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Russian Nat Gas Game Theory
The question many are asking this morning is what is the iron-first of Putin thinking? With his "military exercise" over, does he believe it enough to have shown the world his potential for disruption? We suspect another reason may have been weighing on his mind. As we noted previously, Europe accounts for around a third of Gazprom's total gas sales, and around half of Russia's total budget revenue comes from oil and gas... and whatever Putin's geo-political ambitions, we suspect he did not want to jeopardize that source of revenue - no matter how much sabre-rattling and Gazprom-fear-mongering. As the following chart shows, Europe should be sighing a huge relief this morning - but remain cognizant that this, we suspect, is far from over.
And here's some helpful advice from the EU...
AFP: European Union commissioner says it will help Ukraine to pay gas bill to Russia
— Sky News Newsdesk (@SkyNewsBreak) March 4, 2014
So - follow the money... US to IMF; IMF to Ukraine; Ukraine to Russia; Russia buys US Treasuries again?
Or the EU looks at this chart...
Source: @ReutersGMF
and that's why this happens...
Ukraine live: Medvedev meets Gazprom head, EU could help Kyiv to pay 2blln gas bill to Russia. http://t.co/GHyz9UpnGJ pic.twitter.com/cJy2O9NK3H
— José Miguel Sardo (@jmsardo) March 4, 2014
Remember, as we noted in detail here - Russia receives around $100 million per day from Europe for Natural Gas
And these are the nations (via Morgan Stanley) who are the most dependent on that flow of natural gas...
But while we noted the dependencies last night, it is worth noting that thanks to a warmer than expected winter in Europe, EU states have significant gas stocks...
The game is only just beginning...just as explained in great detail here.
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But unlike Duke Leto, the EU doesn't give a shit about The Ukrainian workers.
...Russia may have Natural Gas and boots on the ground in the Crimea, but the USSA still has the NSA, which hears and knows everything, everywhere.
Yes, and not a brain cell to analyze the data for the good of the nation.
Checkmate bitchez?
Just imagine...had Tesla been able to bring his "free" energy technology to the world, none of this shit would be necessary or even possible.
\facepalm....
Putin doesn't want to lose customers...but there ARE folks who want to GAIN customers, and it is in their interests to make customers question Russia as a supplier.
But then, Putin didn't start this, did he?
Cui bono?
This is merely the latest chapter in a game that has been going on for a long long time...
All Putin had to do was make sure the Ukraine was reasonably run, he couldn't see to it...
A King (or Khan) has to reward loyal followers with spoils, the proverbial piece of newly conquered pie. Grant a few domains to a Duke, here and there. So Putin has let his lackeys like Yanukovich run the place, and that they will loot as much as possible just comes with the turf.
Its old school. In the West, we have the revolving door between government and industry instead of bribes.
Absolutely...
But it still has to be reasonably run, and it wasn't....
No Putin didn't start this. It is the overblown aspirations of the extotionist state "Ukraine" (only because of the pipelines running through it ) which make this situation interesting. Provoking Russia will bring consequences as Russsia is now implimenting. Way overdue !
Is it really BellyBrain or actually 'Jellybrain'? Or more likely marsh-mellow or perhaps snit-for-brains?
Find a short sword and introduce your belly to seppuku, troll.
Just for the sake of argument, what if the Chinese were already on board all along? Would they be so eager to sacrifice the U.S.S.A. and all their investments along with it or could they simply move into California like the Russians did in Ukraine?
The west coast liberals would stop them in their tracks when they sued each and every soldier for environmental damage.
The Chinese are well aware the US is radioactive, and getting worse daily. They are buying US property with US dollars/Monopoly money, and will squeeze every political lever they can. But in the end, it means nothing to them.
The first question is to always ask, can they do without X? Can Russia or China do without the US? Yes. Can Europe do without the US? They're getting there. Can the US do without Europe? Don't know. Can the US do without Russia and/or China? Probably not.
But if I had a shitload of gold, a partner with unlimited energy resources, we both had adequate nuclear capabilities, and the ability to create massive hyperinflation in the neighborhood across town to get them off my ass, well . . .
Good article.
Stock market will prob. play out like gulf war S&P overlay: 1. a fear phase, one rally phase, 1 reset phase, then a rip on the spending as everything goes back to normal.
Makes for a good overlay going into the october elections in which otherwise is a very dull flat technical trading band.
Anywhoo, if one were to drop sanctions on Russia then going into the spring breakup is when the sanction round would be most effective due to the large draw on FX hard currency reserves to pay for both petrochemicals to drill and for chemical manufacturing (urea, sulfates) + transport (refinery catalysts).
You do know Q1 GDP is projected at 1.7%?
Yup.
I'm missing the point on "good of the nation" being done by a government entity.
NSA knew exactly who in the Ukraine was having phone sex. Too bad they didn't notice the Spetznatz.
The spice must flow. And shit flows downs hill. So don't piss down my back and tell me it's raining.
Dune – the best sci-fi series ever created. Always get a chuckle when I see numerous Dune references here.
"Russians don't take a dump, son, without a plan."
https://www.youtube.com/watch?v=Rb0QLxcvowk
Vlad says: "Triple nat gas prices, bitchez. Fire off an ICBM while Horseface is still here to demonstrate pricing power, too."
Vlad is starting to channel the Kim Jong clan....
Flak, I know that geopolitics has you flustered, but unlike North Korea, Vlad's MANY ICBMs fly all over the world and work.
Absolutely true re: Vlads nuclear arsenal...
But to what end? What do you think would happen if he actually launched in anger? Is that a chess player? Or a lunatic?
As far geopolitics goes, the typical ZH poster is in Grade 7 social studies and it shows...I have a shelf in my library devoted to 20th century geopolitics and that doesn't even count WWI and WWII...
An ICBM test at a moment like this is mainly for domestic consumption, a empty show of power... Putin has demonstrated that he is all hat and no cattle and that they are incapable of projecting force, this is not 1956 or 1968...
... "shoring up his base" so they will turn out and FIGHT ... unlike the likely repub voters in 2012 who stayed home and sulked ...
Eh?
For shits and giggles could you reconcile your statement with this:
From http://hotair.com/archives/2012/11/23/gop-turnout-myths-and-reality/ and the WSJ
----------------------
Again, there's that nasty Flakmeister with the facts which he uses to piss on everyones parade...
Whoa, whoa there fella …. No facts here just Obama phones [urban myth], Muslims, Nazis, on and on ad nauseam.
Dumbo, I'm not talking about some repub shoring up his base in this context, but rather Putin shoring up HIS 'base' ... Putin may have to actually fire on somebody shortly, and certainly before ALL this is over.
Such subtleties escape you.
And everyone seems to know it, too.
And something is rotten with your 'numbers' when I see things like this:
"By contrast, Mr. Obama’s turnout was down from 2008 ... "
Yep like your judgement and facts on Tulving being an upstanding guy and good to do business with.
http://about.ag/tulving.htm
They were once...
Like I said I was unaware of what has recently happened...
And I freely admitted my error, unlike many here...
I'm telling you, go see 'Stalingrad' before Friday. Everything you need to know about the Russians is in that movie.
I thought Enemy at the Gates was a better depiction...
An ICBM launch at a time like this is probably exactly as claimed, preplanned a year ago and not even on Putin's desk calendar for today. A complete coincidence.
Yes, no doubt...
Otherwise it comes across as some kind of schoolyard antic and doesn't make much sense...
Flak, I understand that frustrated feeling, but I'd humbly suggest that the ECB is playing the people of Europe (especially the honest, hard working ones) WAY MORE than Russia has or is (depending on which narrative one clings to).
Fraction Fiat Reserve Racketeering - Even King Kong ain't got NOTHIN' ON DAT SHIT.
And you are welcome to your opinion...
Unless someone disagrees with your delusional thinking.
Well then it seems the message is going down well with his own people, which makes me think he is here to stay. -Unlike...
Given you are a turgid academic nerd who does not grasp how people really live, when not paracitizing tax-payers, this is not going to mean much at all to you.
But, for the average Gunther, and his boss, when the gas goes off, and the beamer plant closes for the interim, and export collapse, and soup kitchens popup every where near locations of riots, that is going to look a lot like they are being forced from afar, via strategic power-projection.
As for nukes, and other weapons, their main role is deterrence and are most effective and best contribute to society when they exist, but are not used (which would be fine if we were to pretend that war mongering assholes don't actually exist), as that provides the social and economic structures and stability needed for Gunther and boss to operate an export economy selling real products.
So useless assholes can paracitize them and lobby for shit like carbon taxes that seriously hurts Gunther's interests and ability to live, just to pay for the sorry useless arseholes, and their jobs and high-brow AGW related expenditure fantasies and lobby for useless massive misallocations of public resources.
Just a little primary school social-studies update for your bodacious book case.
Again, "who runs bartertown". Calories bitchez, nothing else matters.
Putin is a taller "Master Blaster."
Cash is all that matters - all else follows.
If Russia accepts gold as payment they will not have the cash flow to run their country.
They could just print more money but no one wants the Ruble.
Russia is more likely to buy bitcoin from MtGox than US Treasuries.
What would happen if Russia just said they were happy to provide all the gas the EU wanted, but they have to pay for it in gold?
dollar would collapse
Hardly....
Price of Gold in Euros increases.
Eventually Russia is going to pay us back for our actions which helped cause their eCONomy to collapse back in 98.
Game over!
then we europeans would pay in gold. we don't have an allergy against the metal, unlike others
I just hope its not stored(looted in bankster) in NY or London.
And yes Flak, the dollar would collapse at that point because without the faith, there is
no credit.
winston, having a slightly positive trade balance gives you the luxury of buying gold, if you need it. yet I'd still not call for the USD's demise. there is a small chance, that's it. the world works in probabilities
Yea, but who will you buy it from? China?
Cretainly not through London or NY. They're out.
If Germany is contributing its gold for payment (and it will have to), the late charges & interest racked up are going to be GINORMOUS based on the rate at which the FRBNY is returning zeee gold.
Who's gold?
Whose gold.
Hoosgow?
Just tell Germany to stand by... Now where did we put that stuff.... don't worry we'll find it... just a few more years...
false flag then putin's house bombed.
holy crap. 1. just a joke. 2. is zh run by the kgb? if i would've said obama/yellen's house everyone would be cheering. wtf.
Maybe they are already doing that, just indirectly:
http://www.fofoa.blogspot.com/2014/02/think-like-giant-3.html
They can't pay in gold because the US has it, and I heard Janet is having a tough time locating it right now.
They should tell Germany to pay it in the gold that they recently got from the FED. Oh wait.
Those are IOU's they're just as good as money. This one is for 2 tonnes of gold, you can get it from the US whenever you want, can we have some natural gas now?
Janet: "Well, I just know it's here somewhere..."
*looks under old newspapers and dated magazines*
The scenario would not be gold since that has no value to Russian society. But your premise is very powerful in that almost certainly discussions have happened about being paid in something other than dollars or Euros.
They are just paper, or computer entries from thin air, after all.
Demanding crops or slave (err, subsidized by EU or US) labor or something already built is a very credible thing to ask.
What - they don't want to be paid in Rubles?
Hmm, is that why Germany wants its gold back?
The key metric is how long does the NG storage correspond to in days of Russian imports...
I estimated that Total European storage is ~100 days of Russian imports but I may have fucked up some unit conversions...
Already there have been reports that demand is up so as to fill that storage...
don't forget the LNG terminals in France, and the deliveries from the Gulf. or, if some have their way, from fracking America
"...from fracking America."
NSA saw you write that and Obama said it's "terristy by Executive Order."
US NG is of no consequence in this matter...
Ironically Japan/Korea could be hit very hard as the price of LNG could spike...
Nod, there are no LNG export terminals in the US as of now. Don''t thing Cheniere expects to have one for years.
And the two French LNG terminals do not have a combined capacity sufficient to supply just France with all its needs.
Everything you want to know about NG and were afraid to ask 2012 edition:
http://www.iea.org/media/training/presentations/statisticsmarch/NaturalG...
France has 3 terminals capable of handling 25 Bcm of gas per year more than adequate to cover electrical generation...
Total French consumption is ~41 Bcm per year....
Sasol is planning to bring the first large GTL plant online in the in US... in 2018. The catering bill in Brussels alone will bankrupt the EU long before then, if the banksters and the MADmen don't do it first.
The politics of wrangling a gas commitment out of the Emir of Qatar (in quantity) are complex, but since hydrocarbons are taxed so highly in Europe, there's plenty of room to sweeten the offer, without damaging the economy (the catering budget might have to be sacrificed though).
The people (everywhere) are always asked to sacrifice for the "greater good" (of the State), but is the State itself willing to sacrifice for the "greater good"?
Poland almost finished LPG terminal in Swinoujscie. It shoud be ready at the end of this year (but more probably at the 1st or 2nd half of 2015).
Germany alone has sixty days. Britain too has a huge amount, it imports roughly every couple months from Africa/other non-Russian sources.
Still, it wont last long. Even with summer coming and the relatively warm winter.
Europe's reserves are very high due to the mild winter. The relationship with Russia re; gas imports is very healthy. The problem is th pimple called Ukraine. Putin is doing now what they should have done years ago.
I wouldn't be surprised if Putins soft approach has something to do with his call to China.
Have the Chinese helped him see that, after the Crimean referendum takes place March 30th, the Ukrainians wont like the Yes vote to splitting, so THEY will likely increase tensions?
Thus giving him a free hand to smash the silly little Western-backed schmucks once and for all...using the wests own card "To save the poor people of the Crimea's life, from the evil self-proclaimed russiaphobes"
Well, that may be the Russian plan...but the USA will escalate tensions before that.
True, but will Russia fall for the bait? Thats the question.
They could simply retaliate by stripping Exxon of their rights to drill in Siberia. Exxon is banking on it to be their future cow-cash.
They need not fire a single bullet to wipe current and future billions off the dow, permanently.
Wouldnt be the first time either, around the time of political issues with a country, that one of their oil majors gets a stiff feeling up their rectum.
The events of the last two weeks are an example of failed game theory...Ukrainians get more money from Russia...overthrow pro-Russian government...accept paltry 1 Billion and IMF bondage.
USA sanctions Russia, loses drilling rights...billions destroyed in capital around the world...loses reserve currency status ?
Yeah game theory, hurray....
Spot on ! The U.S. will only lose by continuing with it's provocations !
The MOSSAD/CIA are working OVER-TIME to destroy the USA.
You have to ask, why the hurry?
Yes, everything the USA touches becomes shit.
Having a man-whore, a MALE Gigolo that takes it in the ASS for political favor as president.
Remember long ago the Roman's made a Horse a Senator, now the PTB have made a black momma's boy who is essentially a male-whore a USA president.
The PTB wants the USA on its knees and is working over-time.
Outing the NSA, .. you know that is a MOSSAD operation.
No, it's the Media who are hyping this provincial spat up.
Yes, and Yes
Hillary/Lurch spend $5 Billion creating chaos in UKRAINE.
CIA gives al-queda unlimited chemical weapons in SYRIA, ... CIA gives Stinger missiles to Taleban
CIA sends CHinese-Taleban to KUNMING to slaughter old people going home to Beijing post Chinese New Year
Yep the USA will escalate tensions, but CHINA/RUSSIA's bond will now grow stronger, and you can be sure that OTHER party's will join them.
It's NOW the world versus the USA,... and ISRAEL is distancing itself very carefully so they don't go down with the USA.
if putin had half a brain russia's currency would be the world standard
How?
Russia probably doesn't want the reserve currency, its been nothing but a curse to this country. Short term gain ya, but long term you're fucked.
Spain's economy was greatly weakened by all the silver and gold taken from the Americas. Riches to buy things from producers in other countries.
The reserve currency status and Keynesianism have done a very similar thing to the US. Why produce when you can print.
The Ottoman Empire is a good example. They were so dominant, that they became complacent. In a way that is what has happened to the US' industrial base as well. It was outsourced, and with it, the nation's economic strength.
No single rain drop feels responsible for the flood.
you think reserve currency has been a curse? holy fuck we've been living like kings for decades.
"For decades" yes just like fed policy has created prosperty beyond your wildest dreams (and means) until the bust part.
But, it did for the boomers. We had generations of prosperity for people smart enough to go into debt and buy stocks.
Wikipedia
The Triffin dilemma or paradox is the conflict of economic interests that arises ... He pointed out that the country whose currency, being the global reserve ...
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You can lead a camel to water, but you can't make him drink.
Any nation that Goes RESERVE CURRENCY must ..
1.) export all jobs
2.) kill its own people
3.) slaughter the world
Yep, ... just what china and russia want, ... NOT
Only the fucking DEVIL would want this.
Does a nation decide to have a reserve currency?
Or does the world decide which is the reserve currency?
Nat Gas and oil are the World's currency ! p.s. Russia has enough of both.
Globalization>nationalism. Everybody is in bed with everybody these days. Going to war is like shooting yourself in the foot.
The tiny-brained people still think in terms of nations.
The highly-evolved sociopaths think in terms of global.
That's why the top 10% has more loot than the rest of us.
"The highly-evolved sociopaths" behavior evolved millions of years ago and 'improved' in parallel with improvements in intelligence.
They are definitely not 'highly evolved', no more than the typical 'highly evolved' idiot voter.
Sociopath Math 101:
What the first chart appears to show is the actual flow rate (of just gas not oil & gas) over some period of time, not the MAXIMUM flow rate.
which then gets plugged into:
... first quantify the % of Russian O&G exports to Europe, as well as the % of total Russian O&G exports that would be shut in by a complete closure of Ukrainian pipelines, as well the resultant % change in price for those exports....
The MOAR war for MOAR profit model, without the "????" step.
That's what they said before WWI and WWII.
Uhhh yes, but that was before the advent of nuclear weapons...
"In essence, this is a war between the big companies to control the energy deposits. The biggest barrier now are the state-controlled giants in Russia and China and neoliberalism is trying to conquer these countries. The Western companies have declared war against companies like Gazprom, as they seek to control all the energy deposits, but in this case things are not so easy. The neoliberal model that opens the road for the Western capital, has to face now, two superpowers."
http://failedevolution.blogspot.gr/2014/03/the-closed-system-of-biggest-...
Re: neoliberal
Is a neoliberal a fascist with a different suit? Is neoconservative and neoliberal the same thing?
Where in the hell did this neo crap come from?
The Matrix.
http://failedevolution.blogspot.gr/2013/09/september-11-1973-start-of-gl...
Neoliberal Globalist Corporations.
Maybe I'm oversimplifying. Some nations appear to import 100% from RUS, others less. Wouldn't the loss of NG in the 100% areas pull on resources from the other areas, thereby lowering the available supply and increasing cost?
Now we know why Russia has been supplying money to the Anti-Fracking so-called Green Groups in Europe for years.
There is at least one error in this gas dependency graph: Romania imported 0 gas from Russia in 2013 - more than that it has a surplus of close to 1 billion m3 per year with a tendency to greatly increase in the future couple of years. This is a reverse situation from more than 5 billion m3 per year deficit (this quantity being imported from Russia before 2012).
The incentive for Europe to cut its dependency on Russia natgas is huge. Russia knows this and tries to wrestle as much as possible now. It is important to know that Germany increased its dependency on cheap Russian natgas after deciding to close its nuclear power plants. But this may change too for this huge customer of Gazprom if Vladimir Putin will become a too great threat to Europe.
The Russia strategy of aggression is not a good sign though. It feels threatened and that means it has internal vulnerabilities that are greater than what is publicly seen. It also means that the current Russian oligarchy would use more often the aggression card to divert attention from internal troubles.
Russians have a long history of quiet coups against leaders who make mistakes.
Its quite possible if this drags out a while Putin becomes vulnerable internally.
Ras-Putin will certainly survive any attempts on his life.
EU, pray for global warming, or prey for Russia.
Option c) reduce Europeans to Fourth World living standards
It seems Putin has accomplished two goals.
Crimea with its warm water port is secure for use by Russian fleet. The rest of Ukraine will be in turmoil for at least three months until the election and probably thereafter as it is a divided nation in many respects. Regional elections will only magnify these differences and further divide the country. Meanwhile Russians are nearby on the ground watching carefully which will further embolden the Eastern portion to remain within the Russian orbit
Secondly, the message to the EU is gas will now come at a price and by no means assured, depending on behavior of the EU which should not be influenced by Washington inspired hegemony, regime change, Neocons etc.
As to what US has accomplished ?
Ousting of Yankovich, but a great deal more uncertainty.
Except for Sen. McCain, a strong popular reaction against yet another military action.
Bottom line--- Putin can claim " Mission Accomplished".
Kerry can only cover up the bad taste with a good
Shmear of ketchup
So I take it that this means the EU has found another polka-dot Unicorn that shits gold and pisses silver, way cool!........
Careful, gunslingers in Ricochet Alley.
Although it would hurt like the dickens, it would only justify and open the door for a pipeline from the ME (KSA, Qatar), via Jordan, Israel, and undersea to Turkey. From there to Bulgaria, etc.
But...
Given the time delays, the Russians and Chinese would have to front-run this also with a dramatic escalation in currency wars. E.g. announce energy sales will be in Roubles, Yuan, Real, Euros, Yen, Gold, and Rupees. No USDs. When the USD flight takes on some momentum, you drop the other shoe: Dump USTs. Full panic ensues, game over for Fed, MIC, and all the hidden and EBT beneficiaries of easy money and QE+.
Why would any sane person accept Rupees as payment for a real asset?
Moreover, your bloc represents at most 20% of world oil exports which are otherwise priced in dollars...
Russia and China have been at odds for a long long time, and few years of peace after the Revolution don't count for much..
Then why does the Dollar strengthen whenever there is a world crisis?
Is anyone fleeing to Rubles and Yuan for safety?
Ukraine: Follow the Energy
Posted on March 4, 2014 by Charles Hugh Smith
http://www.maxkeiser.com/2014/03/ukraine-follow-the-energy/
.
the grand chess board ....
Ron Paul on the media and US government's horrible understanding of Ukraine....pretty interesting...do the US or ANYONE in the West know the history or what's going on over there?
http://www.ronpaulchannel.com/video/ukraine-latest-media-misinformation-...
Let me also remind everyone that Yanukovich, an elected leader, has been replaced by a bunch of unelected leaders of the new government who were receiving support from the West during the protests. But yet this is about "Democracy'? Huh?
The EU and USA also didn't do a damn thing while the country broke down in chaos (other than to support the protesters) over the past few weeks. It's not suprising that after Yanukovich fled and people started dying that they said 'enough' and made a move. But the West is shocked...SHOCKED!! As in OMG wow just wow sorta shocked.
Not saying that Russia might not have some ulterior motives here but the press are asleep at the wheel. And the US intervenes in every damn country it can get it's hands on it's pretty hypocrital for Kerry and Obaman to be bandying about sanctions and illegality.
The EU and USA also didn't do a damn thing while the country broke down in chaos (other than to support the protesters) over the past few weeks.
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Uhhh Hillary/Lurch spent $5 Billion US funny-fiat notes creating the fucking CHAOS,...
For the past few years the CIA had been ARMING the protestors, of course we all know that CIA has gone off the reservation and gone over to MOSSAD. This is why NSA was outed by MOSSAD. They hate competition.
CIA then send Chinese Taleban to KUNMING to slaughter elderly hoping to take the eye of Sauron in that direction.
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Only ONE thing is wanted here. House of Saud made a deal with retired MOSSAD, that if you take out Syria and Ukraine and get rid of GAZPROM, then we can sell Saudi Oil to EUROPE and get EURO's to FUND the MOSSAD pensions on the TEL-AVIV coast during the coming POST US DOLLAR COLLAPSE.
The story is really fucking simple.
The NSA now are MORMON's the CIA has gone over to Zionism.
Why is it that this place seems to attract all the whackadoos...
Thats funny I always envision that burning eyeball from Lord of the rings when I think of the NSA. I wish we could just refer to banking criminals as such and drop some of the religious rhetoric... Criminals are criminals... they deserve punishment. And yes I have noticed the incredible numbers of Jews in big banking circles, reseve banks etc. But ranting about Zionist conspiracies isnt going to get anyone anywhere except maybe completely discredited.
Why would Israel want its strongest ally to collapse?
Putin moves a few chess pieces around, and now the EU chips in $2 billion and the US $1 billion - through the Ukes and right to Putin...