture imparted to the rest of Asia from India - more on it some other day)., so stagflation is what China will skirt around for a while.
For India, it has to put all the public sector NPA to a better use. However the currency bankruptcy laws prevent a wholesale cleanup.
Re: Geopolitics/Geoeconomics Thread- June 2015
The oil-rich are on a slippery slope - G.Parthasarathy, Business Line
The global economy has been shaken in recent days by an unprecedented fall in oil prices. This is particularly so in our oil rich Persian Gulf neighbourhood, from where a substantial share of global oil exports emanates. The economies of other major oil exporting countries such as Russia and Venezuela have also been shaken by falling revenues from oil exports.
Saudi Arabia, which hosts two million Indian workers and was till recently our largest supplier of oil, has played a dominant role in determining global oil prices. Its economic growth has fallen from 7 per cent to 3.4 per cent in 2015, and is set to fall to 2.3 per cent in 2016. With half its population aged below 25 years, youth unemployment in Saudi Arabia is unacceptably high. Moreover, with 75 per cent of its budget met from oil revenues, Saudi Arabia has been forced to take harsh measures which will spiral inflation, even as its foreign exchange reserves fall steadily. Other neighbouring oil rich Arab Gulf states will face similar challenges.
Signs of discontent
There are signs of domestic discontent in Saudi Arabia, amidst this difficult economic situation. The Shia population located in the oil rich areas there has been infuriated by the recent beheading of the influential Shia cleric, Sheikh Nimr Baqir Al-Nimr. Worse, the kingdom is now embroiled in an unpopular military intervention in neighbouring Yemen, to restore a former president to office. Saudi Arabia is being assisted by Sunni Arab states such as Egypt, Jordan, Kuwait, Bahrain, the UAE and Qatar, in this military intervention. It has mounted relentless air strikes in Yemen, resulting in the displacement of 2.5 million Yemenis. 78 per cent of the Yemeni population is in desperate need of water, food and medical assistance. To add fuel to fire, American defence companies have reportedly supplied weapons and equipment to Saudi Arabia, at an estimated cost of $1.29 billion, for precision bombing
Iran has been blamed for supporting the opposition to the Saudis mounted by Yemeni Shia Houthis. Iran has partnered Shia-dominated Iraq, the Bashar al-Assad-led Shia dominated government in Syria, and the Shia Hezbollah in Lebanon, to challenge the Sunni armed opposition in Syria, which is backed by Saudi Arabia, Qatar and Turkey. These developments have followed the American invasion and ouster of Saddam Hussein’s Sunni-dominated government in neighbouring Iraq and its replacement by the Shia-dominated regime of Nouri al-Maliki. The Maliki dispensation disempowered Sunnis, triggering a civil war and the emergence of ISIL. Moreover, ill-advised American support for the effort to overthrow the regime of al-Assad has led to the exodus of millions of Syrians from their homes. It has also triggered a refugee exodus into the heart of the European Union. The ISIL has, meanwhile, emerged as a potent force, creating prospects for strife across the Islamic world, which threatens regional and global security.
Mistaken view
Washington may believe that this situation will end by crushing the ISIL militarily in Iraq and Syria, which it may well succeed in doing in year or more. But, the ‘Jihadi Johns’ from Europe and their jihadi comrades who have come from fellow Arab/Islamic countries to make common cause with the ISIL, will disperse to havens in Libya and elsewhere, including in their own countries. The flow of ISIL supporters to Libya, which was torn apart by American, French, and British military intervention, will inevitably result in efforts to destabilise Saudi Arabia and many of its Arab partners. In his last State of the Union address, President Barrack Obama presented a bleak picture of the prevailing situation in the Islamic world, extending from Pakistan and Afghanistan, to Turkey. He proclaimed: “Instability will continue for decades in many parts of the world — in the Middle East, in Afghanistan and Pakistan, in tracts of Central Asia. Some of these places may become safe havens for new terrorist networks; others would fall victim to ethnic conflict, or famine, feeding the next wave.”
Interestingly, these developments have led to a tacit alliance between Saudi Arabia and Israel. One sincerely hopes that Iran will not return to the rhetoric of the years of President Ahmadinejad, who spoke of “wiping Israel off the map”. With the end of sanctions on Iran, the US would try to become more even-handed on Saudi-Iranian rivalry. But, the Saudi-Israeli partnership will carry considerable clout in Washington. Saudi efforts to forge an alliance of 34 Sunni Islamic countries, ostensibly to deal with the challenges posed by ISIL and Iran, have, in the meantime, not succeeded in getting firm commitments of military support from its members. Pakistan has two defence agreements with Saudi Arabia, signed in 1982 and 2005, to provide Riyadh with military assistance if its security is threatened. Nawaz Sharif has, however, endeavoured to be seen to be even-handed in conflicts between his two “Muslim brothers” during his recent visits to Riyadh and Tehran.
With nuclear sanctions against Iran having been lifted, the entire region is now the subject of global attention, with President Xi Jinping visiting Saudi Arabia, Egypt and Iran. The Emir of Qatar has visited Moscow, primarily to discuss the Syrian crisis — Qatar hosts the US central command. With Obama determined to showcase normalisation of relations with Iran as a major achievement, the unease in Riyadh and Doha is palpable. Both Iran and Saudi Arabia have made it clear that they see China as their primary market for increased oil exports. India will have to move dexterously in meeting these challenges in its western neighbourhood.
Being prepared
While moving ahead with strengthening its close relations with Egypt, Saudi Arabia, Iran and Israel — the major powers in West Asia — New Delhi will have to prepare for contingencies affecting the safety of its nationals living in the region. With falling oil prices, India’s partners in the Arab Gulf Cooperation Council will be unable to increase the recruitment of expatriates from India. The flow of remittances from Indians abroad will not increase, as in the past. While the end of sanctions against Iran will lead to an increase in its oil revenues, the main beneficiaries of greater interaction with Iran will initially be China and the European powers. We share common interests with Iran on Taliban extremism in Afghanistan, and transit to Afghanistan and Central Asia. It would serve our interests well if, this year, the Prime Minister visited Saudi Arabia, Iran and Oman, whose leadership has been consistently friendly to us.
The writer was High Commissioner to Pakistan
Re: Geopolitics/Geoeconomics Thread- June 2015
Its all the more to pass the GST if it can give 2% boost to the economy while everything else is low.
BTW, Venezuela, Azerbaijan and other oil economies are in deep trouble for having banked on high oil prices and its now dropped to~ $34/barrel.
We should look at the impact of the low oil prices on the GCC, the CA stans and South American countries.
Mexico would take a hit and that would increase illegal immigration.
How is UK North Sea crude doing?
Will they lose Scotland finally?
BTW, Venezuela, Azerbaijan and other oil economies are in deep trouble for having banked on high oil prices and its now dropped to~ $34/barrel.
We should look at the impact of the low oil prices on the GCC, the CA stans and South American countries.
Mexico would take a hit and that would increase illegal immigration.
How is UK North Sea crude doing?
Will they lose Scotland finally?
Re: Geopolitics/Geoeconomics Thread- June 2015
Russia is becoming the new pivot of Eurasia.
On the West it ties with Germany
On the East it ties with China
From Baltic to Valadivostok.
Sort of Mackinder nightmare.
On the West it ties with Germany
On the East it ties with China
From Baltic to Valadivostok.
Sort of Mackinder nightmare.
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Re: Geopolitics/Geoeconomics Thread- June 2015
^ Russia is a paper tiger.
They had x10 the strength during the USSR, and nothing came of it.
Right now inflation is hitting hard, and Putin is still scrambling to quell dissent. Their economy and budget still has 44% of its revenue coming from oil, up from 33% in 2000. Meanwhile, all those investments they made for exotic Artic Oil are completely useless in ~$30 a barrel oil market. And a lot of those "new" deals they are signing with China are little more than renegotiations for long-term natural gas and oil contracts that are now more heavily in China's favor.
Meanwhile, their influence in Central Asia is being challenged by China, and Russia Far East can't be properly developed without opening the floodgates for East Asian migration. Something Russia is dreadfully fearful about.
Russia is going back into decline and isolation, their military might is meaningless, just like how it didn't stop the USSR from collapsing. There is absolutely nothing for them to look forward too in the near future that might change this. A new generation plane and tank won't save the economy, and oil is never going to go back up above $50 a barrel again.
They had x10 the strength during the USSR, and nothing came of it.
Right now inflation is hitting hard, and Putin is still scrambling to quell dissent. Their economy and budget still has 44% of its revenue coming from oil, up from 33% in 2000. Meanwhile, all those investments they made for exotic Artic Oil are completely useless in ~$30 a barrel oil market. And a lot of those "new" deals they are signing with China are little more than renegotiations for long-term natural gas and oil contracts that are now more heavily in China's favor.
Meanwhile, their influence in Central Asia is being challenged by China, and Russia Far East can't be properly developed without opening the floodgates for East Asian migration. Something Russia is dreadfully fearful about.
Russia is going back into decline and isolation, their military might is meaningless, just like how it didn't stop the USSR from collapsing. There is absolutely nothing for them to look forward too in the near future that might change this. A new generation plane and tank won't save the economy, and oil is never going to go back up above $50 a barrel again.
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Re: Geopolitics/Geoeconomics Thread- June 2015
There was a chart on the cost of extraction of 1 barrel of oil from the ground in a Dhaga -- not this one below but it suffices to make a point (the numbers here seem too low for saudi, which was pegged at 9$ rather than 3$).
The Saudis and West Asian Nations, can extract oil for less than 10$ and sell it for 30$ , but the Russians seem to require 15$ per barrel, and sell it for 100% profit at 30. States like Oman, Qatar, Iran, and Algeria are in the same boat as Russia in being hurt by Saudi price cuts. UK's North Sea extraction is 44$ a barrel, so they are taking a loss like the US shale companies and canadian tar sands companies, with production costs 2-3 times as much.
Maybe all of these states will try to diversify and cut public spending to make up for loss in revenue, if they can, but KSA seems to think they can sustain their wanton spending and continue their plans for world domination even if prices drop to 20$ per barrel, and that too when the entire saudi society lives on 100% govt. welfare/subsidy for all things, including marriages ceremonies and college education.
KSA must have done some madrassa mathematics and put the decimal point in the wrong place to come up with this kind of self-defeating decision to lower oil prices.
The Saudis and West Asian Nations, can extract oil for less than 10$ and sell it for 30$ , but the Russians seem to require 15$ per barrel, and sell it for 100% profit at 30. States like Oman, Qatar, Iran, and Algeria are in the same boat as Russia in being hurt by Saudi price cuts. UK's North Sea extraction is 44$ a barrel, so they are taking a loss like the US shale companies and canadian tar sands companies, with production costs 2-3 times as much.
Maybe all of these states will try to diversify and cut public spending to make up for loss in revenue, if they can, but KSA seems to think they can sustain their wanton spending and continue their plans for world domination even if prices drop to 20$ per barrel, and that too when the entire saudi society lives on 100% govt. welfare/subsidy for all things, including marriages ceremonies and college education.
KSA must have done some madrassa mathematics and put the decimal point in the wrong place to come up with this kind of self-defeating decision to lower oil prices.
Re: Geopolitics/Geoeconomics Thread- June 2015
KSA wants hurt Iran and Russia. Hence low oil price. Used in mid 80s during Afghan war.
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Re: Geopolitics/Geoeconomics Thread- June 2015
^ They want to hurt US Shale more than anything. KSA will lose just as much revenue as Iran, so it is unlikely a major contributing factor to their decision. Hurting Russia is just a bonus for them. Remember, when OPEC+Russia agreed to drive up prices by cutting production, the Russians were notorious for going back on their word and cheating by increasing production numbers. So now the Gulf countries will not listen to their pathetic pleas to increase oil prices.
Right now ME and other gulf countries have two options:
1. Cut production and let oil rise back up increasing revenue, but lose substantial market-share to Russia, USA, and unconventional oil such as Africa and North Sea among others in the process. Very unlikely.
2. Ramp up production and let everyone who can't pump at higher than $50 go broke and never allow oil to go back up high enough to let shale and others to challenge them. Offset lost revenue by decreasing spending and heavy production increases. Very likely, as Gulf countries like SA have a +$600 Billion war-chest and practically no debt for short-term emergencies like this. They are very well prepared.
The key takeaway here is that if KSA and other Arab countries are solely focused on keeping market-share, then oil will never rise to +$50 ever again. Arabs aren't messing around here this is no 'experiment', they are firmly committed to this production increase so don't expect them to cut production anytime soon.
Of course this is all obviously very good for India. Decreased oil revenue for the time being means less money for export terrorism and Billions saved on imports.
Right now ME and other gulf countries have two options:
1. Cut production and let oil rise back up increasing revenue, but lose substantial market-share to Russia, USA, and unconventional oil such as Africa and North Sea among others in the process. Very unlikely.
2. Ramp up production and let everyone who can't pump at higher than $50 go broke and never allow oil to go back up high enough to let shale and others to challenge them. Offset lost revenue by decreasing spending and heavy production increases. Very likely, as Gulf countries like SA have a +$600 Billion war-chest and practically no debt for short-term emergencies like this. They are very well prepared.
The key takeaway here is that if KSA and other Arab countries are solely focused on keeping market-share, then oil will never rise to +$50 ever again. Arabs aren't messing around here this is no 'experiment', they are firmly committed to this production increase so don't expect them to cut production anytime soon.
Of course this is all obviously very good for India. Decreased oil revenue for the time being means less money for export terrorism and Billions saved on imports.
Re: Geopolitics/Geoeconomics Thread- June 2015
This is a proof that Eurasian politics is dominant politics in the world just like before 100 years ago.udaym wrote:Following is a long conversation on Ookrane, geopolitics, Eye-shish, CAR, IMF, federalization, motives etc. (Nothing that is not already known) [English subtitles, unfortunately]
Chaos and war came to Russia's borders ?
The Atlantic power politics is getting dominated by Eurasian politics.
This shift started in 2011 and is increasing with China and other countries inclining towards the Eurasian power.
The area between Urkaine, Turkey/Syria/ME and Caspian sea will dominate the world politics for the next 20 years.
The American dominance will reduce in the world politics.
Hence choas is created to keep the control over the world affairs
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Re: Geopolitics/Geoeconomics Thread- June 2015
Except West Asia, the break even price of crude the world over if $54 and above. The funny thing is many sovereign wealth funds from oil rich Saudi barbaria to so called progressive norway is run by the wall street types. And most have exposure to less than 5% gold.ramana wrote:Its all the more to pass the GST if it can give 2% boost to the economy while everything else is low.
BTW, Venezuela, Azerbaijan and other oil economies are in deep trouble for having banked on high oil prices and its now dropped to~ $34/barrel.
We should look at the impact of the low oil prices on the GCC, the CA stans and South American countries.
Mexico would take a hit and that would increase illegal immigration.
Oil price fall is IMO done by Saudi. I think they are backing away from the dollar settlement. And they would not do it unless they had alternative. IQ, IR and SA all pumping like crazy means the dollar glut is real.
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Re: Geopolitics/Geoeconomics Thread- June 2015
KSA wants to hurt USA hence the low oil price. Not related to shale, but shale is a collateral damage for the US. the bigger damage KSA is doing to the dollar.ramana wrote:KSA wants hurt Iran and Russia. Hence low oil price. Used in mid 80s during Afghan war.
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Re: Geopolitics/Geoeconomics Thread- June 2015
KSA is hurting multiple economies simultaneously, US's shale markets are going to collapse in the coming months, because of all the bad loans behind it.
But KSA will also have a problem in their hands soon enough because of the enormous subsidies to Saudi citizens is not sustainable if profits are slim -- even x*100% profit margin could be slim if their burgeoning population and govt. spending rate is higher than oil revenue. This in turn puts pressure on the monarchs to continue subsidies beyond the point where their revenues cannot keep up -- leading to political consequences when subsidies are cut over time.
But KSA will also have a problem in their hands soon enough because of the enormous subsidies to Saudi citizens is not sustainable if profits are slim -- even x*100% profit margin could be slim if their burgeoning population and govt. spending rate is higher than oil revenue. This in turn puts pressure on the monarchs to continue subsidies beyond the point where their revenues cannot keep up -- leading to political consequences when subsidies are cut over time.
Re: Geopolitics/Geoeconomics Thread- June 2015
a. if the "dollar glut" is real, the price of oil would be rising, not lowering.
b. the US consumer is getting a real nice expense cut which is leading to:
c. more miles driven and greater petrol usage which will eventually lead to:
d. an equilibrium in the price of oil when the speculators get used to the idea of:
e. the end of US QE in October 2014.
the amount of fracking loans in the US is purportedly $400 billion.
we spend that much on short, stubby, stealth jet airplanes.
thus, when and if the price of oil comes back up, so will the oil fracking industry as its technology and efficiency improves.
efficient producers will stay in the market, guaranteed.
b. the US consumer is getting a real nice expense cut which is leading to:
c. more miles driven and greater petrol usage which will eventually lead to:
d. an equilibrium in the price of oil when the speculators get used to the idea of:
e. the end of US QE in October 2014.
the amount of fracking loans in the US is purportedly $400 billion.
we spend that much on short, stubby, stealth jet airplanes.
thus, when and if the price of oil comes back up, so will the oil fracking industry as its technology and efficiency improves.
efficient producers will stay in the market, guaranteed.
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Re: Geopolitics/Geoeconomics Thread- June 2015
The oil fracking industry coming back up at some later point in time is not the point -- the loans for the fracking companies that are in trouble right now are already bad and will result in a market downturn, even if transient.
Re: Geopolitics/Geoeconomics Thread- June 2015
OK time for two big lessons:
The oil card of the 1973's is dead. After Yom Kippur war, the Arab oil OPEC penalized the West by raising oil prices to hurt them economically. they were gleefully supported by the Seven Sisters of Big Oil. Now with fracking, return of Iran and KSA cussedness OIL card is dead.
Simultaneously, Nixon-Kissinger's China card is also dead. In 1971, N-K duo played the China card to split the Communist front of FSU-PRC. FSU is gone within 20 years after that by 1991. However US continued the China card to get rid of polluting industries, scare Asia with Chinese dragon, and all that. Now China card is dead fro various reasons as they start emerging on their own.
So the geo-politics of the 1970s is dead. Its a new world.
The oil card of the 1973's is dead. After Yom Kippur war, the Arab oil OPEC penalized the West by raising oil prices to hurt them economically. they were gleefully supported by the Seven Sisters of Big Oil. Now with fracking, return of Iran and KSA cussedness OIL card is dead.
Simultaneously, Nixon-Kissinger's China card is also dead. In 1971, N-K duo played the China card to split the Communist front of FSU-PRC. FSU is gone within 20 years after that by 1991. However US continued the China card to get rid of polluting industries, scare Asia with Chinese dragon, and all that. Now China card is dead fro various reasons as they start emerging on their own.
So the geo-politics of the 1970s is dead. Its a new world.
Re: Geopolitics/Geoeconomics Thread- June 2015
spot on, Ramana.
Re: Geopolitics/Geoeconomics Thread- June 2015
TSJ, Means a lot of consequent fallouts.
No more Chinese and Arab funding both sides of the political spectrum etc....
No more Chinese and Arab funding both sides of the political spectrum etc....
Re: Geopolitics/Geoeconomics Thread- June 2015
Posting here due to geopolitics/economic relevance....
EU must have realized how much they are hurting themselves at the expense of forwarding someone else's geopolitical interest. Wonder if the following is moving with a parallel track with Syria related negotiations...
Some European countries want Russian sanctions lifted
EU must have realized how much they are hurting themselves at the expense of forwarding someone else's geopolitical interest. Wonder if the following is moving with a parallel track with Syria related negotiations...
Some European countries want Russian sanctions lifted
Visa and MasterCard join Russia’s National Card Payment SystemSenator John McCain says the US will decide when EU sanctions on Russia can be lifted. The issue of sanctions is expected to be discussed next week in Munich, with many EU countries unhappy that the restrictions are adversely affecting their economies....
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Re: Geopolitics/Geoeconomics Thread- June 2015
In 12 out of 16 comparable cases, war ensued, apparently. Interestingly in the remaining 4 cases, 3 ensured no-war due to n-abled MAD conditions. Which prevail today w.r.t. US and PRC.KrishnaK wrote:The Thucydides Trap: Are the U.S. and China Headed for War?
Weak article, IMHO. No new insight, just rehashing of old tales. Could've been written by an AI machine, for all I know.
Re: Geopolitics/Geoeconomics Thread- June 2015
Book of Extremes: Why the 21st Century Isn't Like the 20th Century By Ted G. Lewis
2014 | 196 Pages | ISBN: 331906925X |
Multi agent modeling program.
2014 | 196 Pages | ISBN: 331906925X |
Hari read all and start a study group in your place.What makes the 21st century different from the 20th century? This century is the century of extremes -- political, economic, social, and global black-swan events happening with increasing frequency and severity. Book of Extremes is a tour of the current reality as seen through the lens of complexity theory – the only theory capable of explaining why the Arab Spring happened and why it will happen again; why social networks in the virtual world behave like flashmobs in the physical world; why financial bubbles blow up in our faces and will grow and burst again; why the rich get richer and will continue to get richer regardless of governmental policies; why the future of economic wealth and national power lies in comparative advantage and global trade; why natural disasters will continue to get bigger and happen more frequently; and why the Internet – invented by the US -- is headed for a global monopoly controlled by a non-US corporation. It is also about the extreme innovations and heroic innovators yet to be discovered and recognized over the next 100 years.Complexity theory combines the predictable with the unpredictable. It assumes a nonlinear world of long-tailed distributions instead of the classical linear world of normal distributions. In the complex 21st century, almost nothing is linear or normal. Instead, the world is highly connected, conditional, nonlinear, fractal, and punctuated.Life in the 21st century is a long-tailed random walk – Levy walks -- through extreme events of unprecedented impact. It is an exciting time to be alive.
Multi agent modeling program.
Re: Geopolitics/Geoeconomics Thread- June 2015
Makes sense.Shreeman wrote:saudi need to jump in. a lot of the problems in the world will be solved if saudi decide to invade. kuwait, uae etc will be history along with saudi. bahrain will have interesting issues. turki cant rake on pkk. all the sunni gelf has been eunuched by houthis. these paper tigers going away takes down more than one four father and triggers a flow back in bakistan too. there is much to rejoice if salman will just keep his panties on and decide to jump in the fight. a reorganisation there minus the 14th century stuff would do wonders for progress.
they have to. send in moral and diplomatic support egging them on. send saudi ships to black sea to fight russia directly, base the air force at incirlik. i mean, joy, this match could finally live up to its billing if the saudis join in. mind you, ballistics will join the game day 1 if this happens. we will see whether the chinese material is any better than green painted ding dongs. what is salman waiting for? he has his coalition ready already, bring in the bakis officially too.
i cant even write straight up just at the prospect of bakis beaching themselves in tartus.
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Re: Geopolitics/Geoeconomics Thread- June 2015
There is recent precedent to indicate that Saudi royal family are incompetent cowards, with a keen interest in protecting their oil loot, which will put at risk if they take on the IS and give IS ideas about bringing down the monarchy.
Don't see why KSA govt. would be motivated to take on the IS and be an active part of the war at the US's behest. They would rather do some houthi bloodletting in Yemen, and they can't even manage that and have to hire mercenaries from Sudan and elsewhere. It would be lovely to have the saudis go and fight wars and destroy themselves, but what about their fear of losing their wealth and control of the world largest cult's "holy places", which also happens to be an eternal cash cow of money and influence from pure green followers from all over the globe?
Don't see why KSA govt. would be motivated to take on the IS and be an active part of the war at the US's behest. They would rather do some houthi bloodletting in Yemen, and they can't even manage that and have to hire mercenaries from Sudan and elsewhere. It would be lovely to have the saudis go and fight wars and destroy themselves, but what about their fear of losing their wealth and control of the world largest cult's "holy places", which also happens to be an eternal cash cow of money and influence from pure green followers from all over the globe?
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Re: Geopolitics/Geoeconomics Thread- June 2015
US shale doesn't seem to be as expensive as everyone seems to think:ThiruV wrote:The oil fracking industry coming back up at some later point in time is not the point -- the loans for the fracking companies that are in trouble right now are already bad and will result in a market downturn, even if transient.
http://www.bloomberg.com/news/articles/ ... rong-at-30
Saudis aren't running US shale out of business overnight. At best they will freeze investment and damage other higher priced players, but not run the entire, or even majority, of the market out of business. Other players like Venezuela would have collapsed in the meantime, which are the real targets of SA. SA wants to annihilate everyone who runs at a loss at +$50 a barrel to regain market-share, and discourage expansion of the lower profit ~$30-40 oil which is where a lot of the US Shale appears to be at. This would only be possible if they show a long-term commitment to running oil prices low, which is why I believe this <$50 barrel oil will persist until oil is replaced as the primary fuel for transportation. SA has state before (http://www.reuters.com/article/us-saudi ... 6C20150428)that they want a solid and predictable price where they control the market, and not this rampant speculation and oil swings that funds unconventional oil and diminishes their share.
Overall, I see 'low' oil prices as a permanent market correction, and not a temporary downward swing.
Re: Geopolitics/Geoeconomics Thread- June 2015
At some point of time, with no new wells coming on line and current wells drying up, the supply has to dwindle. Its at least 5 years before electric cars take over big time causing a downfall in oil demand. So between shale oil getting reduced and electric cars taking over, I see 3 to 4 years of oil at greater than 50$/barrel or even closer to 80$/barrel.
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Re: Geopolitics/Geoeconomics Thread- June 2015
It is a question of competitiveness in the current price slump, not absolute cost. Shale extraction is closer to 100$ per barrel compared to between ~6$ (for KSA) and ~20$ (for russia), and thus not competitive in US markets or in the intl market. It has been reported that shale companies are bleeding money and will bleed less by not extracting. There are lot of players in the shale industry and a bunch of loans about to go bad, based on the books of these players today, and this could one of these coming months.charkra.in wrote: US shale doesn't seem to be as expensive as everyone seems to think:
If these low prices are permanent, then these shale companies have no chance of surviving in the short term.
Once that happens, the consensus seems to be the weaker ones are going to be culled and the more financially sounds are going to be taken over by larger corps., which will absorb the losses until some future point when shale becomes profitable again, but when that is going to happen is anybody's guess. So shale may not be expensive compared to OPECs prices in the past, and the current slump is estimated to be temporary. I think the question has been: how long the Saudis can sustain low prices?