The Emperor is Naked

Off the keyboard of RE

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Published on the Doomstead Diner on June 22, 2014

Discuss this article at the Geopolitics Table inside the Diner

Bonus Rant: IMF Hit Men

What passes for Geopolitical Policy in the FSoA has been pretty much the same ever since the Nixon Era, when folks like Henry Kissinger and Zbignew Bryzinsky first burst on the scene as the main mouthpieces of the Tri-Lateral commission charting out the future course of Empire for NATO in the post WWII period.  Basically everyone has always known this is a war for power and hegemony over Global Resources, primarily Oil, and the idea was to constrict the two other major powers Russia and China while monopolizing the resource base in the main area with the most Oil, the Middle East.

For a good long time since the 50s this WORKED too, puppet Goobermints were installed in places like Iraq and Iran, Syria and Egypt, and for so long as the energy came a bubblin’ up out of the ground as cheap and EZ as it did off Jed Clampett’s farm in Oklahoma over there in MENA.   Populations were mostly kept under control by the various Dictators and Strongmen propped up into power by NATO.

Things began going South with this plan with the overthrow of the Shah in the Islamic Revolution in 1979, but really picked up steam after Saddam Hussein got sent running when NATO dropped the Death From Above down on Iraq in Desert Storm.  Not coincidentally, Saddam took power in exactly the same year the Islamic Revolution took place in Iran, 1979.  At that time, Saddam was playing ball with NATO, and he served as a defense against Iraq walking down exactly the same Islamic path the Iranians took.

Things really began spinning out of control far as NATO was concerned when the Hoser Mubarak was overthrown as Dictator for Life in Egypt as a result of the Arab Spring protests and demonstrations that began in 2010.  He wasn’t the only one of course, the Wave of revolt spread all across MENA over the next few years.

By December 2013, rulers had been forced from power in Tunisia,^[3] Egypt (twice),^[4] Libya,^[5] and Yemen;^[6] civil uprisings had erupted in Bahrain^[7] and Syria;^[8] major protests had broken out in Algeria,^[9] Iraq,^[10] Jordan,^[11] Kuwait,^[12] Morocco,^[13] and Sudan;^[14] and minor protests had occurred in Mauritania,^[15] Oman,^[16] Saudi Arabia,^[17] Djibouti,^[18] Western Sahara,^[19] and the Palestinian territories.

Why did all these places explode in violent revolution all around the same time?  The fuse was lit in Tunisia in 2010, by the self-immolation of a Tunisian Fruit Vendor.

The catalyst for the current escalation of protests was the self-immolation of Tunisian Mohamed Bouazizi. Unable to find work and selling fruit at a roadside stand, on 17 December 2010, a municipal inspector confiscated his wares. An hour later he doused himself with gasoline and set himself afire. His death on 4 January 2011^[61] brought together various groups dissatisfied with the existing system, including many unemployed, political and human rights activists, labor, trade unionists, students, professors, lawyers, and others to begin the Tunisian Revolution.^[53]

Did the entire Region explode in Revolution all just because Mohamed Bouazizi torched himself?  Of course not, this just got the ball rolling, the problems in all these nations were systemic and were brought to the surface with the Financial Crisis of 2008 and subsequent crash in Oil Prices.

All of these countries in one way or the other are dependent on Oil Revenue, and with the cratering in the price of Oil that occurred at the end of 2008, money to run their Goobermints, import food and subsidize food prices, keep the Electricity on etc began to run thin.  On top of that, many of these places also were at the stage of becoming net Oil importers rather than Oil Exporters.

So the reason here for all the tumult becomes quite obvious, these Goobermints were simply out of money to keep their populations fed and comfortable, even if desperately poor in general.  Unlike here in the FSoA, these places do not have the ability to manufacture Credit in the form of FRNs to keep rolling a while longer; if they can’t earn the FOREX by selling Oil, they go broke.  Unless of course IMF Hit Men show up and offer up some loans for them to keep going, but why would they do that if they have no more resource left to exploit?

Which countries did NOT collapse into Failed State anarchy during this period?  Countries like Saudi Arabia, Kuwait and Iran which still DO have Oil left to export.

So what’s the problem here far as Happy Motoring in the FSoA is concerned?  Just forget these loser states that are outta gas and keep the Black Gold flowing from the ones left that still have some!  As you can see from the Kuwaiti and Iranian charts, there are a couple of problems with this idea.

First, the Desert Storm operation designed to KEEP the Oil flowing out of Kuwait took a HUGE hit during the operation itself, it is tough to keep Oil flowing out of a country that has Death From Above raining down on it every day.  This was however only a temporary problem at the time, and once NATO ejected Saddam from Kuwait and got him executed, the Kuwaities got right back to shipping Oil over here to the FSoA in return for Dollars from the perpetual credit laptop of then Fed Chairman Helicopter Ben Bernanke.

Second problem can be seen with the recent Sanctions against Iran, where the Mullahs and Ayatollahs who currently run that country have not been playing NATO ball for quite some time, but still have to an extent been doing BIZNESS with the Western Oil consuming countries selling their Oil to them in return for FRNs. Start dropping economic sanctions on them instead of dropping BOMBS, it has a similar effect which is to reduce the total amount of Oil coming into the pipeline for refinement into Gasoline for more Happy Motoring.

The Myth being promoted by Energy Shills here in the FSoA is that we can achieve Energy Independence by fracking the living shit out of formations like Bakken and Marcellus which have some “tight oil” left in them, along with still more Natural Gas.  This is Bullshit of Denali size proportions, if not K2 or Everest.  As you can see, the FSoA has a HUGE gap between how much it produces versus how much it consumes, and you’ll never frack up enough Oil to fill that gap.

Nor will you be able to continue to import enough to maintain this level of consumption, not with one after another countries which still produce some oil getting sucked in to the ongoing firestorm in MENA.

For now, Puppet Regimes in Saudi Arabia and Kuwait still ship plenty of Oil over to the FSoA for Happy Motoring, but these countries are all declining in production and more than that are subject to the same forces that are bringing down all their surrounding neighbors not so fortunate as themselves to still have a decent amount of Oil left underground at a cheap price to extract out.

As anarchy and mayhem spread through the neighborhood, it becomes ever more difficult for these countries to maintain control over their populations, and “terrorists” have a tendency to migrate around from one country to the next, with the potential always for blowing pipelines and wells and restricting supply flow through such actions.

So, even though the Illuminati could give a shit about Syrians who have no more Oil left to ship out, if they wanna keep the Oil flowing out of Saudi Arabia and Kuwait, they have to “contain” the problem.  How do you contain such a problem?

Traditional answer to this is simply to roll in the Military Machine, drop down Death From Above and once the population has been “cleansed” of “terrorists”, install a Puppet Goobermint to run the country for you.  If said country has exportable energy, this can pay for itself, but once said country is OUTTA GAS, it becomes a huge money sink.  All the current military operations being run to maintain control over Iraq and Afghanistan are enormous money sinks, and probably overall net EROEI Negative, in that it costs more energy to keep a military machine operational in those places than they can ship out.  As of right now, it doesn’t look like NATO has either the resources, will or political clout necessary to run another full scale Desert Storm style operation to try and take control back over places like Syria and Iraq, so inevitably the mayhem currently ongoing in those countries will spread to the still sorta under control places like Saudi Arabia and Kuwait.

If this was the only problem faced here on keeping this Geopolitical farce running, the Emperor would only be about half naked now from the Waist Up, but of course it is not the only problem.  A problem as big or bigger is the ongoing conflict between NATO and Russia, centered in Ukraine which represents the main border state between West and East in Europe, and serves as a transit point for Ruskie energy to flow through to European consumers of that energy, who themselves are basically tapped out as far as further credit is concerned, particularly in the southern PIIGS nations.

On the European side, if they can’t keep Ruskie Gas flowing through Ukraine, they’ll be shivering in winter and have a real hard time keeping the Lights On.  On the Ruskie side, if they can’t keep Western credit flowing in to Mother Russia for further investment into extracting more energy and building more pipelines, they also will run into problems.  Even if you do still have energy in the ground, if you don’t have customers who can afford to pay for it or a way to get it to them, it is pretty worthless stuff.

The problem here which EVERYBODY KNOWS  is that the worth of everything here is based on the worth of the Dollar, which essentially is quite worthless at this point, it is just an exponentially increasing mountain of irredeemable debt that will never get paid off; USTs are worthless toilet paper and the Ruskies and Chinese both know this by now.  Vlad the Impaler over in Mother Russia is tired of getting pushed around by the folks who control credit creation in Europe and the FSoA, and along with the rest of the BRICS Nations they keep floating the balloon they they will pitch the Dollar and go it alone with their own system of credit.  Sergei Glaznyev, one of Putin’s Econ Advisors pitched the idea of a “Anti-Dollar Alliance“:

As summarized by VoR, in his article, published by Argumenty Nedeli, Putin’s economic aide and the mastermind behind the Eurasian Economic Union, argues that Washington is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow’s portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won’t be able to service their debts to European banks.

According to Glazyev, the so-called “third phase” of sanctions against Russia will be a tremendous cost for the European Union. The total estimated losses will be higher than 1 trillion euros. Such losses will severely hurt the European economy, making the US the sole “safe haven” in the world. Harsh sanctions against Russia will also displace Gazprom from the European energy market, leaving it wide open for the much more expensive LNG from the US.

How plausible is it for Russia & China, along with the rest of the lesser BRICS nations to abandon the Dollar and the Western Illuminati Credit system?  ALL of their currencies, the Rouble, the Yen, the Real etc all derive their own value by being valued against the Dollar to begin with.  They can settle up in their own currencies, but those currencies still only hold value relative to their value to the Dollar, they have no real independent valuation other than that.

Besides that, in both cases these countries hold large quantities of USTs, which currently represent savings accumulated from years of energy sales and in the case of China, years of Slave Labor.  Crash the dollar, all those savings become worthless, so what then are the Chinese worth?  The Ruskies may still have worth because of some energy still left underground there, the Chinese have ZERO worth because their whole economy is dependent on mercantilism and selling toys to Amerikans for…DOLLARS!  The Ruskies can’t pick up the slack here as consumers of Chinese toys, they are basically broke and have a declining population base.

It is not impossible for a independent valuation of the Rouble and Renminby, but it would be quite difficult to achieve here, and most certainly the folks who control the current Credit system centered at the Bank for International Settlements in Basel, Switzerland will fight this every step of the way.  These folks have been building this system of Credit going back at least to the 1500′s in the Medici Era, possibly quite further back than that through the Holy Roman Empire.  They won’t simply roll over and die here without a fight.

The Battle Lines are being drawn, but this is a battle no side can win.  Just about every scenario you can work through ends with a collapse of the monetary system, without a viable replacement in a world in deficit.  Right now, small players from individuals to small nation states are collapsing under the weight of the debt they have accumulated here through the Age of Industrialization.  Soon enough, this Bankruptcy will migrate from the periphery to the CORE, the BIS.  There is nobody out there big enough and solvent enough to bail out the BIS.  When the observation is finally made that these folks are well and truly NAKED, the Debt they hold is all IRREDEEMABLE Debt, the “System of the World” will undergo an irrevocable change.  This cannot be stopped, it is inevitable.

How will this finally play out?  Nobody knows for sure here.  Ugo Bardi from Resource Limits, Gail Tverberg from Our Finite World and me did some speculation on it in the last Collapse Cafe, but really, NOBODY KNOWS how it will all play out in the end.

RE