[Peace-discuss] US Risks Economic Crash In Oil War With Russia

Thu Dec 18 10:52:03 EST 2014

Description: Putin

Just don't.

On 12/18/2014 09:08 PM, David Johnson via Peace-discuss wrote:
>
> *In conjunction with this development is the sudden announced ending 
> of the embargo against Cuba.*
>
> *It makes sense if you look at what it appears their new priorities 
> are in regards to encircling Russia and destabilizing Putin. The U.S. 
> elites don’t want a Russian ally so close to the U.S.*
>
> **
>
> **
>
> *US Risks Economic Crash In Oil War With Russia*
>
> Description: Putin
>
> Educate! <https://www.popularresistance.org/category/educate/> Finance 
> and the Economy <https://www.popularresistance.org/tag/economy/>, Oil 
> & Gas <https://www.popularresistance.org/tag/oil-gas/>, Russia 
> <https://www.popularresistance.org/tag/russia/>, Syria 
> <https://www.popularresistance.org/tag/syria/>, usa 
> <https://www.popularresistance.org/tag/usa/>
> By Mike Whitney, www.counterpunch.org 
> <http://www.counterpunch.org/2014/12/16/the-oil-coup/>
> December 17th, 2014
>
> “John Kerry, the US Secretary of State, allegedly struck a deal with 
> King Abdullah in September under which the Saudis would sell crude at 
> below the prevailing market price. That would help explain why the 
> price has been falling at a time when, given the turmoil in Iraq and 
> Syria caused by Islamic State, it would normally have been rising.” 
> (Stakes are high as US plays the oil card against Iran and Russia 
> <http://www.theguardian.com/business/economics-blog/2014/nov/09/us-iran-russia-oil-prices-shale>, 
> Larry Eliot, Guardian)
>
> U.S. powerbrokers have put the country at risk of another financial 
> crisis to intensify their economic war on Moscow and to move ahead 
> with their plan to “pivot to Asia”.
>
> Here’s what’s happening: Washington has persuaded the Saudis to flood 
> the market with oil to push down prices, decimate Russia’s economy, 
> and reduce Moscow’s resistance to further NATO encirclement and the 
> spreading of US military bases across Central Asia. The US-Saudi 
> scheme has slashed oil prices by nearly a half since they hit their 
> peak in June. The sharp decline in prices has burst the bubble in 
> high-yield debt which has increased the turbulence in the credit 
> markets while pushing global equities into a tailspin. Even so, the 
> roiled markets and spreading contagion have not deterred Washington 
> from pursuing its reckless plan, a plan which uses Riyadh’s 
> stooge-regime to prosecute Washington’s global resource war. Here’s a 
> brief summary from an article by F. William Engdahl titled “The Secret 
> Stupid Saudi-US Deal on Syria”:
>
> “The details are emerging of a new secret and quite stupid Saudi-US 
> deal on Syria and the so-called IS. It involves oil and gas control of 
> the entire region and the weakening of Russia and Iran by Saudi 
> Arabian flooding the world market with cheap oil. Details were 
> concluded in the September meeting by US Secretary of State John Kerry 
> and the Saudi King…
>
> ..the kingdom of Saudi Arabia, has been flooding the market with deep 
> discounted oil, triggering a price war within OPEC… The Saudis are 
> targeting sales to Asia for the discounts and in particular, its major 
> Asian customer, China where it is reportedly offering its crude for a 
> mere $50 to $60 a barrel rather than the earlier price of around $100. 
> That Saudi financial discounting operation in turn is by all 
> appearance being coordinated with a US Treasury financial warfare 
> operation, via its Office of Terrorism and Financial Intelligence, in 
> cooperation with a handful of inside players on Wall Street who 
> control oil derivatives trading. The result is a market panic that is 
> gaining momentum daily. China is quite happy to buy the cheap oil, but 
> her close allies, Russia and Iran, are being hit severely…
>
> According to Rashid Abanmy, President of the Riyadh-based Saudi Arabia 
> Oil Policies and Strategic Expectations Center, the dramatic price 
> collapse is being deliberately caused by the Saudis, OPEC’s largest 
> producer. The public reason claimed is to gain new markets in a global 
> market of weakening oil demand. The real reason, according to Abanmy, 
> is to put pressure on Iran on her nuclear program, and on Russia to 
> end her support for Bashar al-Assad in Syria….More than 50% of Russian 
> state revenue comes from its export sales of oil and gas. The US-Saudi 
> oil price manipulation is aimed at destabilizing several strong 
> opponents of US globalist policies. Targets include Iran and Syria, 
> both allies of Russia in opposing a US sole Superpower. The principal 
> target, however, is Putin’s Russia, the single greatest threat today 
> to that Superpower hegemony. (The Secret Stupid Saudi-US Deal on Syria 
> <http://www.boilingfrogspost.com/2014/10/24/the-secret-stupid-saudi-us-deal-on-syria/>, 
> F. William Engdahl, BFP)
>
> The US must achieve its objectives in Central Asia or forfeit its 
> top-spot as the world’s only superpower. This is why US policymakers 
> have embarked on such a risky venture. There’s simply no other way to 
> sustain the status quo which allows the US to impose its own coercive 
> dollar system on the world, a system in which the US exchanges paper 
> currency produced-at-will by the Central Bank for valuable raw 
> materials, manufactured products and hard labor. Washington is 
> prepared to defend this extortionist petrodollar recycling system to 
> the end, even if it means nuclear war.
>
> *How Flooding the Market Adds to Instability*
>
> The destructive and destabilizing knock-on effects of this lunatic 
> plan are visible everywhere. Plummeting oil prices are making it 
> harder for energy companies to get the funding they need to roll over 
> their debt or maintain current operations. Companies borrow based on 
> the size of their reserves, but when prices tumble by nearly 50 
> percent–as they have in the last six months– the value of those 
> reserves falls sharply which cuts off access to the market leaving 
> CEO’s with the dismal prospect of either selling assets at firesale 
> prices or facing default. If the problem could be contained within the 
> sector, there’d be no reason for concern. But what worries Wall Street 
> is that a surge in energy company failures could ripple through the 
> financial system and wallop the banks. Despite six years of zero rates 
> and monetary easing, the nation’s biggest banks are still perilously 
> undercapitalized, which means that a wave of unexpected bankruptcies 
> could be all it takes to collapse the weaker institutions and tip the 
> system back into crisis. Here’s an excerpt from a post at Automatic 
> Earth titled “Will Oil Kill the Zombies?”:
>
> “If prices fall any further, it would seem that most of the entire 
> shale edifice must of necessity crumble to the ground. And that will 
> cause an absolute earthquake in the financial world, because someone 
> supplied the loans the whole thing leans on. An enormous amount of 
> investors have been chasing high yield, including many institutional 
> investors, and they’re about to get burned something bad….. if oil 
> keeps going the way it has lately, the Fed may instead have to think 
> about bailing out the big Wall Street banks once again.” (Will Oil 
> Kill the Zombies? 
> <http://www.theautomaticearth.com/will-oil-kill-the-zombies/>, Raúl 
> Ilargi Meijer, Automatic Earth)
>
> The problem with falling oil prices is not just mounting deflation or 
> droopy profits; it’s the fact that every part of the 
> industry–exploration, development and production — is propped atop a 
> mountain of red ink (junk bonds). When that debt can no longer be 
> serviced or increased, then the primary lenders (counterparties and 
> financial institutions) sustain heavy losses which domino through the 
> entire system. Take a look at this from Marketwatch:
>
> “There’s ‘no question’ that for energy companies with a riskier debt 
> profile the high-yield debt market “is essentially shut down at this 
> stage,” and there are signs that further pain could hit the sector, ” 
> senior fixed-income strategist at U.S. Bank Wealth Management, Dan 
> Heckman told Marketwatch. “We are getting to the point that it is 
> becoming very concerning.” (Marketwatch 
> <http://www.marketwatch.com/story/junk-bond-contagion-fears-rise-as-oil-extends-drop-2014-12-11>)
>
> When energy companies lose access to the market and are unable to 
> borrow at low rates, it’s only a matter of time before they trundle 
> off to extinction.
>
> On Friday, the International Energy Agency (IEA) renewed pressure on 
> prices by lowering its estimate for global demand for oil in 2015. The 
> announcement immediately sent stocks into a nosedive. The Dow Jones 
> Industrial Average (DJIA) lost 315 points by the end of the day, 
> while, according to Bloomberg, more than “$1 trillion was erased from 
> the value of global equities in the week”.
>
> The world is awash in cheap petroleum which is wreaking havoc on 
> domestic shale producers that need prices of roughly $70 per barrel to 
> break-even. With West Texas Intermediate (WTI) presently headed south 
> of 60 bucks–and no bottom in sight–these smaller producers are sure to 
> get clobbered. Pension funds, private equity, banks, and other 
> investors who gambled on these dodgy energy-related junk bonds are 
> going to get their heads handed to them in the months ahead.
>
> The troubles in the oil patch are mainly attributable to the Fed’s 
> easy money policies. By dropping rates to zero and flooding the 
> markets with liquidity, the Fed made it possible for every Tom, Dick 
> and Harry to borrow in the bond market regardless of the quality of 
> the debt. No one figured that the bottom would drop out leaving an 
> entire sector high and dry. Everyone thought the all-powerful Fed 
> could print its way out of any mess. After last week’s bloodbath, 
> however, they’re not nearly as confident. Here’s how Bloomberg sums it up:
>
> “The danger of stimulus-induced bubbles is starting to play out in the 
> market for energy-company debt….Since early 2010, energy producers 
> have raised $550 billion of new bonds and loans as the Federal Reserve 
> held borrowing costs near zero, according to Deutsche Bank AG. With 
> oil prices plunging, investors are questioning the ability of some 
> issuers to meet their debt obligations…
>
> The Fed’s decision to keep benchmark interest rates at record lows for 
> six years has encouraged investors to funnel cash into 
> speculative-grade securities to generate returns, raising concern that 
> risks were being overlooked. A report from Moody’s Investors Service 
> this week found that investor protections in corporate debt are at an 
> all-time low, while average yields on junk bonds were recently lower 
> than what investment-grade companies were paying before the credit 
> crisis.” (Fed Bubble Bursts in $550 Billion of Energy Debt: Credit 
> Markets 
> <http://www.bloomberg.com/news/2014-12-11/fed-bubble-bursts-in-550-billion-of-energy-debt-credit-markets.html>, 
> Bloomberg)
>
> The Fed’s role in this debacle couldn’t be clearer. Investors piled 
> into these dodgy debt-instruments because they thought Bernanke had 
> their back and would intervene at the first sign of trouble. Now that 
> the bubble has burst and the losses are piling up, the Fed is nowhere 
> to be seen.
>
> In the last week, falling oil prices have started to impact the credit 
> markets where investors are ditching debt on anything that looks at 
> all shaky. The signs of contagion are already apparent and likely to 
> get worse. Investors fear that if they don’t hit the “sell” button 
> now, they won’t be able to find a buyer later. In other words, 
> liquidity is drying up fast which is accelerating the rate of decline. 
> Naturally, this has affected US Treasuries which are still seen as 
> “risk free”. As investors increasingly load up on USTs, long-term 
> yields have been pounded into the ground like a tentpeg. As of Friday, 
> the benchmark 10-year Treasury checked in at a miniscule 2.08 percent, 
> the kind of reading one would expect in the middle of a Depression.
>
> The Saudi-led insurgency has reversed the direction of the market, put 
> global stocks into a nosedive and triggered a panic in the credit 
> markets. And while the financial system edges closer to a full-blown 
> crisis every day, policymakers in Washington have remained resolutely 
> silent on the issue, never uttering as much as a peep of protest for a 
> Saudi policy that can only be described as a deliberate act of 
> financial terrorism.
>
> Why is that? Why have Obama and Co. kept their mouths shut while oil 
> prices have plunged, domestic industries have been demolished, and 
> stocks have gone off a cliff? Could it be that they’re actually in 
> cahoots with the Saudis and that it’s all a big game designed to 
> annihilate enemies of the glorious New World Order?
>
> It certainly looks that way.
>
>
>
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