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Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China

Tyler Durden's picture




 

If it was the intent of the West to bring Russia and China together - one a natural resource (if "somewhat" corrupt) superpower and the other a fixed capital / labor output (if "somewhat" capital misallocating and credit bubbleicious) powerhouse - in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely "going according to plan."

For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead... and quite a few steps east.

While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

Here is what will likely happen next, as explained by Reuters:

Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.

 

The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances. 

 

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.

More details on the revelation of said "Holy Grail":

State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world's largest producer of conventional gas to the largest consumer.

 

"May is in our plans," a Gazprom spokesman said, when asked about the timing of an agreement. A company source said: "It would be logical to expect the deal during Putin's visit to China."

Summarizing what should be and is painfully obvious to all, but apparently to the White House, which keeps prodding at Russia, is the following:

"The worse Russia's relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you're isolated," said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think thank.

Bingo. And now add bilateral trade denominated in either Rubles or Renminbi (or gold), add Iran, Iraq, India, and soon the Saudis (China's largest foreign source of crude, whose crown prince also happened to meet president Xi Jinping last week to expand trade further) and wave goodbye to the petrodollar.

As reported previoisly, China has already implicitly backed Putin without risking it relations with the West. "Last Saturday China abstained in a U.N. Security Council vote on a draft resolution declaring invalid the referendum in which Crimea went on to back union with Russia. Although China is nervous about referendums in restive regions of other countries which might serve as a precedent for Tibet and Taiwan, it has refused to criticize Moscow. The support of Beijing is vital for Putin. Not only is China a fellow permanent member of the U.N. Security Council with whom Russia thinks alike, it is also the world's second biggest economy and it opposes the spread of Western-style democracy."

 

This culminated yesterday, when as we reported last night, Putin thanked China for its "understanding over Ukraine." China hasn't exactly kept its feelings about closer relations with Russia under wraps either:

Chinese President Xi Jinping showed how much he values ties with Moscow, and Putin in particular, by making Russia his first foreign visit as China's leader last year and attending the opening of the Winter Olympics in Sochi last month.

 

Many Western leaders did not go to the Games after criticism of Russia's record on human rights. By contrast, when Putin and Xi discussed Ukraine by telephone on March 4, the Kremlin said their positions were "close".

The punchline: "A strong alliance would suit both countries as a counterbalance to the United States." An alliance that would merely be an extension of current trends in close bilateral relations, including not only infrastructure investment but also military supplies:

However, China overtook Germany as Russia's biggest buyer of crude oil this year thanks to Rosneft securing deals to boost eastward oil supplies via the East Siberia-Pacific Ocean pipeline and another crossing Kazakhstan.

 

If Russia is isolated by a new round of Western sanctions - those so far affect only a few officials' assets abroad and have not been aimed at companies - Russia and China could also step up cooperation in areas apart from energy. CAST's Kashin said the prospects of Russia delivering Sukhoi SU-35 fighter jets to China, which has been under discussion since 2010, would grow.

 

China is very interested in investing in infrastructure, energy and commodities in Russia, and a decline in business with the West could force Moscow to drop some of its reservations about Chinese investment in strategic industries. "With Western sanctions, the atmosphere could change quickly in favor of China," said Brian Zimbler Managing Partner of Morgan Lewis international law firm's Moscow office. 

 

Russia-China trade turnover grew by 8.2 percent in 2013 to $8.1 billion but Russia was still only China's seventh largest export partner in 2013, and was not in the top 10 countries for imported goods. The EU is Russia's biggest trade partner, accounting for almost half of all its trade turnover.

And as if pushing Russia into the warm embrace of the world's most populous nation was not enough, there is also the second most populated country in the world, India.

Putin did take time, however, to thank one other country apart from China for its understanding over Ukraine and Crimea - saying India had shown "restraint and objectivity".

 

He also called Indian Prime Minister Manmohan Singh to discuss the crisis on Tuesday, suggesting there is room for Russia's ties with traditionally non-aligned India to flourish.

 

Although India has become the largest export market for U.S. arms, Russia remains a key defense supplier and relations are friendly, even if lacking a strong business and trade dimension, due to a strategic partnership dating to the Soviet era.

 

Putin's moves to assert Russian control over Crimea were seen very favorably in the Indian establishment, N. Ram, publisher of The Hindu newspaper, told Reuters. "Russia has legitimate interests," he added.

To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis", the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.

 

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Fri, 03/21/2014 - 09:43 | 4576584 Van Halen
Van Halen's picture

ALERT!!

Obama prepares to announce HOLY GRAIL of golf games, vacations, and NCAA brackets!

Hope and Change!

Fri, 03/21/2014 - 09:46 | 4576603 Divided States ...
Divided States of America's picture

Advice, maybe its time to get a Chinese or Russian gf....who cares if they are just in it for your greencard (its worthless in the future)...because youre in it for THEIR citizenship.

Fri, 03/21/2014 - 09:48 | 4576610 Gief Gold Plox
Gief Gold Plox's picture

I fully expect the gold price to nose-dive.

Fri, 03/21/2014 - 09:49 | 4576613 Occident Mortal
Occident Mortal's picture

Snap shot of inter-region global oil flows at present

 

http://s22.postimg.org/aclnsv7kx/Oil_Routes.png

 

From BP statistical review.

Fri, 03/21/2014 - 09:53 | 4576624 Looney
Looney's picture

And here comes Kerry’s announcement on re-re-liberating Syria – 3… 2… 1… ;-)

Looney

Fri, 03/21/2014 - 09:54 | 4576629 Occident Mortal
Occident Mortal's picture

Former USSR currently exports 6.5 million barrels a day into the Western Hemisphere and 2 million barrels a day into the Eastern Hemisphere.

If the former USSR flips it's pipeline export strategy East, then that is the moment when power turns.

 

Putin knows what he is doing. He is King maker.

Fri, 03/21/2014 - 09:55 | 4576636 TeamDepends
TeamDepends's picture

We're going to need a bigger distraction....

Fri, 03/21/2014 - 10:03 | 4576664 SRSrocco
SRSrocco's picture

As the U.S. & the WEST continue to play silly childish games with the EAST, the United States had record net gold exports in 2013.  And where did most of that gold probably end up?  China..

The Run On U.S. Gold Continues…

http://srsroccoreport.com/the-run-on-u-s-gold-continues/the-run-on-u-s-gold-continues/

Fri, 03/21/2014 - 10:13 | 4576708 Save_America1st
Fri, 03/21/2014 - 10:14 | 4576714 Occident Mortal
Occident Mortal's picture

Russia got Crimea, Russian got the Black Sea.

 

Obama’s “costs” are that 20 guys are banned from some place they never go?

 

 

 

The sanctions are a farce. Nothing but name dropping and faking jurisdiction. Obama is toothless.

Fri, 03/21/2014 - 10:19 | 4576738 Fortunate Fool
Fortunate Fool's picture

"The worse Russia's relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you're isolated

 

Yeah, because that worked so well during the Soviet Union Era... And I wonder what would happen to China if, pissing off the West a bit too much, was kicked out of the WTO as a time it badly needs foreign exports to sustain its economy.

And by the way, it's not like Russia is the only place where you can buy oil & gas. Just sayin'

Fri, 03/21/2014 - 10:23 | 4576752 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Yeah, and those +30 year old rotting / rusting factories in the US will be fired back up in no time.

Keep dreaming...

Fri, 03/21/2014 - 10:32 | 4576766 nope-1004
nope-1004's picture

The factories could conceivably be revived, but who could work in them?  When the gov't is in the mode of giving out everything, from phones to food, who the hell will get off their ass and work in any of them?

We've become a society of fat, lazy, Xbox idiots.  Our leaders are no different, engaging in all kinds of front running, white collar stealing, and backroom deals.  Harry Reid type of scum.

Putin will win this battle, hands down.

Fri, 03/21/2014 - 10:42 | 4576833 Fortunate Fool
Fortunate Fool's picture

"Russia-China trade turnover grew by 8.2 percent in 2013 to $8.1 billion but Russia was still only China's seventh largest export partner in 2013, and was not in the top 10 countries for imported goods. The EU is Russia's biggest trade partner, accounting for almost half of all its trade turnover.

 

Everything you need to know to understand that it's all bullshit. The truth is, Russia needs Europe a lot more than Europe needs Russia. And at the little game of "screw-you-screw-me", I wouldn't put a dime on Russia. 

Fri, 03/21/2014 - 10:44 | 4576855 LawsofPhysics
LawsofPhysics's picture

Really? I guess we will find out when all the fossil fuels stop flowing from Russia to those arrogant cunts in the E.U.

 

Enjoy the summer...

Fri, 03/21/2014 - 11:03 | 4576932 Manthong
Manthong's picture

Hey, First Wooky Moochie is in China right now soaking in the sights your dime, with NO REPORTERS but with purported intent to (bring) “ the power of her own story, the power of American values.”

 

Maybe she can talk them out of it.

 

hahahahahahaha!

Fri, 03/21/2014 - 11:06 | 4576953 Fortunate Fool
Fortunate Fool's picture

" I guess we will find out when all the fossil fuels stop flowing from Russia to those arrogant cunts in the E.U."

 

I guess Russia showed how humble it is by annexing part of a territory belonging to a foreign country... Your logic is lost on me.

Fri, 03/21/2014 - 11:27 | 4577079 Manthong
Manthong's picture

They do not want “Western-style democracy”.  

See what you get after 100+ years of perverting the meaning of everything including “democracy”?

I don’t want modern “Western-style democracy” either as it is just a  “too big to fail, too big to jail” financial oligarchy and  kleptrocracy that mainstream economists and media continue to ignorantly refer to as operating under “capitalism".

Fri, 03/21/2014 - 13:08 | 4577570 James_Cole
James_Cole's picture

East still needs West more than West needs East, pretty simple. Look at any chart of trade relations / capital flows.

China has enough problems without dumping its largest trading partners. Maybe I'm the only person on Earth to see it this way, but Russia looks weak to me. 

 

This whole conflict has the feel of a massive distraction beneficial to all the key players involved. 

 

Fri, 03/21/2014 - 13:19 | 4577632 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

My guess (guess!) is that you are right.

We have many problems, but THEIRS seem worse.

Fri, 03/21/2014 - 13:45 | 4577742 ThirdWorldDude
ThirdWorldDude's picture

Would be really cute if you could return in some 2000 years and re-read your comment.

Fri, 03/21/2014 - 14:08 | 4577827 kliguy38
kliguy38's picture

He's only saying this whole kabuki theater is not to be trusted.....these scumbags could be fighting for real.....but guess what ......it wouldn't be the first distraction they were all in on

Fri, 03/21/2014 - 14:52 | 4577972 ThirdWorldDude
ThirdWorldDude's picture

Just to make myself clear: the comment above that "the East needs West more than the West needs East" is a total bullshit because its premise is the current Pax Americana Empire measuring units of global trade, GDP cock measuring and creating wealth out of nothing. You saw for yourselves how Russians (and Serbs some 15 years ago) take Imperial sanctions - turning it into the joke that it is.

The reason? Their societies have been around for a while and experienced much worse hardships including total social collapse. If that doesn't kill you as a nation, it only tends to strenghten your social fabric. When you are faced with extinction you define your values, then you stand behind them and do not bow to idiots imagining themselves to be masters of the Universe. 

Only after USA has collapsed as a society a couple of times (though I suspect USA will come out of its first collapse in the same form and size) can you make those comparisons between West and East...

 

btw kliguy, I didn't downvote you.

Fri, 03/21/2014 - 15:58 | 4578269 FEDbuster
FEDbuster's picture

When the SHTF, do you really think Obama will do anything?  Hell he may throw in the towel and let the Chinese and Russians have a go at running things for awhile.  Meanwhile the FSA here in the States, will learn what life is like without the reserve currency providing them with all their wants and needs.  

Or maybe, as Randy Newman sang, they will "Drop the big one now."  https://www.youtube.com/watch?v=lrKYCsE48Lc

Fri, 03/21/2014 - 20:22 | 4579070 old naughty
old naughty's picture

No worries. We'll have Soros announcing ALL gas stations stopping serving Russian drivers abroad.

Fri, 03/21/2014 - 21:33 | 4579258 Mister Kitty
Mister Kitty's picture

Putin screwed up big time.  He'll rue the day.  Bitches.

Fri, 03/21/2014 - 22:27 | 4579364 CultiVader
CultiVader's picture

Because......? When will you and your multiple accounts be banned for that insipid blog link? Tylers?

Fri, 03/21/2014 - 15:46 | 4578237 ebear
ebear's picture

China needs energy and a new market for its manufactured goods.  Russia needs manufactured goods and a new market for its energy.  This looks like a no-brainer to me.

Fri, 03/21/2014 - 16:08 | 4578307 bobola
bobola's picture

riddle me this if you can

with Crimea bagged, according to plan

who is there to stop him

when Putin goes shoppin

for another, a neighboring stan..??

Fri, 03/21/2014 - 16:38 | 4578426 ebear
ebear's picture

and exactly what does that have to do with what I just said?  

You want to write doggeral, do it own your own dime.

Fri, 03/21/2014 - 18:07 | 4578688 bobola
bobola's picture

what does that have to do with what I just said?  

not a thing, mister bear head

i clicked your reply

to post it up high

in the order of stuff that is read

Sat, 03/22/2014 - 02:33 | 4579707 Independent
Independent's picture

Hey BooBoo you can click crap all you want that does not determine the hierarchy here, its based on temporospatial relationships, now that bag you are wearing its my jerk off bag and the slime running down ain't from your runny nose, so lick it and leave Mr eBear alone, he only eats honey, unlike you.

Fri, 03/21/2014 - 16:08 | 4578308 Fortunate Fool
Fortunate Fool's picture

For mathematically challenged people, that would look like a no-brainer indeed.

Fri, 03/21/2014 - 16:40 | 4578437 ebear
ebear's picture

Well then, make your case professor.

Fri, 03/21/2014 - 20:17 | 4579051 James_Cole
James_Cole's picture

 

Here you are - 3 simple points:

-U.S. goods and services trade with China totaled $539 billion in 2011. 

-The EU is also China’s biggest export destination, with €289.7 billion in goods  in  2012. 

-Russia still exports more to China by amount of 21.23 billion US dollars in comparison to an import of 17.52 Billions in 2009.

 

 

Read on:

 

http://www.ustr.gov/countries-regions/china-mongolia-taiwan/peoples-repu...

 

http://trade.ec.europa.eu/doclib/docs/2009/september/tradoc_144591.pdf

http://en.wikipedia.org/wiki/Economy_of_Russia


http://news.bbcimg.co.uk/media/images/73381000/gif/_73381797_russia_trad...

 

 

Fri, 03/21/2014 - 11:30 | 4577096 LawsofPhysics
LawsofPhysics's picture

Logic?  You clearly don't have any.  People define their boarders, not the other way around.

LMFAO!!

You really are a moron aren't you?

Fri, 03/21/2014 - 11:46 | 4577173 Fortunate Fool
Fortunate Fool's picture

yeah, insult me, that's a great way to debate, and that makes you look credible.

By the way, you haven't looked into the definition of boarder, have you?

Fri, 03/21/2014 - 11:54 | 4577211 LawsofPhysics
LawsofPhysics's picture

It's a global marketplace now with a rentier class and an ownership (robber baron) class.

There are no more borders, only boarders who will or won't be able to afford your rent.

Wake up motherfucker, the rent in the E.U. is too damn high.

Not a very critical thinker are you?

Fri, 03/21/2014 - 12:29 | 4577365 Jack Napier
Jack Napier's picture

Russia announced last year they have more diamonds in a Siberian crater than the entire global marketplace. They have vast forests. They have oil. They have platinum. They have gold. They have wodka!

What does the West have? Sure we've got ANWR and fracking, but otherwise the US + EU = debt based assetry.

The only reason anyone thinks they need us is because we are in a position to buy what they are selling. Once the petro-dollar shift is complete and our debt becomes wholly undesirable we will have no ability to pay, and they will have no need for us.

Stockpile resources while you can before the paper bond-fire kicks off.

Fri, 03/21/2014 - 13:42 | 4577731 Bunders
Bunders's picture

"Russia announced last year they have more diamonds in a Siberian crater than the entire global marketplace" Source? I heard years ago that Russia had enough diamond to make the stuff practically worthless, but that was just hearsay.

Fri, 03/21/2014 - 16:40 | 4578435 Jack Napier
Fri, 03/21/2014 - 20:25 | 4579080 James_Cole
James_Cole's picture

Why anyone cares about diamond mining is a mystery. Lab diamonds are already better than natural diamonds and soon will be cheap and easy to make big. 

Fri, 03/21/2014 - 17:29 | 4578576 unrulian
unrulian's picture

The US has Canada which rivals Russia in commodities, of which, it will take as a matter of national security, and as a Canadian our dear leaders will say the same thing as 100 drunk Canadians in a pool who are asked to get out.

Sat, 03/22/2014 - 02:35 | 4579711 Independent
Independent's picture

Well the US better get Canada before the Chinese do, they already have Vancouver and are moving east, oh have you heard of referendums?

Fri, 03/21/2014 - 11:58 | 4577233 jovius
jovius's picture

A boarder is someone who gets food and lodgings for a payment.

Or someone who forces their way onto a vessel.

Or somone who partakes of a board sport eg snowboarding.

Or someone at a boarding school.

 

I can't see which one applies here.

Fri, 03/21/2014 - 12:01 | 4577239 LawsofPhysics
LawsofPhysics's picture

Indeed.  It really has become a global marketplace.  Now think about that in the context of the following; "When fraud is the status quo" possession is the law."

Interesting times ahead.

Fri, 03/21/2014 - 13:05 | 4577551 Element
Element's picture

LoP, can you keep this thread going and see what happens when it gets real small, does it collapse and create a bail-in blackhole? Don't you ever wonder about that?

Fri, 03/21/2014 - 13:06 | 4577573 LawsofPhysics
LawsofPhysics's picture

LOL!  Bail-ins are already happening.

Do you have a point?  No?  That which cannot be sustained, won't be.

regardless of what anyone "thinks" or "believes".

same as it ever was.

Fri, 03/21/2014 - 13:51 | 4577768 Element
Element's picture

Yes, but there will be a whole series of bail-ins. You can have an almost endless series of 50% bail-ins, right? :D

Fri, 03/21/2014 - 17:34 | 4578587 Jim in MN
Jim in MN's picture

Shades of Zeno.

Sat, 03/22/2014 - 02:05 | 4579691 Hephaestus
Hephaestus's picture

Head for the door Element. Lets see if its possible for us to reeeeaaaaaaaaaaaaccccccccccccccccccccchhhhhhhhhhhhhhhhhh it.

Sat, 03/22/2014 - 03:43 | 4579748 Element
Element's picture

Circle within a circle.

Sat, 03/22/2014 - 03:44 | 4579750 Element
Element's picture

It's going to pop bitchez ...

Sat, 03/22/2014 - 02:38 | 4579712 Independent
Independent's picture

@ element

It just collapese on the basic building block or the web page, the single ASCII character, which then strings out in one dimension straight down.  If it goes to the next page then it restarts from the furthest left I believe and we are back again to the start

Sat, 03/22/2014 - 08:22 | 4579925 Element
Element's picture

So will that open up a zero-point energy release, or vlad's natgas field flairs?

Fri, 03/21/2014 - 16:42 | 4578440 ebear
ebear's picture

"yeah, insult me, that's a great way to debate,"

Pot - Kettle - Black

Math boi

Fri, 03/21/2014 - 12:23 | 4577338 tonyw
tonyw's picture

Crimea was a part of Russia since 1856, about the same time California was ceded to the US.

During the time when several countries became the USSR, Crimea was "moved" to Ukraine (a country in the USSR) in 1954 by Kruschev (born in Ukraine) who no doubt thought the USSR would remain as one big happy family.

As for arrogant c*nts surely it is the pinnacle of arrogance to think that the US should be able to decide what is a valid government world-wide??

Fri, 03/21/2014 - 12:40 | 4577438 Zerozen
Zerozen's picture

Officially since 1856, but the Russian have had the port at Sevastopol since 1783. That's almost as long as the U.S. has existed.

Also, fwiw...Ukraine was a region of Russia since the 1600s. It didn't even become a real country/nation state in the modern sense until the USSR collapsed in the early 1990s.

Fri, 03/21/2014 - 12:37 | 4577416 Zerozen
Zerozen's picture

Crimea has been Russian for like 300 years, dumbass. It never should have been put inside the boundaries of Ukraine to begin with, yet it was thanks to that that drunkard Krushchev.

Ukraine/West installed a rabidly anti-Russian unelected government that was almost certainly angling to kick the Russian Black Sea fleet out of (Russian populated) Crimea.

Russia said, "No you don't." I think the annexation was a fair response.

Fri, 03/21/2014 - 14:14 | 4577845 Fortunate Fool
Fortunate Fool's picture

And didn't Russia signed, as wikipedia puts it " Budapest Memorandum on Security Assurances, pledging to respect Ukraine territorial integrity" in exchange for Ukraine's 1900 nukes?

 

Whether Crimea should have been put within Ukraine's borders has nothing to do with the fact that Ukraine's borders were (and still are) internationally recognized, including by Russia. Russia's annexion of Crimea by military means is illegal, period.

 

What that event shows, one more time, is that any country without nuke is vulnerable to being bullied, invaded, annexed and what not. Now, guess what's going to happen at an even faster pace? Within a few months, you'll hear that Iran has finally developed its nuke, and then all the middle east will want (and get) theirs. Japan is going to get theirs as well to make sure China gets its hands off the Senkakus. And then Philipines and Vietnam and most other South East asian countries will want theirs to make sure that China (them again!) shuts up about its South China  sea and paracel island claims. All these countries now understand that even if they have a defense alliance with the US, the US will not help them if a nuclear country attack them.

 

That's the lesson to understand of all this drama. What a great world we're going to live in when every single mad dictator, jihadis and what not will be able to get his hands on a nuke...

Fri, 03/21/2014 - 15:55 | 4578246 ThroxxOfVron
ThroxxOfVron's picture

" Russia's annexion of Crimea by military means is illegal, period."

 

What about the outcome of the referendum and the vote in Crimea?

Whether or not Russia had troops on the ground during those 'democratic' exorcises should carry about as much relevence as does/did the Untied States military troops and 'military contractors' within Iraq and/or Afghanistan during those 'democratic' 'votes' should/whould it not?

 

You people are frothing now?

Anyone remember the Cuban Missle Crisis?

Wait until CUBA has a nice fucking 'democratic' 'referendum' 'vote' to join the Russian Federation and the Russian fleet is parking in Cuban ports not an hour under speed from Florida and all over 'their' 'legal territorial waters' in the Gulf Of Mexico !

This nasty fake 'democracy', especially the faux 'pax American' stylee 'democracy' with an Army and unbranded Mercenaries on the ground -is a bitch created and nurtured all over the World by the oligarchs in the West; practiced with especially deleterious effect by the U.S.A. 

How long did everyone think it would go on being a one sided game?

Fri, 03/21/2014 - 15:59 | 4578277 ThroxxOfVron
ThroxxOfVron's picture

America is going to be very uncomfortable shipping foreign oil into the Gulf Of Mexico if the Russian Navy is hanging out in and all around Cuba.  The refineries are largely in Louisiana.

Then there is what would happen if shit got ugly and the mouth of the Mississippi was closed to commerical traffic...

Fri, 03/21/2014 - 23:15 | 4579500 TheFourthStooge-ing
TheFourthStooge-ing's picture

Fortunate Fool, blissfully ignorant, said:

What that event shows, one more time, is that any country without nuke is vulnerable to being bullied, invaded, annexed and what not.

What the event shows, one more time, is that any country with something to steal is vulnerable to being bullied, invaded, overthrown, and what not by the US government. The US-orchestrated violent overthrow of the Ukrainian government and its replacement by a thuggish puppet regime is just the latest in a long series of similar acts, both covert and overt.

This one seems strikingly similar to events in Iran in the decade following the end of WW2. In 1947, the US ambassador to Iran publicly denounced the extortionist tactics used by foreign governments in obtaining commercial concessions in Iran. He promised full US support for Iran to decide freely about its natural resources.

At the behest of British Petroleum, in 1953 the CIA launched Operation Ajax, successfully orchestrating the overthrow of Iran's democratically elected government, which was replaced by a far more compliant marionette.

Now, guess what's going to happen at an even faster pace? Within a few months, you'll hear that Iran has finally developed its nuke, and then all the middle east will want (and get) theirs.

The assertion that Iran will soon have a nuclear weapon has been repeated ad nauseam for the last thirty years. Anyone who has followed the Iranian nuclear issue at more than a superficial level knows that there is no evidence of a nuclear weapon program and that Iran is, and has been, in compliance with its obligations under the Nuclear Non-Proliferation Treaty.

That's the lesson to understand of all this drama. What a great world we're going to live in when every single mad dictator, jihadis and what not will be able to get his hands on a nuke...

You're not fooling anybody.

Sat, 03/22/2014 - 02:50 | 4579720 Independent
Independent's picture

@Fortunate Fool but an Unfortunately still a mental midget

Hey you are indeed fortunate to have come here to get Zeducated you pimpled little fool, listen all the morons in office swear to uphold the constitution and they wipe their ass with it, and the US has signed tons of treaties and rolled over populations not even remotely related to Amerikanskis killing millions.  Now my kid has his territorial integrity as far as his room is concerned, I told him its your bedroom you can decorate it how you want, but he is my flesh and blood and he still is in my house and Ill go into that room whenever I need to.

Fri, 03/21/2014 - 12:37 | 4577421 SilverSavant
SilverSavant's picture

All logic is lost on you.  Keep drinking the Kool-Aid.

Fri, 03/21/2014 - 12:59 | 4577532 Kirk2NCC1701
Kirk2NCC1701's picture

If you can't follow the logic, try following its history.

Hint: it was Russian for centuries, but annexed TO Ukraine in 1954, by a Ukrainian-born Khrushchev. Try to connect the dots. :-)

Fri, 03/21/2014 - 16:49 | 4578469 ebear
ebear's picture

Exactly.   Russia has far more claim to Crimea than say, oh.... Israel has to Palestine.

Mathematically speaking, that is.

Fri, 03/21/2014 - 16:28 | 4578385 silvermail
silvermail's picture

"I guess Russia showed how humble it is by annexing part of a territory belonging to a foreign country..."

Why are you lying here? Here are no fools, here are going to smart people.
Russia admitted Crimea in composition of Russia only after when Crimea already adopted a declaration of independence.  Such is the will of the people of Crimea and it is right to self-determination of the people of Crimea.

Fri, 03/21/2014 - 12:31 | 4577388 I woke up
I woke up's picture

This is like the scene in Braveheart where the weak Prince's wife gets sent to discuss terms of an agreement

Fri, 03/21/2014 - 11:17 | 4577022 Redneck Hippy
Redneck Hippy's picture

By 2018, when this Holy Grail deal is supposed to reach fruition, most of Chinese capital will have flown along with Chinese capitalists to London, Singapore, Vancouver, Seattle or San Francisco.  Everybody with a brain and a passport has already left Russia except a few kleptocrats.  The remainder will be busy rotting their brains on vodka, shooting up HIV-laced heroin and fighting Chechnyan and Tatar rebels.

Fri, 03/21/2014 - 16:34 | 4578405 24KGOLD FOIL HAT
24KGOLD FOIL HAT's picture

Good point, Redneck Hippy. When Earth goes into a recession in 2017/2018, capital will slosh over to NYC and The City for safety.  BRICS will have pnuemonia while West sneezes.

Na Zdrovya!

Fri, 03/21/2014 - 11:30 | 4577091 Snidley Whipsnae
Snidley Whipsnae's picture

Unfortunate Fool... "The truth is, Russia needs Europe a lot more than Europe needs Russia."

LOL... Would you rather have a BMW or a home with heat? And, where will you purchase fuel for your BMW and at what price? And, how many BMWs will be produced/sold when the factory has insufficent power? I could continue...

Without Russian oil and gas Western Europe is going to face some tough times. Russia is supplying ~ 30%... maybe you don't think thats a problem?

The Western Europeans have let the neo cons push them into a very bad situation... I thought Merkle was too smart to fall into this one.

Could Merkle now use this rift to dump the Euro?

Fri, 03/21/2014 - 12:22 | 4577336 Redneck Hippy
Redneck Hippy's picture

A.  For the immediate future, Russia will still sell gas to Europe.  Why?  Because they need the money and that's where the pipelines go.

B.  Natgas, like oil, is a global market.  If Russia sells to China, it displaces someone else's natgas.  Might cost a little more to ship, but ulimately, its one market.

C. By 2018, U.S. will be exporting natgas in quantity.  We already export some thru Canada and Mexico. 

 

 

Fri, 03/21/2014 - 12:51 | 4577493 Zerozen
Zerozen's picture

A. For the immediate future, Europe will still buy gas from Russia. Why? Because they need the gas and that's where the pipelines go.

B. Wrong. Just plain wrong. LNG is nowhere making natgas a global market yet, if ever.

C. U.S. will be exporting some, but not a huge amount (the U.S. is actually still a net importer of natgas) and what will likely happen if the U.S. exports is that prices here will rise a lot more than they will fall in the more lucrative export markets. The rule of thumb is that the last, most expensive barrel/decatherm is what sets the price for the entire market. Also, 2018 may or may not happen. LNG terminals and ships are crazy expensive.

Fri, 03/21/2014 - 16:52 | 4578478 ebear
ebear's picture

" LNG terminals and ships are crazy expensive."

Not to mention they blow up real good!

Fri, 03/21/2014 - 21:01 | 4579182 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Not to mention they blow up real good!

Big Jim McBob: "Those LNG terminals sure blow up good!"

Billy Sol Hurok: "They blow up real good!"

http://www.youtube.com/watch?v=KUtdXzBSVaU

Sat, 03/22/2014 - 02:54 | 4579724 Independent
Independent's picture

I dont think the Euros can do without that 30% oil and gas, they have no more places to cut consumption.  Go to any Euro capital, they bankslaves are already biking everywhere they can.  They even do their deliveries on bikes just like in Asia.  I am sure the asians would love to get a break from all the biking and use some of that Russian oil in their Chinese made cars.

Fri, 03/21/2014 - 13:11 | 4577587 Element
Element's picture

 

 

"I thought Merkle was too smart to fall into this one.

Could Merkle now use this rift to dump the Euro?"

 

Me too, I think she's going to have to be shoved aside by a new PM, and the way things are shaping up they better hope Russia's production can supply both markets, or Europe is going to get skinned.

Got to say that after reading this article the US looks very tatty in comparison ... very tatty.

Fri, 03/21/2014 - 11:36 | 4577127 CuttingEdge
CuttingEdge's picture

Hmm - Lets see....what has Russia got...

Worlds largest oil producer.

Worlds largest proven natgas reserves (Iran being second - explains things somewhat).

World's largest diamond producer.

2nd behind China on Aluminium.

Joint fifth with S Africa in Gold.

 

Commodities of any strategic value, in a world of dwindling resources, will be king in years to come.

 

Remind me again, what comes out of the ground in the EU?

Apart from Lagarde (and that doesn't count because she uses a sarcophagus).

Russia has all the crown jewels - the EU has fuck all. Game over.

 

Just waiting for Frau Merkel to personally thank Obummer when she has to turn those nuke plants back online.

 

 

 

Fri, 03/21/2014 - 12:11 | 4577216 DoChenRollingBearing
DoChenRollingBearing's picture

Russia is No. 4 ahead of S. Africa (No. 5) in gold production.  

And Peru may catch S. Africa´s No. 5 spot soon.  2012 gold production data:

http://tinyurl.com/9hlvzdx

Fri, 03/21/2014 - 12:26 | 4577362 Redneck Hippy
Redneck Hippy's picture

Obviously, Peru will become a global power any day now.

Fri, 03/21/2014 - 12:37 | 4577423 DoChenRollingBearing
DoChenRollingBearing's picture

Touché!  But, Peru is doing better (economic growth rate) than almost all the rest of South America, and is even doing better than the USA in economic growth.

Peru is a minor country, medium sized at best.  But there is great potential if they don´t blow it (again).

Sat, 03/22/2014 - 02:57 | 4579726 Independent
Independent's picture

https://www.youtube.com/watch?v=-7GzwjwEsQE

Dochen I dont think peruvians will be around much longer, most will be dead of cancer, hope you dont drink the local water

Fri, 03/21/2014 - 12:33 | 4577398 Herd Redirectio...
Herd Redirection Committee's picture

Russia has a GIGANTIC landmass.  And in an era of scarcity, that is a big help.

But America and Canada comprise a similar landmass.  And Germany is the world-leading developer in wind energy.

Sat, 03/22/2014 - 02:59 | 4579728 Independent
Independent's picture

True which is why the Euros should not piss off the Russians because I have a feeling when things get tight the USA and Canada wont be sending stuff to Europe but keeping it for their economies.  This is assuming the Chinese wont own Canada by then

Fri, 03/21/2014 - 14:25 | 4577879 Panafrican Funk...
Panafrican Funktron Robot's picture

The price of this is all that matters:

http://www.finviz.com/futures_charts.ashx?t=ZN&p=w1

I feel like there is still a very poor understanding of just how much the entire global fiat system rides on the price of the US 10-year.  The extent to which the US can control who buys the 10 year, how much they buy, and at what price, is the extent to which the US still has (fill in the blank) degree of control.  

I think the taper by the Fed indicates that the global elites have completed their support of the U.S. as a governmental entity in it's current form.

Fri, 03/21/2014 - 12:24 | 4577353 Divided States ...
Divided States of America's picture

You forgot largest reservoir of fresh water....Canada has 2nd largest but Harper is gonna give it all to the US for free.

Fri, 03/21/2014 - 12:44 | 4577457 DoChenRollingBearing
DoChenRollingBearing's picture

Water is about to become much more valuable.  But the USA is relatively well off re water, even with just our own resources..  If Canada would like to sell us some in a pinch, I suspect that we could work a friendly deal.

The USA and Canada are more likely to be better friends as time goes by than than China and Russia.  China and Russia are two scorpions locked in a marriage of convenience.

Fri, 03/21/2014 - 12:58 | 4577529 Spastica Rex
Spastica Rex's picture

Yes - I look out my window at the mighty Columbia River. Thank you, Canada.

(I love Canada)

Fri, 03/21/2014 - 22:23 | 4579357 Kirk2NCC1701
Kirk2NCC1701's picture

I, on the other hand (thumb and 4 fingers), am partial to getting all the H2O I need from Lake Okanagan. No danger of being sucked dry by...
Go BC!

Sat, 03/22/2014 - 03:01 | 4579733 Independent
Independent's picture

I wouldnt drink that water Rex, that river runs right through the Hanford nuclear instalation in Washington State and the ground all around there is very contaminated.  Water tends to percolate through the surrounding soil if you know what I mean.

Fri, 03/21/2014 - 16:37 | 4578422 24KGOLD FOIL HAT
24KGOLD FOIL HAT's picture

The diamond in the crater thing is full of dust sized diamonds.  Not 2 carat purebreds.  Dont know if micron industrial diamonds are in short supply.

Fri, 03/21/2014 - 16:38 | 4578425 silvermail
silvermail's picture

I recommend to all fans of the so-called Western democracy, look at the forecast growth in gas consumption in Europe over the next 5 years. Without Russia, it is impossible.

Fri, 03/21/2014 - 21:44 | 4579275 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Not only that but the Russians are world class protectors of the environment. Have you ever noticed that none of the enviromental groups protest or complain that Russians are not doing a great job of protecting mother nature? That is because there is nothing to make a complaint about. There are no environmental problems at all.

 

 

Fri, 03/21/2014 - 14:18 | 4577862 Rafferty
Rafferty's picture

Ok, but if the trade is equal to only $8.2 billion annually it's miniscule and won't have much impact on the petrodollar.  The article's premise is therefore seriously misleading.

Fri, 03/21/2014 - 16:18 | 4578350 silvermail
silvermail's picture

{Global balance of oil and gas} minus {Supplies from Russia} equals {Death for Europe}.

Everything else - it's just blah-blah-blah and TROLOLOLOLOLOLOLOLOLOLO.

Fri, 03/21/2014 - 23:48 | 4579578 yatikto
yatikto's picture

In current model yes, China would prefer the western markets because profit margins are higher. But that is negated by higher standards and greater transportation distances.

Russia would prefer European markets also because the profit margins are higher.

However that profit is currently measure by dollars and euros.   When Russia and China turn to each other, dollars and euros are no longer needed. 

Sun, 03/23/2014 - 10:26 | 4582152 Brit_Abroad
Brit_Abroad's picture

Unfortunate fool

Fri, 03/21/2014 - 16:03 | 4578286 DanDaley
DanDaley's picture

...who the hell will get off their asses and work in any of them?

 

Over 5,000 years ago, Moses said to the children of Israel ,
"Pick up your shovel, mount your asses and camels, 
and I will lead you to the Promised Land." 

Nearly 75 years ago, Roosevelt said,
"Lay down your shovels, sit on your asses,
and light up a camel, this is the Promised Land." 

Now, Obama has stolen your shovel,
taxed your asses,
raised the price of camels, 
and mortgaged the promised land. 

Fri, 03/21/2014 - 17:43 | 4578618 real
real's picture

The Latino's.  I work in the trades and just hire latino men.  They can pick up any tool and make music. No smarter then a 3rd grader, but very good with their hands 

Sat, 03/22/2014 - 03:04 | 4579735 Independent
Independent's picture

They are smarter than you think, their numbers are increasing and soon you will be required to learn Spanish and send your taxes to Mexico City after the referendums LOL

Fri, 03/21/2014 - 10:25 | 4576769 Fortunate Fool
Fortunate Fool's picture

And the Russians trusting the Chinese, aren't they dreaming?

Fri, 03/21/2014 - 10:34 | 4576818 Spastica Rex
Spastica Rex's picture

You really think anybody trusts anybody?

Fri, 03/21/2014 - 10:38 | 4576836 Fortunate Fool
Fortunate Fool's picture

No, but I would trust Chinese even less...

Fri, 03/21/2014 - 10:47 | 4576870 Spastica Rex
Spastica Rex's picture

Less than who?

The status quo remains until something changes it. The Western Empire, financed and controlled by western banks, and enforced by the US Military, has provided great benefits in return for vassalage. Perhaps the vassals think they can get more in a different arrangement? Who knows, but when/if they do, I think we'll all know.

Fri, 03/21/2014 - 11:56 | 4577221 TeamDepends
TeamDepends's picture

What you describe sounds like vaselinage.

Fri, 03/21/2014 - 12:35 | 4577407 Herd Redirectio...
Herd Redirection Committee's picture

I don't think the point is to trade ONLY with the EU, or ONLY with China.  Its about having the choice, and thus, being in a better negotiating position.

Like how the US gets its oil from around the world, although primarily Canada and Saudi Arabia, to minimize dependence on any one source.

Fri, 03/21/2014 - 12:48 | 4577475 V in PA
V in PA's picture

I would still call it the British Empire, with US military as the muscle, but Western works too.

Side note, China and Russia are the only significant Countries not under control of the British (Western) Empire. What if they are starting to relize that they have been setup to fail, by some of the world best 'money changers' (NYC/London), and this is thier last best hope at not becoming part of the Empire.

Fri, 03/21/2014 - 12:56 | 4577522 Spastica Rex
Spastica Rex's picture

That's the big question, Rigby.

Like I said; we'll know when things are really changing. Impediments to Western goals in Syria and Ukraine (and maybe Iran) are indicators, but insufficient indicators for me.

Fri, 03/21/2014 - 10:42 | 4576850 11b40
11b40's picture

BASICS FOR UNDERSTANDING INTERNATIONAL RELATIONS

 

Lesson from Reagan - Trust, but verify.

 

Nations don't have friends - only interests.

 

Trust everyone - to act in their own self interests.

Fri, 03/21/2014 - 10:43 | 4576853 Overfed
Overfed's picture

More trustworthy than the US. Name an ally or treaty holder who hasn't been shit on by the US.

Fri, 03/21/2014 - 22:35 | 4579385 Kirk2NCC1701
Kirk2NCC1701's picture

[Crickets]

Fri, 03/21/2014 - 12:25 | 4577358 aVileRat
aVileRat's picture

Yes, the Russians are dreaming.

Tyler and 80% of the movement, including Dr.Paul I think need a crash course in Sino government. Start with Kissinger on China, get back to a post sometime around reading the last 5-year plan's foreign strategy document. It's 80 pages, so I can wait a few days.

Bejing has zero interest in being Russia's buddy. They went as far as to support Mongolia just to piss off Putin. Putin being the same guy that tried to claim the Chechan rebels were using Chinese rifles back when he got elected the first time. They don't forget that kind of shit. Nor that whole problem when Russia wanted to start shit over the Kuriel and North China sea sov.

Bejing plays a game of multilateral "go": keep everyone disrupted so that their swing vote is important.

If China goes Russian, then India and Pakistan will be at risk of being boxed in and at risk for territory losses in their respective border disuputes. Khazakstan is also a big red flag in the area given their oil wealth, weak Russian backed corrupt government and angry mixed ethnic population.

Everyone is on Moldova now, but remember: Judo is 99% a head game, and forcing your opponent to move off balance in a way that you can use to your advantage.

Tricking everyone to think China is leaning into Russia, will be a key strategy to Putin. Count on it.

At least Tyler_1 is not posting propaganda stats anymore, that was painful to read. Everything else has been good coverage sofar.

Dropping the SPR on the world oil markets would also obliterate Argentina, Venez. Cuba and Iran in about 90 days. Ironically India and Japan would both get a 300 and 900 billion economic juice from such a manouver. And it would also generate a US oil market equity ignition trade as UK/EU macro accounts scramble to get out of the way and allocate sectorweight back into NATO economies.

Which would generate a hiring boom, and isolationist libertarians everywhere would a load on the hiring numbers.

 

Fri, 03/21/2014 - 13:23 | 4577645 Johnny Cocknballs
Johnny Cocknballs's picture

People who conflate isolationism with non-interventionism generally don't know much about either libertarianism or world affairs.

Beijing has zero interest in being regime-changed or having its currency manipulated by outsiders.  Alliances no doubt shift, and nations no doubt act in their own interest, but you simply haven't been paying attention to the last 20 years, and the last few in particular, if you think China has no interest in partnership with Russia.

 

Nice rant though.

Fri, 03/21/2014 - 13:44 | 4577741 Stuck on Zero
Stuck on Zero's picture

China is sending hundreds of thousands of workers into Eastern Siberia to work at resource extraction. Lumber, minerals, etc.  Someday China will not like the way Russia is treating the mandarin speaking people and will move to take over the area.  WWIII anyone?

 

Fri, 03/21/2014 - 12:05 | 4577252 McMolotov
McMolotov's picture

+1 for your frakkin' username and for pointing out what should be obvious to everyone. The "energy boom" in the US is a myth, and there sure as hell is no "manufacturing renaissance," either.

This country backed itself into a goddamn corner, and we should all be worried about how the morons in charge will react.

Fri, 03/21/2014 - 12:28 | 4577375 Redneck Hippy
Redneck Hippy's picture

Energy boom is a myth.  Then explain why our balance of payments last quarter was the lowest in 14 years?

 

 

Fri, 03/21/2014 - 12:34 | 4577401 LawsofPhysics
LawsofPhysics's picture

Is there still a deficit?  How much?

One data point out of how many?

Not a very long term investor are you?

Fri, 03/21/2014 - 13:06 | 4577568 SilverSavant
SilverSavant's picture

Energy Boom is not a myth, it is an illusion.  You have lot's of economic activity, at a net loss of energy, looking from a whole cost prespective.   The whole energy boom looks a lot like a "Broken Windows" boom.  It will fool many into thinking that something bad is something good. 

Fri, 03/21/2014 - 13:36 | 4577703 LawsofPhysics
LawsofPhysics's picture

My brother has been in Oli and Gas for 20+ years.  You are thinking about this wrong.  Are you suggesting that fewer calories have to be invested in order to liberate those oil/gas reservoirs (calories)?

FAIL

 

Fri, 03/21/2014 - 14:54 | 4577982 Sven Sikztu
Sven Sikztu's picture

exactly! worse than that, those factories have been SCRAPPED shredded and shipped to where else...Chinese scrap yards/smelters. But even if a few survived there is no such thing as an educated workforce anymore anyway, at least from age 30 & below.

Fri, 03/21/2014 - 20:26 | 4579087 Mitzibitzi
Mitzibitzi's picture

Hardly. Look up the figures on how much 'scrap' the US exported to China last year. Then check out where it came from! Exquisite machine tools are legally scrap if you simply cut the mains plug off. And when there's money to be made by offsetting 'old' equipment disposal against tax.....

Fri, 03/21/2014 - 10:28 | 4576763 Occident Mortal
Occident Mortal's picture

Kick China out of WTO? What would happen to US inflation without Chinese goods? Inflation would probably make it into high single / double digits and the bond market would puke it's guts up. And that's before China pulls the trigger on the SOVX WMD they have constructed.

 

The world has changed since 1990. Maybe you should go outside and take a look?

 

You are living under the sword of Damocles now. 

Fri, 03/21/2014 - 11:07 | 4576966 Fortunate Fool
Fortunate Fool's picture

"What would happen to US inflation without Chinese goods?"

 

Not much actually, but I can guarantee you that Indonesia, Thailand, Malysia, Vietnam, and the rest of South East Asia would do very well...

Fri, 03/21/2014 - 11:18 | 4577025 Occident Mortal
Occident Mortal's picture

Because they know how to teleport factories?

Fri, 03/21/2014 - 11:24 | 4577073 Fortunate Fool
Fortunate Fool's picture

How many factories have been shipped from the US to China again?

Fri, 03/21/2014 - 11:31 | 4577097 rtalcott
rtalcott's picture

over what period of time?

Fri, 03/21/2014 - 11:55 | 4577142 Fortunate Fool
Fortunate Fool's picture

From the example that I have witness directly, it took about 1 month to get the chinese workers trained here, about 2 months to ship all the equipment, and another month to install and get started.

So there, 4 months in that case.

Fri, 03/21/2014 - 12:26 | 4577364 Divided States ...
Divided States of America's picture

Hey buddy, shouldnt you be sticking your head in the sand.

Fri, 03/21/2014 - 13:25 | 4577652 Element
Element's picture

You realize South East Asia has plenty of capable factories, right? It's not such a stretch for them to expand and diversify production further. For years I've been using computer bits made there.

Fri, 03/21/2014 - 11:31 | 4577082 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

You speak as though Americans are entitled to forever be the apex of world demand. I assure you, they are not. The real reason Americans can demand more than other consumers is a silly little thing called a Reserve Currency; a gift from past generations. That will end soon.

Fri, 03/21/2014 - 11:10 | 4576980 DeadFred
DeadFred's picture

The US inflation rate would stay where it is. The hedonic adjustments would get a lot of exercise though.

Fri, 03/21/2014 - 10:25 | 4576767 SteveNYC
SteveNYC's picture

It's all a moot point. The west is as dependent on the east as the east is on the west. "Fully integrated global economy", thats what we have, by design make no mistake. Move one thing, everything moves. One part breaks, the whole thing comes down. Sanctions on major countries are a PR stunt, nothing more.

Its all coming into line, down the track. The major concern for the west is that our living standard has so much further to fall.

Fri, 03/21/2014 - 11:01 | 4576933 Spastica Rex
Spastica Rex's picture

I think the point you make is really interesting.

A true one-world government will require a significant re-balancing of living standards. Globally, median GDP per capita is somewhere around that of Albania. I have no idea what a "middle class" Albanian lifestyle is like, but I bet it's significantly more austere than my "poor" American lifestyle.

Or else the global political/social/economic Mexican standoff gets broken, one way or another.

 

Fri, 03/21/2014 - 11:30 | 4577095 NuckingFuts
NuckingFuts's picture

Having lived in Albania for a couple of years, I can promise you no American would want their middle class life style. Although the raki is quite good and socially acceptable to drink at breakfast..... So there is that. Their weed is not bad either.

Fri, 03/21/2014 - 11:26 | 4577081 bullchit
bullchit's picture

A high majority of the East can go back to family farms and holdings......Yaa ready for that Amerika?

Rural Orient can live well on a dollar a day.....

Regards.

Fri, 03/21/2014 - 12:35 | 4577409 UggSmash
UggSmash's picture

Yep, Steve, I agree. Seems to me too that "our living standard has so much further to fall". Boggles my mind how much purchasing power the average salary in the U.S. is. I make decent bank myself (not a lot, but comfortable), and buying most of the stuff I want and all the stuff I need, I still save some 70% of it. I don't know what people do to blow all their money, get so far into debt, etc. 

Which begs the question: where does all that purchasing power go? 

My thoughts on this over the past 10 years is that a large part of it goes to corporations. That is, I suspect pricing strategies of goods sold in the U.S. involve gouging U.S. consumers (i.e. huge markups over manufacturing costs). These same goods are sold elsewhere for much lower prices, because that's all those people can afford. 

While studying finance in college, some business profs discussed how many items (e.g. clothes, shoes) are very very very cheap to make, especiall when they're made with low-cost labor in "poorer" countries. When a pair of jeans sold at The GAP is made for $2, and sold to some U.S. dummy for $40, but sold to someone in a different country for $5 or $10, it seems that corporations often milk U.S. consumers because most of them don't seem to know any better. 

If I'm onto something about all this, it suggests another question in my mind: how, exactly, would living standards in the U.S. come down? Well, we're seeing one path unfold already: chronically high unemployment, which reduces aggregate purchasing power, which puts negative pressure on corporate earnings (which we've also seen - flat-ish corp earnings recently, with EPS maintained to a big extent by buybacks), which causes high unemployment, etc.

a.k.a. shit has to go on sale for many people in the U.S. to afford it. 

Sat, 03/22/2014 - 00:04 | 4579602 yatikto
yatikto's picture

That dependence is because of banking and forex. People in the east are getting tired of getting paid in paper for stuff.

If this is a real crisis, east will divorce from the currency exchange market in some manner where they can set their own rates and not be dependent on NYC/London.   This may be end of globalization.

What is stunning about Ukraine prompted crisis is the level of hubris in the rhetoric from US and EU.

Sat, 03/22/2014 - 09:39 | 4580020 SteveNYC
SteveNYC's picture

I agree that these "pussy footing" sanctions, as well as sanctions in general, may kil globalization. No developing or major/secondary economic power is going to continue to be held to ransom, even if only symbolic, by this form of aggression. If globalization dies though, it is going to do significant damage to all in the process, at last initially.

Sat, 03/22/2014 - 04:32 | 4579779 StychoKiller
StychoKiller's picture

Comrade Stalin and Chairman Mao didn't trust each other, but current events have given China and Russia a common enemy...

Fri, 03/21/2014 - 10:23 | 4576756 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I truly believe that one political truth that kept us going through the cold war was the simple fact that the threat of communism was out there. It was a real, unifying entity that made our political leaders back US ideals and support the homeland. When communism collapsed, the unifying threat vanished. America's politicians turned on its own citizens selling them out for the quick buck. Especially the elite Libtards. Repugnant at best.

Maybe a new threat will wake up the idiots destroying the country? I can dream.

Fri, 03/21/2014 - 10:57 | 4576913 Shad_ow
Shad_ow's picture

The fear of foreigh communism has been replace with our own government's version of it and the tyanny here.   We fear our leaders now more than Russia's.

Fri, 03/21/2014 - 13:08 | 4577579 Proofreder
Proofreder's picture

You had me until Libtards, asshole.

When TF will you get over this inane left - right artificial social divide which amounts almost entirely to name-calling with no intellect involved.

Grow up.

Fri, 03/21/2014 - 14:06 | 4577822 Parabox
Parabox's picture

I too understand there is a dialectic at work, but of the red team/blue team tribes, the progressive libtard is the most shrill, arrogant and nauseatingly insufferable.

Fri, 03/21/2014 - 17:13 | 4578527 ebear
ebear's picture

"the threat of communism was out there"

A threat that was greatly exagerated to consolidate control by the MIC.

Anyone remember the ban on exporting PC's to the USSR back in the early 80's?

They needed the 6502 and 6800 chips for their missle guidance systems.

Couldn't hit the broad side of a barn, which was why their megatonnage was so much greater than ours.

Missle gap?   Credibility gap was more like it.

Fri, 03/21/2014 - 20:49 | 4579146 Wanderer_1814
Wanderer_1814's picture

The coup in Ukrain might not even be legal...

 

http://www.lawfareblog.com/2014/03/russia-in-ukraine-a-reader-responds/

Fri, 03/21/2014 - 20:47 | 4579151 Wanderer_1814
Wanderer_1814's picture

Legally the coup in Ukrain might not even be legal...

 

http://www.dailystar.com.lb/News/Middle-East/2013/May-30/218852-mccain-c...

Fri, 03/21/2014 - 20:48 | 4579155 Wanderer_1814
Wanderer_1814's picture

Legally the coup in Ukrain might not even be legal...

 

http://www.dailystar.com.lb/News/Middle-East/2013/May-30/218852-mccain-c...

Fri, 03/21/2014 - 23:34 | 4579545 effendi
effendi's picture

Reggie Love likes Obummer toothless. Less chance of getting his Johnson bitten off.

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